The IFF China Report 2018: Foreword

Welcome to the third edition of the IFF China Report, which marks the 40th anniversary of China’s economic reform and opening up programme, and the fifth anniversary of President Xi Jinping’s visionary “One Belt, One Road” speech – the Belt and Road Initiative (BRI) is a major focus of this report. 

The publication of this report comes at a time of major friction in the world economy. The traditional standard-bearer for globalisation, the US, is embarking on more protectionist policies under the leadership of its populist president, Donald Trump. In Europe, meanwhile, challenges are arising, particularly following the decision by the United Kingdom to leave the European Union, which could lead to European countries adopting a more inward-looking approach – at least in the short term. 

China has remained steadfast in its efforts to transform its growth model away from heavily polluting industry and manufacturing towards high-tech and services – moving away from ‘made in China’ and towards ‘made by China’. It has also boosted internal consumption, thus making it less reliant on trade, while committing itself to taking a leadership role in supporting international trade and development. 

China’s Going Out policy offers major opportunities for developing countries to learn from China’s own rapid economic rise, as well as to secure access to Chinese investment and expertise. Emerging and developed countries also seem primed to gain from improved infrastructure and connectivity.

Inevitably, there will be social, cultural and geopolitical challenges – in addition to the technical issues – that need to be overcome. But China’s signature BRI offers a ‘once-in-a-generation’ opportunity to raise economic prosperity of billions of people, indicating potential benefits should far exceed the costs. Indeed, our inaugural survey of central banks in jurisdictions participating in the BRI indicates that 92% believe the BRI will lead to an increase in their country’s GDP within the next five years. 

Moreover, the early reactions to the creation of China-led multilateral institutions such as the New Development Bank and the Asian Infrastructure Investment Bank are broadly positive, indicating that China can be a leader while addressing the sensitivities of other nations involved.

The IFF China Report 2018 includes a forecast by Justin Lin that examines Xi Jinping Thought on socialism with Chinese characteristics for a new era, and predicts the impact of China’s growth model over the next 30 years. The report is then divided into five sections: China’s opening-up and reform; the financial crisis – a decade on; Chinese financial system reform; the Belt and Road Initiative; and the Bay Area Development. Each section contains a series of analytical articles and opinion pieces by leading decision-makers and experts – from China and overseas. We are privileged and extremely grateful for the support of the global leaders, policymakers, finance experts, business leaders, politicians and scholars who have contributed to and supported the publication of this report. 

The aim of the IFF China Report is to instil in readers a thorough understanding of the situation and the challenges China faces as it embarks on the next phase of its economic transformation. We are grateful for your interest in the report and trust it provides you with important insights and a fresh outlook.

This article is part of The IFF China Report 2018, which draws mainly on content provided by China-headquartered think tank, the International Finance Forum, and is published in association with Central Banking.