新加坡）联合早报   (2012-11-01)

　　首先，感谢东亚研究所邀请我出席这个各界知名人士和专家学者聚集一堂的论坛。

东亚研究所对中国经济、社会和政治发展的独立与严谨研究，让它成为一个重要和卓有声誉的研究中心。王赓武教授所提到，自吴庆瑞博士担任研究所前身所长时便贯彻研究工作的精神，也让我印象深刻——尝试了解中国与其面对挑战的复杂性的谦逊精神。我们应该以同样的精神来观察中国未来的走向。

中国的发展对世界有重大影响。王教授刚才谈到了美国和中国即将出现的领导人更换。我相信在11月8日发生的事，会比在11月6日发生的事来得重要。

世界现在比以往更依赖中国及其成功的经济转型；也更依赖中国的需求、中国作为投资来源、以及依赖中国来加强世界不同经济区域的互补性。最后，世界也更依赖中国来保持一个稳定的国际秩序。

中国正经历两个主要转捩点，或者更准确的说，是“拐点”（inflextion points）。首先，是其经济的结构和驱动力；其次，是它对世界的影响力及领导世界的角色。在国内经济转型与在世界舞台所扮演角色的转变，中国皆面对重大转折点。

从剩余劳动力到劳动力萎缩

首先，在国内经济转型上，中国经济正从“旧常态”过渡到“新常态”。“旧常态”着重于资本累积，国有企业扮演主导角色，是个家庭变相津贴生产者的体系。现在，它正逐步转移到一个更具竞争力、更依赖消费为成长驱动力、及更注重资本效益的“新常态”。简而言之，是从注重资本累积转变为注重资本效益的模式。然而，这些改变要通过整体的复杂体制改革才能实现。

利用成长会计（growth accounting）来分析中国增长的经济学家，对中国过去30年的崛起已有很好的了解。使用的估计方式虽然不同，但一些基本的结论却很清楚。

首先，大规模从低生产力农业转移到产业和其他城市化活动的劳动力，给经济增长带来巨大贡献。这是30年来增长的主要来源，就像日本、韩国和台湾早几十年前，和欧洲在二战前与二战后的情况一样。

其次，在工业化过程起步慢让中国得到不少优势，可以很快地跟上全球最佳实践经验。从世界各地注入的科技和点子，是促进增长的动力，让中国的“全要素生产力”（Total Factor Productivity）取得非比寻常的快速增长。

第三，中国是享有优势，但也只是在有限期间——经济自由化的头20年——以人口来看。在过去10年放缓前，它每年取得3％的快速劳动力增长。整体的劳动力增长，加速了劳动力从很低生产力活动转移到中等生产力及生产力更高的活动。

劳动力过剩的阶段就快过去了。中国沿岸省份在经济发展上肯定已到了经济学家所说的路易斯转捩点（Lewisian turning point）:它们再也享受不到廉价外来民工，而工资也急剧上升。中部和东北部省份还没有到达这个阶段。但大概不出10年，整个中国将发现依赖廉价劳工再也不是其工业竞争力和增长的基础。

此外，从一两年后开始，按绝对价值计算，中国的整体劳动力将在接下来数十年逐渐萎缩。同日本、韩国与台湾的发展经验比较，中国比它们更早来到这个阶段。

中国目前的人均收入，大概是日本1980年及韩国和台湾约1990年的水平。这些经济体在达到中国今天的人均收入水平后，劳动力还持续增长了10到20年。日本的人口正在萎缩，但台湾和韩国的劳动力仍有小增长，就像新加坡和香港。中国即将经历的劳动力萎缩将是独特的，因为它仍是个发展中国家。这也同诸如印度等发展中国家不一样，印度的劳动力在未来10年甚至是更长的时间里，将持续显著增长。

这对中国来说不一定是不利的。但却意味着必须更重视资本的有效利用，和提高每个经济领域的生产力。为年长者建立一个健全的社会安全网也变成一项紧迫的工作。

中国有提高生产力的巨大空间，这是我们对中国增长前景应该保持乐观的基本原因。中国的生产力只是美国的约15％－18％，或亚洲新兴工业化经济体的平均约25％，有不少空间来追上——透过新科技、新点子和国内经济更有效的资源分配。同日本及新兴工业化经济体比较，中国劳工的人均资本存量（capital stock per worker）也还处于低水平，有大量的空间提高生产力和收入。

