|China's Current Economic Challenges|
29 May 2012, Brussels
For the last decade, the wind has started blowing from East Asia, driving world growth and North-South convergence, but conveying also a risk of instability. East Asia is more and more confronted with the social, economic, financial, ecological and political challenges inherent to a fast economic rise and to some characteristics of the Asian Model.
Even political stability, so far secured by economic prosperity, is now accruing a problem: the governance model which reserves a large share of growth benefits for the elites as a reward for effective long-term planning and entrepreneurial spirit, is in need of a reshuffling in order to combat inequity, corruption rent and potential financial instability.
The systemic crisis of Western capitalism and the agonizing handling of the euro crisis in Europe, make the East Asian challenges more difficult to handle. They are depriving Asia of a critical source of growth and thereby are taking their toll on its development.
China in particular, because of its size, speed and sustainability constraints looks like the juggernaut whose course will steer the direction of the Pacific region. China’s reform strategy will have a major impact on the rest of the World not only through trade, but also through monetary links since the gradualist internationalization of the RMB will transfer the exchange-rate risk abroad.
China’s leadership has worked out the 12th Five Year Plan as a response to these challenges. The direction is right but the implementation proves difficult because of the waning growth momentum in the markets at a time when the necessary change of the finance allocation model is under way. Understanding changing trends in China, and identifying both risks and progress, is as important as the US and EU twin fiscal and financial crisis.
The Madariaga – College of Europe Foundation was pleased to have organised a seminar that explored the main current trends in China’s economy, one year after the approval of the 12th Five Year Plan and against the backdrop of the aforementioned difficult and volatile international economic situation.
The seminar benefitted from the participation of Mr. Zhang Yansheng, Director of the Institute for International Economic Research, National Development and Reform Commission (NDRC) and Dr. Mary-Françoise Renard, Head of Research at the Department on Chinese Economy at CERDI (Centre d’Etudes et de Recherches sur le Développement International) and Professor at the University of Clermont-Ferrand.