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Will China’s Economy Be #1 by Dec. 31? (And Does it Matter?)

Will China’s Economy Be #1 by Dec. 31? (And Does it Matter?)

A ChinaFile Conversation



On April 30, data released by the United Nations International Comparison Program showed China’s estimated 2011 purchasing power parity (PPP) exchange rate was twenty percent higher than was estimated in 2005. What does this mean? China’s economy could become the largest in the world by the end of 2014, unseating the economy of the United States some five years ahead of earlier predictions by the International Monetary Fund. But does that matter? —The Editors

 

Responses

There are two really fundamental challenges to coming to terms with China’s place in the global GDP rankings: ignorance and apathy. We don’t know, and we don’t care.

First our ignorance: GDP is really hard to measure. Just look at the huge revisions routinely made to GDP reports for the United States or the Eurozone, where statistical agencies have better resources, and face less political interference, than their Chinese counterparts. The measurement issues affecting China’s GDP reports are notorious: My favorite quip about them comes secondhand from Tom Orlik, Bloomberg’s China economist, who told me he once heard from a Chinese local government official that the government measures the economy using fiscal revenue instead of GDP because “GDP is opinion, fiscal revenue is fact.”

Ranking China’s GDP against that of other countries is messier still, since you have to pick an exchange rate to convert this sketchily-measured aggregate into U.S. dollars. The U.N. International Comparison Project’s estimate of the purchasing power parity (PPP) exchange rate is the product of admirable and interesting research, but is still just one of many estimates. The Conference Board, where I used to work, was projecting in 2010 that, using their best estimate of a PPP exchange rate, China would overtake the U.S. as the world’s largest economy in 2012.

Which takes us to the second challenge, our apathy. Say you prefer to use a market exchange rate to compare China’s economy with that of the United States instead of messing around with PPP’s, which would make its economy around two thirds of the size of the economy of the United States. So what? China would still be superlative in many ways: the world’s largest producer and consumer of steel, the largest consumer of energy, the largest importer of soybeans, the largest emitter of greenhouse gases.

Regardless of whether China makes a smooth transition to domestically-oriented growth or makes a hard landing, its footprint is such that focusing on GDP, or growth, has become a distraction from more fundamental issues. Damien Ma and I collectively call these scarcity: insufficient natural resources to feed an investment- and energy-intensive economy; insufficient land to produce the food Chinese consumers demand; a shrinking labor supply that forces wages up, squeezes low-end manufacturers, and pushes the economy out of export-oriented industries. There is more insight to be gained from thinking about these issues, in our opinion, than in wondering whether China becomes the world’s largest economy today, five years from now, or five years ago.

Let me briefly piggyback on Bill’s comments with a couple points.  First, in hindsight, perhaps we should have titled our book the more tongue-in-cheek “China as #1: So What?” That is to say, the obsession over headline GDP is neither here nor there, even though it will inevitably dominate headlines. That a country four times the size of the United States would, short of cataclysmic economic fallout, someday grow into the world’s largest economy should not elicit a modicum of surprise—it’s basically a matter of when, not if. But whether China is still a $9 trillion economy in market exchange rate terms or closer to $14 trillion in PPP terms doesn’t say anything about how to think about today’s Chinese political economy. Aggregate GDP, as Bill said, is but one indicator that reflects some sense of general welfare, but is far from sufficient as an indicator to examine where China stands economically, socially, and politically. China is big, has always been that way, but its size is both a blessing and a curse.

Second, China has had a tremendously successful record in adding GDP every year for as long as I can remember. But when I talk to Chinese interlocutors, policymakers, and others, nobody seems particularly concerned about growth in and of itself. No one is obsessing over GDP figures, except maybe certain bureaucrats in the National Bureau of Statistics. And even the government itself is trying to slowly extricate itself from recent decades of GDP fetish. I suspect many Chinese will see this news and retort that “yeah, well, per capita GDP we’re still about ⅙ that the United States.” This is one problem in looking at China, it can be both an enormous economy and an unbalanced country in terms of development. It’s somewhat akin to the European Union—both Poland and Germany can exist at the same time.

Third, instead of worrying themselves over GDP, the Chinese, both the public and officialdom, are preoccupied over all sorts of other sociopolitical issues. From accessing healthcare and higher education to safe milk and clean water (even core values), these are the central challenges that the “world’s biggest economy” now have to deal with, and to deal with them urgently. We referred to them collectively as various dimensions of scarcity—some are policy-induced, some are secular trends—that will determine how China actually develops, rather than whether it grows in GDP terms.