人力资源发展：从数量到质量

这需要经济和社会领域策略的改变，并为重要的国内改革增添动力。首先，在人力资源上，中国正从讲究数量过渡到重视素质。在提供普遍的基本和中学后教育，中国是个成功的例子，尤其是同印度和其他大多数巨大的发展中区域相比。

但其教育体系质量参差不齐。就像世界银行所指出，寻求教育质量的平等，比寻求教育机会的平等，是中国教育制度未来更大的挑战。

确保毕业生受雇也是个棘手问题。中国培养了许多毕业生。中长期来说，毕业生可能供过于求。从数据来看，没有受雇的年轻毕业生超过9％，尤其是美术和数学系的毕业生。对理论过于注重，对同市场相关的技能不够重视是个问题。

更开放的经济

第二项挑战是通过贸易和投资，维持并加快中国经济的开放度。这在全球重新平衡的讨论中并没有受到足够的关注。我们在谈论美国减少经常项目赤字及中国减少盈余时，解决方案不应该是中国把焦点放在内需，也就是从出口导向转为促进内需。更关键的增长解决方案是加速全球化，进一步开放贸易。按中国的情况并考虑到其发展阶段，若我们要减少盈余，增加进口是比减少出口更好的方法。

这是重要的，因为我们的考虑必须超越整体的不平衡。中国及东亚发展的动力，来自投入世界最先进市场所引入的点子和科技。符合最先进市场买家指定需求的外国直接投资及出口，是经济发展的主要动力。

以像中国这样平均生产力仍然偏低的国家来说，优先考量应该依旧是通过双向的外贸和投资，尽量输入点子、最佳实践经验及科技。开放对长期增长很重要。出口和入口总流量的增长——也同样或甚至比贸易逆差更重要。

过渡到以市场为根本的融资

要更有效的使用资本，中国的第三个挑战，是在经济市场化取得进展。不论是以任何对比分析来看，中国都是从计划经济过渡到市场经济的明显成功例子。和其他新兴区域不同，中国自70年代末开始，便几乎每五年就提出并坚持新的改革。在实行上虽然取得不同程度的成功，但它每五年便有重大的经济改革——印度、俄罗斯及其他大新兴经济体如巴西都没有这样做。

尽管增长有许多不符合效益的地方，中国的国有企业在市场经济的转型上，表现远比俄罗斯寡头出色。严重的不平衡存在，但这是没有导致重大混乱的增长故事，本身已是一项成就。

中国经济要进一步市场化，作为更有效率和平衡经济的基础，并改善家庭的福利，还得在未来进行重大改革。

在未来五年甚至是更长的时间里，中国把重点放在这些改革。改革由国有企业开始。中国必须摆脱受到“指示”的投资，反映投资的真正成本，来激励国有企业以真实的盈利率为决策的基础。与这相关的还有许多改变——股利政策改革、法律和会计上的改变及规制改革。

市场化的另一个重要领域是金融界。中国希望建立更具竞争力、更健全及更多元化的金融领域，来补助发展更平衡及由生产力驱动的经济增长的努力。金融领域改革有五个紧密相连的因素——它们之间的关系显示了金融领域改革的复杂性。

首先是把信贷制度从非正式的方式往正式的方式转移，前者是对金融稳定的威胁。这包括让正式信贷制度扮演更重要的角色，让国有企业以外的私企和家庭也可以受惠，尤其是更方便中小企业向银行借贷。银行从受指示的借贷转移到以盈利驱动的借贷过程中，必须建立有力的风险管理机制。

第二是发展资本市场，包括股票和债券市场，让金融系统更多元化，不过度依赖银行信贷。像中国这么大的转型经济体，有效管理资本市场是项重大挑战。市场必须逐渐由经济基本面驱动，而不只是投机情绪。如果成功了，资本市场可以反映筹集资金的真正成本，为大型企业提供有益的纪律。

