 Good afternoon. My name is Steve Seng. I am the director of the Sours China Institute Let me first of all Welcome you very warmly on behalf of Sours and of its China Institute to the China Debates 2018 As you may have noticed There is a last-minute change to the program on the programs You had been Told that it would be Graham Hutchings who would be moderating the event this evening, but in fact you have me Unfortunately Graham was taken ill this morning, so he was unable to come so The debate today the academic year 2017 to 2018 I think is any it's a particularly important year Perhaps not so much for Sours, but for China There is a year of a potential turning point Well, at least I think it is a beginning of a new era and I was explained why I think we are looking for Potentially at the beginning of a new era to begin with President Xi Jinping told us so at the 19-party Congress And also reaffirmed at the National People's Congress last month. He had made it very clear and now Is officially in the constitution of the People's Republic of China that The element which is known as Xi Jinping thought on socialism with Chinese Characteristics in a new era is part of the Constitution a new era is written right there in the Constitution and In fact, I would say it is not just a formality if we look at the kind of changes that Xi Jinping seems to be unleashing At the 19-party Congress and then we affirm and the NPC We are probably genuinely seeing the beginning of a new era or at least the intention that there will be a new era Why do I say that well until more or less now we really were in the period of the Xi Jinping the Dong Xiaoping era of reform and opening up and In that period of reform and opening up. There were two things that mark that time One was the kind of experimentalism that when the Chinese government the Communist Party Was implementing the Dong Xiaoping era of reform and opening They follow the principle of crossing the river by filling for rocks underneath. It was one of Experimentation in terms of foreign policy. We had China that was going to and indeed for a long time for three decades Hiding China's capabilities and biting for his time at the 19-party Congress Xi Jinping articulated a bold new vision for China that in 30 years time by the time the PLC riches is centenary then there would be a rich powerful Modern and beautiful China a China that would be second to none a China that from now on Expects to play to take center stage in global affairs It is a China that is quite different from the China that we saw under Deng Xiaoping and Then of course that raises the issue of how sustainable is China's model Well to different people China models mean different things you can look at it in terms of politics you can look at it in terms of Economics in terms of social order or all of them and more well That is in some sense a very important issue to be discussed and debated today But you know a very important sense the China model is also a model of authoritarian development And There are many countries in this world Which actually looks to China and see the model in China as something that is very Attractive to them. That is something that they may like to follow Whether China's model is wants to be followed or not In a sense will depends on whether it is actually sustainable if it is well the less Sustainable than other countries may think they may like to think Again, but if it is very sustainable then perhaps it will genuinely see that it is something worth Following and and the Chinese authoritarian model comes in contrast To the more conventional Western liberal democratic Development model so it is something which I think is important and therefore It is a very good time for us to hold this debate Here at source having said that It is a very good subject to debate for us. I should perhaps also remind you that If we look at the same question in China, there's probably rather Less concern about whether is sustainable. Well at least There is rather less concern about the sustainability of President Xi as leader of China clear widespread view now, I think in China and indeed elsewhere that President Xi will be here For what a longer than the customary two terms adding up to ten years Perhaps one could go even as far as to say that there will be a president Xi as long as Xi Jinping is here with us We don't know that yet But the sustainability issue perhaps is not so much about whether Xi Jinping will be sustainable But whether China's development model is indeed sustainable Well to address all these issues Delighted to present to you a Very distinguished paneled Consisting of leading scholars from China from the United States and of course from the home team Kingdom of our panelists. I will introduce them in the order when they will give you the introductory Commence the first to go will be Professor Xi Yan Hong Professor Xi is a distinguished professor of international relations and the director of the Center for American Studies at Berman University in Beijing He has served as a counselor to the State Council of the PRC since February 2011 he has published 18 books and about 600 professional articles and essays The second to speak is Professor Jane Duckett She is the Edward chart chair of politics and director of the Scottish Center for China Research at the University of Glasgow a Fellow of the British Academy and author of several very important and insightful books on China her research interest in cruise works on Chinese state under market reform comparative study of public attitudes to openness in East Asian and Eastern Europe and Eastern Europe and also Chinese public policy and The first to speak is Professor Nicholas Ladi Professor Ladi is the Anthony Solomon senior fellow at the Patterson Institute for International Economics He was previously a senior fellow at the Brookings Institution and was before that a professor and director of the Henry Jackson School of International Studies at the University of Washington a Distinguished economist of China is the author or editor of eight books and the games of numerous countless articles and essays on China To run up the debate we have Professor Mingxing Pei Professor Pei is the Tom and Margot Pariska 1972 professor of government and the director of the Cuts Center for International and Strategic Studies at Claremont McKenna College in California It's also a non-residency fellow of the German Marshal Fund of the United States He had previously served as director of the China program at the Carnegie and Downman for International Peace and taught at Princeton University Again, he is the author of several very weighty books and numerous articles, and it's particularly well known for this evening for articulating the concepts just in China is in a kind of a trapped transition and has a system that notches crony Capitalism so some of those issues perhaps would be addressed Well, let me remind you that the event this evening will be Filmed and it will be put on a podcast hopefully within a week or so If you do not wish to be filmed Please let one of our staff or one of our student ambassadors know and we will arrange for you to