谢国忠文集：世界的动力
leadership baton for globalisation and become its centre for goods,
services and capital, while catalysing a new China boom that could
last a decade or longer. That boom could turn China into the world's
largest economy - and a developed country - within two decades.
China has been a bottom feeder in the global economy. Keeping costs
low and making labour-intensive products have brought it safety and
growth. Australia, Brazil and Russia sell natural resources to China
in return for cheap manufactured goods. Japan and Germany sell
expensive cars and technology to China in exchange for cheap
manufactured goods. And America just hands over dollars for goods and
services, and gets them back by selling derivatives like
collateralised debt obligations, backed by inflated US house values,
to foreigners.
The global economy has run like a motorcycle, with American
consumption as one wheel and China's savings as the other, with
everyone else piled up on top. The sustainability of this world
depended on foreigners believing in the Wall Street debt instruments
that paid for America's imports while keeping inflation at bay.
Inflation came three years ago with surging oil prices. The tightening
that accompanied it burst the US property bubble in 2006. It took
another year for the subprime market, and still another for financial
derivatives, to blow up. The resulting crisis has destroyed Wall
Street's credibility. The motorcycle economy has fallen over.
The US now offers the world, in particular China, a plan for recovery:
you buy my treasuries, Uncle Sam gives the proceeds to American people
to spend, and your exports and your economies may recover. The
recovery plan tries to put the motorcycle economy back on its wheels
by replacing American households with the federal government.
Accepting this offer is not in China's best interests. First, the plan
may bring modest growth for a few years but will be followed by
another, bigger crisis centred on the US treasury market. Second,
instead of taking America's offer, China can start attracting
investment as part of its trade-led development model. In short, it
can start competing with the US for money rather than just rasing
dollars by selling goods to the US.
China has been attracting foreign capital for some time. But this has
been mainly to improve its production capacity, especially in the
export sector. The new strategy calls for foreign capital to fund
China's capital formation in anticipation of earning profits from
richer Chinese consumers in the future. It would help China to shift
its economy to consumption without sacrificing growth.
China is in a good position to replace the US as the centre for
globalisation: with little debt, enormous savings, and its sheer size,
its growth potential is vast. Current per capita income of US$3,300
could be raised to US$10,000 within two decades through a combination
of growth and currency appreciation. At the same time, gross domestic
product could rise from today's US$4.3 trillion to US$13 trillion in
today's dollar terms. Such an increase would offer plenty to investors
who bet on China's future. This is why China can succeed in changing
its growth model.
To engineer the transition, China must create a first-world
environment for capital flow and pursue an aggressive urbanisation
strategy to anchor domestic consumption. First, China should fix a
date, preferably within five years, for floating the yuan; that is,
forgoing accumulating foreign exchange reserves, and making the
capital account freely convertible.
Such a change would require the economy to modernise in many ways. As
money could travel freely, only a first-world environment for
investment would attract and keep money at home. The rule of law would
need to be strengthened enormously to make the new system viable. A
corollary is that arbitrary administrative power would have to be
severely limited. Fixing a date for currency convertibility would be
similar to joining the World Trade Organisation a decade ago: it would
set in motion a new wave of reforms.
Second, as China succeeds in attracting foreign money, it must have a
strategy to turn it into efficient economic growth. Otherwise, the
money would be used for blowing bubbles, which could bring down the
country. The anchor for domestic demand must be urbanisation. To
become a developed country in two decades, China must aim to increase
its urbanisation to 75 per cent by then. Moreover, urbanisation must
be viable in the long run; the system needs to change so that migrant
workers become rooted in cities.
China's urbanisation strategy should focus on building 30 mega-cities
of more than 20 million residents each. These cities would have the
right to issue bonds to fund their development. Because they would
have the size for economies of scale in building infrastructure,
protecting the environment, and creating jobs, they would have tax
revenues to pay off their bonds. When money was plentiful, they would
have easy financing and could accelerate urbanisation. When money was
scarce, they would face high funding costs and could slow down in
response. Basically, China should turn its urbanisation into a sponge
for global capital. Shifting the rural population into big cities is
the only way for the nation to modernise.
The global financial crisis is casting a shadow over globalisation.
Developed economies may resort to protectionism to keep jobs at home,
leading to a vicious cycle of recession and more protectionism. China
is in a position to carry the baton for globalisation. This is a
unique chance to become a developed nation in a generation.
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