Presented for 6^th Meeting of the Trilateral Forum, Sponsored by Berkeley Roundtable on International Economy, Berkeley, California, January 28-29, 2000.

World Economic Restructuring and China’s Economic Transformation

Since 1978, China’s economic system has undergone a 20-year market-oriented reform and begun its open-policy. In the 20 years, system evolvement and structural transformation were mostly driven by domestic factors, but now are increasingly influenced by economic globalization and worldwide industrial upgrade. In the incoming 21^st century, it is estimated that Chinese economic development will be influenced by world economy, especial the economy of Asian area. And Chinese economy will rest on what attitude and strategy China will take to involve in the process. It is an interactional process. Knowing the basic status of the process will help us create future world economic structure. This paper has three parts: the first part is a brief analysis of economic globalization and worldwide economic structural upgrade; the second one is an analysis and illustration of challenges and choices China is facing; the last part deals with various possibilities of Chinese economic development.

 Integration and restructuring of world economy and its characteristics

 Compared with the past years, some new factors influencing the structure of world economy emerged. These driving factors are: transformation of former central-planned countries into market economy; transformation of import-substitution strategy of developing economies into export-oriented development strategy; transnational management strategy and global expansion of large corporations in developed countries; faster flow of commodity, service, personnel and capital increased by modern scientific revolution and information technological advance; stable political environment for international capital flow brought about by worldwide détente.

These new factors react each other, which makes the world market develop in rapid speed and promotes the integrity of national economies. The integrity is manifested as growth of international trade in excess of that of domestic production, growth of international investment in excess of that of international trade, growth of short-term capital in excess of long-term capital among various forms of international capital flow.

Rapid integrity of financial markets is particularly remarkable. Nowadays, transaction volume per day in fore markets is as high as US$1.5 trillion, 100-odd times over world trade volume. This figure is higher than the sum of foreign exchange reserves in all countries. In a sense, it means it does not work even if several strong economies join hands to interfere in exchange rates. In 1980, international security transaction by American investors was only 9% of GDP, however, it rose up to 135% in 1993, and the growth rates in Germany, Britain and other countries were even higher. According to McCarthy’s estimate, global financial marker capitalization will reach US$83 trillion in 2000, 3 times of GDP of OECD countries.

Let’s view this problem in another aspect. The integrity of national economies is economic globalization. It means that economy of a certain country is not independent of world economy, but becomes a knot of it. Accordingly, the efficiency of traditional and independent economic policy is waning, which is mainly reflected on so-called independent monetary policy, freedom of capital account and pegged exchange system are harder to reach balance simultaneously, that is, "triangle problem" is even more outstanding. So it is necessary to form common viewpoint of international political and economic order, then build the framework of international political and economic order on the basis of the common viewpoint.

Economic globalization means fierce competition. In parallel with economic globalization is dramatic changes of economic order and restructuring and upgrade of industrial structure, the background of which is extensive use of new technology, especially the use of information technology. The characteristic of world economic restructuring and upgrade of industrial structure is that human capital such as knowledge and technology become increasingly important in economic performance. Knowledge economy era is coming. According to estimate, in increased GDP from 1993 to 1996, the contribution rate of high-tech industry is 27%, far higher than 14% of construction industry and 4% of auto-making industry. Now, expense for IT hardware of American enterprises and residents has been in excess of that for new houses, new cars and auto parts, much higher than that for fixed assets investment.

Internationalization of division of labor driven by globalization makes up a worldwide production chain from knowledge-intensive industry to capital-intensive industry and to labor-intensive industry. Restructuring and transnational industrial transfer are accelerated, thus new unique features come up in world economy.

1. Traditional industry is now facing problem of over-capacity worldwide.

Great changes took place in economic and technological basis in 1990s. Development of IT is expanding and concluding the third industrial revolution. The life cycle of technology and products become shorter, a large amount of new technologies enter standardized scale production soon after they come out. The expanding speed of products is greater than that of market. So overproduction especially overproduction of traditional industries is most serious in history. Compared with before, overproduction nowadays is not caused by high price, so it is not partial, but comprehensive. In fact some industry has no economic value, because the elasticity of price tend to be zero. This state is spreading to other industries. Take auto industry as an example, production capability in 1996 was 68 million vehicles, but the actual production was only 50 million vehicles. By 2000, global production capability is expected to reach 80 million vehicles, but the actual demand will be only less than 60 million vehicles. Of course, not only auto industry, not only leading industries in the First Industrial Revolution----textile, but also symbol industries in the Second and Third Industrial Revolution----steel, chemical complex material and TV set ----are confronting with the same problem. Large scale of over-capacity resulted in fierce market competition. Against this background, a new round of transnational mergers spread across the whole world involving almost all of traditional industries. The scale of them becomes larger and larger. Worldwide hot competition forces enterprises to take measures to cut down cost in order to increase production efficiency. These measures sacrificing employment for market shard weakened global consumption basis, resulting in a global deflation.

