China's economic strategy focus of panel
Updated: 2015-06-17 10:57
By Dong Leshuo in Washington(China Daily USA)
With the US-China Strategic and Economic Dialogue (S&ED) approaching, China's economic strategy was the central topic at the Council on Foreign Relations in Washington on Tuesday.
"China has a very broad, very proactive, very well thought of international economic strategy, far more extensive than any other country in the world," said Robert Hormats, vice-chairman of Kissinger Associates and former undersecretary for economic growth, energy and the environment at US State Department from 2009 to 2013.
"It serves Chinese domestic interests; it serves the interests for a broader network for integrating with global energy markets, global trade and global finance," Hormats said.
Experts shared their viewpoints on China's economic status quo.
"The rubric to think about the Chinese economy is the term 'new normal'," said Olin Wethington, chairman of Wethington International LLC and a former special envoy to China at the US Treasury Department.
Wethington defines new normal as "a set of policies not yet implemented but a set of policies better designed to steer China toward a lower but more sustainable growth trajectory".
"At this point, the new normal is directionally correct, directionally pointing the right way in general," Wethington said.
Wethington also pointed out that although there is a decline in the rate of growth of investment and consumption, the move toward middle class demand has not made a lot of progress.
Hormats said that when looking at China's economy, it's important to look at the sources of growth.
"I think it's the problem that the Chinese are now tackling," Hormats said.
The Chinese government has said that the market should drive the economy and drive allocation.
"I think the government knows that if it's going to grow more rapidly, it has to have a much more market-oriented use of sources," Hormats said.
"They have a lot of recourse, a lot of financial recourses, and a lot of reserves," he said.
Hormats pointed out that as China increases its foreign direct investment, the US and many parts of the world are actually beneficiaries of those investments.
The US and China are currently negotiating a Bilateral Investment Treaty (BIT).
"The quality of BIT is very important," Hormats said. "I like the idea of a Bilateral Investment Treaty with China. But I do think it has to be very high quality. If you are going to get a very good one, a robust one, one that addresses the 21st century issues, then it will facilitate investments," Hormats said.
The US has not joined the Asian Infrastructure Investment Bank (AIIB), an initiative lead by China.
"The US got the policy right, but they got the diplomacy wrong," Wethington said.
He said the US did not realize the Asian desire for infrastructure and development.
He said that the AIIB issue "should be a wake-up call for the US. It needs broader policies that include a very significant developmental component," Wethington said.
"The view now is let's work with the AIIB; let's encourage other multilateral lender institutions to collaborate with the AIIB," he said.
"Let's also insist that the AIIB function on the basis of high standards. That is the way that the Chinese today are framing this initiative."