be sitting in a corner where you Unlikely to be filmed Now if you have not done so, please put your mobile phone on silent I will not request you to switch your mobile phone off indeed. You are encouraged to Share insights from the debate on the social media, and I think you will have the handles for various social media on the screen and if you are from Source or from another university I think you will be able to connect to the Wi-Fi network automatically If you are not from a university institution and not automatically locked on through the educational room in service You can sign in from the source guess Wi-Fi Before I start the debate, I would like to ask you to Give the panel a sense or whether you think The China model however you understand Is sustainable or not so if those for those of you who feel that The China model is sustainable. Could you raise your hands? It's a very rough straw pole Okay This is the sustainable looks like a Clearly less than a majority those of you who feel that is unsustainable, please right seems a Bit more but not necessarily that much more for those of you who have not decided Right against a bit less. So there's some of you who clearly prefer not to indicate your wish at this stage Which is absolutely fine and I would also like to explain that at the end of the debate I would like to ask you the same question Just to see it get a sense of whether You might have changed your view not individually, but collectively Whether there is a significant change in views afterwards Now over to you professor she okay It's my great honor to be here and with you all and for which I would like to and the sincere sand and Soyes and especially professor director down I think that this is a Discussion but I think that if we and Speak all speakers in simple way and maybe you well and Answer that finally China's model is sustainable or not so But soft key the understanding world or might increase Reluctance to answer the question quickly And our child model and its sustainability Now we are well, I would like to and emphasize four points and make my tentative conclusion Firstly It should be differential between China's model and in both domestic foreign policy pattern in the Chinese official discourse on hand and that The international audiences can understand easily We quickly found there is Sameness and there's a difference What is sameness and Sameness that whether China's official discourse or foreign orders audience and the boost and And on the focusing of economic development and the preco-stability with environmental protection and social welfare And if you deny and the China model now have these fundamental aspects At awesome clarity, you are very objective But today is a difference And the China government often ignorant And a difference on the different emphasis upon Parli so-called dictatorship A preco-control Free market and opening to the Western world Now I think now to the foreign audiences the sync of China model are part of more emphasis and on in China and There is party so-called dictatorship And they are too much political control They are less free market than desire and Maybe less opening to a Western world Secondly China model should also be observed as a historical and evolutionary Conception from the shopping to Xi Jinping And solution as such could be discussed in terms of its inattentions especially those between commanding and marketing elements of the corner in Dunzi year and marketing elements of economy is more Was more prominent at least pay the more attention by both Chinese people and foreign audiences But now and maybe no observer Observeable is commanding elements of economy and also between power centralization and decentralization and Deng Xiaoping is so was so famous for decentralization of power and Xi Jinping in some way and is in opposite and Also between a soft and hard And they shall be compared with now is soft to general And the Xi Jinping in this compatible framework is highly or foreign policy Prudently conservative and radically expansion foreign policy the comparison now they shall be is undoubtedly have a foreign policy calculated by prudent conservative Carnation and plant of course compare with Deng Xiaoping radically expansion is foreign policy and he is correct and The child mode was planned the way not his story. It's of course largely Xi Jinping's job product and his innovation in politics and I think a professor down and just mention it and he innovation economics in social control In military and foreign policy therefore really he launched a new year And sir It shall be differentiate between China's model in China and that's supposing other developing countries The issue of compatibility With local conditions so called local condition other developing countries His problem and for any co-handling analysis Quick point are very simple There are no communist China comes party in other developing countries Not alone come China comes party on the Xi Jinping in other developing countries And generally no applicable change version of almost absolute political control highest centralization and No religious culture there, but on the other hand But under the requirements for economic weapon social stability and even pretty good stability and opening up our Generally the same in other developing countries and in China and finally And we should ask what prudent China's model has solved and worse out in China and what it has not yet solved and or coordinate or even would exaggerate problems also in China the former includes High-speed economy goes and rising up people living standard in general solid internal political stability great increase of national strengths and countries international influence and Chinese people Let only China government have been part of this Even many of them have among people have some different opinion or some aspects of the Chinese still but the later includes listening to the The problems is have not yet solved or corner to even would ever it social equality and a fairness Transformation of excessive environmental driving pattern of China called those political liberalization real rule by law In the higher level of the state So timidity of issues efficient so-called one-man rule probabilistic political culture and Strictly defined international soft power therefore my conclusion time to conclude the issue of a stability of China's model is valid so the contribution of the debate and The vital importance of that of international context in terms of the viability of Western or American model and Why people talk about so much about to the China model one reason is that Western model has been doubted and since to it and especially since I'm sorry to say Donald Trump and become American president and Issue of dynamic competition to win hearts and minds in the world by Both of these models Perhaps each will win card So the future of the world might be as messy as it is today. Thank you for your patience. Well. Thank you very much, Professor She Jane professor. Thank you, Steve. Also. Thank you for inviting me today Okay, yeah, yes, is that on or off? I think it's all This is on is this on that's on the