Workshop on China and the World Economy

The Workshop on China and the World Economy, sponsored by the Atlantic Council and the Bureau of Intelligence and Research, U.S. Department of State, convened Dec. 7, 2005, and January 9, 2006, at The Atlantic Council.  The workshops brought senior scholars, economists, policymakers and analysts together to discuss developments in China’s economy and the impact of these developments on the regional and global economies.  Participants also investigated the potential for changes in China’s diplomacy and international behavior based on China’s growing economic power and role in the global economy.

The conference was chaired by Franklin D. Kramer, chairman of the Atlantic Council’s Committee on Asia and Global Security.  Robert A. Kapp, of Robert A. Kapp & Associates, Inc., served as rapporteur.  Robert Kapp’s report from the extensive workshop can be downloaded here:

Workshop papers include:

Joseph Fewsmith – Hu Jintao’s Outbox

Fewsmith concludes that the challenges facing the party/state – including corruption, social disorder, and dissent in various forms – may yet overwhelm the system, but it seems far more likely that for at least the foreseeable future that the government will continue a process of adaptation that will support China’s continued progress towards globalization and a market economy.

Harry Harding –­ What Could Go Wrong?

Harding applies political risk analysis methodology to explore China’s vulnerability to crises, including economic, humanitarian, environmental, and political disasters, and concludes that China is most vulnerable at present to humanitarian crises produced by environmental degradation or communicable disease.

Albert Keidel – China Succeeding Beyond Expectations

Keidel contends that if sustaining nine-percent growth to 2010 means that China has launched on-going reforms that will continue to engineer institutional changes needed for a market economy’s successful commercial and political management, then the resulting successful development trajectory in the rest of the century will generate profound and, from today’s perspective, unexpected consequences.

Arthur R. Kroeber – China as Employer and Consumer: Economic Outlook for the 11th Five-Year Plan (2006-2010)

In Kroeber’s assessment, the inertia of the current investment- and export-led growth model, combined with demographic factors that favor continued high rates of investment in labor-intensive industry and urban infrastructure, suggest that the structure of Chinese economic growth will remain more or less the same over the next five years. Beginning in 2010, however, a combination of financial sector and (perhaps) fiscal reforms will enable consumption to play a larger role, and beginning in or around 2015 consumption will be further boosted by China’s attaining a level of wealth that in other countries has proved to be the take-off point for

consumer spending.

Kenneth Lieberthal – China as Consumer

Lieberthal argues that regardless of GDP growth projections for China, or the ups and downs of a business cycle, the fundamental underlying processes of urbanization and ameliorating environmental deterioration will inevitably create huge and persistent demand over the next five to ten years, with high rates of investment in infrastructure projects and as well as of consumption of materials and services.

Edward J. Lincoln – Comments on China as a Regional Player

Lincoln maintains that most countries in the region will continue to look at China’s economic success as primarily an opportunity rather than a threat and that if the United States is concerned about the direction that East Asian economic integration, it should reinvigorate the Asia Pacific Economic Cooperation process since APEC is the only regional economic arrangement

that includes the U.S. government.

Thomas Rawski – China as Producer: Chinese Industry After 25 Years of Reform

Rawski concludes that mutual interaction among streams of innovation, reinforced by continuing official efforts to promote institutional reform, point to continued rapid development of Chinese manufacturing capabilities, with market-induced upgrading and enlarged international competitiveness spreading to a growing array of industries and geographic regions and that the competitive mechanisms driving recent advances in manufacturing capabilities are a permanent structural change will survive any cyclical fluctuations.