The funny thing is that when a country gets wealthier and heftier economically, a different set of problems tend to arise that require a different set of policies. Richer countries have to deal with the costs of the “gangbuster growth” era and the dramatic social changes that have accompanied that growth. The tricky thing for China is that it is both wealthy and poor simultaneously, and it is being asked to grow and clean up at the same time. Not an envious position to be in.

China as Number One? Using purchasing power parity (PPP) as a measure, the World Bank’s International Comparison Program says that by the end of 2014 China is going to surpass the United States as the largest economy.

When the Bank formally adopted the PPP methodology back in the early 1990s and thus elevated China’s ranking, there were two general strands of reactions in the Chinese media. One was that this represented Western recognition of China’s real bargaining power, against the backdrop of sanctions imposed in response to China’s handling of domestic instability in the summer of 1989. The other was that the new ranking might as well be a Western propaganda ploy to trick China and the Chinese people to be less hard-working and, by extension, China should instead double its efforts to grow its economy.

China’s leaders, throughout the 1990s, constantly championed the notion that China needed the rest of the world to continue to develop and, by the same token, the rest of the world needed China just as much. Translated into policy, China worked to join the World Trade Organization, applied, twice, to host the Olympics Games, and constantly used ‘linking up with the international track’ as a domestic slogan to drive home the necessity of reform.

Then, in 2010, China was pronounced to have passed Japan as the second largest world economy, measured in GDP. The Chinese media and society took the new ranking in greater strides. It was just another day. As a matter of fact, by then, millions more ordinary Chinese are traveling to the United States, Europe, Japan, as well as the rest of the world. Aggregate numbers hardly passed the test of the human eye: gaps in standards of living are only too visible to ignore.

This time around, it is more likely for the Chinese society to react to the new ranking by the World Bank as just another announcement. After all, just the choking smog that routinely blankets a third of the landmass of China is powerful enough to remind ourselves that China is still way behind in terms of the quality of daily life.

Some pundits, both Chinese and foreign, may begin to connect the new ranking with China’s status, role, and responsibility in the global and regional economic and political systems. But, it is hard to see those articulations resonate with choices on the ground. In this sense, China—both its government and people—has indeed matured.

This does not and indeed should not imply that the time has come for China to disembark itself from the international track. As Chinese government leaders like to repeat these days, reform has to be an agenda in a continuous tense, not the past perfect. For the reform agenda to be effectual, China just has to continue to internationalize.

I agree with Bill and Damien that this is a “who cares?” moment. It has been obvious for quite some time that China would soon overtake the U.S. in sheer economic size. If one doesn’t accept the current PPP conversion rate then just wait five or ten years and China will be bigger at market exchange rates. But basically, all that this shift tells us is that China has way more people than the U.S.— 4.2 times as many, to be exact. So, as soon as China stopped being fantastically poorer (per capita) than the U.S., and became simply a lot poorer, its total economy surpassed that of the U.S. (And still lags that of the European Union, which is arguably the world’s biggest economy, if one takes economic integration rather than political boundaries as the criterion.) Big deal.

Staying in the league-tables discussion for a moment, there are two major economic dimensions in which China still lags the U.S., Europe and Japan. The first is living standards. Even if we accept the current PPP measurement, per capita GDP in China is only ¼ that in the U.S., and the gap in average living standards is even greater, because in the US about ⅔ of GDP consists of household consumption whereas in China that figure is barely over ⅓. In other words, for a given amount of per-capita GDP (at market exchange rates), the average American household consumes twice as many goods and services as its Chinese counterpart. China has recorded a lot of economic growth by installing a huge amount of capital equipment, the fruits of which accrue mainly to the small number of capital-owners—many of them foreign companies. It still has a lot to do in spreading the benefits of growth more broadly to its citizenry.

The second is what generally goes under the name of “innovation”—that is, the ability to create new sources of economic growth and vitality. Some headlines have declared that China is now the world’s “top economic power.” This is simply false. It is the biggest national economy by volume. But the center of technological change in the world is still the U.S., and arguably the United States’ centrality in this role is even more pronounced now than it was ten or fifteen years ago. There is little evidence that China is anywhere close to becoming the engine-room of the global economy.

But fundamentally Damien is right that this “who’s on top?” discussion misses all that is truly interesting, namely how China and other countries manage social tensions, income distribution and other problems arising from high speed economic growth. Because of its sheer bulk, China is indeed wealthy and poor at the same time, and the responses to that paradox are a far more fascinating target of study than the mere size of the economy.

I agree with the group, but would go farther. The International Comparison Program has gone off the rails. It doesn’t make sense to compare two countries’ PPP-adjusted GDP and say one is larger. Not for any countries at any time.

PPP is intended to better understand personal income. Annual income of $500 in Bangladesh is horrifying low but buys more than $500 in Australia. First, we must compare buying power across all of Bangladesh and Australia, then adjust for vastly different goods and services available—not easy. And it’s harder for larger countries. There’s an average price between New York and Louisiana we can compare to the average between Shanghai and Tibet? Strains belief.