green light means it's on right? Okay, thank you Steve. Thank thank you very much for inviting me to be here I think one of the issues we face here is the fact that the the China model is is not something at standing still It's evolving and as many people have noted in the past you know the adaptability of Yeah, the the the party state in China is one of the one of the features of its longevity So I'll sort of begin by making that observation But I want to pick up really on one aspect of the model that professor should mentioned, which is around social welfare I'm gonna focus in particular on that because that's the the area where I where I feel I can Speak more From from my own research So I think that social policy and social provisions and social welfare is a really important part of the China model And it's one that's often overlooked with a tendency to perhaps focus more on the political Aspect the political nature of the of the model and perhaps the economic as well Now as the social Provisioning and social policy angle is something that's become more prominent and and so is part of this evolving and adapting model It's been particularly important. I think to the model to the to the regime in China Since at least the late 1990s over the last 20 years, and I think it's important for two kind of reasons and One is one is that it contributes to the legitimacy of The current political system In the sense that or and that's one of the aims of the of these social policies So the Chinese government has been expanding its social provision It's social welfare and social security systems in an attempt. I think to enhance the their legitimacy It's not the only reason however Having looked in detail at some of the the policy decision-making around the turn of the 21st century If you look very carefully, you can see the economic considerations are already also really important and the Building social provisioning building social welfare tackling poverty extending social programs such as rural pensions and rural health insurance and so forth trying to improve housing and provide Social housing These initiatives were the successful or not and I'll talk about that in a moment These have all been seen as important to contributing to future economic Growth and development and in some cases in the rural case some of those social policies contributing to the Rural consumer and the creation of the rural consumer and consumer led growth from the countryside So I think it is an important part So I've indicated some of the areas in which we we see that social policies have have Have been introduced Also an indicator. I think of the the regime's commitment to improving or at least its stated commitment to improving social welfare and so forth It has and and people's lives has been around Attempts to tackle poverty and of course one of China's great achievements and one for which it's regularly lauded into an international International settings on the international stage is for its reductions in poverty And so where we have the world according to the World Bank where we had maybe nearly 70% of the population living in poverty If we on the measure of just under two dollars a day in in around 1990 We now only have about 1% in that position. So huge huge reduction in And poverty in absolute poverty in China And Xi Jinping currently stating that he wants to eradicate absolute poverty by 2020 So the current the current leadership very keen to pursue that And Has other sort of major targets as well So setting the bar quite high for the future in terms of currently saying that they want to achieve the level of high-income countries rich countries In terms of life expectancy infant mortality rates and maternal mortality rates by 2030 so really kind of continually setting quite ambitious targets I feel and targets that may be difficult in fact to meet so So I think that the ambitions are there there are of course huge problems and on the on the negative side a lot of the programs that have been rolled out are In many ways extremely regressive in the sense that they provide most generously for the wealthiest people in China and least Generously for the poorest and this remains a big problem One of the questions going forward is as as the leadership has kept raising its investment in these programs It's kept sort of the the share of GDP Committed to social spending has risen consistently over the last decade or decade and a half But it's still well below OECD levels. I think the last figure that I've had Seen available is social spending public social spending as a share of GDP is is At least 9% probably a bit more now But it's gonna OECD level OECD levels are around 22% So it's still far below that and So I think I would I Probably finish by saying to the extent and we can discuss this this social social policy is important to the Sustainability of the overall model, and I think it might be in terms of its contribution to future economic growth In terms of producing an educated and skilled workforce for the future for example I think The question is can can the government continue to roll out and actually improve and overcome these regressive policies And I think Xi Jinping one of one of the his claims at the moment is that you need a strong and centralized political system In order to overcome some of the vested interests that there are there have been In the in the model as it's been that he's trying to move forward So the big question really is whether or not he can actually overcome those particular vested interests in order to Build a more equitable social security and social social welfare system That will that will support economic and social development in the future Thank you very much Too very nuanced views and if I could it might you nick professor Ladi Well, thank you. Thank you very much, Stephen. Thanks for the organizers for inviting me I'd like to begin by underlining what Jane said and that is China's model At least as I understand it is far from static particularly when you look at the economic dimensions And I'll just look at it from the point of view of the labor force When reform began 40 years ago 99.8 percent of the workforce was in collectives which were heavily state controlled or in state enterprises or Directly for the government in in the bureaucracy Today state enterprises only employ about 10 percent of the workforce all of the growth of Employment in urban China outside of agriculture Since 1978 has come from the expansion of private businesses So you had an economy that was all the employment was in the state sector Basically a hundred percent of GDP was coming out of the state sector today Only about a fourth of China's total output is being produced by state companies so there's been a tremendous transformation in reflected in the rise of private business both in terms of employment and In terms of its contribution to output So I think when we talk about the China model we have to begin by recognizing that it at least in the economic terms It is far from static The second point I would like to make is that I think from a narrow economic point of view. We are seeing a shift Towards a much more