The Colloquium on China's Medium Term Prospects, organized by the Growth Dialogue at GWSB, highlighted various facets of China's growth and the several sources of economic dynamism that China will continue to tap.

It also drew attention to the slowing of the reform process, and to the desirability of China transitioning away from a growth strategy heavily dependent upon investment (in infrastructure, housing, and manufacturing capacity dominated by state owned enterprises) and exports to one that relies more on domestic consumption and innovation. It pointed to bumps along the way, particularly in housing and the SOE sectors of the economy.
The guest speaker, Professor Barry Naughton, Professor of Chinese Economy and Sokwanlok Chair of Chinese International Affairs at UCSD analyzed China's potential and its caDuring the 1990s, all eyes were trained upon the East Asian Tiger economies. Now the China Miracle that dominates international fora. By averaging an annual growth rate of 10 percent since 1979, China has emerged as the second largest economy and the world's foremost trading nation, and it is on course to pull ahead of the US in terms of aggregate GDP by 2020, if not earlier.
This remarkable achievement has its roots in a long string of reforms initiated after 1978 that have transformed a closed command economy into one in with a 55 percent national savings rate and the ratio of trade to GDP is close to 50 percent. China currently is responsible for more than a fifth of global growth.  Its medium term growth prospects are of enormous significance because how China fares will not only affect domestic incomes, employment and welfare, but also the tempo of international activity and the fortunes of its trading partners.pacity to meet the targets set forth in the 12th FYP, noting that fully realizing China's economic ambitions would be predicated on further pushing the reform agenda. The prospect of a meaningful slowdown in economic growth was perhaps not imminent, but certainly was a very plausible economic projection.

Dean Doug Guthrie, one of two commentators, observed that even though China's state owned sector looms large, a number of the SOEs have emerged as major international players and were beginning to move from the technological catch-up stage to becoming innovators in their own right.

Dr. Shahid Yusuf, the Chief Economist of the Growth Dialogue, underscored the scale of China's growth achievement, but saw the transition to a new growth model as presenting a considerable challenge given a diminished global appetite for China's exports.

A soft landing, namely a modest slowdown of China's growth over the next five years, is distinctly possible; however, making the shift from an investment led strategy spearheaded by SOEs and supported by bank financing to a different model which does not repeat the mistakes of the advanced countries, will require timely and demanding policy actions.

Photo credit: Abby Greenawalt