第三是把利率市场化。中国人民银行采取了重要的措施，有秩序地过渡到由市场力量决定的利率。这可以让家庭和个人的储蓄赚取更高利息，也让借贷者更清楚实际的借贷成本。

第四是汇率。我相信，在接下来的5年－10年里，中国及大部分东亚地区逐步提高名义和实际汇率是有利的。为什么呢？因为这同把国内生产结构往高增值方向提升是一致的，尤其是在激励国内消费的中国。这同让汇率自由浮动以对短期资本流作出反应的呼吁是不同的。这样做是不明智的，也没有适当的经济理由。中长期逐步提高实际汇率可以帮助支持国内经济转型，对中国是有利的。与其让国内的通胀增速比世界其他地方快，倒不如提高实际汇率。

第五是持续逐步开放资本账户，鼓励双向投资。这也应该是渐进的以免造成金融体系的不稳定，但它是接下来5年－10年的重点考虑。

这五个改革元素缺一不可，也必须以同样的速度进行，尤其是不可能让对外开放的步伐远远超过国内改革的速度而不影响金融稳定。以过去五年来看，我得说中国把这极端复杂和平衡的工作处理得很好。然而，这过程中会有赢家和输家，既得利益也会抗拒未来的改变。这显示为什么经济改革是项艰巨的政治工作，既需要技巧，也需要政治决心。

从“供应震撼”到“需求震撼”

现在，让我谈谈中国对世界的影响力及领导世界的角色。

我们知道中国未来会是个重要需求来源。发达世界将经历长时间的去杠杆化，增长也因此可能低于潜能。另外一个考虑中国角色的方式是，中国在过去30年给世界经济带来了经济学家所称的巨大“供应震撼”，未来却不只是“供应震撼”，还会是个“需求震撼”。

“供应震撼”是因为数目庞大的廉价但相对有效率的工人进入了全球市场体制。当工资日益增高及中国中产阶级消费快速增长时，便会为全球的生产者提供一个主要的新最终需求来源。在中国继续开放其经济的同时，这个“需求震撼”的规模会很大。

但“供应震撼”却还没有过去，而是改变了方式。中国正向价值链上游攀升，以往在价值曲线非常低端的“需求震撼”，正转向中等水平工作，甚至一些如研发领域的高水平工作。因此，一系列的中产阶级工作，包括生产和其他白领行业，现在将面对竞争。发达经济体及亚洲新兴工业化经济体的中等水平工作，将面对来自中国的竞争。这是中国对全球劳动力市场冲击的重大改变，虽然它也为世界提供了需求。

中国经济演化的同时，会给其他发展中经济体的其他低成本、劳工密集生产者带来许多机会。正如经济学家林毅夫在最近的一篇文章指出，中国一小部分劳工密集制造业向海外转移，就会给这些发展中国家带来巨大好处。比如，如果1％的中国成衣业转移到非洲，非洲国家的成衣出口将猛增50％。中国工资的上扬，将导致亚洲和其他发展中区域新的劳动分工。

全球领导能发挥作用吗？

然而，中国同全球关系的“拐点”不限于经济，也关系到它在维持稳定国际秩序的角色与责任。我们正进入全球领导的独特阶段。这不是突然的改变，而是趋向一个新局势的渐进发展。它很可能是个多极化的世界，并出现一个仍然是发展中国家的全球领袖。中国经济发展意味着它必须在共同领导世界上扮演重要角色。中国已成为世界第二大经济体，并将在数年后成为世界最大经济体。然而，就人均收入而言，它并不是个富裕的国家。以发达国家水平来看，其大部分人口很可能继续处于贫穷状况。这是前所未有的情况。

中国上一次在经济、政治和军事上达到高峰，是在明朝末期。据经济历史学家安格斯·麦迪森（Angus Maddison）估计，中国1500年的国内生产总值（GDP）约占全球GDP的四分之一。但那是世界经济还没有全球化的时代，中国也选择不主导世界。

作为大部分人口仍不富裕的发展中国家，中国登上世界舞台扮演举足轻重的角色，对有效的全球领导有什么意义呢？这对提供全球公共品来说尤为重要：维持自由与开放的贸易及稳定的国际货币与金融体系——或经济公共品；维持世界安全与确保核不扩散——或战略公共品；维持干净的全球环境和缓解气候变化——或环境公共品。

