Baltic Business Research

Summary / Abstract

There is no doubt that China has achieved great economic progress since the start of the opening-up policy in 1978, particularly in the past 15 years. The fact that the country is currently ranked number 1 exporter in the world and soon to be number 1 importer, already number 1 car market by registrations, soon to be number 2 in total production (GDP), etc., clearly underlines the success of the Chinese policy. It is no exaggeration to say that China has emerged as the main benefiter of the current rapid phase of globalization.

However, obvious economic progress had – and still has – a major flip side. Many imbalances and problems are discussed in this paper. But many challenges are still neglected in the general discussion – even by Westerners. Furthermore, a great number of problems are hidden and not very transparent. Insufficient transparency – especially in the financial sector – must be interpreted as directly contradictory to the spirit of globalization. Despite these shortcomings, economic discussions are nowadays much more open-minded in China than they were ten or fifteen years ago – many times more open than Western business people and analysts discuss the Chinese economy. Some examples will be given in the paper.

Major improvements in the large number of structural problems would mean a very positive impact on China’s potential growth rate. Thus, China should have more to give in growth and import terms (under the assumption of political stability).

One of the most urgent and neglected areas that needs major improvement is transparency, both when it comes to economic policy, the financial sector and corporate China as a whole. Both China and rest the whole global would benefit from such a development.

This analysis is structured as follows:

1. Achievements
2. Short-term challenges
3. Long-term challenges
4. Own view of current discussions
5. Examples of frequent and open discussions in China  �
6. Outlook

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