sustainable model whether it will last for any particular period of time I'm not prepared to say but they moved from a model where growth was generated primarily by investment and Exports to a situation in which most growth is being generated by increased consumption this ties back into Jane's point about the Growth of private income and So forth so we're moving from a model where investment and exports were the most important sources of growth towards one in which Consumption is far in a way the most important source of growth and almost all of that consumption is private consumption as opposed to government Consumption and looking at it from the production perspective. We have moved away From a model that was very dependent on the growth of the industrial sector Which produced all the capital goods for the investment and produced almost all the exports Towards a model in which services have become the biggest driver from the production point of view the biggest driver of China's Economic growth and there's a long way to go in this transition services are still You know they're a little over half of GDP. They will rise over time To something like 70 or 75 percent of GDP and I think this will be driven by what we've seen in the labor market the private sector has generated most of the jobs and Wages are rising fairly rapidly This is the only major economy in the world where the wage share of total output is rising The profit share is going down if you look at the average of the OECD countries. It's fairly fairly flat So I think they're moving towards a much more sustainable Model of economic growth whether you look at it from the income perspective the production Perspective or from the expenditure Perspective and the third point I would like to make is again to reinforce what Jane said I think the model also is much more sustainable socially than it was in the past as Reflected by a very substantial buildout of the social safety net Here I would point out over the last 15 years China's expenditures on education health And other programs have been growing by more than 20 percent per year It's the fastest rate of growth of any middle income or upper middle income Economy in the world and I think here's where I would disagree slightly without Jane said of course China isn't going to have the same kind of social programs as the average of the OECD The average OECD country has a per capita income that is four to five times that of China I think China is doing better at building out the social safety net in providing services They're doing better than any other Country at the same roughly the same level of economic development And I just give one specific example of the resources the government has put into this program Jane mentioned the rural cooperative healthcare scheme Which is a genuinely cooperative program the government puts in money and the individuals put in money If you want to participate when this program began on an experimental basis a few years ago well 15 years ago I think is more accurate the government was putting in 40 renminbi per person individuals were putting in 20 Last year the government was putting in 420 RMB per person This is a genuine insurance scheme where the the contributions are pooled and then used to reimburse expenditures that individuals incur either for outpatient care or inpatient care and Originally the amounts of money were so small that the reimbursement rates were tending to be something like 20-30% Now the re-average reimbursements rates are going up to 70-80% Because the the level of government input into this program has grown so substantially. There aren't many people are beginning to say given the likelihood that fiscal revenue Growth may slow down that this may become unsustainable, but I think the government is pretty committed to improving Services in this area This is not a government obviously that stands for popular elections But I think when they see a program that has gotten such a positive response. They're probably going to continue it So the model is not not static. I think they're moving in a more sustainable direction economically And I think they've done an outstanding job really in terms of social services for a an economy and China's level of per capita development Thank you very much Well thought through positive view. I've noticed that some of you have arrived late and are sitting on the Stapsed there are some seats in front. So please feel free to move to the front and sit more comfortably and in the meantime our hand offers to Missing proof of the bay. Thank you Steve first, I think there's some agreement on As this panel is that The China model actually is not static is dynamic and if you Think about it the China model that we know about most Well is actually dead and that is the most successful China model if you Look at its record and this is the so-called post Tiananmen Political order in China and let me summarize what it is and you can't even extend that to cover the 1980s The things helping period that is this is a model that emphasized China's integration with the world It emphasized a decentralization of power. It emphasized liberalization of the economy Emphasized it focused on a pragmatic low-profile foreign policy is also politically Institute a form of collective leadership this Model produced the so-called China economic miracle, but five years ago There was a real political change in China and as a result of that change What we know about the model not very little of it actually remains what China has today is a Completely different approach practically to practically on every Score that is you have centralization power you have a much more assertive aggressive foreign policy you have economic nationalism which Emphasizes China's National economic interest even at expense of Integration with the rest of world and that's why China's relationship with its major trading powers is Probably at its worst in decades So the real question is whether this new China model will be sustainable on this I think we only have history to refer to as some kind of source of Judgment is that we don't know about the future I think the honest answer to this question is we don't know but how many academics would openly admit their ignorance, right? But also in thinking about the future of this new just sustainable model we own we can answer this question has there been a Successful dictatorship one-party regime that has managed to reach High-income level high-income level or the status of high income is Defined by the World Bank as half per capita GDP in PPP terms put personal property at Half of the leading country in the world so at today the leading country is the US about $1,000 PPP China's PPP is about 13,000 so about roughly a quarter So in other words will China be able to double its per capita Income in the next will have a years and reach the status level in global history. There's not a single Dictatorship that has achieved at that level so in other words history is stacked up against China for very profound difficult Complex reasons we can't explore that but if you look at this is not a single Dictatorship and Singapore is not