“Changing”and“New Normal”on the World Economic Scene

Cooperation in the context of competition?Or competition in the context of cooperation?

In the age of economic globalization,various economic entities are using benefit as the starting point for handling their international economic relationships,in order to seek their own economic development.If we say that the foundation for international politics is authoritarianism,then the foundation for international economics is benefit.Driven by benefits,it is sometimes hard to distinguish cooperation and alliance from ruthless competition—they are just one step apart.Competition promotes human improvement,and cooperation and alliance can reap huge benefits from scale and mutual complementation.Hence cooperation and competition are objective existences created out of market forces in the process of economic globalization.

Whether it is between developed economies,or between developed economies and developing economies,or between developing economies,cooperation and competition co-exist in trade activities.Moreover,the deeper and more developed the cooperation is,the fiercer and more diversified the competition is.

The reason why developed economies and developing economies can cooperate with each other is partly because the former put more emphasis on gaining the right of entry into the market,while the latter are more keen on acquiring advanced technology and management experience.The reason why competition exists among developing economies is that in terms of economic structure,endowment of essential factors,levels of demand,and technology,there is less discrepancy and mutual complementation,and the asymmetry of co-dependence is weaker.Hence,there is often conflicts of interest and competition in introducing foreign capital,acquiring international aid,and scrambling for export markets.

International trade is on the one hand the direct realization of economic competition—it has created the imbalance of the world economy,and on the other hand the preliminary form of economic cooperation—it ensures that among the various economies and between tangible commodities and intangible commodities,there is mutual communication,effective allocation of resources,and the re-allocation of wealth.

Wintelism,which is jointly built by US companies Microsoft and Intel,is the micro-foundation of the US New Economy and the restructuring of global production.

Under Wintelism,the global production network is the medium-view platform for the operation of“competition-cooperation".It ensures that competition takes place in a benevolent and orderly direction,and the promotion of cooperation can be sustained.The“invisible hand"of the market,through the global production network,promotes from bottom to top the competition and cooperation among different economies,forming the mode of“competition-cooperation"in the context of international economic relations.

The present world has become a system of cooperation among three major regions.There are the European Union(EU),the North American Free Trade Area(NAFTA),and the Asia Pacific Economic Cooperation(APEC),the China-ASEAN Free Trade Area(CAFTA),and the ASEAN 10+3 conference system etc.Meanwhile,WTO,the system of cooperation among the above regions,as well as the various regional and cross-regional preferential trade agreements(PTA),forms the macro-platform for“competition-cooperation".To cope with the fierce competition under the conditions of economic globalization,the various economies use the promotion of regional economic integration as the strategic tool for gaining competitive advantage.In the first decade of the 21st century,we saw the formation of several,several dozen and even over a hundred bilateral or multilateral PTAs—whether among developed economies,between developed economies and developing economies,or among developing economies.These include PTAs formed inside the same region,and PTA formed across regions.

Since the start of the 21st century,China has become a key player in global import and export trade,and the largest trade partner for many economies.It has even become the hub and center for processing and manufacturing in the global production network.China is implementing an integrated trade cooperation strategy that seeks harmony at the global and regional level,so as to participate in international economic cooperation on a larger scope,on a higher level,and to a greater depth.

On the one hand,China is actively participating in the multilateral trade system of the world,playing a constructive role in the WTO Doha round,submitting over a hundred proposals,and entering into the core of world trade talks,in order to promote a more open and fair environment for international trade.On the other hand,China is focusing on reopening bilateral and regional economic and trade cooperation.Cumulatively,it has set up 163 bilateral trade cooperation mechanisms and signed 129 bilateral investment agreements,gradually becoming the mastermind of the regional economic integration.

China has signed 10 free trade agreements(FTAs)with developed and developing economies,such as New Zealand,Singapore,Chile and Peru,and another 6 FTAs are under negotiation.2010 saw the official establishment of the ChinaASEAN Free Trade Zone,which has become the largest free trade zone among developing countries,and China is actively promoting the process of integration of economies in East Asia.By the end of 2010,China was negotiating a total of 14 FTAs,involving 31 countries and regions,with the total bilateral trade volume reaching US$521.3 billion,accounting for one quarter of the foreign trade total.