2. Service industry becomes a major source of economic growth momentum.

Progress of science and technology has considerably improved production efficiency with expansion of production capability in excess of that of marker, making marketing and market expansion focus of competition. Future industries will leave more profitability to after-sale services, by contrast, products themselves will become less important, become a bait for potential customers to enjoy after-sale services. Thus, a combination of high value-added products and services becomes a new economic growth engine, drawing purchasing power and employment opportunities to these sectors. In America, production value of service sectors accounted for ?of its GDP in 1996, and employment opportunities was 80% of the total.

Rapid development of service sectors promoted upgrading of industrial structure, thus bringing along uni-dimensional growth of the indicator of economic total volume, transforming traditional economic cycles. Agriculture industry is the leading industry in agricultural society, the main cause of economic fluctuation is good or poor harvest; mechanical mass production in capitalistic society results in the separation of production and consumption, which makes economic fluctuation inescapable; when service industry, whose production and consumption occur simultaneous, the characteristic of economic fluctuation is changing. Take America as an example. 1999 is the ninth consecutive year of American economic growth. The boom has lasted 103 months, longer than any of its booms after World War , probably even longer than booms of "Japanese Miracle" and "German Miracle" after World War . Economic academic community refers to it as "New Economy", a preclude of the fifth long cycle of western economies.

3. Redefinition of leading industries will lead to dramatic changes of world economic order.

A leading industry has two interrelated sides: firstly, the industry has come to play an important role in a country’s industrial structure; secondly, the industry is in line with future directions of world economy. In the incoming knowledge economy era, the leading industry candidates are new industries close to high-tech fields, namely, computer (software, hardware and service), telecom and information (publishing and entertainment included). At present, every country is seeking for science and technology advances, and industrial adjustment, in order to stay firm in fierce competition of leading industries. Judging from present situation, the U.S. has become the leading country in the process far ahead of Japan, Western Europe and other countries.

In recent years, American economic growth is characterized by rapid development of high-tech. The U.S. has an absolute advantage in the world in upper reach raw materials of computer and semiconductor, middle reach key components, and software development. It also has leading edge in technology-intensive industries including electronics, telecommunication, optical instruments, aviation and space flight and new technologies. Since 1980s, American enterprises have invested more than US$100 billion per year into IT and related aspects. Generally speaking, the United States has reserved the declining trend of competitive power compared with Japan and Western Europe, and regained its competition edge in international markets

Under the background of globalization, dramatic adjustment and rapid upgrade of world economic industrial structure maybe allow us to gain a deeper understanding of Japanese economic decline after its bubble economy evaporated and of the Asian Economic Crisis in 1997. Seen from the deep structure, the Asian Financial Crisis is essentially a result of the fact that industrial restructuring has lagged far behind against the background of global over-capacity of traditional industries and leading industries lacked of core competition power.

