Brown Bag Lecture Series
Is China a New Growth Engine for the World Economy?
Co-sponsor: WEAI as part of the “Global Financial Crisis” series
Columbia Law School professors Benjamin Liebman and Owen Nee, SIPA professor Daniel Rosen and Business School professor Shang-Jin Wei made their observations about China and its role in the world economy to an overflow crowd. Professor Nee began the discussion by explaining the transformation of the Chinese attitude toward foreign investors. It has become much more difficult for foreigners to enter the Chinese market because government bureaucrats no longer promote investment in Chinese corporations, and SOEs only want to interact with foreign technology suppliers. While Chinese entrepreneurs are open to cooperation, be it legal or illegal, they too are no longer open to foreign ideas.
Professor Wei emphasized that an overconfident China, in the wake of its successful response to the financial crisis, may see little need for continued reforms. In addition, while past growth has been spurred by imitation of others, the Chinese are now confronting the difficulty of innovation, and it is possible that they will be unable to maintain similar growth rates. Despite these internal risks, China's current demographically male-dominant population supports an increasingly strong labor output as men strive harder to find and attract wives.
Professor Rosen presented the least optimistic analysis, focusing on rising tensions that have emerged over the last year, contrasting with the earlier consensus in Washington that economic cooperation with China will lead to mutual accommodation. Citing Obama's treatment by the Chinese on his trip to Beijing, China's aggression at Copenhagen and its threatened boycott of Boeing, Rosen sees China playing games with European and U.S. economic interests. Pairing the deterioration in Sino-U.S. and Sino-E.U. relations, China will have difficulty maintaining the trust of either as it seeks continued growth. However, on the bright side, all three panelists forecasted that China will come to embrace intellectual property rights over time, as both government and entrepreneurial investment demand that domestic innovation be protected.