Economics and Business Exchange Supported by Deloitte.

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Economics and Business ExchangeSupported by
Deloitte.
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Can China Really Become the Next
Superpower? Professor Shujie Yao China Policy
Institute Leverhulme Centre of Globalisation
Economic Policy University of Nottingham Nottingha
m NG7 2RD E-mail Shujie.yao_at_nottingham
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• What constitutes a superpower
• Chinas emergence An awakened dragon
• China may fail?Constraints challenges
• Hu-Wen Policies
• Possible scenarios of evolution

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• 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, controlled corruption

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• 3. Chinas 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 peoples living
  standards
• Worlds largest producer/consumer of key AI
  products
• Worlds third largest trading nation
• Worlds largest/second largest recipient of FDI
  (Fig 1)
• Growth engine of the world economy
• Significant political influence after the cold
  war

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Table 1 Key indicators of world powers, 1981-2004
US Japan Germany UK China India Russia
Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars) Total GDP and trade volume 2004 (trillion US dollars)
GDP Trade GDP Trade 11.7 2.34 4.6 1.02 2.7 1.63 2.1 0.81 1.6 1.15 0.7 0.17 0.6 0.28
GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate GDP annual growth rate
1970-81 1970-81 2.9 4.5 2.6 1.7 5.5 3.6 n/a
1980-90 1980-90 3.4 4.1 2.1 3.1 9.5 5.3 n/a
1990-00 1990-00 3.4 1.3 1.5 2.5 10.3 6.0 -4.8
2000-04 2000-04 2.6 1.3 0.5 2.2 8.7 6.2 6.1
GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs GDP as of the USs
1981 1981 100.0 39 24 17 9 5 n.a.
2004 2004 100.0 40 23 18 14 6 5
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Figure 1 FDI inflows into China 1979-2004
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• 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

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• Development theories
• From SPOT to AREA (yi dian dai mian, ????)

Figure 2 Economic growth and linkage to a growth
centre
Growth centre
DA lt Dmin
A
DB gt Dmin
B
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Foreign technologies to serve China (yang wei
zhong young, ????)
Walking with Two Legs for ST (liang tiao tui zou
lu,?????)
Figure 2 Technological progress and FDI
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• 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

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

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• 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

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• 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

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• 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

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Economics and Business ExchangeSupported by
Deloitte.