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How did Asia become the engine of the world's economic recovery?

How did Asia become the engine of the world’s economic recovery?

by YCPress

On the morning of April 18, the Boao Forum for Asia held its first press conference at its 2021 annual meeting to officially release two high-profile annual flagship reports, The Asian Economic Outlook and Integration Process and Sustainable Development of Asia and the World. According to the report, Asia will see resilient growth this year, with growth expected to reach more than 6.5 per cent, and Asia will be an important engine for a sustainable global recovery.

“Leading” the world economy in Asia

Asia’s economy posted its first negative growth in 60 years in 2020 as a result of Coronavirus outbreak, but overall outperformed the rest of the world. This year, Asia’s economic development continues to improve. In its latest report, the IMF raised Growth In Asia To 7.6 Per Cent, Up From 6.9 Per Cent In October.

In response to the Asian economy, which is in the leading position in the post-pandemic era, Boao Forum for Asia Secretary-General Li Baodong pointed out that Asian economies will be more active, participate in international economic and trade rule-making, promote the reform and improvement of international institutions, promote the construction of an open world economy, and make more contributions to the maintenance of economic globalization and multilateralism. “Asia is the ‘engine’ of world economic development, and in recent years the Asian economy has contributed more than 50% to world economic growth,” said Zubkov, a member of the Forum and special representative of the President for Cooperation between the Russian Federation and the Forum of Gas Exporting Countries. There is no doubt that Asia will continue to be the most important source of power for world economic development. ”

As early as the end of last year, Morgan Stanley said in a research note that Asian economies, including China and Singapore, would emerge from the outbreak earlier than major Western economies and move into the “goldilocks” phase by 2021 (referring to the “just as good” state in which an economy maintains high growth and low inflation).

With what is Asia?

Against the backdrop of the sudden global economic downturn caused by the sudden Coronavirus outbreak, it is no accident that Asia has been able to stand out and achieve remarkable economic results for the following reasons:

First, Asia has done a better job of fighting the pandemic, minimizing the economic impact of the outbreak.

From The Closure Of WuhaN On JanuarY 23rd To The Mobilization Of More Than 40,000 Health Care Workers From All Over The Country To AssemblE In Hubei, China Has Spent More Than A Month Bringing The Outbreak Under Control. Similar things happen in Singapore, South Korea, Japan and other Asian countries, on the one hand, because the government’s control policies are in place quickly, and the people adhere to a culture of compliance, public health awareness is relatively strong, the policy can be understood and coordinated, so that the government can effectively respond to Coronavirus outbreak. On the other hand, most countries in Asia have adopted scientific and technological tools in controlling the outbreak, and big data and artificial intelligence have played an active role. Asia’s response contrasts sharply with anti-mask and anti-doping rallies in the West. It is precisely because the control of the pandemic is relatively rapid, The Asian economy is less damaged than countries such as Europe and the United States, the economic rebound is relatively fast.

According to the International Monetary Fund, the global recession will be 4.9 per cent in 2020, while emerging and developing economies in Asia will be in recession at just 0.8 per cent.

Second, another important factor in Asia’s economic recovery is the rapid development of technology, particularly in East Asia and India, where more investment is flowing to intra-domain technology start-ups.

With half of the world’s tech giants headquartered in Asia and the rapid rise of the four innovation centres of Wuhan, Jakarta, Yangon and Hyderabad, Asia is becoming a key driver of technological progress. Factors that drive technological progress include a vibrant Asian economy, huge innovation resources, and cost-effective, high-quality talent. Significant increases in literacy rates across Asia have also contributed to productive employment. The OECD estimates that China and India will account for more than 60 per cent of the world’s science, technology, engineering and mathematics (STEM) graduates by 2030, compared with just 4 per cent in the US and 8 per cent in Europe.

As the pioneering middle class grows in major Asian economies such as China, India and Indonesia, the consumer market is changing rapidly, with a trend toward patriotic rather than Western imports taking shape and increasingly stringent regulations phasing out poor-quality products. This has given birth to world-renowned companies such as Alibaba, Samsung, Toyota and Huawei, expanding Asia’s global reach.