One of the major features of East-Asian Model is to place technological introduction ahead of technological development, take advantage of its comparative advantage, and adopt export-oriented strategy to promote economic growth. It made sense and was greatly successful in that historical context. However, if a country does not yet emphasize developing its own technology even after its economic development has reached a reasonable degree, still follows a way of introduction and imitation, then it will be unable to lift its position in international division of labor, most probably will be locked into low reaches of the international production chain, and subject to shocks at time of global industrial restructuring and upgrading. Take Japan as an example. In term of Japanese technological export volume relative to import volume, it is 0.007 in 1953, 0.13 in1970 and only 0.38 in 1989, far lower than 5.26 of the United States, also lower than 0.92 of Britain in 1987. In addition, from 1950 to 1996, Japan has four Nobel Physiology, Physics, Chemistry of Economics Prize laureates, while the United States has 178 and Britain has 46.This difference shows Japanese weakness in basic researches, which leads to its failure in 1990s in scrambling for high-tech industrial commanding heights. Another example is the South Korea, whose image of high-tech producer is always in contradiction with the following facts. The best-selling Hyundai car maybe is the most famous export products of the South Korea, but its bodywork is an imitation of an Italian design and its motor and driver are designed and manufactured by Japanese Mitubishi Corp. 85% of parts of color TVs made in the South Korea are also manufactured in Japan. The South Korea is the fifth largest PC export country, but indeed only computer desk is manufactured by it. The Southeastern Asian economy is even worse. High dependence on foreign capital, foreign markets and foreign technology leaves its economy very vulnerable. On the one hand, they have only cheap land resources and cheap labor as their bargaining chip, once this chip is lost, foreign capital and even domestic businessmen will leave these countries; on the other hand, once foreign capital, markets of technology put some restrictions on them for some reason, they will lose their basis of survival and development.

As mentioned above, on one hand, industrial upgrade of Asia countries has lagged behind, their industries have no competitive advantage in the world. To maintain and expand quota of the market, it is inevitable to lower price, the currencies of these countries have the trend of depreciation; on the other hand, industrial upgrade in developed countries is quicker, which makes its competitive advantage even more evident, the currencies of these countries have the trend of appreciation. As mentioned above, currencies of Asian countries are softening, currencies of Europe and the U.S. are hardening, so pegged exchange system is hard to maintain and financial crisis is inescapable.

Challenges for Chinese Economy

 As mentioned above, it appears as if we could draw a conclusion that the only way for Asian emerging economies to adapt themselves to economic globalization process is to speed up their restructuring, which is no less than a severe challenge.

The challenge of industrial structural upgrade is more severe to China, a member of Asian economy.

Since the founding of the People’s Republic of China, especially since 1978, China’s transformation from traditional agricultural society to modern industrial society has been greatly accelerated with rapid industrial restructuring and a relative complete modern industrial society has been greatly accelerated with rapid industrial restructuring and a relative complete modern industrial system taking shape. China ’s industrial structure involved around the objective of industrialization, represented that the proportion of primary industry has declined ceaselessly, the proportion of secondary industry has ascended continually, and the proportion of tertiary has ascended by inches (See Table 1).

Table 1 China ’s Industrial Structure (1952-1998)

Source: China Statistical Yearbook 1999

Obviously, the characteristic shown in the above table generally accords with industrial structure transformation of all countries in the industrializing process. From the development stage, China ’s structure patterns are in interim phases of industrialization of other countries. The characteristic includes three aspects. Firstly, the proportion of primary industry value dropped from 50.50% in 1952 to 18.39% in 1998, accordingly, the proportion of second and tertiary industries has ascend from 49.50% in 1952 to 81.61% in 1998, non-agricultural industry including service industry has become the pillar of China ’s economy. Secondly, the output of some important industrial products has become number one in the world. The pillar industries in the interim of industrialization, such as auto industry and housing industry has developed by leaps and bounds, which show that the industrial system is being perfected and tends to be mature. Thirdly, as seen from the structure of foreign trade, most important export products are machinery and electric equipment and most important import products are raw materials, which imply that China has begun to purchase raw materials around the world and ship industrial products to the whole world. China has become an industrialized country to some extent (See Table 2).

Table 2 Structural Indication of the Foreign Trade

Source: China Statistical Yearbook 1999

Though Chinese industrial structure has followed regular patterns of industrialization of other countries, there are still some obvious differences as compared with structure patterns in interim phases of industrialization of other countries.

Firstly, urbanization lags far behind industrialization. While non-agricultural industries become main body of national economy, agricultural sectors still employ a large amount of labor force disproportional to its output proportion (See Table 3).

In 1998, proportion of employees in the first industry is as high as 49.8%, but their output is only 18.4 of the national economy. The second industry sectors use only 23.5% of labor force, but their output accounts for 48.7% of GDP. The relative labor productivity of the former is 0.37, only 18.7% of the latter, also far less than 1.23 of the tertiary industry. This shows the dualistic economic structure is still obvious. Vast difference between productivity and income of every industry brings Chinese economy into economic radiation described by Kuzneci, which is a result of excessive labor supply to non-modern sectors and impeded productivity rise of these sectors. If this situation lasts for a long time, the process of further industrialization will be severely blocked and social stability will be confronted with big threats.

