Friedman: China Is ‘Story of Our Lifetimes’

Two leading experts on international economics presented visions of China’s past and future to a packed Fong Auditorium on Friday night, projecting what may lie in store for one of the world’s largest and fastest growing economies.

Maier Professor of Political Economy Benjamin M. Friedman ’66 began the event, titled “The Chinese Economy: Trade and Investment,” by focusing on the social and political implications of China’s standard-of-living increases over the past 25 years.

“It is very clear that, from the perspective of an economist, China really is the story of our lifetimes,” said Friedman, who also serves as an adviser to the Federal Reserve Bank of New York.

Friedman called himself cautiously optimistic about whether China’s growth could continue in the face of threats such as overproduction, dramatic rises in income inequality, and bad lending practices.

“If the Chinese are able to sustain the level of growth that they have experienced, [they] will liberalize and democratize, which does not mean that their liberal democracy will look like ours,” he added.

The event’s other main speaker, Yasheng Huang, an associate professor of international management at MIT, contrasted developments in the Chinese economy during the 1980s and 1990s and praised the country’s private rural entrepreneurship, which he said has proved more successful than government-controlled urban development.

Huang, a former Harvard Business School faculty member who has also worked for the World Bank, said Western economists often overlook the establishment of 10 million privately owned rural township and village enterprises in China during the 1980s—which played a significant role in the country’s rapid growth in both GDP and personal income.

But those trends were reversed in the 1990s as the government financed urban development at the expense of rural enterprises, Huang said. The changes occurred in cities like Shanghai, which he called the “apex of economic inefficiency, waste, and government intervention.”

Fan Zhang ’09, a board member of the Harvard-Radcliffe Chinese Students Association, which sponsored the event, described the Chinese economy as a “hot topic” in economics.

“People who are [economics] students here can go to China and have practical effects,” he said.

Zhang added that the topic was also relevant for many undergraduates.

Audience member Weiqi Zhang ’10 added, “Everyone’s focusing on China and the Chinese economy, and the two professors are quite famous.”