China’s economic growth is slowing down, but the country’s economy is unlikely to collapse in the near future, nor is the rising power likely to impose economic sanctions against Taiwan or Japan, experts said at a forum yesterday.
China’s economy would not collapse in the near future, because Chinese officials are very much aware of the problems they are facing and have sufficient policy tools and resources on hand to handle a possible crisis, the experts concluded.
For the third consecutive week, the Democratic Progressive Party (DPP) held a symposium on China affairs to improve its understanding of the country. Yesterday’s forum focused on China’s economy, following previous topics on social and political development.
Beijing understands very well that its rapid economic growth in the past decade could not be sustainable and it would have to tackle the three major issues of “imbalance, inconsistency and unsustainability,” National Chengchi University professor Tung Cheng-yuan (童振源) said.
In an analysis of China’s economic transformation to the audience, among them DPP Chairman Su Tseng-chang (蘇貞昌) and Policy Research Committee executive director Joseph Wu (吳釗燮), Tung said China has been trying to slow down its export and domestic investment to transform its export-oriented economy to one with emphasis on domestic consumption.
Given the relatively slight reduction in Chinese exports to the US and major economies and its low unemployment rates, China’s economy would be stable for now, despite a GDP growth rate of more than 7 percent still being required to keep its economy moving, Tung added.
While the authenticity of China’s official economic data is questionable, National Taiwan University political scientist Tao Yi-fen (陶儀芬) believed that Beijing officials are capable of steering the economy away from meltdown.
The collapse of the Chinese economy that US political analyst Gordon Chang predicted in 2001, and again last year, never happened, she said, because China keeps a tight rein on its financial system and “state capitalism” successfully helped it absorb the impact caused by the global financial crisis.
However, “China does face a number of challenges, such as the diminishing contribution of its demographic dividend and decreasing saving rates and its limited success in stimulating domestic consumption,” Tao said.
Economists around the world have been split — some were optimistic and some were pessimistic — on their forcast of China’s economy, DPP’s China Affairs Department Director Honigmann Hong (洪財隆) said.
In case of a Chinese economic collapse, Taiwan would be the biggest victim, regardless of a hard landing or a soft landing, because of its close economic integration and high dependence on the Chinese economy, Hong said.
Hong said it was unlikely China would impose economic sanctions against Taiwan or Japan in the case of escalated tension related to the controversial Diaoyutai Islands (釣魚台).
“Theoretically, a country that imposes economic sanctions would have to have a GDP four to six times larger than the target country to avoid backfire,” he said.
Tung agreed, saying that economic sanctions against Taiwan would be a double-edged sword for China, where more than 14 million people were employed by Taiwanese businesses.
Sanctions against Japan would harm China’s manufacturing and services sectors as well, he said, adding that China could consider partial sanctions against Japan, but not full-scale sanctions.