It is not surprising that China has surpassed Japan as the world’s second-largest economy as its ascendance has long been expected. However, the change has significant implications not only on the global economy but also on the international balance of power.
China’s climb to the No. 2 position is the direct result of the three decades of its economic reform that was initiated by Deng Xiaoping. The nation deserves praise for breathtaking economic growth and modernization. Deng and other Chinese leaders had sought to emulate Korea’s development model. But now, China has set its own model for many other countries.
China posted $1.33 trillion in gross domestic product (GNP) in the second quarter of the year, compared with Japan’s $1.28 trillion. There is little chance of Japan’s reversing the trend. It is not welcome news for Japan that had established itself as the second-biggest economy in the world since 1968.
China is also predicted to match the U.S. in total output in the early 2020s. It has already emerged as the G2 nation, keeping abreast of America _ the world’s largest economy. Of course, the Asian county still has a long way to go before becoming a real global power. It has to tackle such problems as the low standard of living.
China recorded $3,600 per capita income last year, much lower than Japan’s $37,800 and America’s $42,240. The nation is likely to maintain the high growth momentum for the time being. But it is called into question whether China can continue its sustainable growth in the long term. Some pessimists are worried that the nation’s economic bubble might burst some day, triggering a new global economic crisis of an unfathomable magnitude.
In this context, Korea needs to pay more attention to China’s ever-growing economic clout because of its increasing reliance on the giant neighbor. China is Korea’s largest export market. Shipments to China took 23.9 percent of Korea’s total exports last year, followed by the U.S. (10.4 percent) and Japan (6 percent).
It can be said that China’s rapid growth is posing opportunities and challenges to Korea at the same time. Korea can expand its export market in China. But it may be relegated to a subcontractor to the so-called factory of the world. China is also rapidly catching up with Korea in terms of technology. In four to five years, Korea could be behind China in many technological fields.
Another problem is that China is jockeying for regional and global hegemony with its increasing political influence and military buildup backed by its economic strength. Thus, it is important for Korea to forge a mutually beneficial partnership with China. It is also necessary to launch active negotiations to strike a free trade agreement (FTA) with China in a move to strengthen cooperation between the two countries.