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China's Global Growth: Looking Inwards
Pinnacle Digest writes: China has been at the heart of the world's economic growth for many years. This is common knowledge, but now as western nations continue to struggle and contract, the question becomes; Can China continue to expand by making the switch to servicing its middle class and not the world?
This is a question Jeremy Paltiel, a professor of political science at Carleton University in Ottawa, attempted to answer in a recent report. He stated, “For much of the 21st Century China’s growth alone has been responsible for a very sizeable portion of the growth in the global economy, pulling along other economies with it."
Paltiel went on to discuss China's impact in the Southern Hemisphere stating, “The rise in Chinese investment and interest in Africa has pulled along other countries’ investment and reinvigorated interest in Africa.”
Although China's expansion has been impressive, many analysts have feared that if its middle class did not begin filling the product demand void, a global contraction could hurt China's manufacturing industry and ultimately its entire economy. This will ultimately challenge China's culture as it is ingrained in society, especially among the middle class, to save, save and save some more.
Paltiel went on to say that, “China should base its economic development on its domestic needs.” In fact, domestic needs contribute more to its economic development while its dependence on foreign trade has been lessened.
He explains that when Chinese families feel more secure and need not to save a lot for the education of their children and health care, they can spend more freely.
Although that sounds more like what happened in America, ultimately leading the US down a treacherous, consuming path to become the most indebted nation in the world's history, a bit more spending by China's middle class would reduce its economic dependency abroad.
He notes, in conclusion, that a rising demand in the Chinese domestic market will have “salutary effects” on the global economy. Perhaps one day China's domestic demand will be providing Americans with manufacturing jobs.