Transcript Slide 1

Economics and Business
Exchange
Supported by Deloitte.
Can China Really Become
the Next Superpower?
Professor Shujie Yao
China Policy Institute
Leverhulme Centre of Globalisation & Economic Policy
University of Nottingham
Nottingham NG7 2RD
E-mail: Shujie.yao@nottingham
 What constitutes a superpower

China’s emergence: An awakened dragon

China may fail？Constraints & challenges

Hu-Wen Policies

Possible scenarios of evolution
What constitutes a superpower
•
Absolute size
•
Per capita income and entitlement
•
Justice and fairness
•
Science, technology and human capital
•
Military strength and foreign diplomacy
•
Democracy, freedom, controlled corruption
3. China’s emergence: an awakened dragon
3.1 What has China achieved in 30 years of reforms?
•
Fast growth for a prolonged period (Table 1)
•
Enormous improvement of people’s living standards
•
World’s largest producer/consumer of key A&I products
•
World’s third largest trading nation
•
World’s largest/second largest recipient of FDI (Fig 1)
•
Growth engine of the world economy
•
Significant political influence after the cold war
Table 1 Key indicators of world powers, 1981-2004
US
Japan
Germany
UK
China
India
Russia
Total GDP and trade volume 2004 (trillion US dollars)
GDP
Trade
11.7
2.34
4.6
1.02
2.7
1.63
2.1
0.81
1.6
1.15
0.7
0.17
0.6
0.28
GDP annual growth rate %
1970-81
2.9
4.5
2.6
1.7
5.5
3.6
n/a
1980-90
3.4
4.1
2.1
3.1
9.5
5.3
n/a
1990-00
3.4
1.3
1.5
2.5
10.3
6.0
-4.8
2000-04
2.6
1.3
0.5
2.2
8.7
6.2
6.1
GDP as % of the US’s
1981
100.0
39
24
17
9
5
n.a.
2004
100.0
40
23
18
14
6
5
FDI inflows into China 1979-2004
Figure 1
70
60
50
40
30
20
10
0
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
19
86
19
85
19
84
79
3.2 Why China succeeds?
•
Institutional reform
White-Black Cat Theory:
changing plan to market
Touching Stones to Cross Rivers Theory:
gradualism, experiment, timing, scale
•
Development strategies
Export-push vis-à-vis import substitution
Globalization vis-à-vis close-door
• Development theories
From SPOT to AREA (yi dian dai mian, 以点带面)
Figure 2 Economic growth and linkage to a growth centre
Growth
centre
DA < Dmin
A
DB > Dmin
B
Foreign technologies to serve China
(yang wei zhong young, 洋为中用)
Walking with Two Legs for S&T
(liang tiao tui zou lu，两条腿走路)
Figure 2 Technological progress and FDI
Y
Yft
Ydt
Yf0
Yd0
PFA
PFB
4. China may fail? Constraints and challenges
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High growth but low quality
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Unfairness, injustice, inequality, corruption
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Insecurity of citizens: social unrest
health, education and social security
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Stickiness of poverty
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Politics and democracy
5. Hu-Wen new strategies
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Reducing inequality
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Improving growth quality
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Fighting corruption
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Fighting poverty
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Protecting environment
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Building a harmonious society
6. Possible scenarios of evolution
6.1 Most pessimistic scenario
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Hu-Wen policies do not work
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Slow growth – high unemployment
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Corruption unchecked – social unrest
•
Banking reform fails – financial crisis
•
Unstable, highly polarised, stagnant society
6.2
Medium scenario
• Hu-Wen policies work reasonably well
• High growth – low quality
• Rising inequality
• Corruption partially controlled
• People unhappy, but the country is stable
• Similar to the present situation
6.3 Most optimistic scenario
• Hu-Wen policies work extremely well
• High growth – high quality
• Reduction of inequality
• Reduction of poverty
• Fuller employment
• Sustainable growth with high security
• China becomes a real superpower in 30 years
Economics and Business
Exchange
Supported by Deloitte.