Nearly 40 years have passed since President Deng Xiaoping announced a raft of economic reforms that initiated China’s economic opening up to the world.
Professor Fan Gang, a prominent Chinese economist and reform advocate, reflected on the remarkable pace of change he has seen since that time at the launch of The China Update: China’s 40 Years of Reform and Development: 1978–2018, published by ANU Press.
“When I was in the US for the first time some 30 years ago, the only commodity I saw with the label of ‘made in China’ was… a basket on the floor,” he said.
“Now the US and China have a trade war. That’s remarkable. It’s kind of a landmark for these 40 years of changes, even if a trade war is not a good landmark.”
Professor Fan’s speech was one of many at the two-day China Update conference, which examines the economic development of Australia’s largest trading partner.
Held at The Australian National University (ANU), the conference focused on the recent and controversial US-China trade war that pundits fear could also harm Australia, likely through fluctuations in the Australian dollar.
“Why the trade war that the US has initiated with China?” Professor Fan-Gang asked. “You have a trade deficit, yes, but you can negotiate, you can talk… so why the trade war?”
“First of all, somebody believes that the trade deficit represents their losses and that the trade deficit is about other people taking advantage of the country. However, we know there are many more issues beyond the trade issue,” he added.
Professor Fan attributed the recent escalation to Sino-US trade tensions to the Trump Administration’s push to “stop China from further economic development”.
“The question is, how will China respond? They continue to say we need to negotiate, we need to cooperate…with the American government but…game theory says that you need ‘tit-for-tat’, at least for the beginning,” he said.
“Some people say you can retaliate [toward] US companies, but US companies in China are Chinese companies. They are a part of the domestic economy and… a large part of China’s export value – a lot of goods – are coming from foreign companies.”
Despite this gloomy outlook, Professor Fan does see a positive side to the debacle, seeing it as an incentive for China to continue with much-needed economic reforms.
“What the trade war tells us is that opening up is so important,” he said. “All of our discussion about this book, every author, every contributor finds problems and things that China can improve further. And then China can be stronger and stand high for further globalisation and economic development,” he said.
By CAP Student Correspondent Georgie Juszczyk.