China Is Not Saving the World Economy

A reckoning with slower growth for the Chinese economy has been a long time coming.
China Is Not Saving the World Economy
Traders work on the floor of the New York Stock Exchange during the morning of August 27, 2015 in New York City. Andrew Burton/Getty Images
He Qinglian
Updated:

Recently, the international community finally, and collectively, began to have a pessimistic view of China’s economy. Reasons for their pessimism vary. Some believe that Xi Jinping’s anti-corruption campaign has led to political instability and hence economic recession. Others believe that the Chinese regime’s intervention in the stock market directly caused an economic crisis.

But people almost never seriously consider that it’s China’s economic system that makes it difficult to sustain prosperity. Despite everyone’s wishful thinking, China has never been a Noah’s Ark, able to save the world economy.

China Dream

With unemployment on the rise and tougher economic realities unfolding for China’s middle- and lower-classes, many Chinese are cracking jokes about the “China Dream,” calling it “pure illusion.”

Few Chinese are aware of the other “China Dream” that’s been circulating in the international community. This dream has been the same in Europe, America, and Africa where governments had fantasies of the Chinese government opening its big money bag and investing in their countries to boost their economies and employment.

China has actually done that. It has made large-scale investments overseas. Data from the United Nations Conference on Trade & Development (UNCTAD) indicates that China became the world’s third largest foreign investor in 2013, right behind the U.S.’s $338.3 billion and Japan’s $135.7 billion. From 2005 to the first half of 2014, China’s foreign direct investment (FDI) totaled $515.3 billion and projected investments totaled $355.1 billion.

In the United States, Britain, and Germany, investment from China increased at the greatest pace. Between 2007 and 2013, China’s investment in the United States increased by 14 times. Among 50 U.S. states, 35 of them have received investment from China, with New York state, California, and Texas being the top three. China’s investments cover extensive areas, including energy, real estate, manufacturing, finance, services, information, electronics, biotechnology, green projects and others, creating more than 80,000 jobs in the United States.

Germany has also become a hot spot for Chinese investment. In 2012, Germany accounted for 38 percent of China’s FDI projects in Europe, far more than Britain and France combined.

An investor walks past a digital board showing stock market movements at a brokerage house in Shanghai on Sept. 1, 2015. (Johannes Eisele/AFP/Getty Images)
An investor walks past a digital board showing stock market movements at a brokerage house in Shanghai on Sept. 1, 2015. Johannes Eisele/AFP/Getty Images
He Qinglian
He Qinglian
Author
He Qinglian is a prominent Chinese author and economist. Currently based in the United States, she authored “China’s Pitfalls,” which concerns corruption in China’s economic reform of the 1990s, and “The Fog of Censorship: Media Control in China,” which addresses the manipulation and restriction of the press. She regularly writes on contemporary Chinese social and economic issues.
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