Table 3: Current Employment Population vs. GDP Industrial Structure

Sources: China Statistical Yearbook 1999?A Statistical Survey of China 1999

As shown before, non-agricultural industries’ value amounts to main body of national economy, but proportion of employees in the first class dominated the worker forces at present and will do in the future. The conflict of dual economic structure is still obvious. It reflects on the enlarged income gap between industry and agriculture, rising from 2.12 in 1991 to 5.25 in 1995, and its estimated value will reach 5.62 in 2005(See Table 4).

Table 4: Forecast on China’s Industrial Structure in 10yrs

Sources: China statistical Yearbook?relative issues

Secondly, while primary industrialization still needs further boost, the trend of heavy industrialization is increasingly remarkable.

Industrialization process is usually characterized by gradually shifting labor-intensive light industries to capital and technology-intensive heavy industries. Light industries are labor-intensive, easier to absorb redundant labor from the first industry, while heavy industries are capital-intensive, with a poorer ability in this term. In China, however, the proportion of heavy industries’ output in manufacturing industrial output has risen from 35.5% in periods soon after the founding of PRC to 50.7% in 1998 (See Table 5). Development of heavy industries is an insurmountable phase in later stages of industrialization, but while China has a large number of rural redundant labors, rapid growth of heavy industries will make employment situation only more severe, exerting heavy pressures on Chinese society.

Table 5: Proportion of Light & Heavy Industry

Source: China Statistical Yearbook 1999

Thirdly, the industrial structure has a higher level of manufacturing, but still far from high manufacturing degree.

Since 1978, the proportion has decreased largely of output of low level manufacturing sectors in light industry with agricultural products as raw material and mining sectors in heavy industry, but low level expansion and repetitious construction in these sectors are still very serious. Product quality upgrade is still behind upgrade of demand structures, leading high dependence on import of national economy for high level manufactured goods (See Table 6). The proportion of the two preceding sectors dropped from 34.19%, 8.19% in 1985 to 27.16%, 5.97% in 1998, dropped 7.03% and 2.22% respectively. Horizontal industrial expansion with low level of manufacturing causes low level malignant competition in domestic manufacturing sectors as well as high level consumption of energy and raw materials. Inflated demands for this reason bring about large increase of sectors with low technology content, delay upgrade of industrial structures (See Table 7).

Table 6: Proportion: Heavy Chemical Industry vs. Light Industry

Sources: China Statistical Yearbook, relative issues

Table 7: Proportion: Raw Materials Industry vs. Manufacturing Industry

Sources: Adapted from "Reflection on China’s Industrial Structure in New Era" Management World 1997 Feb.

Fourthly, the industries are generally in low technology level, and technology-intensive development is only at the beginning of a long march.

Generally speaking, Chinese industrial system has a low level of technology, and high-tech industries ate in starting periods. The first evidence is that major industrial sectors have only poor technologies, lack of self-equipment capability. Large-scale IC chips account for only 40% of all IC chips made in China, 80% of Chinese telecom equipment and instrument market is taken by foreign enterprises. In machinery sector, in 1994, leading products had only 17.5% reaching 1990s level, 52% reaching 1980s level, 30% still at 1960s and 1970s level. Average life cycle for more than 2000 kinds of Chinese leading products is 10.5 years, 3.5 times that of same products in America. The other evidence is that American economic information index is 242, that is, 45% of workers are employed in information sectors, while by 1993, Chinese economic information index was only 84, only 9.9% of workers were employed in information sectors (See Table 8). Thus, there is still a long way to go for development of Chinese technological level, particularly high-tech industries oriented toward knowledge economy in the 21^st century.

Table 8: Information Technology Development of Several Countries

Source: First Conference on China ’s Information Problem

There are many causes for these differences, including historical as well as realistic, international as well as domestic, developmental as well as structural. Generally speaking, the following two reasons are especially important:

1.There is not reliable system basis to support economic development; the hysteresis of economic system reform impedes evolvement of industrial structure.

International experiences prove that during evolvement of industrial structures, market has sufficient driving force. The development in order of every country’s industrial structure is largely a result of market choices. What governments should do is only to rectify marker failures and provide good external environment for evolvement of industrial structures.