Unfortunately, there’s a bigger problem. PPP is about purchasing power, not economic size. That comparable goods and services are cheaper in Bangladesh than Australia doesn’t mean Bangladesh’s economy suddenly got much bigger. The claim China will soon be #1 cites GDP, which combines personal and government consumption, investment, and trade. PPP struggles with personal consumption. To apply it to all of GDP is a bridge too far.

An illustration. China has grown faster than the U.S. for decades; what’s unclear is the remaining gap. There’s a $2 trillion gap in PPP-adjusted GDP in 2011 and a $7 trillion gap in standard GDP in 2013. There’s also a $35 trillion gap.

Not a typo. GDP measures what happened in an economy, not how big it is. GDP resets to zero each year. But economies don’t reset to zero - the stuff is still there. It’s there even if we hide it under a mattress and it’s omitted from GDP. The right measure of economic size is national wealth – what we have, not calendar year transactions.

Credit Suisse estimates global private wealth. At mid-2013, it has Chinese private wealth at $22 trillion and American at $72 trillion. Private wealth isn’t everything. But you can’t pass a country in economic size with $50 trillion less private wealth.

As a check, the Federal Reserve estimates U.S. private wealth at $80 trillion at the end of 2013. Net public debt cuts American wealth to $65-70 trillion. China’s government owns a great deal through state enterprises but those firms also owe a great deal. The net wealth of the Chinese state on top of the wealth of the Chinese people is uncertain, but $10 trillion appears generous.

This puts China between $30 and $35 trillion, about $35 trillion behind the US. The gap has not closed in the past three years, as the US emerged from the crisis and Chinese firms borrowed heavily. Plainly, China won’t catch up soon. It may not catch up at all.

I just want to add a wrinkle to this excellent discussion: While it is indisputably true that, from a purely economic perspective, the “Chinese GDP (PPP) to surpass U.S.” story is meaningless, it does not necessarily follow that it is equally meaningless in a political or social sense. As Professor Zha has already alluded to in his comment, there are plenty of people, both Chinese and foreign, who will trumpet this story for a variety of purposes. To me, at least, it is not clear that they will make no real difference.

For starters, the psychological impact of being “No. 1 in GDP” could be quite significant in certain Chinese intellectual and political circles. The idea that China has finally “bested” the U.S. in “national power” will very likely resonate with a deep and centuries-long national obsession—among both elites and the general populace—with measures of aggregate wealth and military power. One can, for example, easily see it fanning the flames of the increasingly vocal and influential Neo-Leftist movement, which draws much of its popular support from various strands of aggressive and often virulent nationalism. Whether these psychological effects will have any material influence on political activity, particularly in the realm of foreign policy (where, lest we forget, aggregate “national power” is actually a meaningful concept), is at least an open question. There is sufficient ideological uncertainty and conflict among China’s intellectual and political elite these days that this sort of substantively vapid but symbolically powerful “news” could nonetheless generate major waves.

In addition, this story will almost certainly provide fresh fodder for the “China as a rising threat” geopolitical narratives that seem to sell so well in the mainstream American media, and perhaps in Washington as well. The sensationalist tone of The Economist article itself is arguably an example of this. If one takes a particularly cynical view of American democracy, the general public, ill-informed and short-sighted, often seems particularly susceptible to waves of paranoia about the “rise” of foreign competitors (Japan in the 1970s and 80s, and now China), and such paranoia often translates into concrete legislation and policy via demagogic politics. Reality may not be quite so dismal, but it is hard to deny that there is at least some kernel of truth to such cynicism—in which case the social and political impact of this “news item” in the U.S. may well be completely disproportionate to its actual economic significance.

The previous commentators are basically unanimous in their belief that economically meaningless “milestones” will be psychologically dismissed by both policymakers and the general population. Were people only so rational.

William Adams is a Senior International Economist for PNC Financial Services Group. He is responsible for forecasting economic conditions in China. Formerly Resident Economist at The Conference Board...
Damien Ma is a Fellow at The Paulson Institute, where he focuses on investment and policy programs and the Institute’s research and think tank activities. He is the co-author of In Line...
Zha Daojiong, a Senior Arthur Ross Fellow at the Center on U.S. China Relations at the Asia Society, is a Professor of International Political Economy at Peking University, where he specializes in...
Arthur R. Kroeber is Managing Director of GaveKal Dragonomics, an independent global economic research firm, and Editor of its journal, China Economic Quarterly. He is a non-resident senior fellow of...
Derek M. Scissors is a resident scholar at the American Enterprise Institute (AEI), where he studies Asian economic issues and trends. In particular, he focuses on the Chinese and Indian economies...
Taisu Zhang is an Associate Professor at the Duke University School of Law and a Ph.D. candidate in History at Yale University. He has published several articles on comparative legal and...

