【原创】Chinese and US Economies in Comparison and Interaction: ...

Chinese and US Economies in Comparison and Interaction: Now and Future as China Economist Surveys

Li Gang¹; Li Oumei²

¹ Institute of Industrial Economics, CASS

² School of Economics, Minzu University of China

Abstract: China Economist has continuously carried out surveys among economists and this round of survey focuses on comparison and interactions between China’s and the United States’ economies. The result of the survey shows that economists are generally optimistic about the outlook of both countries’ economies. Respondents believed that great differences exist in the components of industrial competitiveness of China and the US: while the US leads in terms of talent, creativity, social system, industrial system integrity and financing, cost is the biggest barrier to improvement in US competitiveness. In comparison, China leads in infrastructure, cost competitiveness and government driving force but inadequate technology is the biggest barrier to improvement in China’s competitiveness. Respondents believed that in the coming 20 years, China’s economic growth will be 5.2% and US growth will be 2.4%. Around 2034, China’s economic aggregate will equal the US level but it will take over 60 years for China to catch up with the US in terms of per capita GDP. China’s manufacturing technology will equal the US level around 2045. More than 62% of economists believed that the Trump administration will effectively re-shore manufacturing and the average score they give to Trump’s “first 100 days” in office is 76 points. More than 61% of economists considered it unlikely that a serious trade war will break out between China and the US. They generally believed that China and the US cooperate and compete with each other and that China-US trade enjoys great potential to grow. According to the survey, respondents are more confident about China’s debt sustainability in comparison with the US.

Keywords: China-US interaction, China-US trade, China-US cooperation, competitiveness, Trump administration

JEL: F01; F010; F057

To learn about how economists perceive the industrial competitiveness of China and the US, we conducted a survey by distributing questionnaires to the e-mail addresses on China Economist’s contact list and China Economist WeChat public account from May 9 to May 18, 2017.

In this survey, we collected 131 valid questionnaires from universities (69.2%), research institutes (14%) and enterprises and government agencies (16.8%). According to the 127 valid questionnaires in which respondents indicated their regions, economists participating in this survey are from China’s eastern region (70.1%), central region (18.1%), western region (10.2%) and overseas (1.6%).

1. Perception of Current Economic Development and Industrial Competitiveness of China and the US

1.1 Economists Are More Optimistic about the US Economic Recovery

In the post-crisis era of the world economy, major economies including China and the US have embarked upon a slow recovery amid volatility. In our survey, 67 economists (53.6% of total respondents) believed that the US economy has passed its trough and is moving upwards; 49 economists (39.2%) believed that the US economy will hover around its current status for a while; and only nine economists (7.2%) considered that the US economy has yet to reach its worst point in history. Meanwhile, 20 economists (16%) believed that China’s economy has passed its trough and is moving upwards; 73 economists (58.4%) believed that China’s economic growth will hover around its “L-shaped” curve for a while; and 31 economists (24.8%) believed that China’s economy has yet to reach its worst point in history. Overall, economists are more optimistic about China’s economic development compared with the US, believing that the latter is still struggling with its economic recovery (see Figure 1).

1.2 Economists Believed That Chinese and US Competitiveness Is Fueled by Different Drivers

The economic competitiveness of a country hinges upon its industrial competitiveness. In our survey, economists identified very different components of industrial competitiveness of China and the US. The US leads China in terms of talent, creativity, social system, industrial system integrity and financing availability. This reflects the fact that based on the advantages of education, social welfare and low market friction, the US has developed advanced technology and built a fairly complete industrial system. China leads the US in terms of infrastructure, cost competitiveness and government driving force, which is reflected in China’s unique industrial competitiveness under the leadership of a strong government (see Figure 2).

