If you want to get a clear picture of the impact of China's economic rise over the past 35 years, and of how China sees itself in our rapidly evolving global economy, I recommend you visit Shanghai's popular waterfront area called The Bund, and feast your eyes on the breathtaking view of the Lujiazui district – Shanghai's super-highrise precinct and rapidly expanding financial district.
There is one building in the area that is scheduled to open in 2015 and will stand above the rest: Shanghai Tower. When it's complete it will have a total floor area of 574,000 square metres, contain 143 elevators, and measure 632 metres in height. By comparison, the CN Tower in Toronto stands at 553 metres, and the soon-to-be-completed One World Trade Center in New York will measure 541 metres.
It is not just the physical characteristics of Shanghai Tower that are noteworthy. The building symbolizes the dynamic emergence of modern China. Within the next 10 years or so, Shanghai will be the gateway to the world's largest economy, and Shanghai Tower will be at the centre of this gateway.
The exact timing for when China overtakes the United States as the largest economy in the world is a function of many factors, including global economic and geopolitical stability. And while the U.S. government, with its infighting and rolling budget crises, has been doing its best to wreak havoc on the foundation upon which our global economic and financial systems are based, China continues to grow its economy at rates that are the envy of the western industrialized world.
Last month, China's National Bureau of Statistics reported that in the third quarter, the country's gross domestic product (GDP) expanded by 7.8 per cent from a year earlier. This represents the highest quarterly year-on-year growth rate for 2013, and it effectively guarantees that China will exceed the government's growth target of 7.5 per cent for the year.
Fixed-asset investment – which includes both government investment in infrastructure and private investment in buildings and factories – continues to be the primary catalyst behind these growth figures, accounting for 55.8 per cent of the GDP increase in this latest quarter. This was followed by domestic consumption, at 45.9 per cent. Net exports contributed negative growth of 1.7 per cent.
These positive results provide Chinese policy makers with the necessary ammunition to advance an economic reform agenda that will focus on growth stability over the long term. What that means in specific terms will be clarified during the Third Plenary Session of the 18th Communist Party of China Central Committee in mid-November. Key topics that are likely to be addressed include:
- The opening of the services sector to private and foreign participants
- Further development and expansion of pension and healthcare insurance platforms
- Industrial overcapacity
- Financial sector reform
- Pricing and management of bubbles in the real estate market
If Xi Jinping, General Secretary of the Communist Party of China (in addition to his role as president of the country), and his colleagues get it right – and given the country's economic track record over the past three and a half decades, the smart money suggests they will – we can expect China to take another important step forward in establishing itself as the leading economy of the 21st century.
And when this happens, the view from the 121st floor of Shanghai Tower will only be that much more impressive.
William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management at McGill University, and president of AMAXIS Inc., a global management consulting firm. This is the first of his two-part series on China. In Part 2, on Wednesday, Mr. Polushin shares his observations from the business and economic front lines in China, and discusses how this relates to Canadian competitiveness.