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Obama’s Canceled Trip to Asia: How Much Did It Matter...

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Last week as the U.S. Federal Government shut down, President Obama canceled his planned trip to Indonesia and Brunei, where he was to have attended the Asia-Pacific Economic Cooperation (APEC) forum in Bali. Some foreign policy analysts have argued the canceled trip will inflict...

Conversation

10.07.13

Why Is Xi Jinping Promoting Self-Criticism?

STEPHEN C. ANGLE & TAISU ZHANG

Critics both within and without China have suggested that Xi Jinping’s promotion of self-criticism by Communist Party cadres has at least two motives: it promotes the appearance of concern with lax discipline while avoiding deeper reform, and it softens up potential targets of...

Conversation

09.27.13

Can China’s Leading Indie Film Director Cross Over in...

JONATHAN LANDRETH, MICHAEL BERRY & more

Jonathan Landreth:Chinese writer and director Jia Zhangke’s A Touch of Sin won the prize for the best screenplay at the Cannes Film Festival in May. Though the dialogue and its fine translation and English subtitles by Tony Rayns are exemplary, I found that as the screening...

Media

09.26.13

Execution or Murder? Chinese Look for Justice in Street...

TEA LEAF NATION

This morning, a Chinese street vendor named Xia Junfeng was executed. Xia had been found guilty of murdering two urban enforcers, known colloquially as chengguan, in 2009. Xia’s lawyers argued he acted in self-defense, presenting six eyewitness accounts and statements from...

Conversation

09.24.13

A Shark Called Wanda—Will Hollywood Swallow the...

STANLEY ROSEN, JONATHAN LANDRETH & more

Stanley Rosen:Wang Jianlin, who personally doesn’t know much about film, made a splash when he purchased America’s No. 2 movie theater chain AMC at a price many thought far too high for what he was getting.  A number of knowledgeable people felt that the money could have...

Conversation

09.17.13

What’s Behind China’s Recent Internet Crackdown?

THE EDITORS, XIAO QIANG & more

The Editors:Last weekend, Charles Xue Manzi, a Chinese American multi-millionaire investor and opinion leader on one of China’s most popular microblogs, appeared in handcuffs in an interview aired on China Central Television (CCTV). Xue is just the most visible blogger to be...

Conversation

09.13.13

What Can China and Japan Do to Start Anew?

PAULA S. HARRELL & CHEN WEIHUA

Paula S. Harrell:While the media keeps its eye on the ongoing Diaoyu/Senkaku islands dispute, heating up yet again this week after Chinese naval ships and aircraft were spotted circling the area, a parallel, possibly game-changing development in China-Japan relations has gone...

Conversation

09.09.13

What Are Chinese Attitudes Toward a U.S. Strike in...

CHEN WEIHUA, VINCENT NI & more

Chen Weihua:Chinese truly believe that there is no military solution to the Syrian crisis. On the contrary, a U.S. air strike would only worsen the situation there. Chinese have seen many failures of U.S. intervention in the Middle East in the past decade.The U.S. clearly is...

Conversation

09.05.13

To Reform or Not Reform?—Echoes of the Late Qing...

ORVILLE SCHELL, JOHN DELURY & more

Orville Schell:It is true that China is no longer beset by threats of foreign incursion nor is it a laggard in the world of economic development and trade. But being there and being steeped in an atmosphere of seemingly endless political and economic tension where questions of...

Conversation

08.28.13

Beijing, Why So Tense?

ANDREW J. NATHAN, ISABEL HILTON & more

Andrew Nathan:I think of the Chinese leaders as holding a plant spritzer and dousing sparks that are jumping up all around them.  Mao made the famous remark, “A single spark can start a prairie fire.”  The leaders have seen that terrifying truth confirmed in the pro...

Conversation

08.21.13

Is Xi Jinping Redder Than Bo Xilai Or Vice Versa?

MICHAEL ANTI & SHAI OSTER

Michael Anti:Competing for Redness: The Scarlet Bo vs the Vermilion Xi?Bo Xilai, the fallen Chinese princeling famous for leading a “Red Songs” communist campaign in southwest China's megacity Chongqing, is on trial today, live-Twittered from Jinan in Shandong province, east...

Conversation

08.15.13

What Should China Do to Reverse its Tourism Deficit?

THE EDITORS, LEAH THOMPSON & more

The Editors: Recent news stories and industry studies show that fewer international visitors are choosing China as their destination. January-June arrivals in Beijing are down 15% from the same period in 2012 and more Chinese than ever before are spending their money to travel...

