Conference Presentation, Panel
The Chinese Economy in the Next 30 Years: Political Reform vs. Status Quo?
Milken InstituteSheryl WuDunn, Nicholas Lardy, Michael Pillsbury, Sophie Richardson, Stephen Roach, Perry Wong, Max, Michael Chewy
- China's economy is projected to potentially become the world's dominant entity, with convergence with U.S. per capita income (currently at 25%) suggesting massive growth potential despite the absence of an immediate collapse similar to Japan's 1990s experience, though a similar downturn remains a risk in a couple of decades.
- Total debt levels including corporate and household liabilities are expected to stabilize at 250-270% of GDP while the state deleverages, leading to a shrinking shadow banking sector that has peaked at approximately $270-280, a process anticipated to leave the private sector in dire straits.
- Long-term Chinese governance is expected to shift specific policies to address urgent domestic challenges including an aging and shrinking workforce, environmental destruction, and a chronic disease crisis comparable in scale to the U.S., creating a consolidation period that contradicts the state's tight control requirements for technological innovation.
- U.S.-China trade relations are predicted to hinge on a bilateral deal driven by self-interest that fails to resolve the underlying multilateral deficit caused by low U.S. savings rates, with outcomes ranging from a modest agreement to a severe downturn or "Cold War-style" escalation if China refuses reforms or engages in alleged cheating.
- The U.S. political and legal landscape is expected to feature increased arrests for economic espionage, potential amendments to the Foreign Agents Registration Act targeting pro-China views, and a refusal by Beijing to abandon growth measures like technology theft if they perceive no cost, raising concerns of potential nuclear escalation.
- Structural and societal predictions include the U.S. eventually entering the data science and AI race if China leverages its data collection advantage, a reversal of bureaucratic professionalization under Xi Jinping, and a low outlook for political reform as the state actively suppresses opposition and increases high-tech surveillance.