Prospects for the Global Economy in 2013

{
  "authors": [
    "Yukon Huang"
  ],
  "type": "legacyinthemedia",
  "centerAffiliationAll": "dc",
  "centers": [
    "Carnegie Endowment for International Peace"
  ],
  "collections": [],
  "englishNewsletterAll": "asia",
  "nonEnglishNewsletterAll": "",
  "primaryCenter": "Carnegie Endowment for International Peace",
  "programAffiliation": "AP",
  "programs": [
    "Asia"
  ],
  "projects": [],
  "regions": [
    "East Asia",
    "China"
  ],
  "topics": [
    "Economy"
  ]
}

In The Media

Prospects for the Global Economy in 2013

Even as the currency war between China and the United States recedes, the battle over foreign investment and technology transfer policies will continue to escalate in the coming months.

By Yukon Huang

Published on Dec 27, 2012

Source: Council on Foreign Relations

The upcoming year will mark the turning point when 8 percent growth in China is viewed as a welcome norm rather than a disappointment. It will also signal when tensions between the United States and China shifted from recriminations over the value of the renminbi to the barriers inhibiting foreign investment.

Over the past year, markets were fixated on China's economic slowdown given the unrealistic hope that continued double-digit growth might compensate for the problems afflicting the OECD economies. But slower growth will be good for China if it represents a more sustainable path. As a maturing economy, quality rather than quantity of growth is what now matters.

With slackened import demand in the United States and Europe, China's already much reduced trade surplus will continue to decline. The renminbi is no longer significantly out of line, although the United States will probably be the last to acknowledge the new reality.

Currency wars will recede as the source of tension for the two countries, but circumstances will push them to battle over foreign investment and technology transfer policies. This is evident in the recent outcries over security risks as Chinese firms seek greater access to the U.S. market and U.S. firms are pressured to share valuable technologies as the price for accessing China's market.

China is the center of an Asian production sharing network that brings in components from other countries for assembly with export of the final product to the West. But these are low paying assembly jobs, and the priority now is to develop more sophisticated product lines that can generate the better paying positions needed to sustain rapid growth.

Beijing believes that this needs to come through development of "indigenous" technology, as was the case with South Korea and Taiwan. This involves securing the technological expertise either from abroad or developing it locally with or without the involvement of foreign partners. Thus tensions over technology transfer and respect for intellectual property rights will likely dominate discussions between the United States and China this coming year even as the rhetoric over exchange rates moderates.

This piece was originally published by the Council on Foreign Relations.

About the Author

Yukon Huang

Senior Fellow, Asia Program

Huang is a senior fellow in the Carnegie Asia Program where his research focuses on China’s economy and its regional and global impact.

Recent Work

Commentary
Three Takeaways From the Biden-Xi Meeting
- Yukon Huang, Isaac B. Kardon, Matt Sheehan
Commentary
Europe Narrowly Navigates De-risking Between Washington and Beijing
- Yukon Huang, Genevieve Slosberg

Economy East Asia China

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

More Work from Malcolm H. Kerr Carnegie Middle East Center

Commentary
Diwan
On AI, Cairo Plays China and the U.S. Off Against Each Other
Huawei pushed hard to enter the Egyptian data centers market, until the Americans made a better offer.
Angie Omar
Paper
Egypt’s Military Landlord Economy and its Limitations
The armed forces champion a form of capitalism that is generating revenue, but its reliance on rent faces diminishing returns, leaving the country with massive sunk costs and deferred returns, deepening dependency on external borrowing.
Yezid Sayigh
Commentary
Diwan
Unpacking Lebanon’s Gap Law
In an interview, Ishac Diwan looks at the merits and flaws in the draft legislation distributing losses from the financial collapse.
Michael Young
Commentary
Diwan
Has Sisi Found a Competent Military Entrepreneur?
Mustaqbal Misr has expanded its portfolio with remarkable speed, but a lack of transparency remains.
Yezid Sayigh
Research
Arab Diaspora Business Communities in Egypt
Arab diaspora business communities in Egypt often mirror the same systemic challenges facing Egyptian businesses.
+4
Nur Arafeh, Yezid Sayigh, Qaboul al-Absi, …

More Work from Malcolm H. Kerr Carnegie Middle East Center

Commentary

Diwan

On AI, Cairo Plays China and the U.S. Off Against Each Other

Huawei pushed hard to enter the Egyptian data centers market, until the Americans made a better offer.

Angie Omar

Paper

Egypt’s Military Landlord Economy and its Limitations

The armed forces champion a form of capitalism that is generating revenue, but its reliance on rent faces diminishing returns, leaving the country with massive sunk costs and deferred returns, deepening dependency on external borrowing.