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Economics and Business Exchange Supported by Deloitte.

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.

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Economics and Business Exchange Supported by Deloitte.

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  1. Economics and Business ExchangeSupported by Deloitte.

  2. 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

  3. What constitutes a superpower • China’s emergence: An awakened dragon • China may fail？Constraints & challenges • Hu-Wen Policies • Possible scenarios of evolution

  4. 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, controlledcorruption

  5. 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

  6. Table 1 Key indicators of world powers, 1981-2004

  7. Figure 1 FDI inflows into China 1979-2004

  8. 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

  9. 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

  10. Y Yft Ydt Yf0 Yd0 PFA PFB Foreign technologies to serve China (yang wei zhong young, 洋为中用) Walking with Two Legs for S&T (liangtiao tui zou lu，两条腿走路) Figure 2 Technological progress and FDI

  11. 4. China may fail? Constraints and challenges • High growth but low quality • Unfairness, injustice, inequality, corruption • Insecurity of citizens: social unrest • health, education and social security • Stickiness of poverty • Politics and democracy

  12. 5. Hu-Wen new strategies • Reducing inequality • Improving growth quality • Fighting corruption • Fighting poverty • Protecting environment • Building a harmonious society

  13. 6. Possible scenarios of evolution • 6.1 Most pessimistic scenario • Hu-Wen policies do not work • Slow growth – high unemployment • Corruption unchecked – social unrest • Banking reform fails – financial crisis • Unstable, highly polarised, stagnant society

  14. 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

  15. 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

  16. Economics and Business ExchangeSupported by Deloitte.

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