Chinese Economy

Speakers: Evan Feigenbaum, Vice Chairman, The Paulson Institute Robert Hormats, Under Secretary, Economic Growth, Energy, and the Environment, U.S. Department of State. China's post-Mao history has been marked by sea changes in economic policy. In 1979, a modernization and reform agenda paved the way for growth over political ideology. The leadership deepened and broadened the market economy in 1992, facilitating its integration into the world system. Today, China is embarking on a more complex development path, requiring hard decisions to sustain its growth and stability over the long term. Things may change again, not only in the economy but in the political and human development spheres. What can be expected from the new coterie at the top? Our panel will pinpoint these critical issues and assess the likely pace of reform - or whether the status quo will endure. Which way Beijing? James McGregor, Senior Counselor, APCO Worldwide Perry Wong, Director of Research, Milken Institute Moderator: Mei Fong, Director, Asia Global Programs, and Adjunct Professor, University of Southern California Annenberg School.

Speakers: David Bonderman, Founding Partner, TPG Capital Howard Chao, Senior Partner for Asia, O'Melveny & Myers Benjamin Fanger, Co-Founder and Managing Director, Shoreline Capital John Pattar, Managing Director, CLSA Capital Partners Moderator: James McGregor, Senior Counselor, APCO Worldwide. Despite China's importance on the global business stage, its financial markets are rarely called investor-friendly. Companies tend to have short histories, so investors seeking track records will be frustrated. On top of that, company data is not always available or reliable in an environment that lacks transparency. Creditworthiness is sometimes influenced by political ties, especially among state-owned enterprises. Our panel will tackle the logical question: How well can you know a Chinese company? We'll discuss how financial instruments are packaged, bought and sold in China, and how they work politically as well as financially. We'll offer guidance on finding higher-quality information and consider how recent cases reflect on the prospects for greater openness and reliability as these markets mature.

In the past three decades, China has transformed itself from a central-planned, agricultural economy to the world’s manufacturing base and growth engine. Expanding at an average annual rate of more than 10 percent, the Chinese economy is now the second-largest in the world. Globalization is undoubtedly one of the most important drivers behind this extraordinary growth. Globalization is not a one-way process. As Chinese businesses grow and mature, they are increasingly turning to outward direct investment (ODI) to diversify their product portfolios, take advantage of cheaper labor in foreign countries, and claim reliable sources of raw materials. In recent years, several instances of Chinese outward direct investment received wide media attention. Among them were Lenovo Group’s purchase of IBM’s personal computer division in 2005 and Wanda Group’s acquisition of AMC Entertainment in 2012. However, acquisitions of assets by state-owned enterprises in natural resource-rich countries—especially African countries—have stirred the most concern. Still, despite the hype, Chinese outward direct investment remains small in relative size. In 2011, China’s ODI stock was 1.7 percent of the world’s total, or 5.2 percent of the nation’s GDP. When measured by direct investment, China is much less globalized than when measured by international trade. Is China’s relatively low outward direct investment level justified by economic fundamentals? What are the determinants of Chinese ODI? This paper uses country-level data to analyze the patterns of these investments.

China has weathered the global financial turmoil in much better shape than most other countries, including the United States. However, there been concerns that banks loosened their lending standards too much as a result of a huge stimulus, among other factors. This led to excessive lending to individual home purchasers and rapidly rising housing prices that, in turn, may eventually lead to an increase in nonperforming loans at financial institutions should those prices collapse. The result, if corrective actions prove insufficient, could be a banking crisis that might require a government bailout. The crucial issue, therefore, is whether there is a housing bubble in major cities throughout the country that is about to burst. China has certainly experienced extraordinary growth in the housing market during the past decade, which has been accompanied by substantial increases in residential property prices. This report examines whether the decade of rapid growth in home prices in fact represents a housing bubble, and if so whether the authorities are able to achieve a "soft landing" in the housing market.