Author: Geng Xiao, Columbia University

China’s key macroeconomic challenge over the next two decades of reform and development is to determine how to manage its exchange, interest and inflation rates so as to facilitate sustainable, stable and efficient economic growth while the Western economies shrink in size relative to emerging market economies.

To appreciate magnitude of this challenge, one must realise that China’s high growth in the past 30 years has largely been a story of rapid productivity growth and catching up. Read more…

Author: Xiao Geng, Brookings Institution

Recent debate has focused on how to increase US exports and savings and increase Chinese imports and consumption in order to correct the trade imbalance between the US and China. In America in particular, focus has been placed on Chinese exchange rate policy. American leaders would like the RMB to appreciate significantly and quickly. They hope that this would lead to an increase in US exports and employment.

Yet Chinese leaders regard pressures to appreciate and protectionist measures from the US as unfair, and as detrimental to China’s development. They place emphasis upon structural and institutional reform in order to increase Chinese consumption and to bring about more efficient domestic investment. Read more…