As China’s 19th Party Congress approached, Carnegie scholars discussed the economic fundamentals that challenge China and the new leadership that will emerge from it.
China’s increasingly sophisticated approach to managing and mitigating multiple forms of investment risk shows that its economic role around the world will evolve and perhaps become more conservative over time. Headline pledges of billions of dollars in project finance don’t tell the whole story.
Conventional wisdom about China’s economic problems, such as debt, growth, and trade, can often be wrong due to the lack of an appropriate framework for analysis.
There are a number of common contradictions in mainstream understanding of China’s economy.
The original conception of BRICS, to bring together the world’s most important emerging markets, may have become obsolete, destined to be replaced by ChIPs: China and India Plus.
If local governments and state-owned enterprises in China systematically invest in projects that are not economically justified, to the extent that these projects are not correctly marked to market, China’s reported GDP will be overstated by that amount, as will its total wealth.
China’s development of strategic technologies is increasingly drawing attention from its economic partners. Observers and non-Chinese firms need to understand that China’s interest in strategic technologies has long been a central part of the Chinese policy landscape.
Very large persistent surpluses and deficits are almost always the result of distorted policies in one or more countries.
Beijing seems certain to continue using economic leverage for political and strategic ends, but blunt coercion isn’t likely to become routine. It is a tool in an increasingly diverse toolkit.
Political sensitivities, security concerns, and industrial structure direct the flow of investments.