Leader Development & Education for Sustained Peace Program: Cross-Cultural, Geopolitical & Regional Education

Topic Debate: China’s Economy

Background: In mid-July, new data on China’s second quarter indicated that their growth had slumped to the lowest level since the financial crisis in early 2009. The Wall Street Journal’s China Real Time Report provides a recommended in-depth and illustrative analysis.

It is important to note that these are figures complicated by China’s economic opacity. As Kristopher Harrison, senior managing director for a leading provider of macro-economic policy intelligence explains:

“The part that is troubling is that China’s economy is not becoming more transparent. All of their statistics come from a national statistics bureau ultimately beholden to political leadership. The numbers are spartan, and even if the numbers are accurate they are far too broad to dissect an economy as complex as China’s.”

Interestingly, while observers and analysts generally agree on the fiscal figures, interpretations of the recent events are widely ranging: some view this with great optimism and argue that China has prudently and actively succeeded in avoiding the financial problems plaguing many other countries around the world; others say that this is indicative of China’s waning economic prowess and that they are an unreliable proposed champion for the global economic situation. Meanwhile, there is an increasingly dichotomous debate over whether China “poised for more growth or a spectacular crash?”

The Debate: The following articles offer varying perspectives on the debate on the future of China’s economy.

  • Simon Rabinovitch of the Financial Times rather objectively explains that the growth decline is in fact the result of the government   unwinding certain excesses by stifling the pace of investment: “This, many analysts believe, is a good thing. For a fragile world economy, tepid Chinese growth might seem unwelcome but the alternative scenario is more frightening. If Beijing does not induce a mild downturn now, the prospect of a big collapse as bad investments pile up would loom ever larger in a few years.”
  • Minxin Pei, Professor of Government at Claremont Mckenna College, writes in Project Syndicate a rather pessimistic elucidation of the causes behind China’s current economic slowdown, arguing they are “symptomatic of deeper institutional problems.”
  • Matthew O’Brien, associate editor at The Atlantic covering business and economics, offers a more tempered cautionary interpretation saying, “it’s not time to panic but there is room for concern.”
  • On the other hand, Steven Rattner, a long-time Wall Street executive and self-proclaimed “China believer,” rebuts the “drumbeat of negative views about China’s economic prospects” using personal experience and field research carried out within the country during a recent trip. Rattner says, “The people I met were firmly optimistic that the fundamental ‘urge to surge’ remained. If anything, the intervening decline in the Chinese stock market had made them more enthusiastic about investing.”
  • As a visiting professor at Antai College of Economics and Management at Jiao Tong University Shanghai, John Ross is not only optimistic about China’s economic success but argues that it should be used as an “example the world should follow.”
  • Looking more broadly at China’s future, Trevor Moss, a Hong Kong-based journalist and former Asia-Pacific editor at Jane’s Defense Weekly lists “5 signs of the Chinese economic apocalypse in Foreign Policy Magazine,including decreases in business loans, manufacturing output, and imports.
  • Contrary to Ross’s (and others) apocalyptic forecast, David Lundquist, a lecturer of Western philosophy at Tsinghua University in Beijing, presents a more nuanced perspective in which economic analysis gives way to political analysis showing “China Won’t Collapse.”

Why do you think there is such a disparity in the commentary? What do you think will happen to China’s economy?


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1 Response »


  1. China’s Territory Disputes: The Nexus between Economy, Military, and Leadership | LDESP Blog

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