Conversation

08.07.13

What Will Come out of the Communist Party’s Polling...

DAVID WERTIME, DUNCAN CLARK & more

David Wertime:Simon Denyer’s recent article (“In China, Communist Party Takes Unprecedented Step: It Is Listening,” The Washington Post, August 2, 2013) provides a valuable look at some of the ways that Chinese authority mines domestic micro-blogging platforms like Weibo...

Conversation

08.01.13

How Dangerous Are Sino-Japanese Tensions?

JEROME A. COHEN

Sino-Japanese relations do not look promising at the moment. Obviously, the Diaoyu-Senkaku dispute is not the only factor in play but it does focus nationalist passions on both sides. Yet both countries are capable of wiser conduct if their leaders can manage to rise above the...

Conversation

07.30.13

Is Business in China Getting Riskier, Or Are...

ARTHUR R. KROEBER , DAVID SCHLESINGER & more

Arthur Kroeber:The environment for foreign companies in China has been getting steadily tougher since 2006, when the nation came to the end of a five-year schedule of market-opening measures it pledged as the price of admission to the World Trade Organization. Soon after the WTO-...

Conversation

07.25.13

The Bo Xilai Trial: What’s It Really About?

THE EDITORS, JEROME A. COHEN & more

The Editors:China has charged disgraced senior politician Bo Xilai with bribery, abuse of power and corruption, paving the way for a potentially divisive trial. But what’s at stake goes beyond the fate of one allegedly corrupt official: Is it really a fight between factions in...

Conversation

07.23.13

What Would a Hard Landing in China Mean for the World?

BARRY NAUGHTON, JAMES MCGREGOR & more

Barry Naughton:Paul Krugman in a recent post (“How Much Should We Worry About a China Shock?” The New York Times, July 20, 2013) tells us NOT to worry about the impact of a slowing China on global exports, but to be worried, very worried about the indirect and unanticipated...

Conversation

07.18.13

Xu Zhiyong Arrested: How Serious Can Beijing Be About...

DONALD CLARKE, ANDREW J. NATHAN & more

Donald Clarke:When I heard that Xu Zhiyong had just been detained, my first thought was, “Again?” This seems to be something the authorities do every time they get nervous, a kind of political Alka Seltzer to settle an upset constitution. I searched the web site of The New...

Conversation

07.16.13

What’s the Senate’s Beef with China’s Play for...

THE EDITORS, ARTHUR R. KROEBER & more

The Editors:Last week the U.S. Senate held hearings to question the CEO of meat-producer Smithfield Farms, about the proposed $4.7 billion sale of the Virginia-based company to Shuanghui International, China’s largest pork producer. The sale is under review by the Committee on...

Conversation

07.09.13

What Is the “Chinese Dream” Really All About?

STEIN RINGEN, JEREMY GOLDKORN & more

Stein Ringen:I’m coming to the view that the ‘Chinese Dream’ is a signal from the leadership of great import that has much to say about the nature of the Chinese state. It is striking, in my opinion, how effectively and rapidly the system swung into action to interpret and...

Conversation

07.03.13

How Would Accepting Gay Culture Change China?

THE EDITORS, FEI WANG & more

The Editors: Last week's U.S. Supreme Court decision to strike down the core provisions of the Defense of Marriage Act is not only “a stride toward greater equality in the United States, but also a shift that will reverberate far beyond our shores,” wrote novelist and...

Conversation

06.27.13

Is Xi Jinping’s Fight Against Corruption For Real?

RODERICK MACFARQUHAR, WINSTON LORD & more

Roderick MacFarquhar:Xi Jinping’s overriding aim is the preservation of Communist party rule in China, as he made clear in speeches shortly after his elevation to be China’s senior leader.  Like his predecessors, he is obsessed with the Gorbachev phenomenon and doesn't...

Conversation

06.25.13

How Badly Have Snowden’s Leaks Hurt U.S.-China...

MATT SCHIAVENZA

Matt Schiavenza:In the understatement of the day, the United States is unhappy with the recent developments of the Edward Snowden situation. Just three days ago, Washington was in negotiations with Hong Kong to file a warrant for Snowden's arrest, a process which the U.S. hoped...

Conversation

06.21.13

How Should the World Prepare for a Slower China?

ARTHUR R. KROEBER & PATRICK CHOVANEC

Get Ready for a Slower ChinaThe recent gyrations on the Chinese interbank market underscore that the chief risk to global growth now comes from China. Make no mistake: credit policy will tighten substantially in the coming months, as the government tries to push loan growth from...

Conversation

06.18.13

What’s Right or Wrong with This Chinese Stance on...

