Anthony Kiedel Report: China’s Economic Rise – Fact or Fiction

Wednesday, July 9, 2008 1:49

The Carnegie Endowment has some of the best policy research around on China, particularly on how its economy is growing, the challenges it faces, and how US policy makers need to think about these issues when developing their own China positions.

In Albert Keidel’s recent report, China’s Economic Rise – Fact or Fiction (Full Text PDF Here), he looks at a wide range of issues related to China’s development history, some of the current challenges, and where it will go… which according to him include the following business relevant conclusions:

• Potential stumbling blocks to sustained Chinese growth—export concerns, domestic economic instability, inequality and poverty, pollution, social unrest, or even corruption and slow political reform—are unlikely to undermine China’s long-term success.

• China’s financial system, rather than a shortcoming that compromises growth potential, is one of the strengths of what the report calls “China’s money-making machine,” in part because of its ability to support the financing of infrastructure and other public investments necessary for sustained rapid growth.

• American policy makers should take this opportunity to enact wide-ranging domestic reforms and rethink their concepts of global order.

Some of the most interesting reading in the report was his RMB analysis where Kiedel showed how people focused on the RMB/ USD conversion are really watching the destruction of the dollar rather than the strength of the RMB as the RMB has actually fallen against the EURO.

and I really enjoyed the commentary on the inequality issue where he shows that traditional models do not always apply.

Overall, he holds the leadership in high esteem, as do I, and he does a good job of showing how China has changed through his 4 stages of development. No doubt, being here for the third stage and entering into the 4th stage, we are seeing a clear and needed difference in policy and enforcement… all good for the long term of China.

However, I have some issues with the report are:

1) Using other models of development to model China’s

He continually benchmarks China to Japan, Korea, and other developing Asia countries in areas I do not think he should. Example is linking Japan’s environmental issues in the 70s to China’s now and using that as a means to say that the problems will resolve themselves…

2) Not addressing the raw material/ logistics hurdles that are showing themselves to be more formidable as China continues to grow

Looking at the coal issue as an example, China is not lacking in coal, it is lacking in rail infrastructure to move the coal… a problem that a countries like Korea, Japan, and Thailand could overcome through building new roads or importing the quantities needed (keeping in mind that China’s need is significantly larger than all of those countries combined).

Overall, this is an good report and while I would push for some more figures to back up the assertions, Keidel’s overall view of China is one of continued growth, continued maturity, and continued opportunities is one that I would agree with.

Personally, I just see/ think/ feel that there is more to China’s growth than is being explained, and these things will continue to present themselves as growth continues.

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2 Responses to “Anthony Kiedel Report: China’s Economic Rise – Fact or Fiction”

  1. Egor Grebnev says:

    July 11th, 2008 at 12:39 am

    Thank you for the information.
    Looks like the name of the person is Keidel, not Kiedel.

  2. Murray says:

    July 21st, 2008 at 9:20 am

    Great report. Here’s an interesting story on How Coal Shortages in China Will Spark More Foreign Takeovers of U.S. Assets:

    http://www.contrarianprofits.com/articles/how-coal-shortages-in-china-will-spark-more-foreign-takeovers-of-us-assets/3945