Open debate needed to find the best path for economic reform in China
A rising tide of nationalism spurred by trade tensions with the United States has added to the internal resistance for further economic reform. But the threat of a full-blown trade war may ironically be what pushes Beijing into considering change
The case for further landmark reform and opening up in China is being frustrated by internal resistance. A rising tide of nationalism spurred by trade tensions with the United States has not helped.
Ironically, however, the threat of a full-blown trade war could make a difference, by raising pressure on the government to address meaningful reform just when opposition to it is increasing.
A Chinese government adviser has warned the looming threat could actually push Beijing into reviewing its industrial and economic policies and considering further reform. Lu Feng, an economics professor who had a role in the now-stalled Comprehensive Economic Dialogue with Washington and still advises the Ministry of Finance, was speaking ahead of the next round of trade negotiations.
With Vice-Premier Liu He expected in Washington this week, Lu said it was time China reconsidered its economic strategy and the trade conflict gave pause for reflection.
In talks with an American delegation in Beijing earlier this month, China ruled out compromise on its plan to support an industrial upgrade embracing advanced technologies or agreeing to US President Donald Trump’s demand to lower the trade deficit by US$200 billion by 2020.
With responsibility for scientific and technical development as well as trade negotiations, Liu He has a complex brief. If he were to make concessions to US demands to change industrial policy, radical nationalists would brand him a traitor.