THE EDITORS, SHAI OSTER & more

The Editors: For today’s ChinaFile Conversation we asked contributors to react to the following excerpt from an op-ed published on Monday June 17 in the Global Times about Edward Snowden, the 29-year-old American contract intelligence analyst who last week in Hong Kong...

Conversation

06.13.13

Who’d You Rather Be Watched By: China or the U.S.?

THE EDITORS, TAI MING CHEUNG & more

Editor’s note:Reports of U.S. gathering data on emails and phone calls have stoked fears of an over-reaching government spying on its citizens. Chinese artist Ai Weiwei worries that China will use the U.S. as an example to bolster its argument for surveillance on dissidents....

Conversation

06.11.13

What’s the Best Way to Advance Human Rights in the U....

NICHOLAS BEQUELIN, SHARON HOM & more

Nicholas Bequelin:The best way to advance human rights in the U.S.-China relationship is first and foremost to recognize that the engine of human rights progress in China today is the Chinese citizenry itself. Such progress is neither the product of a gradual enlightenment of the...

Conversation

06.06.13

What Would the Best U.S.-China Joint Statement Say?

THE EDITORS, WINSTON LORD & more

As we approach the June 7-8 meeting in California of U.S. President Barack Obama and Chinese President Xi Jinping we are holding a small contest. We have asked ChinaFile Conversation regulars and a few guests to envision their ideal Sunnylands summit and then write the joint...

Conversation

06.04.13

How Would Facing Its Past Change China’s Future?

DAVID WERTIME, ISABEL HILTON & more

David Wertime:The memory of the 1989 massacre of protesters at Tiananmen Square remains neither alive nor dead, neither reckoned nor obliterated. Instead, it hangs spectre-like in the background, a muted but latently powerful symbol of resistance.There’s no question that an...

Conversation

05.29.13

What Should Obama and Xi Accomplish at Their California...

SUSAN SHIRK, ORVILLE SCHELL & more

Susan Shirk:It’s an excellent idea for President Obama and President Xi to spend two days of quality time together at a private retreat in Southern California. Past meetings between Chinese and American presidents have been too short, formal and scripted for them to develop a...

Conversation

05.23.13

China and the Other Asian Giant: Where are Relations...

MICHAEL KULMA, MARK FRAZIER & more

Mike Kulma:Earlier this week at an Asia Society forum on U.S.-China economic relations, Dr. Henry Kissinger remarked that when the U.S. first started down the path of normalizing relations with China in the early 1970s, the economic relationship and trade between the two...

Conversation

05.21.13

U.S.-China Economic Relations—What Will the Next...

JONATHAN LANDRETH, ORVILLE SCHELL & more

On Monday, within hours of the announcement that Chinese President Xi Jinping will meet U.S. President Barack Obama on a visit to California on June 7-8, Tung Chee-hwa, the former Chief Executive and President of the Executive Council of Hong Kong, introduced former U.S....

Conversation

05.16.13

China: What’s Going Right?

MICHAEL ZHAO, JAMES FALLOWS & more

Michael Zhao:On a recent trip to China, meeting mostly with former colleagues at the Chinese Academy of Sciences, I got a dose of optimism and hope for one aspect of the motherland. In terms of science, or laying down a solid foundation for better science to come, things are...

Conversation

05.14.13

Why Can’t China Make Its Food Safe?—Or Can It?

ALEX WANG, JOHN C. BALZANO & more

The month my wife and I moved to Beijing in 2004, I saw a bag of oatmeal at our local grocery store prominently labeled: “NOT POLLUTED!” How funny that this would be a selling point, we thought.But 7 years later as we prepared to return to the US, what was once a joke had...

Conversation

05.10.13

What’s China’s Game in the Middle East?

RACHEL BEITARIE, MASSOUD HAYOUN & more

Rachel Beitarie:Xi Jinping’s four point proposal for a Palestinian-Israeli peace agreement is interesting not so much for its content, as for its source. While China has maintained the appearance of being involved in Middle East politics for years, its top leaders, so far,...

Conversation

05.07.13

Why Is a 1995 Poisoning Case the Top Topic on Chinese...

RACHEL LU, ANDREW J. NATHAN & more

With a population base of 1.3 billion people, China has no shortage of strange and gruesome crimes, but the attempted murder of Zhu Ling by thallium poisoning in 1995 is burning up China’s social media long after the trails have gone cold. Zhu, a brilliant and beautiful...

Conversation

05.02.13

Does Promoting “Core Interests” Do China More Harm...

THE EDITORS, STEPHANIE T. KLEINE-AHLBRANDT & more

On April 30, as tensions around China’s claims to territories in the South- and East China Seas continued to simmer, we began what proved to be a popular ChinaFile Conversation, asking the question, What's Really at the Core of China’s ‘Core Interests’? The participants...

