The future of China’s economic development is a question that hangs in the balance and China heads across the globe debate. This year’s forum explored the country’s future outlook and took a deep dive into the China-US economic relationship, Corporate China and the vital role consumerism will play in China’s future economic development. Joined by an impressive line-up of speakers, Guanghua led the discussion at this exclusive event.


  • Despite the protectionist rhetoric and bullish China stance that characterized the Trump campaign, it seems US President Donald Trump was more style than substance- and that’s a good thing. The successful Mar-a-Lago Summit with President XI Jinping and the resulting US-China Comprehensive Economic Dialogue signal positive economic relations between the US and China in the road ahead. The establishment of a free, bilateral trade agreement, however, will not occur in the foreseeable future. 

  • China’s investment-led rapid, economic growth is coming to an end. What will fuel its growth moving forward? In China, its all about the micro foundation and Corporate China is the key. Innovation, efficiency and increased Return on Investment Capital (ROIC) in the corporate sector will play a vital role in China’s economic transition from investment-led to consumer-driven. 

  • China’s Middle Class consumer market will reach 630 million by 2020- unprecedented in human history. While this creates a market rife with opportunity, it is also intensely competitive. Chinese consumers are diverse, nuanced and rapidly changing. In order to “win” in this market, firms must ‘go local’- viewing China as regional markets, rather than a national consumer segment. Firms must continuously fight for their market share and physical ‘bodies on the ground’ (operations/ sales teams) are essential for a winning strategy.


Joseph Lake, the Director of Global Forecasting for The Economist Intelligence Unit, started off the conversation by giving an overview of the "Age of Anxiety," a time marked by political uncertainty around the globe. From Brexit to the US presidential election of Donald Trump, over the past year, Lake said, "it felt, at different times, that the world was on fire."

In the face of this new reality, the US and China have taken markedly different stances. The US, departing from its leadership role, has become increasingly isolationist. While, China seems ready to pick up the mantle.

The panel, which involved Joseph Lake as moderator; Hongbin CAI, Professor at Guanghua; David Dollar, Senior Fellow at Brookings Institution John L. Thornton China Center; and Simon Jin, President of Greater China at S&P Global, explored the US-China economic relationship within this context and the year ahead for China.


The Mar-a-Lago Summit between US President Donald Trump and China President XI Jinping this past April signaled a positive step for the US- China economic relationship moving forward. This comes quite contrary to the tough China rhetoric during the Trump campaign. Thankfully, as David Dollar, pointed out,“Trump seemed to be anti- China before and during the election, but after the election he did a 180.”

Moving beyond simple rhetoric, the Mar-a-Lago Summit produced the US-China Comprehensive Economic Dialogue and the 100 Day Action Plan. As Simon Jin mentioned, a tangible result of the dialogue has been a move to soften some of China’s financial regulations in order to allow US financial institutions to provide certain services in China.

Yet, a constant issue for both sides is protectionism. Dollar argued that the US would like to see China increase the openness of its markets, particularly in the service sector. While, CAI argued that the US also employs protectionist measures, which bar Chinese firms from investing in certain sectors.

Central to this issue is trade and the trade deficit, yet significant reform and major policies are not anticipated this year. Instead, stability for China’s economy and financial markets is a key policy driver for China. Further, as CAI argued, domestic politics of both countries play a critical role in what can be accepted for any trade deal to come into fruition. In short, as CAI put it, “it would be a tough negotiation.”


The panel looked at the year ahead for China, particularly focusing on two central issues: (1) Debt and (2) One Belt, One Road.

While the panelists conceded that a financial crisis is unlikely, China’s debt level is still a major cause for concern. As CAI simply said, “You can’t build up debt forever.” However, he argued that China’s debt level is often-times exaggerated by the West. “The micro foundations of the economy may not be as solid as in the West, CAI said, “but the macro control, the resources, and the assets that the government has is much larger than, and at a different scale, than that of western governments.”

The panelists agreed that China’s central government needed to enact better controls and measures in order to lessen the debt level. Dollar mentioned several solutions to this issue: lowering the GDP growth rate and opening up certain sectors to increase productivity will work towards lessening the debt level.