While strengthening dialogue and deepening cooperation has become the main tune in the handling of international economic affairs by various countries,the various economies have never ceased to engage in real and potential competition.For instance,in the realm of clean energy,China-US cooperation has entered into a real stage,and in the fight for the more say in the global new energy field,the two countries are the strong and direct competitor of one another.In October 2010,the Office of the United States Trade Representative applied the Clause 301 of the 1974 US Trade Laws in launching an investigation into the case of“unfair assistance",where the US iron and steel labor union accused the Chinese Government of implementing a protectionist strategy against the US in the field of new energy,including wind energy and solar energy.Now,the China and US competition for new energy has emerged into the foreground.

In the various forms of coopetition,the various economies can establish beneficial interaction on the macro and micro levels.As a result,the competitioncooperation manifested an active stance of upward spiraling,causing positive effect.The passive effect of competition-coopetition mainly originates from cooperation,including economic growth,trade and investment expansion,and the rise in the people's welfare standard.Meanwhile,the dynamic effect mainly stems from competition,including the upgrade of the production structure,rise in competitive advantage,and the strengthening of the overall external competitiveness. Under the counter-balance of market regulations and benefits,the various forms of coopetition has formed a win-win scenario of mutual benefit.

Among the various economies,the most militant form of trade competition is trade friction.In the first decade of the 21st century,we see imbalance among various economies,competition between industry and trade structure,exclusivity of regional trade groups,contradiction of trade benefit allocation,and politicization of trade issues.All of these exacerbate the onset of protectionism in international trade.

The various economies used a range of new and old tools for trade relief,including anti-dumping,anti-subsidy,special safeguard measure,TBT,SPS,technological and labor standards,corporate social responsibility,and green barrier,all with an aim to strengthening the protection for domestic industries and the domestic market.

We should say that the status of economic globalization as at today is that with the strengthening of the mutual dependence among various economies,it is virtually impossible for them to return to the days when they were self-sustaining,and segregated from their neighbors.Today,trade protectionism mainly manifests itself in the full application of the traditional anti-dumping,countervailing,and special safeguard measures—under the banner of fair trade.Meanwhile,the new measures for trade protectionism include various technological barriers such as product quality standards,TBT,SPS and health checks.

Moreover,trade friction is growingly impacting more and more economic and social realms.Conservation and emission reduction standards,social security and exchange rate mechanisms have started to become a cause of friction.

With Chinese exports sweeping across the international markets,there appeared an unending range of tangible and intangible trade barriers against traditional Chinese export commodities and some high-tech products.According to WTO statistics,China has,for 17 consecutive years,been the WTO member that has been investigated for anti-dumping and countervailing allegations.Indeed,about 35%of the anti-dumping cases and 71%of the anti-subsidy investigation cases in the world involve China.

Since 2010,the European debt crisis and the US debt crisis have led to the instability and imbalance of the global economy.Under these circumstances,China has become a heavy disaster zone in respect of international trade protectionism.

On the one hand,China actively exercises its rights as a member of the WTO,resolutely safeguarding its national interests and the interests of the industry,and appropriately addressing trade frictions.On the other hand,China has taken solid actions against trade protectionism.In 2008,as the international financial crisis was growing,China organized over 30 merchandizing tours to other countries,to promote Chinese imports and to expedite direct external investments.

From the time China entered into the WTO to the first quarter of 2013,China became the victim of trade relief 842 times,involving a total of US$73.6 billion.In the entire 2010,China's export products fell victim to trade relief investigations 66 times,involving about US$7.14 billion.In 2011,the Spanish Government introduced a policy against the import of shoes,benchmarking Chinese shoes imported into Spain against shoes in the customs catalog that are of similar style and material.If the declared prices of the imported shoes are lower than what is in the customs catalog,the shoes will be impounded.It is only after the shoe merchant has paid the surplus customs taxes,value-added taxes and the relevant fines that he can retrieve his commodities.Meanwhile,over 40 US major merchants started on 1 December 2011 to implement a new industry standard,laying restriction on the lead content of briefcases and shoes.This new standard may apply also to waist belts and other fashionable accessories.