这是专家学者进行研究的重要领域。

中国已经是全球经济和金融领域中一把重要的声音。它不光是国际货币基金组织（IMF）的第三大份额国和一个主要的资源贡献者，在布雷顿森林（Bretton Woods）体系也占据主要职位——著名经济学家林毅夫四年前成为世界银行首席经济学家，其任期今年较早时届满；中国人民银行前副行长朱民在去年中出任IMF副总干事。这些多边机制的管理必须继续演变，以反映新全球现实，包括中国与其他新兴市场新增的实力。此外，这也让我们可以建立更大的决心和能力，应对相互联系的全球经济的挑战。

不过，中国的经济特质，特别是它的人均收入不高，以及它仍面对显著的内部失衡问题，必将影响它如何扮演全球领导的角色。面对全球课题时，它可能非常关注课题如何影响其国内脆弱性和国家所面对的挑战。

然而，在这个新的阶段，我们还是有更多的理由保持乐观而不是感到悲观。首先，中国有进行国内经济改革的决心。其次，中国对其悠久的历史和文化有信心，包括源自根深蒂固的社会和谐发展原则的信心。这种对自身文化的信心，可以转化为发展软实力的资产。第三，中国一直强调它将选择和平崛起。

这三个因素增加了中国在多极化全球体制扮演正面和负责任角色的可能性。一个强大但依然支持开放的经济和金融秩序、和平、稳定及国际法治的中国，将在未来数十年为一个更美好的世界作出重大贡献。

世界期望中国成功克服双重挑战。既完成内部改革，也适应作为全球领导者所须挑起的责任。世界这么依赖单个国家能否成功适应作为全球领导者的要求和责任，以及这么依赖这个国家能否在经济和政治领导舞台上成功被接纳，是前所未有的。

叶琦保译

 

（以下为英文原文：）

China’s two turning points: how they will shape a new global future

Transcript of Keynote Address by Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam at the Public Forum to Commemorate the East Asia Institute’s 15th Anniversary, 24 October 2012, 9am at Regent Hotel

　　Prof Wang Gungwu,

Prof Zheng Yongnian,

Prof John Wong,

Distinguished speakers and guests,

1. First of all, thank you for giving me the opportunity of being here at this illustrious gathering of dignitaries and scholars.

2. The East Asian Institute has established itself as a leading and well reputed centre, for independent and robust research on economic, social and political developments in China. I have been struck too by the spirit which Prof Wang Gungwu mentioned as having instructed such research from the days of Dr Goh Keng Swee at the EAI’s predecessor institutions – that spirit of humility in seeking to understand China and the immense complexity of the challenges it faces. It is the same spirit that should inform us as we observe China going forward.

3. What happens in China is going to matter a lot to all of us, in the rest of the world. Prof Wang was just talking about the impending leadership changes in the United States and in China. I suspect that what happens on November 8 is going to matter more than what happens on November 6.

4. The world is more dependent than ever on China and its successful economic transformation. More dependent on Chinese demand, more dependent on China as a source of investment and more dependent on China to strengthen the complementarity between different economic regions in the world. Finally, more dependent than ever on China to preserve a stable international order.

5. China is going through two major turning points, or to be more precise, inflexion points. First, in the structure and drivers of its economy; and second, with respect to its impact on the world and role in global leadership. In both these regards, its domestic economic transformation and the evolution of its role in the global stage, China is going through major inflexion points.

From surplus labour to a declining labour force

6. Let me make some observations on each of these two inflexion points. First, with regards to its domestic economic transformation. China is in the process of transition from the ‘old normal’ to a ‘new normal’ in its economy. The old normal was focused on capital accumulation, with a dominant role for the state-owned sector, and a system where households implicitly subsidise producers. It is now moving, in steps, to a new normal based on greater competition, greater reliance on consumption as a driver of growth and a much greater focus on capital efficiency. In short, it is a shift from a model that is focused on capital accumulation to one focused on capital efficiency. However, these changes can only come about through a whole set of complex institutional reforms.

7. China’s rise in the last three decades is now well-understood amongst economists who use ‘growth accounting’ to decompose its growth. Although the technical estimates vary, some basic conclusions come through very clearly. First, there has been a massive contribution to economic growth arising from the large scale transfer of labour from low productivity agriculture to industries and other urbanised activities. That has been the major contributor to growth over the three decades, just like it was in Japan, Korea and Taiwan a few decades earlier and in Europe before and after the war.

