One year after China’s Third Plenum reforms were announced, Beijing has shown that it is “moving ahead across all economic dimensions with purpose and urgency”, says a new report released by the Asia Society on Wednesday.
The Asia Society Policy Institute (ASPI), the group’s new think tank, called the Third Plenum economic reforms “game changing – far more than a minor adjustment of business as usual or an attempt to stall for time”.
The new report, entitled Avoiding the Blind Alley: China’s Economic Overhaul and Its Global Implications, discusses the status of China’s economic overhaul as the country moves forward.
The Third Plenary Session of the 18th CPC Central Committee was held in November 2013 to discuss major economic and social issues concerning comprehensive reform.
“With the launch of the Asia Society Policy Institute, we really seek to look at issues where there isn’t full understanding of the implications, and do a very thorough analysis to help the world better understand the major trends in Asia and in China,” Josette Sheeran, president and CEO of Asia Society, told China Daily.
“We feel it’s important to have taken a look at the large-scale economic reforms that were announced 11 months ago, and to look at the full body of work and also the implementation since then,” she said.
“Our main conclusion is that these reforms are clear, they’re very comprehensive, and they’re very compatible with China becoming an advanced economy,” she added.
“So we think it’s important in our analysis that people understand how these are moving forward not just urgently but with great purpose on the part of the leadership.”
Dan Rosen, author of the report and cofounder of research firm Rhodium Group, predicted that China’s GDP growth will be 6 percent by 2020, which he said falls on the optimistic side of the spectrum.
Rosen’s figure is in the same range as projections released by the World Bank and the International Monetary Fund, who predict that Chinese GDP growth will hit 7 percent and 6.6 percent, respectively, in the same time period.
“The most important takeaway from the study is that China has the opportunity to deliver 6 percent GDP growth all the way through 2020 if they get reform right. The stakes are huge for doing that,” he said.
With trade, for example, if China can see its reforms through, exports will increase from $2.4 trillion in 2013 to $3.5 trillion by 2020. Imports will jump to $3.7 trillion by 2020, from $2.1 trillion in 2013, which would make a “huge difference to the rest of the world”, Rosen said.
“One of the reasons we did this report is that people are underestimating the reforms,” Sheeran said, “and it’s important to see the extraordinary opportunities that will open up under this soft landing scenario. Just the increase of imports into China alone really points to an opportunity.”
If China were to hit a hard landing, the rest of the world would definitely feel the effects as well, she said.
In the US, for example, exporters would see less trade opportunity with China, and financial institutions would have more difficulty accessing what could have been a very healthy boom in China’s financial globalization, Rosen said.
“It also means potentially a less stable and confident China to be partnered with us around the world, so it’s very much in America’s interest to see China come through this and hit its potential,” he added.
A year after the reforms were announced, there are China watchers who have said that economic reform has not come at a pace that shows confidence from the Chinese government, which Rosen said should be considered from both sides.
“Part of the answer is on the American side, and part of it is on the Chinese side,” Rosen said.
“I think for a lot of Chinese researchers, a lot of this is not transparent, it’s a little hard to sort out. There needs to be a little bit of appreciation from the Chinese side of why there’s this sort of reaction around the world.
“Here in the US, people need to bear in mind all the challenges that come with undertaking reform in China, given all the social and developmental challenges the country faces. By looking at all the evidence very carefully, we can appreciate just how much has already been done this year,” said Rosen.
By AMY HE October 22, 2014 in China Daily