According to the statistics of the Ministry of Commerce of the People's Republic of China,there were 19 countries or regions initiating a trade relief investigation against China in 2013,with a total of 93 cases,an increase of 17.9%over 2012.Judging from the number of cases,the increase was rather fast.

Among these,72 were anti-dumping investigations,14 were anti-subsidy investigations,and 7 were related to protective measures.Moreover,the US initiated 19 cases of“337"investigation against China,an increase of one case as opposed to 18 in 2012.Apart from the drastic increase in the number of cases initiated by developed economies,the cases initiated by newly emerged industrial nations and developing countries are also on the increase.Judging from the data we have at present,China has been the country with the largest number of antidumping investigations for 18 years running,and of anti-subsidy investigations for 8 years running.China is still the largest victim of trade protectionism.For instance,the European Union initiated anti-dumping and anti-subsidy investigations against photovoltaic products from China,involving as much as US$20.4 billion,jacking up the total sum of money involved in cases involving China.Although this trade friction case was successfully resolved as a result of direct meetings at high levels between China and European countries,a shadow of distrust still remained in the trade relations between China and Europe.If the anti-dumping and anti-subsidy investigations by the European Union against Huawei and ZTE in respect of their telecom and wireless products in 2014 finally ends up in putting on record,it will possibly become the“double reverse",anti-dumping and countervailing investigation against China involving the largest amount of money.

As the ultimate consumer of global products,the US has continued to criticize China's RMB exchange rate mechanism and China's trade policies.However,the fact is that the US is the largest beneficial owner from its trade relations with China.On the one hand,the US asks China to protect its intellectual property,but on the other hand,it imposed lots of restrictions on the import of its hightech products.On the one hand,it enjoys various preferential treatments in its investments in China,but on the other hand,it imposed various hurdles and barriers on Chinese enterprises investing in the US.All of these act against the principles of international trade,which are mutual benefit,fairness,and mutual complementation.

“Happy alone”or“happy together"?

In Confucianism,there is an anecdote that Mencius suggested to Emperor Liang that“being happy alone is not as good as being happy together",or“enjoying happiness alone is not as happy as sharing it".

When this logic is applied to the current global economic scene,we have a new term“inclusive growth",or“shared growth".This has even become a mega trend in world economy(see Figure 1.1).The term“inclusive"means“widely inclusive,inclusive,and the ability to include".The term“inclusive growth"was first raised by the Asian Development Bank in 2007,and is a concept being perfected in recent years by various international economic organizations.Being inclusive means bringing things together to the benefit of others.Sharing means refusing to enjoy benefits alone,or being great alone.

Inclusive growth means that inside the same economy,more people can enjoy the benefits of globalization,and the disparity between the rich and the poor is reduced.It also means that in the world economy,the disadvantaged groups,industries and economies can be better protected,and the global disparity between the rich and the poor is lowered.Furthermore,it means that in the process of pursuing world economic growth,the resources and environment for human survival are protected,and the harmony and balance between man and nature are realized.

Inclusive growth advocates that only with more comprehensive and balanced development can we overcome the defects of pure development economy,so that economic growth can take place in parallel with improvements in society,people's livelihood and the sustainability of resources and the environment.

First,there is change in the allocation of global resources,and as a result,the contrasting forces in the world economy become more balanced.More and more newly industrialized countries are included in the global allocation of production and capital.Brazil,Russia,India,China and South Africa(BRICS)are becoming an important driver in the growth of the world economy.

Let's talk about the newly industrialized countries themselves.In the current world,most of the newly emerging economies are growing faster and stronger than developed economies,and this offsets the economic recession of other markets.In the global economic development process,these countries have a growing voice and have more say in pricing.Hence they play an indispensable role in the global allocation of resources.From 2001 to 2010,the rate of economic growth in newly emerging economies exceeded 6%,far higher than the 2.6%among the developed countries and the global average of 4.1%.

In 2010,the GDP growth rate of China,India and Brazil reached 10.3%,9.7%and 7.5%respectively.Although in 2012-2013,the economic growth of BRICS countries slackened due to unfavorable external and internal factors,they still remain the newly emerging markets with the highest potentials,and also the engine of growth in their respective regions.

