download MP4 video (Witt/Pesek)

Will China’s economy continue growing rapidly in the years ahead? It’s likely to continue growing, panellists of the ‘China Rising’ session at the INSEAD Leadership Summit in Asia said, although perhaps not quite as quickly as before.

Willie Pesek , Bloomberg News

“I tend to think Chinese growth will slow down, but I don’t think China will experience a financial crisis. I don’t think it will slow to four per cent, which would be a depression given its growth needs, but five years (from now) China could be growing closer to six or seven per cent and China in many ways has to beat the system,” Willie Pesek of Bloomberg News told INSEAD Knowledge. “Every industrialising economy has had major slowdowns and it’s just unrealistic to look at China’s economy, look at the current leadership and say somehow they can beat this risk. To me it’s just not a credible argument.”

'China Rising' session

“China won’t necessarily crash but the idea they can grow ten per cent indefinitely is a bit out there,” he adds.

INSEAD Affiliate Professor of Asian Business and Comparative Management Michael Witt says China’s economy has, in some ways, been underperforming. “If you benchmark the growth rates we’ve seen in China with some of the Asian tigers, such as South Korea and Taiwan – but also Japan at a similar stage of development – we actually see that the growth rates we have in China are not that unusual. If anything, the slope of the growth has actually been a little bit less, smaller than we’ve seen in these other economies."

INSEAD Professor Michael Witt

“I think for the foreseeable future, what we will have is probably a continuation of what we have right now, at least for the next few years, but I think ten years from now, which of course is when things get difficult to predict, that’s when things start to get really interesting,” Witt says.

According to some estimates, he says, environmental degradation could reduce GDP growth by at least three per cent or even result in negative growth in some provinces.

Dell manufacturing facilities, Xiamen, China

He says that, given the country’s environmental and management issues, as well as the prospect that China could become the first society to get old before it gets rich, he would be “very astonished if basically we saw a lot higher per capita GDP growth in China, at least in our lifetime, than about 50-60 per cent of what we have in the United States.”

Another of the panellists, Amit Midha, President of Dell China, says he expects China to become the number one PC market in about ten years. However he points out there are risks going forward.

Amit Midha, Dell China

“Today Dell is about three billion dollars in China, growing at 30-35 per cent,” Midha says. “So you can see the tremendous opportunities and challenges we have coming from a market like China. I think the biggest risk is political and social stability in China. Many other things can be sorted out. But if you look at the history as well, when China has failed, it has primarily been because of social changes as well as political changes. Instability and ambiguity do not work well for China."

download MP4 video (Witt/Pesek)

Related books:

The Future of Chinese Capitalism

Gordon Redding and Michael Witt

Oxford University Press

Due for release November 2007

Michael Witt teaches on the following Executive Education programme:

Building the Business: Strategies for Asia Pacific

International Executive Programme

Dubai FORSA Programme for Women in Business