In 2010, when China's economy was expanding at an annual rate of more than 10 percent, the world pondered the ripple effects of what many observers thought would be another decade of spectacular Chinese growth. Five years later, reality has caught up with the Chinese miracle, and the world is recasting its question: What will China's economic slowdown mean for the globe, especially if growth continues to decelerate?
To explore possible answers, the Maurice R. Greenberg Center for Geoeconomic Studies (CGS) and the Asia program at the Council on Foreign Relations (CFR) convened a workshop in New York City with roughly forty participants with backgrounds in economics, finance, government, political science, and military affairs. The group debated the prospects of a prolonged economic slowdown in China and attempted to forecast the fallout—for the global economy, geopolitics, and China's ambitions and clout—if the Communist Party's goal of "medium-to-high growth" through 2020 turns out to be unachievable. This report, which you can download here, summarizes the discussion's highlights. The report reflects the views of workshop participants alone; CFR takes no position on policy issues.
Framing Questions for the Workshop
Prospects for the Chinese Economy
What is the plausible range of average Chinese growth rates over the next decade? What would be the main drivers of high- and low-end outcomes? What would be early warning signs of a low-end outcome? How much do Chinese economic prospects depend on the broader international economy?
International Economic Spillovers From Low Chinese Economic Growth
What are the main channels through which low Chinese growth might affect other economies (e.g., commodities prices, broader deflation, shifts in competitiveness, altered availability of capital)? Which types of economies would be most affected? Developed vs. developing economies? Commodities importers vs. exporters? Asian vs. non-Asian economies? How, in particular, might the U.S. economy be affected? Are there significant systemic risks from low Chinese growth, such as through the financial system or through commodities markets? Are there any countries that might benefit economically from low Chinese growth? Could headline growth numbers become misleading in a shifting Chinese economy?
International Geopolitical Spillovers From Low Chinese Economic Growth
In the face of an economic slowdown, what are the implications for China's security posture? Greater assertiveness (and if so, what forms will that assume)? Greater accommodation to other actors' interests? A more pronounced focus on domestic issues to the exclusion of international concerns? Lesser or shifted focus on military capacity and modernization? How would a decline in China's resource demand caused by slower growth influence its political behavior both regionally and globally? What would a slower growth rate signify for China's efforts to project influence (for example, through overseas development assistance)?
China's Global Ambitions and China's Role in International Institutions
How would a lower rate of Chinese economic growth affect Beijing's pursuit of initiatives—such as One Belt, One Road—and its broader influence in other regional economic institutions? How might weaknesses in the Chinese economy affect China's interest or ability to assume a leadership role in international economic institutions, such as the International Monetary Fund and multilateral development banks? What are the implications of an economic slowdown for Chinese leadership in new Chinese-sponsored multilateral economic institutions?
Charts From This Report