The influence of the BRICS countries on the international market is growing by the day.In the market for bulk commodities transactions,China's need for petroleum,metallic ores and soybeans,the supply of petroleum and natural gas from Russia,as well as Brazil's supply of ferrous ores and coffee,are all major supply-and-demand forces in the international market,with significant impact on the market prices of bulk commodities.

Since the Ukrainian crisis in 2013,Western countries are blaming Russia,and implementing several economic sanctions against it.In August 2014,Russia took resolute anti-sanction measures,imposing for one year an embargo on goods from countries sanctioning it.As Russia is embargoing agricultural products from Europe,the European Union has allocated hundreds of millions of Euros to compensate for the economic losses suffered by agricultural organizations in Europe.In the international financial market,BRICS countries have considerable foreign capital.The changes in the allocation of offshore capital of BRICS countries,as well as changes in international capital flow,are already having a huge impact on the exchange rates and interest rates of major currencies.

At the same time,the commercial models of newly emerging economies are evolving.Economies of scale,coupled with high-tech innovation,have become the general choice for newly emerging economies.They are all working hard to achieve intensification of production,developing high-tech industries characterized by the use of new energy,energy conservation,electronic information,and biological matters.They are also forging ahead in structure optimization and upgrading,in order to form a modern production system that fits the special features of the domestic resources.

Moreover,the establishment of the multilateral mechanism of the“Chiang Mai Initiative"worth US$120 billion and the regional internal markets in the Asian bonds market enable the economy of the newly emerging economies to acquire a deep and active development momentum.

From the perspective of the characteristics of the global production network,we can see that with module formation and concept of breaking in becoming the basic logic in modern industrial production,the development trend on the international production scene is polarization and sharing of the value chain.Meanwhile,the integration and disintegration of the various production stages of the production value chain has become the norm in international trade.

As the hub of processing and manufacturing in the East Asian production network,China can,on the one hand,integrate various economies at different stages of development into a new international production system,so that all the players have the chance to take advantage of their own specific strengths and benefit from the huge contributions of economic globalization.And on the other hand,as an active player in the flow of global commodities and basic factors,China is also evolving from its export-driven development strategy to a strategy that promotes trade balance.

In China's import needs,the portion that satisfies“indirect needs",comprising spares and parts as well as intermediate products for goods for export to US and European markets is gradually shrinking.On the other hand,the parts used to satisfy China's own“direct needs"in consumption is gradually on the increase.

The flow and origin of the global FDI provides another perspective from which to look at the inclusive growth of the world economy.Developing countries like China,as well as transit economies,are year by year providing essential support for the growth in global external direct investments.The total foreign capital they attracted in 2010 was already on a par with developed economies.

After the US subprime crisis in 2008,the world financial centers of Wall Street and London City were hard hit,and their capabilities in the allocation of global resources were undermined.This provided a good opportunity for Chinese enterprises,due to their own interests in the global allocation of resources. Indeed Chinese capital has really“gone global".

In the process of merging and integrating global capital and technology,China is evolving from“world factory"to“world investor",from“receiver"to“creator",and from a“recipient"in international political and economic incidents to a“participant".In the final stage in China's 13th Five Year Plan,as the“Chinese people's economy"(manifested as GNI)chases after“China's economy"(manifested as GDP),there is hope that China will achieve balance in the inflow and outflow of capital.This will be an important step as China evolves from a“big country"into a“great nation".

Furthermore,there are changes in the global pattern of production.The growth in the world economy has returned from a dependence on virtual growth in demand to a mode that depends on real growth in demand.The high prices of oil have brought the global mode of production to a state where there is adjustment to inclusive growth.

On the one hand,since the subprime crisis emerged in the US,market forces have started to adjust from a mode of resource allocation driven by a virtual economy with an excessive rate of return.And developed countries have started to adjust in the direction of reviving the manufacturing industry.

Gordon Brown,then British Prime Minister,was the first to propose that Britain needs to revive its manufacturing industry.Then US President Barrack Obama also stressed the US needs to double its exports and create 2 million jobs by the end of 2015.

At the end of 2009,Warren Buffett acquired the BNSF,and this made people feel that the tycoon is betting on businesses that strive to revive the manufacturing industry.Then the European Union stressed in 27 countries that the manufacturing industry needs to be developed.Then Japan also stressed that the revival of the manufacturing industry is imperative.When newly emerging economies are more and more inclined to use the domestic market demand to drive the growth of the domestic economy,export growth that faces the emerging markets will become essentials in reviving the manufacturing industry in developed countries.

