A Changing China : Implications for Developing Countries

Abstract

Three decades of rapid growth and
 structural change have transformed China into an
 upper-middle-income country and global economic powerhouse.
 China's transformations over this period wielded
 increasing influence over the development path of other
 countries, either directly through bilateral trade and
 financial flows or indirectly through growth spillovers and
 terms of trade effects. Looking ahead, as China embarks on a
 new phase in its development journey, a phase characterized
 by slower but higher-quality growth, the economic landscape
 facing the developing world is expected to be redefined yet
 again. As China changes, so will its interactions with the
 outside world. China is expected to remain both a market and
 a competitor, but its changes are likely to lead to new
 opportunities for many and new challenges for some. Key
 questions in this respect are: (i) how will the level and
 composition of China's import demand evolve as its
 economy slows and rebalances; (ii) to what extent will the
 presumed out-migration of labor-intensive manufacturing
 materialize and create new opportunities elsewhere; and
 (iii) how quickly will China move up the value chain and
 redefine its competitive advantage in the global
 marketplace? How these uncertain long-term developments
 affect individual countries will depend on differences in
 total supply chain costs, resource availability, and
 innovation capability. As in the past, China's
 transformations are expected to put formidable pressure on
 countries to adapt and reform, requiring both political will
 and entrepreneurial capacity, in a collective race where
 success will be measured against a rapidly moving frontier.