On Thursday 18th April, I attended an excellent lunch-time lecture on this topic at the RSA, London by Dr Linda Yueh which is based on her recent book – http://www.amazon.co.uk/Chinas-Growth-Making-Economic-Superpower/dp/0199205787.
Linda Yueh is BBC’s chief business correspondent, director of the China Growth Centre and fellow in economics at St Edmund Hall, University of Oxford. She is also adjunct professor of economics at the London Business School; and visiting professor of Beida, Beijing.
Her talk covered two main areas:
For the growth drivers, I refer you to an excellent MindMap – http://mcgilljd.files.wordpress.com/2013/03/lsechina1.jpg?w=960&h=483 – by Jan D McGill, who wrote a very good summary of the LSE lecture on the same subject in March by Linda that Jan attended – http://mcgilljd.wordpress.com/2013/03/25/chinas-growth/.
I will summarise the Re-balancing challenges here – with my own thoughts following each headline:
- Increasing internal market and reduce dependency on exports. This includes boosting services instead of manufacturing and infrastructure, and is slowly coming to bear and is highly dependent on the next factor.
- Increase consumption, reduce savings. As this recent article by Reuters shows, this is probably not going to be an issue with the new generation of Chinese who are spending and not saving – http://www.reuters.com/article/2013/04/18/us-china-consumer-2020-insight-idUSBRE93H18K20130418
- Increase private sector and reduce SOE. This is happening gradually and the pace needs to be increased. SOE is already down to between 30% and 50% of the economy. But there are concerns that in fact the pace is slowing and possibly reversing – http://www.economist.com/node/21564274
- Increasing innovation and reducing imitation. On the face of it China is charging ahead with patents and new technology – https://chindia-alert.org/prognosis/how-well-will-china-and-india-innovate/ But some experts suspect the quality of the innovation.
- Increasing opening up and globalising of Chinese firms. The latter has yet to make an impact.
All in all, Linda’s prognosis is that, assuming political stability and continuity is maintained, there is every reason to believe that China will be an economic superpower within 30 years.
CHINDIA ALERT: You'll be living in their world, very soon 