On the other hand,the sustained rise in international oil prices has continued to escalate the global transportation costs.This created uncertainty in the pattern of allocation of essential factors in the international market and in the determination of the prices of essential factors.At the same time,it poses a challenge to the mode of global production and sale.

Many multinational companies have been abandoning the global mode of production and sale in order to save the cost of long-distance transportation.As a result,they moved their production lines and assembly lines back to their own country or neighboring countries.In the US,a lot of electronics manufacturers have moved their production facilities from China to Mexico,which is closer.US consumers have found that more and more commodities are bearing the label“Made in USA".Following Nike's closure of its only factory in China—the Tai Cong Factory—in 2009,Adidas'China headquarters closed in 2012 their only directly managed factory in China's city of Suzhou.Meanwhile,shoe-making giants like Clarks,K-Swiss and Bakers are all setting up production lines in Vietnam and Indonesia.With foreign enterprises moving their production lines from China to Southeast Asian countries with even cheaper essential factors,the goods on US supermarkets are not just Chinese goods,but goods made in various countries.Diversification has begun.

Furthermore,there is now diversified competition in the international currency system.Global gaming is moving towards multi-polarization.The expedited process of regionalization and internationalization of RMB has raised widespread concern in the international community.

First,the US dollar is still at the core of global foreign exchange reserves as well as international payments and clearing.However,its hegemonic position is on the wane.Various countries have set up diversified reserve pools,and are demanding the use of their own currencies for clearing in international trades.This is an attempt to make adjustments to the single-currency system.

Second,the Euro,as a product of the era of integration of European countries,is facing serious challenges.However,there is still the political aspiration for Europe to move towards unification.As long as the three major economies in the Eurozone—Germany,France and Italy—are not keen on overthrowing the Euro,the Eurozone will continue to exist.

Third,China's surplus in current account and capital account maintained for over a decade,has progressively raised the international competitiveness and influence of RMB.In 2006,the international market liquidity of the RMB overtook the Japanese yen.In ASEAN countries as well as in Hong Kong,Macau and Taiwan,there is remarkable growth in the flow and deposits of the RMB.

According to data released by SWIFT in October 2014,the RMB has risen to 7th rank in the league table of global major payment currencies.And about two years prior to that,the RMB was still in 14th position.With the progress of the Chinese financial market and its financial regulatory system,China's capital account is progressively opening up.The establishment of the Shanghai Free Trade Zone in 2013,and the pilot scheme of the Shanghai-Hong Kong Stock Connect,are both conducive to the opening up of China's capital account and the internationalization of RMB.

Following Nigeria and Thailand announcing their inclusion of RMB into their foreign exchange reserves basket in September and November 2011 respectively,Saudi Arabia also announced that they are including RMB in their foreign currency reserves basket,in a bid to realize the diversification of their foreign currency reserves.

In July 2012,the central bank of Indonesia started to buy securities based on RMB issued by China,and it also included RMB assets in their foreign currency reserves basket.It is estimated that in the global foreign currency reserves,RMB assets account for about US$15 billion to US$20 billion.Apart from some countries like the Republic of Belarus that have used RMB in their foreign currency reserves basket,some developed countries have secretly included RMB in their domestic foreign currency reserves basket.The issue of RMB bonds by the United Kingdom in October 2014 further testifies to the stable progress of internationalization of RMB.

Finally,the international cooperative effort to combat climate change has made considerable progress,and China has made significant contributions in this.In recent years,China has been the most active country in implementing measures to conserve energy,to reduce emissions,and to compensate their environmental deficits.

In December 1997,the United Nations Framework Convention on Climate Change held its third meeting in Kyoto,Japan.It passed the Kyoto Protocol,aimed to impose limitations on developed countries in their emission of greenhouse gases.According to the Kyoto Protocol,the emission of six types of greenhouse gases,such as carbon dioxide,by developed countries must be reduced by 5.2%in 2010 as compared with 1990.The US refused to accept this agreement,stating that it would hinder the country's economic growth,and complained that the Kyoto Protocol did not include countries like China and India in reducing their emissions.In April 2001 and December 2011 respectively,the US and Canada withdrew from the Kyoto Protocol.Meanwhile,Japan and Russia have grown passive,while the leadership of the European Union in managing global climate change has weakened.

