Stuart Simpson: We should welcome China's growth, not fear it

Goldman Sachs forecast that by 2050, out of the current G7 nations, only the United States and Japan will be among the world's six largest economies in US dollar terms – and the largest economy will be China, not the United States. The exact date on which China replaces the US as the world's largest economy is uncertain, but barring a major catastrophe it will happen at some point before the middle of the century. China, it seems, is set to be a superpower.

There is much hype and hysteria about this fact. But we need calm heads to see what is really exciting about China's economic miracle. We need to clearly understand the economic reality in the here-and-now compared with what it could be in the future.

China can surpass the rates of growth seen in the developed world not because it is an economic leader but precisely because it is not an economic leader. China and other emerging economies are in the early stages of a history-making "catch-up" with the developed world. It is the "catch-up" effect that is providing such high rates of economic growth.

The initial move of populations from rural poverty to urban squalor generates massive growth rates, as does the shift from urban squalor to "middle-class" suburbs (in China's case "middle-class" means having an income of $3,000 or more). The ability of peasants to move to a city and find employment in a factory that is competing in the mass production of textiles is an enormous step. While it took the economies of the developed world decades – if not centuries – to make the transition from rural economies to industrial societies, it takes only a train ride in China. This "catch-up" has been miraculous indeed, but it is only "catch-up". The really tantalising question is what happens when China has caught up and moves, in the words of the recent Commission on Growth and Development, from learning to inventing, from being behind to leading.

In our clamour to predict "all change", we should not ignore the particular problems that face the world's largest developing nations. For the foreseeable future, China's focus will be on the myriad problems and challenges that rapid development and continued poverty bring.

The West's fear and awe of China's rapid economic growth should not become yet another unnecessary problem that confronts China in its attempt to emerge as a modern economy. Instead, should we not celebrate China's continued rapid growth – after all not only will this mean many Chinese people will attain lifestyles their parents could only dream of, but it could also unleash an inventive power to change all our lives?

Stuart Simpson is convenor of the Emerging Economies' Forum at the Institute of Ideas. This is an edited version of the introduction to a debate on China at the international legal practice Norton Rose LLP