What Next: China’s Economy
The main challenges China faces economically are:
- How to moderate the excesses of industrial capitalism and mitigate market failures (including wealth gaps, exploitation of labor, irresponsible of inefficient use of scarce resources, production of poor quality goods, pollution of the global commons) that harm people, the environment, social stability and international good will;
- How to shore up the commercial rule of law to promote faith in the Chinese economy, especially in the area of intellectual property protection, regulation of banking practices, and the elimination of corruption;
- How to spur innovation in technology and fairly use the expertise and ideas of others around the world to develop new products people will be demanding in the future, especially around the “green industry;”
- How to obtain the resources and inputs China needs to meet the staggering demands of its economic system in a sustainable way, and how to obtain these without violating international norms around fairness and the support of unsavory regimes; and
- How to thwart nationalistic impulses which favor protectionism, mercantilism, and controversial currency exchange practices at the expense of free trade.
The ultimate challenge will be how to factor the above adjustments into the economic system while keeping Chinese goods competitively priced on global markets, so that China can maintain current levels of growth in its economy. At some time in the future, presumably, this pace of growth will decrease; it is almost a mathematic certainty that China’s extraordinary rise will ultimately level out. The Chinese need to be prepared for this as well.
Most people believe that the solutions to China’s critical economic challenges lie in international institutions as much as they do in the policies of the CCP. These challenges are not unique to China; they are common to any industrializing nation at some point in its development. The sheer scale and pace of China’s industrialization has compressed natural stages of growth and exacerbated its attendant liabilities. In an era marked by increasing globalization, however, the stakes are the world’s, not just China’s.
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