a dictatorship. Let's just give Singapore the proper Title it deserves Singapore actually has legitimate opposition parties as rule of law It has a lot more personal freedom Economic freedom freedom than Chinese if China is actually government like Singapore's and I have absolutely no Doubt that it will be a successful So history so China has this history to add the historical record to contend and also We should not forget that China's past success The last 35 years or 40 years Depended a great deal on its external environment in especially a stable cooperative beneficial relationship with the US And those who have been watching the development of US-China relations I think most of them would have conclude that that relationship has turned so in the years ahead China's external environment will be most likely much less favorable than What it was in the last 40 years. So if you put history international environment and then The also within China the record of one man rule this form of centralized power It's not very encouraging. I think we only We only have to refer to the Maoist period to know how successful that kind of system is so on the on balance even though I I tend to be receptive to the idea of ignorance but I'm actually more confident than Most people that this is not going to be a successful sustainable system. Thank you Thank you very much for putting a very clear views on the more skeptical side of this debate. I am not going to start off by asking the most skeptical to Disagree with the most positive I'm going to start with a more neutral Question somewhere in the middle. I think change me a comment Which essentially says that the success of China's reform and its reform agenda to be pursued it Will require a strong leadership and if that strong leadership is not there, then it's going to be much more difficult Would you agree and do feel free to interrupt each other if you want to in the course of the Discussions, Nick, would you like to get started? Is it necessary for your economics success? I mean to have more centralization and more centralization is stronger leadership and Xi Jinping has now the strongest possible leadership Since certainly since from shopping and arguably since after Mao died Well, I'll be the honest academic and and say I don't know I Think you can point in different directions Obviously if she goes off in the in the erratic Policy directions at least in the economic domain and to a certain extent in the cultural and political domains that we saw Under Mao Zedong then China China we can write China off as a as a model and a successful developing economy I Simply don't know. I mean there are optimists who thinks yes now she's consolidated his political power He's run his anti-corruption campaign now. He's going to go back to this very ambitious economic reform agenda that was laid out in The third plan in November of 2013 a document that people claim I wasn't there, so I don't know people claim that she was guiding the pen on that document and it's a And by Chinese standards as a revolutionary document from an economic perspective But very little of that has been actually implemented. So the optimists say okay Now he's gotten rid of a lot of his political enemies. He's revised the Constitution so he can stay in power indefinitely So now he's going to turn to economics. I hope that's true But I I'm not prepared to make that argument because I don't see too much evidence that that is the case the one Really important piece of evidence I think comes on the personnel side and that is in the economic and particularly in the financial domain At the National People's Congress a few couple to three weeks ago We did see the appointment of some very good people to run the central bank To run this newly reorganized combined regulatory agency that is going to deal with both banking and insurance we had Liu Hu getting promoted we had Wang Yang who I think is a reformer moving from vice premier to Standing committee of the poet bureau a lot. I mean I hesitate to say this with Min Shin Present because he will probably find some counter examples, but a lot of the appointments at least from my perspective indicate a possible reform agenda certainly a leadership that is giving key positions to people that have argued systematically for Economic reform so maybe these people are going to be given Some leeway and maybe with Xi Jinping in a stronger position The best in interest that Jane mentioned who thwarted a lot of these reforms will Have to give in and be pushed aside. So I don't really know but I'm hoping we'll see more on the on the economic reform I cannot agree with you know a simple conception that the make Chinese political leadership since opening a reform into the court of men And a simple conception that Xi Jinping is only only Xi Jinping is a strong leadership And I don't think that Deng Xiaoping is the reformist strong leader Jiang Zemin is a little less reformist but still strong leader Only Hu Jingtao is not less reformist and much weak lead So What China require For its progress and for as well stapled Is the reformist strong leader? So this is not only you know strong Stronger is only requirement and of course And the China reform and opening already not this year is for its 40th anniversary We have almost and the 30 years And the China reform and economic development and and foreign policy as well Generally on the reformist Strong leadership Deng Xiaoping and in a little less degree Jiang Zemin And Xi Jinping now is in his sixth year And of course he's a very strong leader All powerful strong leader But whether he is at some time fully reformist And we still have to wait and see Thank you If if a country has been reforming for 40 years and it's still reforming I think something has to be wrong with the reform process itself So when people talk about China reform I say what reform? So in terms of political strength I think it really depends on where The guy is going where The leader the strong leader is leading the country If you have relatively weak leadership, but the overall direction is still correct and then It's really a matter of the pace of progress But if you have a very strong leader, but he's leading the country in the wrong direction Then probably strength is not what we would like to see in that kind of leadership In part because I didn't say China needs a strong leader But I said that the arguments that are put forth in China for a strong she is a strong leader Are that he can you know tackle these vested interests whether or not He can in in these social policies. I think you know, I don't know either Maybe he maybe he can but he hasn't done it yet and Coming back to the issue of those kind of the the positives on social policy I mean the spending is going up, but the problem is it's it's still extremely regressive So too much of the spending is is going on and so further improving the benefit, you know The policies that benefit the the the wealthier part of the population to really shift that is going to hurt Um, and there's going to be a lot of opposition now. She has actually demonstrated in some Areas through the corruption anti-corruption