Objectively speaking,developed countries are willing to bear responsibility for their“luxury emissions".However,they fear that without the cooperation of the newly emerging industrial countries and the developing countries,their effort would be futile.Meanwhile,newly emerging industrial countries that are undergoing“survival emissions"fear that the reduction of emissions would hamper their industrial development.On the other hand,numerous developing countries are concerned about the source of capital and technology needed for emissions reduction,and whether newly emerging and developing economies can really benefit from emissions reduction in fulfillment of their pledges to reduce emissions.Hence without the cooperation of the north and the south,and without considering the development issue of“inclusion",it would be difficult to have fundamental progress in the reduction of emissions.

From the Copenhagen Convention in Denmark in 2009,the Cancun Convention in Mexico in 2010,the Durban Convention in South Africa in 2011,the Doha Convention in Qatar in 2012,and the Warsaw Convention in Poland in 2013,we can see that the pace of solid progress in international cooperation in combating climate change is still labored,and quarrels among representatives from different countries are fierce.But what we can also see is the aspirations of newly emerging economies are adequately expressed.

It is well known that on the basis of the current pattern of global production network and production activities,the role of developing countries like China in the global production chain—processing and assembly—is characterized by low value added and high carbon emissions.However,the large quantities of products are eventually consumed in the developed countries.The principle of“whoever consumes will pay"seems to be more reasonable and fair in the context of emissions reduction.Regarding the carbon emissions in the production process,it is feasible that the tax is levied in the phase of consumption.The“greening"of the production process and the“greening"of the consumption process are both indispensable.China has raised and held onto the principles of“common but differentiated responsibilities"and“affordability of different parties",and this has produced a constructive effect.Indeed,with sincerity,determination and faith,China has projected the image of a responsible great nation.

“Multi-polarization”or“non-polarization"?

Economic globalization suggests that a“unified market"is progressively formed at the global level,and the two“parallel markets"during the cold war between the US and the USSR is gone forever.Today,the economic activities of the various economies are intertwined—there you have me,and I have you,and we are dependent upon each other.This also suggests that the“market game rules"are progressively formed on a global basis.In other words,the general rules and mechanisms that regulate economic activities are established on the global scale.

Under these conditions and in this environment,the benefits derived from a unified market and a unified set of game rules are being allocated on a global scale.Although economic globalization can benefit the participants,yet the scale of benefit is definitely not balanced.The power structure in the global economy led by developed countries is hard to change in the short term.

The weighting of developing countries in the world economy is still much lower than the developed countries.If the developing countries wish to play a key role in the development of the world economy,they still need to go a long way in gathering strength.The contrasts in economic strength on a global scale have not seen any dramatic reversal,and the transfer of the role of global economic hub from Europe and the US to the Asia Pacific will be a long process.

From the perspective of the distribution of world needs,there are about 7.3 billion people in the world today.China and India make up 2.6 billion,and they spend about US$6,000 billion a year.China has 1.3 billion people,and their total spending amounts to about US$4,700 billion.On the other hand,the US population is only slightly over 300 million,yet their annual spending amounts to US$11,000 billion.So it is clear which country is a bigger pillar of the world economy.

Under the circumstances where the supply is greater than the demand in the overall world economy,trade deficit is a manifestation of strength.The US takes advantage of its international credit reputation and provides spending credit through issuing excessive currency,to directly pay for imports,maintaining its status of being the final realizer and absorber in the global commodities market.

From the perspective of the new round of global growth points and innovation drivers,there is still a lot of uncertainty in the slow recovery of the global economy since the financial crisis in 2008.

Although the demands and innovations that are needed to drive the next round of rapid growth are still unclear,yet when we look at the Nobel laureates over the years,or where most of the applied technologies originate,we may come to the conclusion that the innovations that will lead the next round of rapid growth will probably come from the US.Meanwhile,new energy sources may be the area where the first breakthroughs will occur.

