The Great Creep Backward: Policy responses to China’s slowing economy

PolicyCast

Harvard Kennedy School Professor Rana Mitter and Harvard Business School Associate Professor Meg Rithmire say that after decades of tremendous growth, an economically slowing China is the new normal. With a growing debt-to-GDP ratio, an aging population, a devastating real estate bubble, and a loss of confidence among both foreign investors and domestic consumers, Chinese President Xi Jinping and the Chinese Communist Party face a daunting array of thorny problems—including ones of their own making resulting from the One Child law policy and other home-grown policies. So how should the United States and other Western countries respond? Is it a moment China's rivals can use to their advantage, or one where great power rivalry can give way to great power cooperation? And how will an economic slowdown affect China’s geopolitical ambitions, and is an annexation of Taiwan now more or less likely? Rana Mitter is a historian and the S.T. Lee Chair in U.S.-Asia relations at the Kennedy School and the former director of the China Center at Oxford University. Harvard Business School Associate Professor Meg Rithmire is a political scientist who studies the comparative political economy of development in Asia and China’s economic relations with the rest of the world, particularly the United States. They join host Ralph Ranalli to explore some of the underlying reasons behind for the country’s current malaise, and to offer some policy ideas to help create a positive outcome with relations with China moving forward.

Rana Mitter’s Policy Recommendations:

• Liberal nations should take a realistic view of security issues involved in engagement with China, while preserving cultural interaction and scientific knowledge exchanges with the long-term benefits to both sides.

• The United States should focus on deepening free trade agreements and opening up new markets and in the Asia Pacific region to counter-balance China's influence.

Meg Rithmire’s Policy Recommendations:

• U.S. and Western officials should reassure China they that they want to see its economy succeed as long as it isn’t weaponizing trade and is moderating its geopolitical ambitions to reduce conflict.

• Continue pursuing “de-risking” policies instead of decoupling policies that would lead to a hard economic break with China.

• Avoid framing the situation as a choice between bringing jobs back to the United States or keeping them in China, while also addressing the fallouts of global trade and compensating those who are negatively affected.

Episode Notes:

Rana Mitter is the ST Lee Chair in U.S.-Asia Relations at the Harvard Kennedy School and a member of the board of directors of the Belfer Center for Science and International Affairs. A historian who focuses on the politics and history of modern China, particularly during the communist era, he was formerly director of the China Centre at Oxford University, Mitter is the author of several books, including “Forgotten Ally: China’s World War II,” which was named a Book of the Year in the Financial Times and Economist. His latest book is “China’s Good War: How World War II is Shaping a New Nationalism.” His recent audio documentary on contemporary Chinese politics "Meanwhile in Beijing" is available on BBC Sounds. He won the 2020 Medlicott Medal for Service to History, awarded by the UK Historical Association. A Fellow of the British Academy, he holds a master’s degree and a PhD from King’s College, Cambridge (UK).

Meg Rithmire is the F. Warren McFarlan Associate Professor at Harvard Business School, where she teaches in the Business, Government, and International Economy Unit. A political scientist, her my teaching and research focus on comparative politics and political economy with a geographic focus on Asia, especially China and Southeast Asia. Rithmire is also faculty affiliate at the Fairbank Center for Chinese Studies, where she convenes a seminar on the Chinese economy. Her first book, “Land Bargains and Chinese Capitalism,” examines the role of land politics, urban governments, and local property rights regimes in the Chinese economic reforms. Her most recent book, “Precarious Ties: Business and the State in Authoritarian Asia” investigates the relationship between capital and the state and globalization in Asia, comparing China, Malaysia, and Indonesia from the early 1980s to the present. The book examines how governments attempt to discipline business and how businesses adapt to different methods of state control. She holds a master’s degree in political science from Emory University and a master’s and a Ph.D. in government from Harvard University.

Ralph Ranalli of the HKS Office of Communications and Public Affairs is the host, producer, and editor of HKS PolicyCast. A former journalist, public television producer, and entrepreneur, he holds an AB in Political Science from UCLA and an MS in Journalism from Columbia University.

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