Important questions about China’s future

14:39 by Hubert Fromlet, Kalmar

China has advanced to an increasingly important player on world (financial) markets. This special position increases China’s responsibility to avoid future economic and financial imbalances – partly because of the well-known cross-border contagion risks.

Some big questions in a financial deregulation context are for China in the next five to ten years (also part of ongoing discussions with students at Linnaeus University):

¤  Generally: Will China’s GDP growth be big enough for being able to introduce initially hurting reforms?  How will China handle the restructuring of its state-owned companies and the shift to competitive modern technology and products? We know from the Swedish financial deregulation that such a new policy stance should happen from a position of strength.

¤  Can China achieve surpluses in the current account balance in the longer run – also when regarding the possibility of renewed harsh American protectionism?

¤  How rapidly will China deregulate its capital account – and open for speculative capital flows?

¤  Can China handle its global power and strong international influence in an appropriate way and develop into an appreciated global partner politically, financially and economically? What will happen in Hong Kong?

¤  Will China’s version of the market economy be reversed at some point – or rather be improved in a longer perspective?

¤  How will China come out of the post covid-19 challenges in the medium run and what about the impact on unemployment also from this factor?

Altogether, there is a lot of room for further optimization of Chinese economic policy and of financial markets. Such improvements would be good for China’s own economic growth and stability but also in a global perspective – particularly when applying a long-term view.

Why not trying to reflect on these issues a little bit on your own?

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board


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