Another issue, ‘One Belt, One Road’ was also discussed at length. The initiative looks to integrate the economies of China and central Asia along the ancient Silk Road. It could play a key role revitalizing growth in these areas. Jin viewed the initiative as a good way to reallocate resources from the developed Eastern regions to inland areas, “there is no over-investment [in China], in fact in the rural areas, that is where we need to make things happen.”


Drawing from his recently published book, China financial expert and economist, Qiao LIU, explored why Corporate China is the key to transforming China's economy from investment-led to efficiency-driven.

During his presentation, LIU discussed China's rapid economic development. He explained that for the past three decades, China's economic rise was fueled by a high, credit-fueled investment rate. While, this growth model was successful in driving double-digit GDP growth, it is no longer sustainable. In fact, LIU argues that the new driver of growth will be a significant increase in ROIC (Return on Investment Capital) in the corporate sector.

During China's rapid economic development, Corporate China exploded. In fact, in 2016, China had 103 Fortune Global 500 Companies (second to the US) in 2016. However, "big does not equal brilliant," LIU pointed out. These Chinese Fortune Global 500 firms are not in diverse industries; they are mostly State- Owned and concentrated primarily in factor production sectors. Further, their large size (sales) were not matched by high profits. In fact, in 2015, China's average ROIC was at 3%, compared to the US' 11.6% over the last three decades. So, China has significant room to grow in this respect. Further, given that (ROIC x Investment Rate)= GDP, an increase in ROIC is exactly what China needs to drive sustainable, continued economic growth.

LIU outlined key areas that are needed to achieve the increase in ROIC: (1) shift focus of the micro foundation from an emphasis on large size firms to efficiency and capital-driven forms in order to increase the Total Factor Productivity, (2) leverage the human resource talent of the 400 million 'Post-90s College-Educated Generation', and (3) leverage the consumer demands of the Middle Class Consumer segment.

LIU remains optimistic about China's future, saying:"Indeed, China is facing [a] huge amount of challenges, but in the meantime, I think the opportunities are also plenty...The goal is to create new business models to provide products and services which can satisfy the needs of the new generation.”


With China's middle-class population expected to reach 630 million by 2020, the possibilities for businesses are endless. Yet, many brands are finding it difficult to compete. The Chinese market is intensely competitive and characterized by fickle consumers, ever-changing trends and a nuanced environment.

The panel, which involved Ying ZHANG, Professor at Guanghua and moderator of the panel; Carolyn Brehm, Vice President for Global Government Relations and Public Policy at Proctor & Gamble; Patricia Graue, Director at the Brunswick Group; and Jeffrey Towson, Professor at Guanghua, explored China’s Middle Class Consumer and how brands can win in China.


While the demand for products and services present numerous business opportunities, as Towson put it: "the complexity is exploding, its almost impossible to make any definitive statements about the Chinese Consumer like you could ten years ago.”

Given the nuanced and dynamism of the Chinese Middle Consumer segment, the panelists agreed that you need to go to the granular, local level to understand the Chinese Middle consumer and how to win in each local market, rather than viewing consumers as one national market. Further, Towson argued that you must employ “bodies on the ground”- sales and operations teams at the regional level to execute strategy and secure market share. However, you don’t just need to win, you need to continuously fight to win.


Another unique characteristic of the Chinese consumer is the trust in institutions to collect private data, a point raised by Brehm. This unique characteristic partially explains China’s high technology adoption rates and the popularity of WeChat, which integrates social media and mobile payment services into one platform, and FinTech overall. In fact, the panelists echoed that the story of the Chinese consumer, smart phones, apps and FinTech are intertwined. FinTech in China, said Graue, “has leapfrogged a lot of the infrastructure in the US and Western Europe in terms of financial services and the innovation that comes.”



The US-China Business Council, Inc. (USCBC) is a private, nonpartisan, nonprofit organization of roughly 200 American companies that do business with China.


The Peking University Guanghua New York Forum is made possible through the generous sponsorship of Peking University alumni, friends and partner companies. With a community of over 30,000 leading business professionals, alumni, students and scholars, sponsor companies receive a unique opportunity to promote their brand at the Forum and to the Guanghua community, as a whole.

If your company is interested in sponsorship opportunities, please email: huamulan@gsm.pku.edu.cn