Conversation

04.30.13

What’s Really at the Core of China’s “Core...

SHAI OSTER, ANDREW J. NATHAN & more

Shai Oster:It’s Pilates diplomacy—work on your core. China’s diplomats keep talking about China’s core interests and it’s a growing list. In 2011, China included its political system and social stability as core interests. This year, it has added a vast chunk of the...

Conversation

04.25.13

Hollywood in China—What’s the Price of Admission?

JONATHAN LANDRETH, YING ZHU & more

Last week, DreamWorks Animation (DWA), the Hollywood studio behind the worldwide blockbuster Kung Fu Panda films, announced that it will cooperate with the China Film Group (CFG) on an animated feature called Tibet Code, an adventure story based on a series of recent Chinese...

Conversation

04.23.13

How Would You Spend (the Next) $300 Million on U.S.-...

ORVILLE SCHELL & MICHAEL KULMA

Orville Schell:When Stephen A. Schwarzman announced his new $300 million program aimed at sending foreign scholars to Tsinghua University in Beijing the way Rhodes Scholarship, set up by the businessman and statesman Cecil Rhodes in 1902 began sending American scholars to Oxford...

Conversation

04.18.13

How Fast Is China’s Slowdown Coming, and What Should...

PATRICK CHOVANEC, BARRY NAUGHTON & more

Slower Chinese GDP growth is not a bad thing if it’s happening for the right reasons. But it’s not happening for the right reasons.Instead of reining in credit to try to curb over-investment, Chinese authorities have allowed a renewed explosion in credit in an effort to fuel...

Conversation

04.16.13

Why is China Still Messing with the Foreign Press?

ANDREW J. NATHAN, ISABEL HILTON & more

To those raised in the Marxist tradition, nothing in the media happens by accident.  In China, the flagship newspapers are still the “throat and tongue” of the ruling party, and their work is directed by the Party’s Propaganda Department.  That’s the first...

Conversation

04.11.13

Why Is Chinese Soft Power Such a Hard Sell?

JEREMY GOLDKORN, DONALD CLARKE & more

Jeremy Goldkorn:Chairman Mao Zedong said that power comes out of the barrel of a gun, and he knew a thing or two about power, both hard and soft. If you have enough guns, you have respect. Money is the same: if you have enough cash, you can buy guns, and respect.Israel and Saudi...

Conversation

04.03.13

Bird Flu Fears: Should We Trust Beijing This Time?

DAVID WERTIME, YANZHONG HUANG & more

David Wertime:A new strain of avian flu called H7N9 has infected at least seven humans and killed three in provinces near the Chinese metropolis of Shanghai, with the first death occurring on March 4. Meanwhile, in the last month, about 16,000 pigs, 1,000 ducks, and a few swans...

Conversation

04.02.13

Why Did Apple Apologize to Chinese Consumers and What...

JEREMY GOLDKORN, ISABEL HILTON & more

Jeremy Goldkorn:On March 22, before the foreign media or Apple themselves seemed to have grasped the seriousness of the CCTV attacks on the Californian behemoth, I wrote a post on Danwei.com that concluded:“The signs are clear that regulators and establishment media would both...

Conversation

03.28.13

Will China’s Renminbi Replace the Dollar as the World...

PATRICK CHOVANEC, DAMIEN MA & more

Patrick Chovanec:This week’s news that Brazil and China have signed a $30 billion currency swap agreement gave a renewed boost to excited chatter over the rising influence of China’s currency, the renminbi (RMB). The belief, in many quarters, is that the renminbi is well on...

Conversation

03.26.13

Can China Transform Africa?

JEREMY GOLDKORN, ISABEL HILTON & more

Jeremy Goldkorn:The question is all wrong. China is already transforming Africa, the question is how China is transforming Africa, not whether it can. From the “China shops”—small stores selling cheap clothing, bags, and kitchenware—that have become ubiquitous in Southern...

Conversation

03.19.13

China’s New Leaders Say They Want to Fight Corruption...

ANDREW J. NATHAN & OUYANG BIN

In his first press conference after taking office as China's new premier, Li Keqiang declared that one of his top priorities would be to fight corruption, because “Corruption and the reputation of our government are as incompatible as fire and water.” This put Li on message...

Conversation

03.15.13

Is the One Child Policy Finished—And Was It a Failure...

DORINDA ELLIOTT, ALEXA OLESEN & more

Dorinda Elliott:China’s recent decision to phase out the agency that oversees the one-child policy has raised questions about whether the policy itself will be dropped—and whether it was a success or a failure.Aside from the burdens only children feel when it comes...

Conversation

03.13.13

China’s Post 1980’s Generation—Are the Kids All...