8. Second, there has been considerable advantage in China having started off later in the process of industrialisation, and being able to catch up quickly with global best practices. The infusion of technology and ideas from the rest of the world has been a motive force for growth. It has contributed China’s unusually rapid increases in Total Factor Productivity.

9. Third, China has been advantaged but only for a limited period – for the first two decades after economic liberalisation – by demographics. It had rapid labour force growth of about three per cent per year, before that slowed down over the last decade. Overall labour force growth compounded the shift of labour from very low productivity activities into middle and now increasingly into higher productivity activities.

10. The phase of surplus labour is fast being exhausted. Certainly the coastal provinces in China have reached what economists call the ‘Lewisian turning point’ in economic development: they no longer have access to cheap migrant labour, and wages are going up very rapidly. The central and northeastern provinces have not reached that point yet. But it is a finite number of years, probably no more than a decade, before China as a whole will find that reliance on low cost labour is no longer its basis for industrial competitiveness and growth.

11. Importantly too, China will see its overall labour force gradually decline in absolute terms over the next few decades, starting a year or two from now. It has reached that stage earlier than Japan, Korea and Taiwan did in their own development experience.

12. China’s per capita income today is around the level in Japan in 1980, Korea and Taiwan around 1990. These economies saw continued labour force growth for a couple of decades, one to two decades, after that period. Japan is now in a stage of population decline, but Taiwan and Korea continue to see small growth in their labour forces just like Singapore and Hong Kong. China’s coming experience of decline in its labour force will be unique in that it is still developing. It is also very different in this regard from other emerging countries like India which continued to see very significant growth in their labour forces in the next decade and beyond.

13. This is not necessarily a disadvantage for China. But it is does require a much greater emphasis on efficiency in the use of capital, and on raising productivity in every sector of the economy. It also gives urgency to the task of developing a robust social security system for the old.

14. There is indeed significant scope in China for productivity growth, and that is the basic reason why one should have optimism in the China’s growth prospects. The level of productivity is roughly 15 to 18 per cent of that in the United States, or about 25 per cent that in the Asian NIEs on average. So there is still tremendous room for catch up – new technologies, new ideas, more efficient allocation of resources within its domestic economy. The level of capital stock per worker is also still low compared to Japan and the NIEs. Great scope ahead for improving productivity and incomes.

Human capital development : from quantity to quality

15. This will involve changes in economic and social sector strategies, and adding momentum to important domestic reforms. First, with regard to human capital. China is shifting from a focus on quantity to quality. China has been a success story in providing widespread basic education and post-secondary education, especially compared to India and most other large developing regions.

16. But there are wide disparities in quality in the Chinese education system. As the World Bank puts it, equality of quality is a major challenge in Chinese education, more than equality of access. This is a major challenge going forward.

17. There is also the challenge of ensuring employability of graduates. China is producing many more graduates. It may have even have overdone the supply of graduates in the short to medium term. This is why when you look at the unemployment numbers, over nine per cent of young graduates are unemployed in China, and much more so in disciplines such as fine arts and Mathematics. There is an over-emphasis on theory, and under-emphasis on skills relevant to the marketplace.

More openness, not less

18. The second challenge is to retain and intensify the shift to openness of the Chinese economy, through trade and investment. This is not given enough attention in the debate on global re-balancing. When we think about the United States reducing its current account deficits and China reducing its surpluses, the solution should not be for China to focus on domestic demand per se, in other words to shift from an export orientation to a domestic market orientation. The more critical growth solution is to intensify globalisation, by opening up one’s economy even more to trade. In China’s context and given its development stage, if we want to reduce surpluses there is more merit to increasing imports than to reducing exports.

19. This is important because we have to look beyond overall imbalances. The motive force for China’s development, and indeed East Asia’s development, has been the influx of ideas and technology that comes from inserting yourself in the most advanced markets in the world. Foreign direct investment as well as exports that meet the specifications of buyers in the most advanced markets is a major motive force in economic development. For a country like China whose productivity level on average is still low, the priority should remain to maximise the import of ideas, best practices and technologies through foreign trade and investments, flowing in both directions. Openness matters greatly to long term growth. And the growth in gross flows of exports and imports respectively – are just as important or if not more than the net balance of exports over imports.

