Event Summary: ‘Cracking the Chinese Conundrum: Why Conventional Economic Wisdom is Often Wrong’


By Jack Wright

On 25 September 2017, the Henry Jackson Society hosted a special event with the illustrious Yukon Huang—Senior Fellow with the Asia Programme at the Carnegie Endowment for International Peace, adviser to the World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank, and formerly the Chinese country director at the World Bank (as well as director for Russia and the Eastern Republics)—to speak about his new book, Cracking the China Conundrum: Why Conventional Economic Wisdom is Wrong.

Hosted by Dr John Hemmings, Director of the Asia Studies Centre at the Henry Jackson Society, Mr Yukon argued that modern China preternaturally commands public attention unlike any other power in the new century, including even the established American hegemon. Pursuant to explore a nuanced approach toward “the China Question,” the lecturer sought to demonstrate that conventional (specifically, in this regard, economic) wisdom often proves to be completely inaccurate. “If the diagnosis of the problem is wrong,” he said, “then the recommended policy [option] is wrong.”

Since policymaking would ordinarily begin with public opinion, Mr Yukon insisted, the conundrum was itself rooted in divergent perceptions: First, in exploring the determinative salience of public opinion within the Sino-American bilateral relationship, he emphasised that both populations habitually regard the other as the predominant economic power despite reference to credible statistics; Second, Mr Yukon illustrated the record-high levels of “unfavourability” toward Beijing amongst the European capitals, most particularly Berlin (Germany), Paris (France), Madrid (Spain), and London (Great Britain). Keen to assert that political opinions are more regularly driven by “unpredictable personal predispositions,” the consequence of emotive diplomacy was the formulation of policy routes wholly unsuitable or inappropriate to the widening gulf of distrust between the two powers. Mr Yukon proceeded by challenging preconceived and established wisdoms; summarily:

  • There is no relationship between the Chinese surplus and the American deficit;
  • Chinese ambitions to improve relations with the Western powers vis-à-vis the establishment of the One Belt, One Road project will plant the seeds of multigenerational geopolitical tension and, thus, rivalry;
  • Beijing has invested energy and resources into “innovation,” including regional development, the promotion of domestic universities, and company proliferation within the high-tech sector, resulting in unprecedented gains;
  • As the comparatively small and unconnected G20 states “worsen,” a natural pivot toward the gravitational pull of China will ensue;
  • Unlike similarly-minded Asian states, China engages in technology theft at intolerably high rates; with both the capacity and the institutions to exploit these gains, Beijing will likely continue to steal for as long as it sees fit;
  • “Greased” by systemic corruption, the Chinese economy will continue to grow as it undergoes “financial deepening”—indicative of long-term chronic structural issues.

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