SUN YUNFAN, ORVILLE SCHELL & more

This week, the ChinaFile Conversation is a call for reactions to an article about China's current generation gap, written by James Palmer, a Beijing-based historian, author, and Global Times editor. The article, first published by Aeon in the U.K., “The Balinghou: Chinese...

Conversation

03.08.13

Will China’s Property Market Crash, and So What If It...

DORINDA ELLIOTT & BILL BISHOP

Dorinda Elliott:At this week’s National People’s Congress, outgoing Premier Wen Jiabao proclaimed that the government kept housing prices from rising too fast. Really? I wonder what my 28-year-old Shanghainese friend Robert thinks about that. He and his fiancée could never...

Conversation

03.06.13

Are Proposed Sanctions on North Korea a Hopeful Sign...

ORVILLE SCHELL, SUSAN SHIRK & more

Orville Schell:What may end up being most significant about the new draft resolution in the U.N. Security Council to impose stricter sanctions on North Korea, which China seems willing to sign, may not be what it amounts to in terms of denuclearizing the DPRK, but what it...

Conversation

03.01.13

Is America’s Door Really Open to China’s Investment...

DANIEL H. ROSEN, ORVILLE SCHELL & more

Daniel Rosen:There have not been many new topics in U.S.-China economic relations over the past decade: the trade balance, offshoring of jobs, Chinese holding of U.S. government debt, whether China’s currency is undervalued and intellectual property protection problems have...

Conversation

02.27.13

How Long Can China Keep Pollution Data a State Secret?

ELIZABETH ECONOMY, ORVILLE SCHELL & more

Elizabeth Economy:The environment is center stage once again in China. A Chinese lawyer has requested the findings of a national survey on soil pollution from the Ministry of Environmental Protection and been denied on the grounds that the information is a state secret. (The...

Conversation

02.22.13

Will Investment in China Grow or Shrink?

DONALD CLARKE & DAVID SCHLESINGER

Donald Clarke:I don’t have the answer as to whether investment in China will grow or shrink, but I do have a few suggestions for how to think about the question. First, we have to clarify why we want to know the answer to this question: what do we think it will tell us? This...

Conversation

02.20.13

Cyber Attacks—What’s the Best Response?

JONATHAN LANDRETH, JAMES FALLOWS & more

Jonathan Landreth:With regular ChinaFile Conversation contributor Elizabeth Economy on the road, I turned to her colleague Adam Segal, Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations in New York. Segal said that “the time for naming and...

Conversation

02.15.13

U.S.-China Tensions: What Must Kerry Do?

DORINDA ELLIOTT, ELIZABETH ECONOMY & more

Dorinda Elliott:On a recent trip to China, I heard a lot of scary talk of potential war over the disputed Diaoyu Islands—this from both senior intellectual types and also just regular people, from an elderly calligraphy expert to a middle-aged history professor. People seemed...

Conversation

02.13.13

North Korea: How Much More Will China Take and How...

WINSTON LORD, TAI MING CHEUNG & more

China is increasingly frustrated with North Korea and may even see more clearly that its actions only serve to increase allied unity, stimulate Japanese militarism and accelerate missile defense. For all these reasons the U.S. should lean on Beijing to—at last—not only help...

Conversation

02.08.13

Rich, Poor and Chinese—Does Anyone Trust Beijing to...

ANDREW J. NATHAN, SUSAN SHIRK & more

Andrew Nathan:The new Chinese leadership under Xi Jinping seems to be making some bold opening moves with its attacks on corruption and the announcement on February 5 of plans to reduce the polarization of incomes.  Does this mean Xi is leading China in new directions? ...

Conversation

02.06.13

Airpocalypse Now: China’s Tipping Point?

ALEX WANG, ORVILLE SCHELL & more

The recent run of air pollution in China, we now know, has been worse than the air quality in airport smoking lounges. At its worst, Beijing air quality has approached levels only seen in the United States during wildfires.All of the comparisons to London, Los Angeles, and New...

Conversation

02.01.13

China’s Cyberattacks — At What Cost?

JAMES FALLOWS, DONALD CLARKE & more

James Fallows: Here are some initial reactions on the latest hacking news.We call this the “latest” news because I don’t think anyone, in China or outside, is actually surprised. In my own experience in China, which is limited compared with many of yours, I’ve seen the...

Conversation

01.30.13

China, Japan and the Islands: What Do the Tensions Mean...

ORVILLE SCHELL, JOHN DELURY & more

How did the Diaoyu, Spratly, and Paracel islands come to replace Taiwan as the main source of tension for maritime Asia? And how are we to explain the fact that China’s foreign policy toward its Asian neighbors has now morphed from such slogans as: “Keep our heads down, and...