1.3 Technical Capacity and Cost Are Respectively the Biggest Barriers to Competitiveness Improvement for China and the US

Given different national conditions and strengths, China and the US face different barriers to their development of industrial competitiveness. In our survey, economists believed that rising cost (49.6%) and export restrictions (20%) are important barriers to the improvement of industrial competitiveness for the US, whereas inadequate technology (44%), the lack of brand influence (23.2%), surging cost pressures (16%), insufficient national image and cultural influence (12.8%) are the key barriers to the improvement of industrial competitiveness for China (see Figure 3).

2. Perception of Economic Development Gaps between China and the US

2.1 Economists Believed That China’s Economy Will Grow at 5.2% and the US Economy Will Grow by 2.4% in the Coming Two Decades

With respect to China’s average growth rate in the coming two decades, 64% of respondents believed that it will hover in the range of 4%-6%; 22.4% of respondents believed that it will fall in the range of 6%-8%; and 12% of respondents believed that it will fall in the range of 2%-4%. This indicates that most economists thought that China’s economic growth will further decelerate. Economists forecast that the average growth rate of China’s economy in the coming two decades will be 5.2% (see Figure 4).

With respect to the average growth rate of the US economy in the coming two decades, 48% of respondents believed that it will fall in the range of 2%-3%; 32.8% of respondents believed that it will stay in the range of 1%-2%; and 13.6% of respondents believed that it will fall in the range of 3%-4%. Economists forecast that the average growth rate of the US economy in the coming two decades will be 2.4% (see Figure 5).

2.2 Economists Believed That China Will Catch up with the US in Economic Aggregate by around 2034

With respect to how many years it will take for China’s economic aggregate to equal the US level, 38.4% of respondents believed that it will take another 10 years; 30.4% of respondents believed that it will take another 20 years; 20% of respondents believed that it will take 30 years or more; and only 11.2% of respondents believed that China’s economic aggregate already equals the US level. Summarizing their answers, this survey believes that it will take about 16.64 years for China to catch up with the US in terms of economic aggregate. Based on the economic aggregate of China and the US in 2016 and the survey data in Figure 5 above, the result of calculation also indicates that China’s economic aggregate will equal the US level during 2033-2034, which shows that the result of survey is fairly reliable (see Figure 6).

2.3 Economists Believed That It Will Take Over 60 Years for China to Catch Up with the US in Per Capita GDP Level

With respect to how many years it will take for China’s per capita GDP to equal the US level, 31.2% of respondents believed that it will take another 50 years; 28.8% of respondents believed that it will not happen until at least the end of this century; 24.8% of respondents believed that it will take 30 years or more; and 15.2% of respondents considered that it will take another 70 years. Summarizing their answers, the survey believes that it will take 62.48 years for China to catch up with the US in terms of per capita GDP (see Figure 7).

2.4 Economists Believed That China’s Manufacturing Technology Will Equal the US Level by around 2045

With respect to how many years it will take for China’s manufacturing technology to catch up with the US level, 35.2% of respondents believed that it will take another 30 years; 21.6% of respondents believed that it will take 20 years; 18.2% of respondents believed that it will take 50 years or more; 16% of respondents believed that it will take another 10 years; and 7.2% of respondents believed that it will take 40 years. Summarizing their answers, this survey believes that China’s manufacturing technology lags behind the US level by about 28.46 years (see Figure 8). That is to say, economists believed that China’s manufacturing technology will equal the US level by around 2045. In other words, upon the centennial of the founding of the People’s Republic of China, China’s real economy will stand at the forefront of the world.

2.5 Economists Believed That the USD/RMB Exchange Rate Will Reach 5.4 or So 20 Years from Now

With respect to the USD/RMB exchange rate 20 years from now, 40% of respondents believed that it will reach 1:5-7; 36% of respondents believed that it will reach 1:3-5; 20.8% of respondents believed that it will exceed 1:7; and 3.2% of respondents believed that it will stay below 1:3. In summary, the economists forecasted that the mean value of the USD/RMB exchange rate 20 years from now will be about 1:5.4 (see Figure 9).

