In this continuing series, the 4th panel was titled Chinese Economic Competitiveness. Perhaps, in summarizing some remarks, the focus was more about the US itself, in terms of economic pros & cons.
Robert Rubin, as moderator, opened with these comments: ‘in the current atmosphere, there’s a feeling China is in the process of becoming an economic goliath. As for the US, it is experiencing difficult conditions at present times, i.e. enormously powerful headwinds. Hence, recovery is likely to remain slow, with difficult & stubbornly high unemployment.
There’s sentiment a double dip recession is unlikely; but, it is imperative to have another stimulus and serious long-term-deficit reductions. That should include cost constraints across all segments of expenditures, along with significant increase in revenues; however, the politics around all of this is difficult; the ultimate dispositive challenge being political will.
Long-term, the US is considered to have enormous comparative advantages; the dynamics of our society, flexible labor, capital markets, the rule of law, demographics, natural resources, & much else. Consequently, in a rapidly changing global economy, the US is well positioned to succeed; but to realize that potential, there’s a need to have a sound fiscal regime. And that includes strong public investment and reform in key areas of the economy, i.e. healthcare costs, immigration, energy, etc.). Again, the dispositive challenge being: do we have the political will & will our political system have the effectiveness to do what it needs to do?’
Cheng Li, another panelist, addressed this inquiry: What is the view in China of the long-term prospects in respect to the US economy & political system? He noted, ‘the perspectives are not unitary or monolithic or rigid; it is rather broad, divided, and pluralistic.
For him, there are three perspectives: 1) the latest US financial crisis is reflective of an America in decline & a structural issue; thus, a long-term problem; for some conservatives in China, it indicates China is going in the right direction; 2) Sees American strength & competitiveness; an America of dynamic & mature private sector, with strong social sector; and 3) the mainstream view, where a collaboration with US, for China, is not a matter of choice, but of necessity.’
Continuing with the panelists, Li Bin was ‘very optimistic of US economy; however, he echoed that if US monetary intervention tools are not available, why not try more fiscal tools.’
The next participant, David Rubenstein, ‘recalled growing up with a US being the dominant economy in the world & thought it would remain so. Yet, China, by 2016 or 2025, will likely become the largest, with US to fall to second.
Furthermore, we in the US make a lot of investment in China, but not vice-versa; China invests approximately 2% of their foreign direct investments into the US. Why? We in the US are not welcoming to China & make it difficult for them to invest here; and thus, they go elsewhere.
The last panelist was David Loevinger. He went on to say, ‘the US is a resilient economy & has a lot of fundamental strengths, i.e. rule of law, innovation, and a financial sector that can get capital. So, don’t count US out.
Additionally, China faces some medium term challenges; it needs to change if its going to get to the next stage of development; also, like in the US, China has very powerful vested interests; whom have a stake in China’s development model, and will resist change very fiercely.’