Thirdly, mutual assistance among the different economies within Asia, and Asia’s insistence on globalization and multilateralism have all contributed to the development of the region’s economy.

First, Asia has developed countries such as Japan and South Korea, which can provide capital and technology for economic development, but these countries are facing severe aging and need external cooperation; And, like southern Africa, there is the world’s youngest demographic. These four sectors have complementary advantages in Asia, and the cooperation and integration of different resources, driven by multilateralism and free trade, has made the development of the Asian economy flourish.

In this regard, Mr. Li Baodong pointed out at the Boao Forum for Asia that China’s “Belt and Road” initiative, the ASEAN Master Plan for Connectivity 2025 and the construction of the Eurasian Economic Union and other regional and global connectivity initiatives, the strong convergence and docking, for regional economic and trade cooperation, post-pandemic economic recovery and development is of great significance.

“Leading” The Asian Economy Of China

In Asia, which is “leading” the world economy, China has played a central role. As Asia’s largest economy, China has grown at an average annual rate of more than 9% since its reform and opening-up in 1978. China’s economy will grow by 2.3 per cent in 2020, a record low, but it still leads Asia last year. On a quarter-by-quarter basis, China’s GDP fell 6.8% year-on-year in the first quarter, bottomed out in the second quarter, growing 3.2%, continuing to accelerate to 4.9% in the third quarter and 6.5% in the fourth quarter. In the fourth quarter alone, growth has reached pre-pandemic levels, even higher than the fourth quarter of 2019 (6%). In 2021, China’s economy grew 18.3% year-on-year in the first quarter.

“As the first region in the world to restart its economy after the outbreak, and with extensive digital operations across all walks of life, China will undoubtedly lead the global economic recovery in the coming year,” said Shi Neng, national managing partner at Deloitte China. “In 2020, the world economy will contract by 4 per cent, while China’s economy will grow by about 2 per cent,” said Elliot Clarke, senior economist at Westpac Australia. By 2021, the world economy will grow by about 6%, with China’s growth rate of nearly 10% playing a key supporting role. ”

All the above examples reflect the international community’s confidence in China’s economic growth prospects, and thus strengthen its confidence in the world economic recovery in the post-pandemic era. The root cause of this judgment is that among the world’s major economies, China is showing the most certainty, which is internalizing as a key driver of the world economic recovery.

On the one hand, China’s pandemic prevention and control has achieved significant strategic results, has been highly recognized by the international community. This “certainty” creates the conditions for economic development. Among the world’s major economies, China was the first to achieve the normalization of pandemic prevention and control, minimizing the economic and social impact of the outbreak. Since then, although there have been sporadic cases of distribution, but China’s governments at all levels moved quickly, relying on strict prevention and control mechanisms and measures to avoid the spread of the pandemic.

A good situation of pandemic prevention and control has created a stable operating environment for foreign investors in China, and also provided a guarantee for China’s economy to maintain a healthy operation.

On the other hand, China is firmly committed to expanding its opening up. This “certainty” raises expectations that the international community will share China’s development dividend. After the outbreak, there are concerns about whether China’s pace of opening up to the outside world will be slowed or even interrupted. Such concerns have proved superfluous. In the face of the impact of the pandemic, China has introduced a series of extraordinary measures to stabilize foreign trade and foreign investment, and has achieved the same for domestic and foreign enterprises. In addition, from reducing the negative list of foreign investment access, to liberalizing foreign equity ratio restrictions in a number of financial sectors, from holding trade fairs, Canton Fairs and Expos, to actively promoting the signing of the Regional Comprehensive Economic Partnership Agreement, a series of established initiatives have been implemented as scheduled, and a series of new measures to expand opening up have been introduced, demonstrating China’s firm determination to expand its opening up and giving the international community the confidence to share China’s development dividend through China’s open policy.