Guest Lecture by Professor Wing Thye Woo (胡永泰)

Asia Research Centre and the Department of Economics is pleased to invite you to a guest lecture by Professor Wing Thye Woo (胡永泰) on

The Return of China to the World Stage: The Many Difficulties It Faces

The 6th Plenum of the 16th Central Committee of the Communist Party of China (CPC) concluded on October 11, 2006 with a new commitment to establish a harmonious society by 2020 instead of reaffirming as usual (for almost two decades) the commitment to economic construction as the primary task of CPC. The obvious implication from this new commitment is that the present major social, economic and political trends are not leading to a harmonious society or, at least, not leading to a harmonious society fast enough.

Analytically, if the Chinese economy is depicted as a speeding car, there are three classes of failures:

(a) a hardware failure from the breakdown of an economic mechanism, a development that is analogous to the collapse of the chassis of the car. Specifically, there will be a decline in the effectiveness of China’s traditional macro-stimulus instruments and a decline in the dynamism of China’s growth unless China introduce new growth mechanisms in the financial markets, the rural economy, the urban economy, and the industrial sector.

(b) a software failure from a flaw in governance that creates frequent widespread social disorders that disrupt production economy-wide and discourage private investment, a situation similar to a car crash that

resulted from a fight among the people inside the speeding car. Specifically, China’s outmoded governance is causing the pace of improvements in administrative performance to fall behind the pace that social expectations about the state is rising; and the outcome is rising social disorder.

(c) a power supply failure from hitting either a natural limit or an externally-imposed limit, a situation that is akin to the car running out of gas or having its engine switched off because an outsider reached in and pulled out the ignition key. Specifically, China’s chronic trade imbalances are creating increasingly acrimonious trade disputes; and China’s rapidly deteriorating natural environment is imposing a growing array of physical constraints to economic growth.

Wing Thye Woo is Professor at University of California at Davis, Yangtze River Scholar at the Central University of Finance and Economics in Beijing, Director of the East Asia Program within The Earth Institute at Columbia University, and Nonresident Senior Fellow at the Brookings Institution. He has published over 130 articles in professional economic journals and books. His article "The Monetary Approach to Exchange Rate Determination under Rational Expectations: The Dollar-Deutschemark Case," Journal of International Economics (JIE), February 1985, was identified by JIE in 2000 to be one of the twenty-five most cited articles in its 30 years of history. His current research focuses on the economic issues of East Asia(particularly, China, Indonesia,and Malaysia).