David Chao

Macroscope | Emerging or developed market? China’s economic uniqueness defies labels

Never has an emerging market been so influential in the global economy; the scale of China’s markets demands its own analysis framework

To grasp the next stage of China’s development, investors must take it for what it is – nearly the world’s largest economy and one of its largest and most diverse markets

Reading Time:3 minutes

Why you can trust SCMP

Lunar New Year decorations in Beijing on January 12. China’s reopening in the Year of the Rabbit has lifted global hopes of an economic recovery. Photo: EPA-EFE

David Chao

Published: 10:00pm, 15 Feb 2023Updated: 11:21pm, 15 Feb 2023

In the last Year of the Rabbit in 2011, China officially leapt over Japan to claim the mantle of the world’s second-largest economy. Can China jump again, out of the emerging-markets rabbit hole to achieve the coveted developed-market status?

Indeed, the end of Covid-19 controls in China is unleashing a wave of economic activity that should reignite growth for the entire globe.

At the World Economic Forum in Davos last month, Chinese Vice-Premier Liu He said: “China’s national reality dictates that opening up to the world is a must, not an expediency. We must open up wider and make it work better.”

It “matters tremendously”, said International Monetary Fund managing director Kristalina Georgieva, also at Davos, as China’s successful economic reopening “is very likely the single most important factor for global growth in 2023”.

There is little doubt China’s reopening is a boon for the global economy. While Chinese economic growth has moderated in recent years, it is still expected to remain significantly stronger than that of developed countries.

Concerns about regulatory risk, which contributed to a serious downturn in China market sentiment from late 2020, has largely abated. The goals of “common prosperity”-aligned regulations have come into sharper focus: better risk management in financial services companies, stronger data protection, avoiding big tech monopolies, improving worker conditions and, of course, combating climate change.