Research Highlights

Is China's economy poised for continued growth? Or are internal factors - and tariffs - standing in the way.

The Impact of China's Rise on the Pacific and the WorldThe ongoing U.S.–China trade spat has heightened focus on the world's second largest economy, revealing internal weaknesses—including rising debt, a lack of consumer confidence, and growing income inequality—that may be impeding its growth.

But does the recent concentration of power around leader Xi Jinping, which includes tighter societal controls and adopting policies driven by Xi’s distrust of private markets, offer China a path forward for sustained double-digit growth? China-watchers say that for such growth to occur will require a successful transition from a centralized economy to one more market-driven, and from one dominated by manufacturing and exports to one driven by services and consumption. And will China use its growing political influence, backed by a modernized military, to destabilize existing regimes? A group of China experts weigh in on these issues in a new book from the Upjohn Press. The Impacts of China’s Rise on the Pacific and the World, Wei-Chiao Huang and Huizhong Zhou, editors, offers an in-depth look at key internal factors influencing China’s economy as well as factors that will impact the U.S.-China relationship for years to come. Included are:

  • Introduction, by Wei-Chiao Huang and Huizhong Zhou.

  • The United States and the China Challenge, by Murray Scot Tanner. Tanner addresses five underlying factors in the U.S.-China relationship that pose challenges for the U.S.: 1) China’s expanding national interests and its increasing power to protect them, 2) China’s governance problems and its unwillingness to cooperate, 3) China’s view of security and the complexity of building U.S-Chinese “strategic trust,” 4) mobilizing the U.S.’s allies and partners, and 5) China’s internal challenges.

  • Is There a Xi Jinping Model of Economic Reform?, by Barry Naughton. Naughton gives a timely assessment of the prospects of the Chinese economy under Xi Jingping, and why Xi’s model for the economy may fail.

  • Understanding the Major Threats to China’s Economic Growth, by Wing Thye Woo. Woo points to three types of failures that, he says, will interrupt China’s growth: 1) a breakdown of economic mechanisms spurred by state banks’ solvency and the central government’s fiscal health, 2) flaws in governance that lead to frequent events of social disorder, and 3) hitting some sort of natural or externally imposed limit.

  • State Enterprise Reform in China: Grasp or Release, by Mary E. Lovely and Yang Liang. Lovely and Liang examine firms that were retained by the Chinese state and those that were released to the private sector between 1998 and 2006. This allows them to estimate the size of the state sector and to identify the characteristics of firms that made them more likely to be retained by the state.

  • Why Exit Rights Are the Key to the Reduction of Urban-Rural Income Disparity in China, by Guanzhong James Wen. Wen points out that, despite China’s dynamic economic growth, income inequality remains among the worst of all East Asian nations. To help correct this he calls for reforms to China’s land tenure and hukou (family registration) systems.

  • Trade, Migration, and Growth: Evidence from China, by Xiaodong Zhu. Zhu provides convincing evidence of the benefits of reducing restrictions on movements of goods and people in an economy, using China’s experience between 2000 and 2005 as a case study.

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Research Highlights

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            Contact: Justin Carinci