"China's Economy & Trade "
Dr. Pieter P. Bottelier
July 11, 2008
The seminar series continued on July 11 with a discussion of the Chinese economy and China’s trade relations led by Dr. Pieter Bottelier. Dr. Bottelier gave program participants an overview of the unique economic model used by the Chinese leadership to achieve unprecedented growth.
For almost three decades, the People’s Republic of China has enjoyed its status as the fastest-growing major nation with an average annual GDP growth rate above 10 percent. China has the second largest economy in the world after the United States with a GDP of over USD $7 trillion when measured on a purchasing power parity basis. China is expected to overtake Germany as the world’s largest exporter this year and is currently the second largest supplier to the United States after Canada. These figures and projections indicate China’s weight in the global economy is growing and will continue to expand; a recently released study suggests China’s economy will surpass the United States by 2035 and will be twice its size by mid-century. China’s rapid growth today is driven by domestic demand, not exports.
After presenting the policymakers with a general statistical profile of China’s economy, Dr. Bottelier outlined some of the reasons the marketization and reform process was so successful in China, as opposed to the Soviet attempt. Although there is no convenient textbook explanation for the road the Chinese took − in fact, they often made moves that were contrary to western conventional economic wisdom − the most vital instrument to the reform was the role played by the CCP in guiding development. Dr. Bottelier remarked the CCP was both motor and guide to the market reform transformation, and that the party under Deng had “become a completely different animal” from the Maoist structure.
Dr. Bottelier stressed the importance and value of competition within the Chinese economy. He explained competition is a pervasive quality that is an intrinsic part of the Chinese character; therefore, there is little to no collusion between firms, despite perceptions the Chinese corporate landscape is comprised of state-owned enterprises.
With regard to the Chinese financial system, Dr. Bottelier explained that although China receives a substantial amount of FDI, the bulk of the investment resources have been provided domestically. China has an incredibly high savings rate (about 50 percent) as compared to other large economies. Not only does China have enough capital saved to invest domestically, there is also enough to export to other areas of the world.
Dr. Bottelier concluded by discussing the vital interactions that take place between the Chinese political and economic sectors. He strongly emphasized the role those individuals in leadership positions have played in China’s economic success. He remarked that the high quality of China’s leaders − all of whom are extremely well prepared to execute the roles that they hold − governmental consistency and general political stability have all been vital ingredients to China’s economic success.
The government has used its resources well, and the long-term planning and development of a strong infrastructure are allowing the continuation of Chinese growth. To illustrate this point, Dr. Bottelier cited the Chinese port system as an example. Despite being the busiest port system in the world and experiencing a significant increase in annual flow, the Chinese ports still enjoy 20 percent spare capacity.
As a result of China’s economic growth and expansion, the Chinese people have confidence in their government. In the most recent Pugh survey, 82 percent of Chinese believe their government is “doing the right thing,” revealing the Chinese people to be the most optimistic in the world.
Links to additional Policymakers pages:
Return to Lectures Page
Policymakers Program Home
2008 Program Overview
2007 Program Summary
Policymakers Program Group Photos
Policymakers Program Photo ArchiveIf you have any questions about this lecture series, please contact the foundation at uscpf@uscpf.org