If we look back on the many results in the realm of high technology in the 20th century—from the semiconductors in the 1950s,the microcomputers in the 1970s and the biotechnologies in the 1980s to the IT industry in the 1990s,we can see that all of them were actively driven by the US,with the technologies transferred into the industries,creating huge economic benefits.

The multi-level financial markets provide a diversified range of financing and exit paths for various kinds of investors.Coupled with the socialization and internationalization of risk,the US is commanding a firm grip on the ability to be proactive in the international division of labor,and the peak point of command in international competition.

Since the beginning of the 21st century,the US has been skilled at using innovation to enhance the added value of its products and services.The source of value is the intellect,and the vessel for value is the intangible products.

There is much room for development when it comes to the value that can be carried by this kind of innovation,and the speed of innovation is far faster than the pace of improvement in the process of producing tangible products.Meanwhile,the risk of invisible waste and inventory depreciation is transferred to the newly emerging economies in East Asia,including China.The economy of apps and mobile wireless terminal businesses,boosted by Facebook,Google and Apple,has become popular in the US and other countries.The apps industry in the US alone has employed over 300,000 staff members,and the related games and virtual products have taken overseas markets by storm.

When it comes to the pattern of distributing benefits,whether in respect of the core businesses of key technologies as well as high-end spares and parts,or in product standards,business regulations and the global realization of the ultimate values,it remains in the hands of the major developed countries.They use standards to integrate the global resources,forming a pattern of global production,distribution and interchange.

Developing countries like China mainly engage in the processing and assembly of products,and have yet to acquire an advantageous position in the key sections of the production chain,or to have control of the direction of flow of the global key resources,essential factors and the manufacture of products.

Generally speaking,if the time required for raw materials to be made into products and then delivered to the hands of the consumers is 100%,then the production time accounts for not more than 10%,while the remaining 90%is spent in the realm of logistics.

We know that developed countries command control of the research and development as well as the logistics,thereby reaping huge benefits.The US business giant Walmart has for many years topped the list of“Global 500"companies,and this is worth contemplating on.At the end of the first decade of the 21st century,Walmart has opened 358 shopping arcades in 133 cities in 21 provinces in China,and 80%of the shopping arcades are situated in cities outside the top tier cities.In 2014,Walmart planned to open 30 new shopping arcades in China,and invest RMB 580 million in upgrading about 55 outlets,in order to enhance the customers'shopping experience and the operational performance of the shopping arcades.

Although China has grown up,yet basically it is still a developing country.And there is still a wide gap between China's total GDP and GDP per capita in the global ranking list.China's per capita economic strength is far behind the developed countries,and its per capita GDP is less than one quarter of that of the US,and is ranked around 90th in the world.Even in terms of total economy,China is just slightly over one half of that of the US or the European Union,and the World Bank and IMF still categorize China as a middle-income country.

In terms of the productivity,self-dependent innovation and financial standard,China is still significantly lagging behind the advanced countries.

Jr.Charles Wolf,Senior Researcher at the Hoover Research Institute at Stanford University,stated that the decline of the US in certain indicators only signifies a relative decline.In certain realms that are hard to evaluate by data, such as systemic factors related to boosting the innovative spirit,as well as areas like culture,proprietary rights and law,the US is still commanding an advantage that is hard to match by other countries.

It took about 100 years for the US to overtake Britain as the world's number one economy,and it took Japan 30 years after the Second World War to rise from the ruins and rise to the status of the world number two economy.

China's total economy may overtake the US in the coming 15 years,and in recent years it has been“made"first in various areas.According to data published by the International Monetary Fund in October 2014,in terms of purchasing power parity(PPP),China's GDP in 2014 will reach US$17,600 billion,exceeding that of the US.However,in terms of market exchange rate,China's GDP in 2014 will be only US$10,400,far behind the US's US$17,400.However,although the significance of the GDP is extraordinary,yet it does not signify that China has overtaken the US in overall national strength,nor does it suggest the end of the international economic order and global scene led by US.As for fast dialing the super clock of China's total economy forward,it means the support of the RMB exchange rate and other political and economic issues,and we must have a clear mind around this(see Figure 1.2). nTC8sONrgCJ4dVOEBPIqGqK7K8b5KzsTV/YUQY5wYyR4dMipUBPEHZ/RbCKmh08A