China's future is everyone's future

At the same time, many people in the West who live outside the major cities have seen their purchasing power stand still, or even shrink. Huge change affects our interconnected world, but our minds cannot change at the same speed. Most Westerners do not understand the dimension of the change in China since 1980, let alone since 2000. They still rely on the perceptions they learned when they were growing up.

The reaction to China's currency announcement did not just reflect China's importance to the rest of the world. It showed the Western lack of comprehension of China's development, and what it means for them. Most people in 1980 would have been apprehensive about the effects of a modernizing China on the rest of the world, and would have agreed with Napoleon's famous saying: "Let China sleep, for when she wakes, the world will tremble".

But the joining of China's huge labor force to the global economy starting in the 1990s, which brought much lower prices for everyday manufactured goods, and 10 years later, the massive increase in Chinese demand for commodities that provided huge windfalls for resource-rich countries like Australia, Brazil, Chile and South Africa, have meant that China's emergence has brought much more good than bad to the rest of the world. And, of course, these two big trends have had a huge impact on the global economy.

Now that the Chinese government has taken the advice of its own (and other) think-tanks, and is conducting a fundamental economic structural overhaul of the world's second-largest economy to ensure its economic and environmental sustainability, its relationship with the developed world has to change.

China can't carry the burden of world economic growth in the way it did in the 2000s, especially after the 2008 financial crisis, when the US and the rest of the developed West crashed into recession.

It has to take time out to repair and renovate its institutions and remodel its economy.

The global impact of this "time-out" will have some negative aspects, in the short to medium term. Moving from a managed to a market-led Chinese economy will take a number of years, and is bound to bring more economic and financial volatility and uncertainty. Change, which destroys the old in order to create the new, involves uncertainty and loss, in the same way that autumn gales and winter snow destroy old trees before giving way to spring flowers and summer sun.

The real meaning of the events of August in the financial markets is to demonstrate that China's future is everyone's future, because in our inter-connected world, China has become a part of us, and we are a part of it. Today's challenge is to transcend our separate systems of thought and culture so as to better understand and appreciate each other, not just experience each other. The level of mutual understanding between China and its neighbors in the world must improve to the point that people everywhere can understand China's essentially peaceful aims and support its development goals, as a way of furthering their own well-being and prosperity.

China's economic and social transformation is still at an early stage. It has a long way to run before the Chinese can feel that they are living up to the greatness of their Tang and Han ancestors, and are realizing their full potential as one of the world's largest and most culturally significant nations. In order for that to happen, the rest of the world has to reach a level of understanding about China, not evident at present, which will permit this large country to achieve its possibilities, and permit us to share China's stability and prosperity.

The author is a visiting professor at Guanghua School of Management, Peking University. The views do not necessarily reflect those of China Daily.