Asia Financial Forum
Economic and Financial Reforms for China - What’s New and What’s Different This Time
On September 4th, 2013, The Asia Society Southern California co-sponsored an event organized by the Federal Reserve Bank of San Francisco. The symposium looked at China’s current economic conditions and was entitled, “Asia Financial Forum: Economic and Financial Reforms for China - What’s New and What’s Different This Time.” The event took place in the Federal Reserve Bank of San Francisco's downtown Los Angeles location. Two panelist, Perry Wong, from the Milken Institute, and, Cindy Li, from the Federal Reserve Bank of San Francisco, spoke on a myriad of economic topics. The structure of the conversation was split into two sections: in the first, Mr. Wong and Ms. Li shared their thoughts on the current economic opportunities and challenges in China for 45 minutes, and then, in the second, the floor was opened to questions and comments from the audience.
Central to the content of the symposium was the fact that the new growth rate target for China has been lowered, significantly, to 7.5% and what impacts that would have on the Chinese economy, the Asian economy, and the world economy, in general. Some believe that the growth rate target will fall even further, but the unanimous consensus was that 7.5% is a realistic number to maintain high growth in a sustainable manner. This is in contrast to the past. Former premier Wen Jiabao was quoted as saying that the prior double-digit growth rate was uncoordinated, unbalanced, unstable, and unsustainable, etc. Yet, even though the drop can be perceived as a negative, this lower growth rate target is actually an economic positive for the future of China – with a lower growth rate target comes a higher quality of economic growth, on par with the most developed nations of the world, which consistently boast a small growth rate target at a very high quality.
Also on the docket was the issue of China moving away from purely a manufacturing and labor based economy that simply adapts technology towards an innovation and domestic consumption based economy. China needs to increase domestic consumption and wean itself off of its heavy reliance on foreign investment in order to self sustain. Mr. Wong, in particular, posed a list of five reforms that the Chinese government could undertake to improve the future of its economy. High on Mr. Wong’s list was engaging urbanization and reform, addressing the broken and defunct SOE system, and coming to a real understanding of the meaning of the quality of life (for instance, lessening pollution in the major metropolitan centers, like Beijing.) The clear, lasting message from the entirety of the event: there needs to be fundamental changes to China’s financial system in order for China to acheive maintainable and steady economic success in the future.
Review by: Julien Isaacs, Marketing and Outreach Intern