campaign that he can and and will sometimes take on the elite in the country So maybe maybe he can do it, but I I don't know Okay, let's move on and then I'd like to raise the questions that in fact means in put on the Table, which is that he said China's success depends on the existence of a benign external Environment and he is having some question as to whether the external environment is will be as benign as previously um What are we going to be expecting in terms of that environment for china's to Developed will take external environments to be benign Well, I think it's uh, it's an open question at this point I certainly think there's a lot of rhetoric coming out of washington that suggests that You know things are pretty quickly going off the track On the other hand president trump throws out a lot of things just to get a stronger negotiating position And it may be that he will find the chinese make a few concessions that are not very big And he will declare victory as he has already in the case of the renegotiated bilateral trade agreement between the united states and korea Um, I'm not forecasting this, but I'm saying it's it's a possibility that one can't rule out The second point I would make is that it was kind of implicit in what I said earlier And that is china is a much less export oriented economy than it was prior to the global financial crisis his Growth is being driven more by domestic demand And the simple metric that economists tend to look at is you know, what what our exports relative to gdp and china was I don't remember the exact numbers. They were up in the 30 some percent now. They're in the 20 some percent So exports as a share of gdp have declined quite substantially over the last Decade and so if the worst scenario emerges in terms of collapse of globalization and The demise of the wto wto and some of the other things that have been mentioned in washington China certainly will suffer it'll be a tougher environment But they're nowhere near as vulnerable to a development like that than they were 10 years ago Well, because I see you are china's leading expert on american studies What do you think? I think that it early feels again simply as the answer From Xi Jinping and from china's party and even from people's republic of china's perspective in one fundamental aspect the environment international one become much more Much more benign to the party regime and to china model And for example, I think the party had undergone its greatest greatest difficulty in 1989 as a time Within china even majority of people majority of people think that the The moon in new york and brucella is more long than china But now no one can see this This greatly increased the legitimacy and self-confidence of china's party And including Xi Jinping and to incit on their fundamental, you know load or models But on the other hand And in a past most of the past 40 years china enjoyed The liberal globalization which widespread perceiving china are fundamental beneficial for china But now this liberal globalization is losing A large part of its domestic social basis or critical basis In advanced country, especially in united states and in some other few Maybe european countries On the other hand In a strategic front you look at China dropped the criminal eyes Including its ministers Finally, we mobilize our And talents and the united mobilizes to chucking on china's strategy equally Along with its allies, especially japan so I think now to the The following environment is very complicated And on one hand Become even more benign On the other hand become much more challenging And even in some degree brutal I don't think that Maybe china leaders And china elite opinion Is very propelled for the former But they really And Quite under propelled for the Later aspect I just mentioned Thank you I mean thing, are you Yes, I think in terms of external environment we have to Think In almost a worst-case scenario That is even though I think the chinese Export dependence has fallen, it is still a huge chunk. We're talking about roughly 22 percent of its 20 percent of the gdp Is derived from exports. China exports something like 2.4 trillion dollars So it's a huge amount and a lot of that is because of china's central position as The center of global supply chain And suppose a form of co-war between china and the us And that global supply chain will have to be restructured So that it will bypass china And china's export will take a huge hit if that's the case And also china will have to spend a lot more on its military expenditures In order to compete with the us In the security area So if the external strategic environment really deteriorates the economic impact will be substantial And it's not just the us. I think what's Need to be said Is that Europe the us and lifelong japan have all come to the same conclusion That their engagement policy with china has failed to deliver the desired results And it is time for a fundamental shift. We don't know what specific policies will come out of this assessment, but in the next five ten years A much more Robust policy a very different policy much more confrontational policy is likely And if that policy is put into place The There has to be there will be unavoidably consequences on the economic front Okay, I will now open the floor And if you would not mind Standing up when I call on you so that the Syrian ambassadors can identify you and hand you with a microphone If you could also very very briefly one sentence explaining who you are Uh, then we would enable us to Speakers depend on us to know I think the gentleman in the suit That's christopher. That's you. Oh Thank you. My tailor will be delighted I think shijing ping has said many times that the future of the chinese economy in particular Is dependent on science and innovation None of the speakers have mentioned this And there's a corollary question here very important very simple Where are the top brains in the world going to migrate to? We live in a world of extraordinary international fluidity The top people not merely in science, but in finance services Government everything and they move very quickly We've seen this recently even mrs. Merkel can't get the bankers to go from london To frankfort quite an attractive place Will the innovators scientists Want to stay in china that is the question I'm not answering it, but that is the question Thank you Would you like to get started with that one, uh, professor she A more authentic voice from china will will decide will the scientists Will the dynamic people will the innovators in china Stay in china It's a it's a very tough question to answer But I think um from what we've seen in a lot of domains china is leading in innovation and artificial intelligence self-driving cars potentially 5g technology and china has an enormous pool of talented people Mostly working for private companies that are driving innovation In many domains, but they're not doing it in isolation There's a flow of people back and forth between china and silicon valley and other centers of innovation in the west A lot of chinese investment going into silicon valley firms So I think a lot of this