Transitioning to market-based financing:

20. A third challenge for China, in order to achieve greater efficiency in use of capital, is to make progress in the marketisation of the economy. China has been a remarkably successful example of transition from a command economy towards a market economy, by any comparative analysis. Unlike many other emerging regions, China has initiated and persisted with new reforms almost every five years since the late 70s. It has had varying degrees of success in implementation, but every five years, there have been significant economic reforms – unlike India, Russia and other major emerging economies like Brazil. China’s state-owned enterprises, for all the inefficiencies associated with their growth, have done a far better job in the transition to a market economy than for example the oligarchs in Russia. Severe imbalances exist, but this has been a story of growth without major disruption. That is an achievement.

21. But there are important reforms ahead in achieving further marketisation of the economy, as the basis for a more efficient and balanced economy, and to improve the welfare of households.

22. China is placing much importance in these reforms in the next five years and beyond. These start with the state-owned enterprises themselves. China has to move away from ‘directed’ investments, and to impose the true cost of capital on their investments so as to motivate decisions that are grounded on true profitability. Many related changes are associated with this shift – dividend policy reforms, legal and accounting changes, regulatory reforms.

23. A further important area of marketisation concerns the financial sector. China hopes to move towards a more competitive, robust and diversified financial sector, to complement the move towards a more balanced economy and productivity-driven economic growth. There are five elements in the financial reforms that are very closely related together – and the connections between the five elements illustrate the complexity of financial reforms.

24. First, reforms that shift the balance between the formal credit system and the informal credit system, which is a threat to financial stability. This involves growing the role of the formal credit system beyond the state-owned enterprises to private enterprises and households. Bank credit has to be more accessible to SMEs in particular. Banks have to develop strong risk management systems, as they move towards profit driven lending and away from directive lending.

25. Second, developing the capital markets, both the equity and bond markets, so that there is a more diversified financial system, not over-dependent on bank credit. Regulating the capital markets well is a major challenge in a transitional economy of China’s size. The markets have to be driven by fundamentals, at least over time, not just speculative sentiment. If this succeeds, the capital markets can provide useful discipline on the largest enterprises, by imposing the true cost of capital on investments.

26. The third set of financial reforms comprises the marketisation of interest rates. The People’s Bank of China has made significant moves, and is achieving an orderly transition to market-based interest rates. This will allow households or savers obtain a better return on their savings, and again provide for a more realistic cost of capital to borrowers.

27. Fourth, exchange rates. I believe it will be beneficial, over the next five to ten years, to have a gradual appreciation of both nominal and real effective exchange rates in China, and indeed in much of emerging East Asia. Why? Because it is consistent with the move towards the upgrading of domestic production structures towards higher value, and in China especially, with the move towards spurring domestic consumption. This is quite different from the call to free up exchange rates so that they can respond to short term capital flows. That would not be wise, and lacks a sound economic justification. However, the gradual appreciation of real exchange rate over the medium to long term can help support domestic economic transformation, and would be an advantage to China. Far better also to appreciate the real exchange rate by strengthening the nominal exchange rate rather than by seeing domestic inflation growing faster than the rest of the world.

28. The fifth element is the continued opening up of the capital account, or to various capital flows in and out of China. That too has to be gradual so as to avoid destabilising the financial system, but it is an important priority for the next five to ten years.

29. All five elements go together. It is not possible for one element to move much faster than the others. In particular, it is not possible for external opening to proceed much faster than domestic liberalisation without risking financial stability. I must say looking at the process over the last five years, China has been managing this very complex, balancing task well. However, there will be winners and losers in this process, and vested interests that will be opposed to the changes that have yet to come. It illustrates why economic reforms are a complex political task, requiring both skill and political will.

From ‘supply shock’ to ‘demand shock’ for the world

30. Let me move on to the second major inflection point that I referred to earlier, which concerns China’s impact on the world and its role in global leadership.

31. We know China will be a major source of demand in the years to come. The advanced world will go through a prolonged period of deleveraging, and may hence grow below their normal potential. Another way of thinking about China’s role however is that whilst in the last three decades China imparted what economists call a major ‘supply shock’ to the global economy what we will see going forward is not just a supply shock but a ‘demand shock’. The supply shock comprised the entry of a large number of low paid but relatively efficient workers into the global market system. Increasingly, as wages rise and middle-class consumption grows rapidly in China, it will provide a major new source of final demand for the world’s producers. The scale of this ‘demand shock’ will be significant, especially as China continues to open up its economy.