China has adopted highly centralized planning economic system for a long time. This system uses state’s power to mobilize all possible resources to realize industrialization quickly and shape a state industrialization pattern. Objectively, however, this pattern puts barriers between industry and agriculture, between city and countryside, sharpening conflicts in dualistic economy. Meanwhile, the administrative way of allocating resources is rigid and inefficient, distorting price signals, easy to cause malformation of industrial development and repetitious construction.

The above abuses of planning economic system form the rationale of system reform. Since 1978, Chinese economic system reform has bee deepening; market economy has bee developing, however, because China is still in system transition, a market economic system suitable to economic development has not been established, the system abuses still exist.

Firstly, administrative hierarchical management system and administrative market division are still serious, enterprise investment scale remains small, market share expansion is blocked, and non-state-owned economy is difficult to grow.

Secondly, there is not a convenient relationship between industrial capital and financial capital. For now, bank is a major funds source for Chinese production enterprises, capital market is not complete, financial products are relatively simples, as is the major reason for high asset liability ratios and low momentum of enterprises, especially state-owned large-and medium-sized enterprises. Moreover, there are no proper risky financing channels to support Chinese high-tech industries and knowledge economy.

Lastly, the lag of state-owned enterprise reform also affected industrial restructuring. For now, there are still some special barriers against exits of state-owned enterprises, making restructuring a formidable job. These barriers are: Politics and enterprises management is mixed up because of long-term governmental care of state-owned enterprises. Nobody is truly responsible for the enterprises and enterprises are short of adjustment momentum. Restructuring among different sectors or among different ownership is facing strong "administrative barriers". Enterprises are unable to play a major role in industrial restructuring. In addition, incomplete social security system makes it difficult for state-owned enterprises to realize exits from state ownership.

2.Insustrial structures are more open, sensitivity of industrial development to international competition are higher.

International experiences show opening-up is an important component of industrialization strategy for developing countries. In recent 20 years, deepening and widening of Chinese opening-up promoted economic development.

However, while breaking isolation, Chinese industrial structure becomes highly open, which is manifested by the following features: import and export of industrial products has been main body of foreign trade, accounting for more than 80% of the total volume; growth rate of foreign trade is high, foreign trade has become major driving force of industry and even the whole economy at large; growth rate of export of manufactured goods (8.6%) are higher than that of total volume of foreign trade, which shows a better commodity structure of Chinese foreign trade, and also shows that extroverted development of foreign trade is the main impulse to machining industry (See Table 9).

Something especial must be pointed out is that since mid of 1990s, extroverted characteristic of China ’s industry is even more obvious, manifested by export structure of manufactured goods improved a lot.

Firstly, machinery and transport equipment took the first place among the export, amounting to 50.23 billion dollars in 1998. The proportion of it is 48.43%, much higher than the proportion of light and textile industrial products (26.51%). On the other hand, export structure of machinery and transport equipment is changing for the better. Proportion of more technology-intensive products is going up, and that of more labor-intensive mental products is lowing down.

Secondly, the interim structure of traditional export products such as light and textile industrial products changed a lot. Resource and labor-extensive, low value-added and low-technology products of them descended, lower labor-extensive but higher technological and value-added products of them ascended obviously.

Table 9 Growth of Industry and Foreign Trade

Due to economic extroversion, Chinese industry has completely been positioned in international competition of relevant industries; Chinese industrial development is increasingly influenced by international economic changes. In international competition, Chinese competition power is relatively poor because Chinese industries are in middle and low reaches of international division of labor and has low level of technology. On the one hand, export is increasingly difficult, export prices are declining; on the other hand, market share of foreign products and foreign-invested enterprises’ products are increasing. The above two factors increase difficulties of production and sale of national industry, state-owned enterprises in particular. In fact, textile and other light industries have slowed their growth around1985, after 1989, the production capability of durable consumption foods becomes idle, after middle 1990s, bottleneck sectors including steel, oil and raw material begun to fall into market saturation. All these are related with harder international competition.

