No. 32 | China Poised for a Prominent Future
The 32nd Tsinghua University Forum of China and World Economy, organized by Tsinghua University Center for China in the World Economy (CCWE), was held on the evening of June 21, 2017. With the theme “Breaking Through While Maintaining Stability”, CCWE brought together distinguished experts and scholars from relevant fields, including: Liu Yuanchun (Vice-President of Renmin University); Xu Shanda (former Deputy head of China’s State Administration of Taxation); Shi Yinhong (Dean of the School of International Studies, Renmin University); Lei Dingming (Professor at the School of Economics, Hong Kong University of Science and Technology); He Maochun (Professor at the School of International Relations, Tsinghua University); Timothy Stratford (Managing Partner in Covington & Burling LLP’s Beijing office); and Yuan Gangming (Research Fellow, CCWE). The Forum was moderated by David Daokui Li, Director of CCWE.
David Li began the event by introducing the contents of CCWE’s newest macro-economy forecast report. David Li believes that China is poised for a golden opportunity of economic recovery and development after experiencing years of a decline in growth rate. Domestically, steady investments have been secured, total consumption is on the rise, and an overheated financial market has been cooled off, while the rate of monetary growth has slowed down. Internationally, despite the uncertainty of Donald Trump and trans-Atlantic Alliance, the U.S. economy looks steady as both Europe and Japan are on course of recovery. As a result, China’s real-economy is likely to again see an increase in growth rate once the new official assume their new positions after the 19th CPC National Congress.
According to the report, China’s growth in the economy, investment, consumption, exports and imports will reach 6.7%, 8.4%, 10.5%, 5.0% and 6.6%, respectively, in 2017. On the other hand, CPI and PPI will see a year-on-year growth of 1.6% and 5.0%, while the RMB exchange rate to the USD will remain at 6.8. It further suggested that China’s overall economic growth will pick up to 6.9% in 2018.
During the panel discussion segment of the event, Liu Yuanchun said that China’s economic development will be steady following a promising start in 2017. The biggest concern for China is that the last couple have seen risk in debt issue, real-estate, private investment and the world economy. China will not achieve a strong recovery until the end of 2018 and the start of 2019.
Yuan Gangming insisted that the rise in housing price was behind China’s economic recovery last year since PPI and industrial profits also picked up thanks to the boom of relevant industries. Therefore, it is rather groundless to say that China’s overall economy is improving.
Xu Shanda thought that Donald Trump has been doing a good job in attracting foreign investment but his trade policies might put pressure on both China’s imports and exports. Both sides need a new round of negotiations, but Sino-US relations has a rather bright future.
Shi Yinhong said that North Korea might eventually possess nuclear missiles and force both China and the U.S. to acknowledge that. It appears that China, the U.S. and South Korea have all failed in preventing Kim Jong-un from possessing weapons of mass destruction.
He Maochun believes that risks for the “Belt and Road” initiative vary from place to place as progress the in Eurasian region is being made while projects on the Pakistan side remained rather unsafe. However, he is quite optimistic about future of China’s investment in Africa as high returns comes from high risks.
Lei Dingming thinks that the world economy is at a stalemate thanks to uncertainty of the European welfare system and the U.S. economy. In term of the “Belt and Road” initiative, he believes that short-term success is rather unrealistic.
Timothy Stratford said that there are vacant positions at top levels in the U.S. government and that Donald Trump himself, even to his team members, remains highly unpredictable. Although Sino-US relations is still in its honeymoon period, the North Korea issue could become tricky and risky for both sides if the partnership goes sour.
During the Q&A session, students, audiences and media members raised questions ranging from the “Belt & Road” initiative and new colonialism, potential U.S. involvement in AIIB, and the future of Sino-Korea trade relations.