innovation is global in nature But I think the chinese are playing an increasingly important role. Yeah I want to point out two hurdles one is this flow Of talent and information between china and the outside world probably you will be Blocked to substantial degree by the worsening strategic relationship between china and the u.s and one of the priorities of the u.s. Administration is to dramatically limit china's capacity to gain technology From the u.s. So even though specific measures have not been proposed based on the record of The u.s. Government blocking chinese acquisition of tech companies the record is very clear the direction is very clear So that's one the other is what's happening in china I think the biggest problem for anybody who wants to move china is their internet access Right, it's not just them their children and they will feel living in a very different world. How can they? How do they deal with a system which views the flow of information and personal freedom as a form of existential threat To the party state So this I I want to relay an anecdote. I don't know whether it's true on the property. It's true that Six five years three years ago The chinese government convened a very high level National conference on science and technology six of the seven top leaders showed up and they gave Very glowing speeches encouraging speeches on why china should innovate and leading and during qna Very distinguished senior academician in the science academy stood up and said I have a problem That is if you want us innovate But you don't let us use the internet freely How can we innovate and there was this huge round of applause and of course he didn't get a clear answer from china's top leaders Okay, uh, yeah, no china for for for technology innovation china in first place have a huge advantage this is china size and allowing china every year produce and from university graduate from university and hundreds of solace engineers and another example that Every year in china's excellent students and go to oc's and many of them in first rate universities and including launder launder university And at least 20 percent or 30 percent Well, you turn to china especially on the recently years the government huge, you know The incentives economically and in terms of position and so and so And also and i think like the chinese government is specializing for himself And among his comrades have king's sense to go to in this direction But on the other hand china still have some You know substantial weakness which could discount The advantage i just mentioned the first is To the in china And why so many chinese excellent students well And go to especially for graduate graduate courses and go to oc's Because in china university generally as in chinese political and social life There are too much confirmation culture And i'm not so encouraged debate and personal initiative and creative And of course commanding economy elements government You know promotion called overcome And this kind of you know problems, but only partially The second is that the china government may be and in future will be better China does most of them and up to not graduate from engineers And so they pay a lot of attention to New technologies strictly defined But they pay much less attention to You know so-called the management of people and management of finance And xin himself said that we should Should accelerate the process to to transform china's national strengths into our managing capability in Global stage just means that in the later sense we are relatively weak Surely of course And there's no purely economic technology problem This world is governed by political economy And the united states and in less degree and some european countries and in japan and because for strategic purpose they now realized and a kingly that the to to to To slow this process of china escalating to order in high-level technology technology is The one of the most important strategic issues so and Trump's high tariff and other you know, incompatible threats And is generally And concentrated around those industries And which most closely connected with next generation of technology. Thank you jane Yeah, just really briefly. I know you want to move on um I would agree that you know Well, I would say some people will obviously stay and that's partly because there's a lot of investment As I think you said and some people won't stay some people would prefer to be in a in a freer environment But I would I would say there's a there's a paper came out actually just a few I think a couple of months ago Which was a study of returned So it was a study of scientists in china on this exact question I think it was mainly chemists and a lot of them did say that they found the environment somewhat less advantageous in terms of the sort of the freedoms and the and the sort of the the innovative environment the sort of educational training and innovative environment But they did also appreciate the investment. So I think you know That so so so for some people It despite the problems that this was a study of people who are still in china So some people despite the problems were still were still there whether they're the very best Is another matter um I'll take I'll take one on this other side and I'll take one in the in the middle if I if I if I could If everybody could be very succinct including our panelists. We might be able to be squeezed in two The lady there, please Hi, I'm alumnus from soas. I'm chinese in law My question is um, we talked a lot about the us and a bit of uh about europe What are your views and the last sort of five years on foreign chinese foreign policy on the african continent? Or in like the development of like big infrastructure structure projects in iran and whether you would assess this as a success for the future or something a bit more nefarious and And a danger globally. Thank you Okay first We don't have to go all around the table I could I won't comment on africa since I I'm not really following the chinese activities there But on the on the broader question of the chinese belt and road and how that's working Yeah, I think we're still in a very early stage there's a lot of talk about Trillion dollars or more, but the amounts of money that have actually been spent are much much smaller And we don't have enough of a track record. I mean this program really began only five years ago To judge whether or not the projects are going to be Successful remember they're all mostly financed by chinese loans every time I read in a chinese Any newspaper that the chinese are investing in the belt and road as an economist I get I get angry because they're lending money and maybe if the borrower is all default It will turn into a chinese investment, but that's certainly not their intention, but I think that's that's the greatest Downside from the chinese if the projects are not Carefully designed carefully chosen carefully implemented that they will end up with a lot of projects that are not viable Some of the governments in these countries Even though they may guarantee the projects are probably not in a position to do so the IMF is already warning