Table 10 Export Structure of Manufactured Goods

Sources: China Statistical Yearbook, relative issues

 Future Choices for Chinese Economy

 As discussed above, considering knowledge economy wave in the next century and the economic globalization, these lag deviations in Chinese industrial structure are even more challenging. It implies not only Chinese industrial restructuring has not been completed, but also the restructuring has to be completed as quickly as possible. China has to compress what has happened, is happening and will happen in developed countries into one job, and to realize in a short time the three goals including rural industrialization, urban industrial structural upgrade and developing knowledge economy. This is a formidable task. Firstly, in order to wipe off differences in dualistic structure, to absorb redundant rural labors into non-agricultural sectors, we will still have to develop labor-intensive industries. However, economic globalization and worldwide over-capacity of traditional industries leave less room for development of labor-intensive industries, which will also impede rural industrialization and urbanization process. Secondly, there are also some contradictions between industrialization and knowledge economy. On the one hand, development of knowledge economy is based on development of physical economy; it’s impossible to expect China to directly enter knowledge economy era beyond industrialization period. On the other hand, industry is a mature sector, a worldwide division has taken shape, and access barriers are increasingly strong. Especially because of development of high-tech industries, the predominance of main stream industries in international competition is on decline, unable to provide lasting momentum to economic development.

Thus, under the background of economic globalization, choices for Chinese economic development are quite limited, which requires new thinking and cautious maneuver. Generally speaking, the new development strategy should employ Chinese resource endowment advantage accurately, increase international competition power through comparative advantage, thus accelerating capital accumulation, changing comparative advantages and stimulating rapid upgrade of industrial structure.

First, China has comparative advantage in term of physical capital. Labor-intensive industries have to continuously absorb and employ new technologies, IT in particular, to renovate themselves, reduce cost and improve competitive power. Through capital accumulation brought about by improved competitive power, capital-intensive manufacturing industries will be developed gradually, especially high-tech-related manufacturing industries. In heavy industry fields, energy-saving and material-saving technologies must be used to reduce cost through reducing wastage.

Second, development of high-tech industry is closely related to human resource accumulation. Just as discovered by new economic growth theory of Rumo and Lucas, human capital difference is an important element to explain long-lasting growth of per capita income and economic international differences. Abundance in real natural does not assign to a country with strong international competitive power; it rests on a country’s resource convertibility, which is a key factor to convert potential competitive power into realistic one. Resource convertibility depends on human capital. From this sense, science and technology and education have become major sources of social development. In contrast with developed countries, we are short of human capital as well as physical capital. Cultivating human capital can resolve contradictions among labor-intensive, capital intensive industries and high-tech industries, and combine the three perfectly.

Third, a flexible and innovative system basis and system environment must be established to support economic development, which means fair legislation and law enforcement, protection of intellectual property rights and property rights, independent and effective contract arbitrage, perfect financial systems, transparent capital markets, social security system, perfect public finance and expense system. For now, state-owned enterprises reform and financial system reform have to be priorities on the reform list.

It is worth noting that Chinese government has realized challenges Chinese economy is facing in the 21^st century, made a positive policy response, and put forward a strategy of rejuvenating China through science and education. China is advancing state-owned enterprises reform and financial system reform, speeding up economic restructuring and expanding opening-up in order to achieve sustainable development. Facts have shown that the above reform measures are producing positive effects. Chinese economy is still growing at a high speed, deflation has been relaxed, and demands are being further expanded. We have every reason to believe Chinese economy will have a better performance with above measures.

 China is a big country with the population of 1.3 billion. It has very important effect in world economy, especially in Asian economy. In the Asia Economic Crisis in 1997, China promised to maintain its currency, which avoided further currency depreciation of Asian countries. China’s responsible attitude provoked praise of world.

As a matter of fact, world economy without China’s economy is not complete. The sino-U.S. negotiation of WTO entry succeeded not long before. Soon after that, China reached agreements about WTO entry with more than ten countries. China’s entry WTO is expected soon. The agreement between China and the U.S. and its anticipative entry to WTO will promote world economy and China’s internal investment.

Whether China’s economy transforms successfully or not restricts world economic restructuring. Without the success of China’s economic transformation, world economy is hard to restructure successfully, which determines by China’s role in world economy.

World economic restructuring has very important impact on China’s economic transformation also. Successful restructuring of world economy will favor the development and the transformation of China’s economy.

World economic restructuring and China’s economic transformation are interactional. To realize in a short time the three goals including rural industrialization, urban industrial structural upgrade and developing knowledge economy will promote both domestic and world economy developments. World economic restructuring and its redefinition of leading industries will favor China’s taking advantage of its comparative advantage and benefit its economy.