On Monday 18 September 2006,Dr Harry Harding (Director of Research and Analysis, Global Macro, Asia, Eurasia Group) addressed Members of the Institute on the “Major Risks Associated with China over the Next Ten Years”. Organised by IISS-Asia, the event took place at Trademark Room, 9 Raffles Place, Level 18 Republic Plaza II.
Synopsis:
China has enjoyed outstanding overall economic performance over the last quarter century, with a concomitant rise in its international influence and prestige. There is also some reason to believe that the Chinese government enjoys a relatively broad base of popular support from the beneficiaries of reform. At the same time, however, China is also plagued by serious internal problems, including environmental degradation, abuse of power by local officials, corruption, weak financial institutions, and inequality. These problems have given rise to episodic protest, which has been effectively localized and suppressed. Although the Chinese leadership seems committed to addressing these problems, doing so will be financially expensive, technically difficult, and politically controversial. As a result, many analysts have raised questions about the sustainability of China’s present course. Much discussion has focused on three “headline risks”: a financial crisis, political collapse, and strategic confrontation between China and the United States.
A comprehensive study by Eurasia Group of the risks associated with likely developments in China over the next ten years concluded that the likelihood of these headline risks is quite low, largely because the Chinese government has both the desire and the ability to prevent them from occurring. Rather, several other risks were considered more serious, including environmental crises, epidemics of communicable disease, competitive pressures on foreign firms, and divisions within the Chinese leadership. The probability of these risks is very high, although their severity would vary depending on the concrete circumstances. At the same time, milder versions of the headline risks are also highly probable: chronic political dissent, strong inflationary and deflationary pressures, and tensions in China’s bilateral relations with other powers. Could the headline risks ever materialize? Yes, if the shocks to China’s economy, political system, or foreign relations were unusually strong, and if the Chinese leadership proved unable to manage the shocks effectively. Alternatively, the headline risks could occur if China fell victim to a “risk cascade,” in problems in one area triggered negative developments in another.
Dr Harry Harding joined Eurasia Group on 1 August 2005 as the firm's Director of Research & Analysis. He recently completed his service as Dean of the Elliott School on 30 June 2005, and is now University Professor of International Affairs at the George Washington University. Dr Harding received his BA in public and international affairs from Princeton, and his MA and PhD in political science from Stanford. A specialist on Asian affairs with a particular interest in China, he is the author of A Fragile Relationship: The United States and China Since 1972 (1992), China and Northeast Asia: The Political Dimension (1988), China's Second Revolution: Reform After Mao (1987), and Organizing China: The Problem of Bureaucracy, 1949-1976 (1981). His edited volumes include The India-China Relationship: What the United States Needs to Know (2004), Sino-American Relations, 1945-55: A Joint Reassessment of a Critical Debate (1989), and China's Foreign Relations in the 1980s (1984).
Dr Harding has served as the Dean of the Elliott School of International Affairs for the past 10 years. He had previously been a Senior Fellow in the Foreign Policy Studies Program at the Brookings Institution (1983-94), and had served on the political science faculties of Stanford University (1971-83) and Swarthmore College (1970-71). He has also been a National Fellow at the Hoover Institution, directed the East Asia Program at the Woodrow Wilson International Center for Scholars, and held visiting or adjunct professorships at the University of California at Berkeley, the University of Washington at Seattle, Georgetown University, the George Washington University, and United College of the Chinese University of Hong Kong.
Dr Harding is a trustee of the Asia Foundation, a director of the Asia Foundation in Taiwan, a director of the National Committee on U.S.-China Relations, a director of the U.S. Committee of the Council for Security Cooperation in the Asia Pacific, a director of the Atlantic Council of the United States, and a member of the Committee on International Security Studies of the American Academy of Arts and Sciences. He is also a member of the Council on Foreign Relations and a member of the International Institute for Strategic Studies. He has previously served as a fellow of the World Economic Forum, the chairman of the Program on International Studies in Asia, a member of the U.S.-PRC Joint Commission on Scientific and Technological Cooperation, a member of the Defense Policy Board, and a member of the Senior Advisory Panel that advised the Asian Development Bank in drafting a Long Term Strategic Framework for the years 2000-2015.