32. But the supply shock is itself not over. It is instead changing in form. China is moving up the value ladder, and what used to be supply shock at the very low end of value curve is now shifting to middle-level jobs and even certain higher end jobs such as in R&D. So a whole range of middle-class jobs, both in production and white collar professions, will now be up for contest. A whole range of middle-level jobs in the advanced economies as well as the NIEs in Asia will be subject to competition from China. This is a major change in China’s impact on global labour market, although it will be accompanied by the demand impulse that China is also providing to the rest of the world.

33. Together with this evolution in China’s economy, there will also be many opportunities for other low cost, labour-intensive producers in other developing economies. As Justin Lin pointed out in a recent piece, it takes only a small shift overseas in Chinese labour-intensive production to create a big difference for any of these developing countries. For instance, if one per cent of Chinese apparel production moves to Africa, it will effectively means a 50 per cent increase in apparel exports for these African nations. China’s move up in wages will lead to a new division of labour within Asia as well with other developing regions.

Will global leadership work?

34. However the inflection point in China’s relations with the world is not just about economics. It is also about China’s role and responsibilities in preserving a stable global order. We are entering a unique phase in global leadership. It is not a sudden change, but an evolution towards a new situation which will very likely be characterised by multi-polarity, as well as the emergence of as a global leader that is still a developing country. China’s economic ascendance will mean that it has to play an important role in this system of shared global leadership. It is already the second largest economy in the world, and will in a matter of years be the world’s largest economy. However, it will still be not rich in income per capita terms, and much of its population will likely remain poor by developed country standards. This is an unprecedented situation.

35. The last time that China was at its zenith, economically, politically and militarily, was in the late Ming Dynasty. Angus Maddison, the economic historian, has estimated that in the year 1500 China accounted for about one quarter of world GDP. But that was a period when the world economy was not globalised, and China chose not to assert global leadership either.

36. What will China’s emergence onto the global leadership stage now, despite being a developing country with a large number of its people poor, mean for effective global leadership? This is especially important with regard to the provision of global public goods: maintaining free and open trade, and a stable international monetary and financial system – or economic public goods; maintaining conventional security and nuclear non-proliferation – or strategic public goods; and maintaining a clean global environment and mitigating climate change – or environmental public goods.

37. This is a very important field of study for scholars.

38. China is already a significant voice in the global economic and financial world. It is the IMF’s third largest shareholder and a major contributor to its resources. It holds key management positions in the Bretton Woods institutions – Justin Lin just stepped down from his four-year term as chief economist of World Bank; Zhu Min, former Deputy Governor of People’s Bank of China took on the role of Deputy Managing Director of the IMF in middle last year. The governance of these multi-lateral institutions will have to continue to evolve to reflect the new global realities, including the increased weight of China and other emerging markets. It will continue to evolve also so that we develop stronger resolve and capacity for tackling the challenges of an interconnected global economy.

39. However, China’s economic characteristics especially the fact that its per capita income is not high, and the significant domestic imbalances it still faces, will surely influence the way it plays its role in global leadership. China can be expected to approach global issues with a sharp eye on their implication for domestic vulnerabilities and challenges.

40. But there are more reasons for optimism than pessimism in this new phase. First, because of China’s resolve to pursue domestic economic reforms. Second, because of China’s confidence in its long history and culture, including the confidence gained from deeply rooted precepts of harmonious development of society. This confidence in its own culture can be turned into an asset as China seeks to project soft power. Thirdly, because China has consistently emphasised that it will choose the path of peaceful development.

41. These three factors increase the odds of China playing a positive and responsible role within a multipolar global system. A strong China that remains committed to an open economic and financial order, remains committed to peace, stability and international rule of law will make a major contribution to a better world in the decades to come.

The world looks forward to China’s successfully navigating its dual challenge of domestic reforms and adapting to responsibilities as part of global leadership. Never before has so much been dependent on the successful adaptation of a single country to the needs and responsibilities of a global leadership, and so much dependent on the successful accommodation of that country on the stage of economic and political leadership.