By Matthew Kredell
Retired four-star general and former CIA director David Petraeus was joined by an official from the Chinese Consulate of Los Angeles on April 14 for a roundtable discussion on the significant economic challenges China will face in years ahead. The talk was hosted by the USC Price School of Public Policy.
Accompanying Petraeus on the China roundtable were Ren Zhifang, director of the political office at the Chinese Consulate General in L.A., USC Price professor Shui Yan Tang, USC professor David Kang, who serves as director of the USC East Asian Studies Center, and USC School of International Relations postdoctoral research associate Chin-Hao Huang. The conversation was moderated by Clayton Dube, director of the USC U.S.-China Institute.
Petraeus, a Judge Widney Professor at USC, stated that the theme of the roundtable might be how “China’s remarkable leaders face China’s remarkable economic problems.” He began the dialogue by noting that the three primary drivers of China’s enormous growth over the past 20 years have decreased. China no longer is the low-cost labor provider to the world, infrastructure investment-led growth is producing diminishing returns and there is less migration from rural environments to cities.
Because of the enormous dependence on infrastructure at national and municipal levels, China is estimated to have the largest debt-to-GDP ratio in the world, he noted. The country also faces challenges including pollution and a demographic downturn of 5 million people per year.
Petraeus was complimentary of Chinese President Xi Jinping, who he said might be the most significant Chinese leader since Chairman Mao Zedong.
“So you have all these different issues with which China has to contend, and they are very significant,” Petraeus said. “The question is: Can that remarkable leadership team with the remarkable powers, because of the structure of the state and political system, guide China through these extraordinarily challenging times, or will the Chinese miracle begin to unravel and ultimately come undone?”
Ren, who was making her first visit to USC, attempted to answer that query with an optimistic view of China’s economy. She compared China’s growth to a high-speed train that is now shifting gears and slowing down a bit to focus more on efficiency than only speed and size. She anticipates that future Chinese growth will be driven more by innovation than by infrastructure and investments.
She also asserted that future Chinese economy will benefit from more trade and cooperation between countries, particularly the United States. Dube noted that China now has $36 billion of investments in the U.S., $26 billion made just in the past two years, and about $1.3 billion of that is in Los Angeles.
“At home, China is trying to operate our economy, and abroad we’re trying to build better relations with all other countries,” Ren said. “I believe with China and the U.S. joining hands together, we can better operate the Chinese economy, and it will be better for the U.S. economy and the world.”
Tang noted that China’s leaders are well meaning but added that wider accountability would be beneficial toward solving the problems facing the country.
“They can control the province or the big city, but going down to the township level problems are very difficult to solve because ultimately you have to develop some kind of horizontal accountability system,” Tang said. “The officials shouldn’t just be answering to Beijing, but also have a way of making them accountable to the people they serve.”