Asia expert Nicholas Lardy has big hopes for China.
Lardy, a fellow of the Brookings Institution in Washington, D.C., spoke yesterday to 14 academic colleagues about the impact of China’s joining the World Trade Organization. The luncheon talk at the Yale Center for the Study of Globalization preceded a panel discussion in Luce Hall called “From America: A Closer Look at China.”
“I think that China’s going to be a very big winner from this process,” Lardy said at the luncheon discussion.
He even had a few specific predictions.
“I think they’ll be the fourth-largest trading country in two to three years,” Lardy said.
Later, he said he thinks China might even become the second-largest trader in the next 10 years.
Lardy published a book last month called “Integrating China Into the Global Economy” that examines the topic Lardy said he would focus on during his talk: China’s reasons for joining the WTO.
“The first question I try to answer is ‘what was the motivation for making the commitment?'” Lardy said.
China’s economy was already growing quickly before it joined the WTO this past November, Lardy said. Lardy said that most foreign direct investments in China are in manufacturing.
“At least in the goods area, the market is already remarkably open,” Lardy said.
Lardy praised China for its commitment to globalization from the start.
He called its joining the WTO “a big gamble,” but said that “at least at the top, the leadership seems to think that it can make it work.”
Strobe Talbott, the director of the globalization center, raised what he said was an important question, especially considering the distinction between Lardy and other political thinkers considered to be “China hawks.”
“There’s a view in Washington that China is a big-time threat for the United States and our interest is in a weaker China and maybe even in breaking China up,” Talbott said.
Lardy responded that people who hold this position focus less on economic issues and more on China’s recent military buildup, and added that he is not sure how anyone could slow down China’s economic growth.
“This trajectory that they’re on is almost unstoppable because of [the few restrictions on] foreign direct investments,” Lardy said.
Talbott pressed the political implications of Lardy’s statement.
“Is a China that trades as much as you predict less of a threat?” Talbott asked.
Lardy answered by calling himself a big supporter of the “engagement strategy” to which former President Bill Clinton subscribed.
Nayan Chanda, the director of publications at the globalization center, praised Lardy for his expertise.
“He has been a major scholar on China’s economy,” Chanda said. “He built a very lucid picture of how China’s trade openness is creating new dynamics.”
Lardy said he thinks part of the future of China’s trade lies in computers, even though China’s share of U.S. imports has grown only gradually in this area.
“It looks like the beginning of a story,” he said, referring to a graph comparing China’s share of U.S. imports of PC hardware with that of Japan, Singapore and Taiwan. “You can easily see China emerging as the number one producer of notebook [computers]. This is a very important sector.”
Lardy taught at Yale from 1975 to 1983.