EVENT: China’s Economy After the Party Congress
Michael Pettis will be joined by Carnegie’s vice president for studies Douglas H. Paal to address economic factors challenging China and the new leadership that will emerge from the congress. Watch live on Monday, October 2.
More work from China Financial Markets
Which Country Should Design U.S. Industrial Policy?The decision Americans must make about industrial policy is whether policies that drive the nature and direction of the U.S. economy should be designed at home or abroad by its trade partners. In a hyperglobalized world, trade and industrial policies in one country are transmitted through trade imbalances into their obverse among that country’s trade partners.
Can Trade Intervention Lead to Freer Trade?A well-functioning trading regime would permit neither the large, persistent trade imbalances that characterize the current global trading system nor the perverse flow of capital from developing economies to advanced economies. Global trade needs new rules that encourage a return to the benefits of free trade and comparative advantage.
What Will It Take for China’s GDP to Grow at 4–5 Percent Over the Next Decade?If China’s GDP is to continue growing at 4–5 percent for the next decade, either other major economies must be willing to reduce their economies’ investment and manufacturing shares to accommodate China or China must establish policies that cause the locus of growth to shift from investment to domestic consumption. Neither is easy, and the former is very unlikely.
Rising U.S. Debt Is the Mirror of Rising Chinese DebtBoth Washington and Beijing treat rising debt as a consequence of irresponsible behavior by local institutions. But in China and the United States, rising debt is spurred by policies that have encouraged distortions in the distribution of domestic income. Until these distortions are addressed, both countries must choose between rising debt and rising unemployment.
Can China’s Long-Term Growth Rate Exceed 2–3 Percent?Beijing’s economic policymakers largely accept that China must rebalance its economy so that growth is driven more by domestic consumption and less by investment. But once China begins to take seriously the need to rebalance its economy, China’s annual GDP growth is unlikely to exceed 2–3 percent for many years, unless there is a substantial increase in the growth rate of consumption.
