“China presents to the world an economic model that’s been fairly successful and has lifted millions and millions of people out of poverty. It’s a very different economic model than the U.S. economic model,” says UCLA Anderson Forecast Director Jerry Nickelsburg. “People are looking at both economic models and trying to understand what might be a good model for their country. Economists focus on two things: the role of economic incentives in human behavior and the allocation of scarce resources and these two models have different ways of doing that. It’s really interesting to see how these will play out and what the implications of these are.”
Going forward, Nickelsburg and his fellow economists with the UCLA Anderson Forecast will continue to explore these implications in depth, the result of a new partnership with Cathay Bank. With support from Cathay, the Forecast intends to produce an annual report on the economic relationships between the U.S. and China in addition to three quarterly updates.
The first annual report in the series was released in spring 2018. Authored by Nickelsburg and UCLA Anderson Forecast Economist William Yu, it arrived at a turbulent time in economic relations between the two countries, as U.S. President Donald Trump promoted an “America First” economic agenda and China’s President Xi Jingping enacted his “China Dream” policies. The report suggests that the two approaches are simultaneously complementary and competitive, with a series of tariffs and proposed tariffs enacted by both countries aimed at furthering their distinct interests. (Read “The Era of ‘America First’ and ‘The China Dream’” here.)
The analysis concludes with several points:
- To pursue “America First” as currently constituted, the U.S. will continue its negotiating posture of using tariffs and restrictions on foreign direct investment and technology transfer.
- To pursue “The China Dream” as currently constituted, China will continue to advocate for free trade agreements internationally, while engaging in tariff and non-tariff policies to protect and foster domestic industries.
- As these two policies are in direct conflict with each other, the question is whether or not the two countries will find sufficient common ground for compromise.
- While the incompatibility of the two countries economic goals creates the risk of a full blown trade war, the latest UCLA Anderson Forecast acknowledges that risk, but assumes compromises will be made.
According to Nickelsburg, the reports are aimed at two important audiences. “The first are business and governmental officials, because what happens in U.S.-China relations in terms of the economic implications very much affects California. Secondly, Cathay Bank has many clients engaged in Trans-Pacific business and what happens in U.S.-China economic relations effects their business and their decision making.”
The first quarterly update to the Cathay Bank/UCLA Anderson U.S.-China Forecast Report will be released in fall 2018.
The Chinese economic model is really great and we have to learn from them.
Posted by: Invoice Factoring | 08/29/2018 at 07:07 PM