Transcript
Summary of Roundtable Remarks:
The Center for Northeast Asian Policy Studies (CNAPS) at the Brookings Institution was pleased to host a roundtable luncheon on October 28, 2002 featuring remarks by Dr. Frank-Jürgen Richter, Director for Asia for the World Economic Forum, the prestigious economics-focused think tank based in Geneva, Switzerland. Dr. Richter's remarks were drawn in part from his recent book Recreating Asia: Visions for a New Century, coauthored with WEF colleague Pamela Mar. The theme of Dr. Richter's presentation was that the United States is approaching the end of its time as the primary engine for global economic growth and will most likely be replaced by a flourishing China. Over 40 representatives of various think tanks, universities, companies, and government departments attended the luncheon.
Dr. Richter began by noting that he had arrived in Washington directly from the APEC meetings in Los Cabos, Mexico, at which discussions focused on crises of national and regional security rather than economic and trade concerns, the outlook for which Dr. Richter is not optimistic. He cited the October 12 bombing in Bali, the Moscow hostage situation, and the threat of war in Iraq; with these and other factors in mind, some observers have gone so far as to predict that a global recession looms.
Citing the United Nations Conference on Trade and Development (UNCTAD) World Investment Report, 2002 which shows that global foreign direct investment (FDI) was down significantly in 2001, Dr. Richter argued that the process of globalization, defined as free and fair trade, is coming to an end. The decline in relative importance of multilateral institutions such as the World Trade Organization (WTO) in favor of bi-lateral free trade agreements is another key piece of evidence.
Returning to his main theme, Dr. Richter listed a number of potential replacements for the U.S. as the world's economic engine, finally predicting that China will assume the role due in part to its large pool of consumers, fabled work ethic, and the fact that according to the UNCTAD report it is the only economy in the world with increased levels of FDI for 2001. More tangible indicators, according to Dr. Richter, include the rising quality of Chinese products, especially in the IT sector; major Chinese investments in Asia, Europe, and the United States; and the resultant increase in global business- and public relations-savvy.
Dr. Richter argued that enhanced integration with both Northeast and Southeast Asia is the general policy that China should pursue in order to consolidate its candidacy for the position of global economic engine. Multilateral discussions should take place in Asia among both governments and non-governmental organizations—not only on economic or trade issues as has been the practice, but on the full range of political, social, and economic issues. Though some Southeast Asian leaders perceive an economic "China threat," Dr. Richter feels that a more subtle analogy is valid: China is the sun around which the Southeast Asian nations must revolve. For Southeast Asia, the goal should be to find an orbit neither too far from nor too close to China. Dr. Richter predicted the recent announcement of an ASEAN-China free trade agreement at the Phnom Penh summit. This agreement raises the stakes for the Southeast Asian economies and creates a proving ground for his theory of a Chinese solar system.
Integration with North America and Europe can also help China overcome some of the challenges it faces, which include the looming AIDS crisis, rural social unrest, the glut of bad loans in the financial sector, and relative underdevelopment and official corruption in the western provinces. Dr. Richter called for deepened understanding of both China's potential and risks by western observers and measures by Beijing to increase transparency and build trust.
These steps should lead to China's inclusion in the Group of 8 and leadership positions for Chinese nationals in the World Bank and the International Monetary Fund and, in the long term, status as the global economic engine.