Outlook on the U.S.- China Economic Relationship
NBR, the Henry M. Jackson Foundation, and the Jackson School of International Studies at the University of Washington co-presented the event “Outlook on the U.S.-China Economic Relationship” on November 10, 2010. The panel discussion examined what drives China’s economic growth: How can China’s growth be sustained? How will it be affected by China’s upcoming leadership transition? How can the United States demonstrate effective leadership in such a complex relationship, especially in relation to the ongoing U.S.-China Strategic and Economic Dialogue?
Welcome remarks and introductions were given by Resat Kasaba (The Jackson School of International Studies, University of Washington), Michael Wills (The National Bureau of Asian Research), and panel moderator John W. Hempelmann (Henry M. Jackson Foundation). Watch video of the full event, download audio from each presentation, or read a summary of the event below.
WELCOME & INTRODUCTIONS
Thomas G. Rawski, Department of Economics, University of Pittsburgh
Minxin Pei, Department of Government, Claremont McKenna College
David Loevinger, Senior Coordinator and Executive Secretary for China and the Strategic & Economic Dialogue, U.S. Department of the Treasury
Panel Q & A
Panelists Thomas Rawski, Minxin Pei, and David Loevinger gave remarks on the current U.S.-China economic relationship.
Thomas Rawski noted that although the Chinese government announced 6% growth following the 2008 financial crisis, in fact China’s economy actually went into recession in the beginning of 2009. Rawski pointed out that China did recover very rapidly due to the application of fiscal and monetary stimulus, and that a deeply flawed political economy can deliver enormous economic benefits despite inefficiencies and other shortcomings like corruption, unemployment, inequality and environmental problems. Rawski warned that China could grow for the next 10-20 years at rates of 6-8% per year without much difficulty, but that a new wave of bad investments will eventually come due.
Minxin Pei reflected that China is no longer a rising power but is a power that has risen, and the challenges today that China is facing are completely different from the problems it faced 20 years ago. Pei described the remarkably open intellectual and political atmosphere of the 1980s, but since then he has seen the Chinese government shift to focusing entirely on economic growth. He remarked that Deng Xiaoping’s pragmatic philosophy has given way to the return of ideological justifications for the regime’s legitimacy as well as support among the country’s political elites for the “China Model” as a successful political and economic strategy for authoritarian regimes. Pei also noted that the current nationalist sentiment in China has led domestic audiences to view the government as internationally weak even as foreign audiences tend to view China as assertive.
David Loevinger remarked that China’s growth is not at the expense of the United States, that both countries’ economies are very complementary, and that China’s rise provides enormous opportunities. It is important though to build relations with all levels of Chinese policymaking—from the government, to think-tanks, to the military, to average citizens, even those in the countryside—in order to overcome powerful forces in both the United States and China that resist change. He also suggested that consumption is important for economic recovery but that Chinese people are unlikely to spend without a stronger safety net, given the uncertainties surrounding necessities like medical care in the post-reform era.
A question-and-answer session followed the presentations, with questions related to the revaluation of the RMB, China’s real estate bubble, environmental tariffs, and U.S. economic policy.
David Loevinger is the Treasury Department’s Senior Coordinator and Executive Secretary for China Affairs and the U.S.-China Strategic & Economic Dialogue. In this role, he leads the U.S. government’s negotiations with the Chinese government on the economic track of the dialogue. Prior to his appointment, he was the U.S. Minister-Counselor for Financial Affairs to the People’s Republic of China. As the Treasury Department’s first permanent representative to China, he was responsible for deepening U.S.-Chinese engagement on financial and macroeconomic issues, including exchange rate policies.
Minxin Pei is the Tom and Margot Pritzker ‘72 Professor of Government and the director of the Keck Center for International and Strategic Studies at Claremont McKenna College. His research focuses on democratization in developing countries, economic reform and governance in China, and U.S.–China relations. He is the author of China’s Trapped Transition: The Limits of Developmental Autocracy (Harvard University Press, 2006) and From Reform to Revolution: The Demise of Communism in China and the Soviet Union (Harvard University Press, 1994).
Thomas Rawskii joined the University of Pittsburgh’s faculty in 1985 after fourteen years at the University of Toronto. His research focuses on the nature and implications of recent developments and long-term changes in the economy of China. His recent work includes editing and contributing to the volume China’s Great Economic Transformation (University of Toronto Press, 2008), and coauthoring China’s Rise and the Balance of Influence in Asia (University of Pittsburgh Press, 2007).