China economy

Reform or no reform? Authors clash over China’s way to a healthy economic future

A view that Beijing’s approach to governing could impede growth collides with a claim that the country is on the right path to prosperity

PUBLISHED : Thursday, 22 February, 2018, 6:57am
UPDATED : Thursday, 22 February, 2018, 11:01pm

Beijing’s heavy-handed approach to leading China could be a drag on future growth, the author of a new book on the country’s economy said at a hotly contested New York forum.

“Many [people in China] are worried about the hubris of the current regime,” said panellist Paul Clifford, who wrote The China Paradox – At the Front Line of Economic Transformation.

Clifford, who spent two decades in China working closely with state-owned enterprises, said that China’s firm leadership style has raised a feeling of “real danger that if it succeeds, it will mean a rollback of the reforms”.

“Some of the companies are feeling a great deal of pressure that [a lack of reform] hampers their ability to be nimble in the market,” Clifford said. “The political overhang is an anxiety that a lot of people have.”

Clifford was one of two authors of books on China who clashed at an event presented by the China Institute over whether the country’s current political systems could impede its economic growth in the years to come.

He faced a challenge from Ann Lee, a former Wall Street hedge fund investor who has written the book, Will China’s Economy Collapse?

Lee said she disagreed with the view that reform in China is necessary or likely.

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“China never had democracy in history but that has worked out pretty well for them,” Lee said. “It didn’t stop them from innovating.” She pointed out that China’s earliest inventions included gunpowder and paper.

“The idea that they have to reform to be more like us is not something I think is likely to happen,” Lee said.

Moderator Ian Bremmer, who founded the New York political risk research firm Eurasia Group, said China’s economic development has stunned China watchers.

However, “a recent crackdown on media” and a pullback on the use of Western textbooks in school have raised the question of whether China needs political reform for its economy to keep growing, Bremmer said.

As the evening wore on, the panellists clung to their contrasting views of China’s current and potential influence on the global stage.

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While Clifford acknowledged that China is closing the gap with other countries in innovation, “it still lags the US by at least 20 to 25 years in most areas,” he said.

“China isn’t a super power. It isn’t the threat that some people talk about,” Clifford said. “But the US needs to protect itself from China’s aggressive stealing of technology.”

Lee insisted that China was indeed “a super power.”

US venture capital has been spending more time in China than in Silicon Valley, she said. Furthermore, China and US are neck-to-neck in developing artificial intelligence, Lee said.

By replicating what the US did by tying its currency to oil contracts, China is making the yuan more international and into a reserve currency status, another major step to garner influences globally, Lee said.

Responding to US President Donald Trump’s claims that China has been stealing US technology, Lee said technology theft “happens everywhere with everyone”.

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She cited Europe’s claims that the US has been stealing its proprietary scientific breakthroughs.

China also has less need to steal from the US at this point, because it now has enough capacity to develop technology on its own, Lee said.

Bremmer said China’s “current systems aren’t likely to change much”.

“That’s what makes it exciting living in this environment,” the moderator said. “People don’t actually know which [political] model is going to dominate.”