Despite intense scrutiny and analysis surrounding China’s economy, there is still no consensus on how to best understand China’s increasingly complex markets. How should we view China’s economy and what are the key indicators for its future development? In this podcast, Paul Haenle sat down with Carnegie Senior Fellow Yukon Huang to discuss his new book Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong and evaluate pressing issues in U.S.-China economic relations.
Huang said that most analysis of China’s economy fails to account for its unique growth and development history. He countered the widely held view that Chinese economic data is overstated, arguing it is understated. While China’s debt levels bear close scrutiny, Huang said much of China’s surging debt is due to the infant stage of its property market which needs time to develop. He argued that domestic pressure to limit U.S. foreign investment in China is misdirected—U.S. investment is miniscule compared to countries in Europe and the Asia-Pacific, and policymakers should shift their focus to the underlying causes. Huang agreed with Haenle that signing a Bilateral Investment Treaty (BIT) should be a top priority for U.S. and Chinese policymakers. A BIT could lead to the opening of China’s services sector, spurring growth in both nations. It would also open the door for firm commitments preventing cyber and technology theft, one of the most consequential issues in the relationship.
Paul Haenle is the director of the Carnegie–Tsinghua Center for Global Policy based at Tsinghua University in Beijing.
Yukon Huang is a senior fellow in the Carnegie Asia program.