3. Perception of the Trump Presidency

3.1 Over 62% of Economists Believed That the Trump Administration Will Effectively Re-Shore US Manufacturing

With respect to whether the Trump administration will effectively re-shore US manufacturing, 62.4% of respondents believed that it will; 18.4% of respondents gave a negative response; and 19.2% of respondents expressed uncertainty (see Figure 10).

3.2 Economists Gave a Score above 76 Points for the “First 100 Days” of Trump’s Presidency

With respect to the scoring of economic policy within the first 100 days of Trump’s presidency (full score is 5 points), 91.2% of respondents gave a rating above the passable level, among whom 5.6% gave a full score, while only 8.8% of respondents gave a failure rating. Converted into centesimal system, the overall rating of Trump’s “first 100 days” in office by economists is about 76.32, which is generally above the global rating on Trump’s presidency. It seems that Trump has more fans in China (see Figure 11).

4. Assessment of the Future Economic Development Tendency of China and the US

4.1 Over 61% of Economists Believed That a China-US Trade War Is Unlikely

With respect to whether a serious trade war is likely to break out between China and the US in the coming three years, 61.6% of respondents believed that it is unlikely; 16.8% of respondents believed that it is highly likely; and 21.6% of respondents expressed uncertainty (see Figure 12).

4.2 Over 67% of Economists Believed That China-US Trade Enjoys Great Potentials

With respect to assessment of the growth potential of China-US trade, 67.2% of respondents believed that China and the US are highly complementary in economic development with great growth potential of two-way trade; 27.2% of respondents considered that the complementarity between China and the US in economic development is diminishing and the growth potential of trade is insufficient; and 5.6% of respondents expressed uncertainty. We believe that the confidence of economists on the stability and potential of China-US trade relations derived from an understanding on the complementarity of economic development between the two countries (see Figure 13).

4.3 Economists Believed That China’s Debt Is More Sustainable

With respect to China’s and US’s debt sustainability, 35.2% of respondents believed that China’s debt is more sustainable; 29.6% of respondents believed that US’s debt is more sustainable; and 35.2% of respondents expressed uncertainty. Hence, economists are more confident in China’s debt sustainability in comparison with the US (see Figure 14).

4.4 More Than 81% of Economists Believed That China and the US Cooperate and Compete with Each Other

With respect to assessment of China-US mainstream economic relations 20 years from now, 81.6% of respondents believed that the two countries will create a mutually beneficial relationship where competition and cooperation coexist; 11.2% of respondents believed that China and the US will become strategic partners; 4.8% of respondents considered that a conflict between China and the US is inevitable in the short run (see Figure 15).

5. Recommendations on China’s Future Industrial Development

5.1 Low Cost Is a Diminishing Competitive Advantage for China

With respect to assessment of the competitive advantage of China’s manufacturing sector in the coming 20 years, respondents believed it lies in (in descending order of percentage): China’s domestic consumer market is multi-tiered and comprehensive; the Belt and Road Initiative will further expand the space of international cooperation; the manufacturing industry chain is complete; infrastructure is strong; government policy-making is forward-looking; industrial manufacturing technology is advanced; production cost is low (see Figure 16).

5.2 The Domestic Market Will Be Vital to China’s Industrial Development

With respect to assessment of what kind of industrial policy China will adopt, 60% of respondents believed that China should focus on expanding the market share of premium domestic products; 24.8% of respondents believed that China should continue to expand its international market share; and 11.2% of respondents expressed uncertainty (see Figure 17).

As a platform of academic exchange between China and foreign countries, China Economist serves as an important window for international scholars to learn about China’s economy and policy-making. For a continuous survey program, China Economist has conducted eight rounds of survey. The result of this round of survey shows that significant disparities still exist in the development stage of China and the US with China lagging behind the US by at least 60 years in terms of economic development. As a result of the disparities, China and the US enjoy significant economic complementarity and growth potential of trade, which make it unlikely for the two countries to experience a serious trade war. In a nutshell, China Economist holds an optimistic view on the economic outlook of China and the US.

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