Confronting the current global economic crisis

"Emancipate the mind, seek truth from facts and unite as one in looking to the future."  

Title of Deng Xiaoping’s speech, December 13, 1978.

The economic crisis in US financial markets, which began in 2007, has threatened stability, generated considerable obstacles to international economic development and worsened during 2008. Across the globe, the specter of a "Great Recession" threatens to destroy confidence in the very foundations of the global economy. A new situation with an imposing set of problems, it is causing concern and increasing tensions in industrialized nations and is a formidable challenge to those which are still developing.

Based on modern science and technology, the industrial society’s development during the second half of the 20th century, led to the rapid growth of the global economy and gave rise to the phenomenon of economic and financial globalization. That growth also led to the end of the Cold War and the subsequent emergence of four enormous markets: Brazil, Russia, India and China. This deeply transformed the world’s economics and politics. Continued economic development, now threatened by the global financial crisis, is not only of vital interest to these countries, but also to developing countries.

Ever since it began reforming and opening itself up 30 years ago, China has been, and remains, at the forefront of this process of global expansion of production capacity: its immense influence on manufacturing, combined with its huge workforce, has sustained global economic growth on an unprecedented scale. At the other end of the process, Brazil has flooded the world with its raw materials and basic foodstuffs. In much the same way, Russia (as a major energy power) and India (as a large industrial power), have followed in China’s footsteps. These four countries must continue to grow along with the world market, due to the economic slowdown as a result of a major recession in the United States and the European Union which poses serious obstacles to their continued development.

These problems, which threaten the world’s economies, should be approached with an open mind which is focused on the successful experiences, in order to accelerate economic development. Given the fact that contradictions in the current economic policies of industrialized societies, and/or in the industrialization process, point to a sharp contraction of the economic process with repercussions on production and consumption in every economy, it is imperative to make an adjustment in order to shift towards domestic markets and the strengthening of same.

The Third Plenary of the Seventeenth Central Committee of the Chinese Communist Party, which ended a few weeks ago, seemed to indicate this very shift. Having begun rural property reform aimed at doubling rural incomes, China aims to expand domestic markets via new incentives for innovation and economic openness. If this strategy succeeds, and if other economic measures neutralize threats to the dynamic growth of the Chinese economy, China will have made a very strong and positive contribution to the effort to combat the global financial crisis.