that Some of the countries in the belt and road Program already have excessive external debt And they should not be encouraged to borrow more Okay Perhaps we press on and you could focus your questions on the issue of sustainability Yes, please Yes, yes George Magnus. I'm a research associate here at SOAS and also at the china center in oxford um the I didn't put my hand up when you asked the question about sustainability steve because I thought it was only a marginally better question than the referendum question. We had a couple of years ago We can talk about that later But seriously because a it wasn't kind of time constraints. I didn't know whether you meant for 10 years or 100 years um But also it just struck me that actually the the key issue really is we We all know how successful remarkably successful uniquely successful china has been during the last 20 or 30 years and The idea that we can kind of take that and say that we can extrapolate that into the future I think personally that that's kind of finished now. So the governance system has changed as professor mingsham pay eloquently explained And it seemed to me that at the 19th congress one of the big takeaways from that was the change in the central contradiction now If if everything In action actually backed up the rhetoric of that change in the central contradiction Then I think we could feel very comfortable But I'd like to ask the panel about other contradictions which I think have not really been mentioned or have only been Kind of skirted over the first is how do you reconcile the maintenance of a growth target with deleveraging? And that's I think one of the big issues. It's certainly in the near term second question is How do you reconcile all of the advantages of having a big population? with the fact that china is the fastest aging country on the planet and Obviously jane's comments about social welfare and social And the aggressive nature of of the of the benefit system. I think is really important there You know the third is about productivity, which is a sort of a shortcoming which Not only is kind of gone missing in the west, but obviously it's gone missing in china, too And the fourth question really is about Well, you say that about actually if you look at total factor productivity, which is the thing that most economists look at it's basically At a snail's pace in china and it's very very highly correlated with reform Which is also stalled as professor lardy said as well and the last question really Builds on I think I think we okay run it off those three you'll do for now sorry well There are a number of very good questions there And nick because there's quite a lot of on the economic side. Perhaps you could get started Yes, I'll just be very brief and take the first. Maybe it was the second contradiction about D leveraging versus growth I'm a relative optimist here the Chinese have succeeded in bringing down the rate of growth of credit quite significantly over the last About the last year and a half and the growth is not slowed down I think they are reducing financial risk because the chains of lending through nonbank financial institutions and all the rest of it Are shrinking But the credit that's reaching the real economy has not slowed down that much so they've been able to Bring down credit to GDP From its peak in the third quarter of 2016 And as we saw last year the growth of the economy actually ticked up a little bit. So So far so good I think a little in Beijing now What most is not relatively slower a little slower growth rate There are very much to worry about in the past two years the financial delicacy And the financial risk is really remarkable increased the second problem And I think that they are not saying there's so much but still And it's an element to be adjusted for many years and in despite of so called to To to to make the poorest and portion of the population, which is a definitely a small minority and emancipated by poverty the among the the majority of people and the social gap income gap is still increasing and I don't think that's instantial opinion and so Jiang Zemin Hu Jintao and even Xi Jinping himself any of the leaders and take a very strong and systematic and measure and to you know Shorter remarkably the social gap social gap is still expanding I think this called influence negatively long-term sustainability of China's model and within China Thank you. Um, please. Okay. Uh very briefly, uh I'm glad you raised productivity and aging issue Indeed China today is the fastest aging Society in the world. Let me just throw out two numbers 15 years ago The increase of 65 years an older portion of the population grew about 15 basis points at a point one five percent a year today. It is point six percent so four times faster China is only about 15 years behind Japan in turn in its demographic curve So in, uh, what Japan what you see in Japan today was 24 percent of its population 65 years older Is what China is going to look like In the early part of 2030s. So this is uh, and that drives down growth. The other is the productivity growth There's a good reason for it to be slow because the Chinese economy is transitioning into a service sector service oriented economy And the service oriented economy is going to have much lower Productivity growth because of the nature of the activities in the service sector So, uh, if you think about a high gross economy based on what China has done in the last Cities of all years that kind of economy is no longer What we have in China today. It's going forward. It's a very different economy Well, thank you very much I am afraid that we have been defeated by the clock The fault is of course entirely mine because I'm the one who's moderating But I do apologize to those of you who are not able to Have your questions or comment Before I draw this to a close Could I ask you to raise your hand if you have changed your mind In terms of whether you think it's sustainable or not sustainable It doesn't matter whether you originally start thinking that it was sustainable and become Unsustainable or the other way around if you have changed your mind as a result of this Discussion could you raise your hands? So So very few of you have changed your your mind on on on that on that basis I think in that case we don't we don't need to ask the three questions separately Just let me Thank our panelists and also Thank you for this very interesting evening of discussions and debate I think that is an important subject that we will be coming back to Is something that I think we never really expected To have a clear cut answer one way or the other or clear cut Decisioned as to whether it's sustainable or not But it is going to be a quick big issue that we will have to be Revisiting time and time again because of its sheer importance At the end of this debate We have a reception and you are all Invited and that is in the Brunei suite on the ground floor of this building So at the end of these if we could all move upstairs, please don't try to Button hose these speakers because they will be at the reception and they will be there available is to talk to you So, thank you very much