Beijing's Inefficient Economics Policies

Posted: November 25th, 2016

By Scott Kennedy

Scott Kennedy is deputy director of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at CSIS. A leading authority on China's economic policy and its global economic relations, specific areas of focus include industrial policy, business lobbying, multinational business challenges in China, Chinese participation in global economic regimes, and philanthropy. He is the author of "The Business of Lobbying in China" and the editor of three books, including "Beyond the Middle Kingdom: Comparative Perspectives on China's Capitalist Transformation" and "The Dragon's Learning Curve: Global Governance and China," which is forthcoming. For over 14 years, Kennedy was a professor at Indiana University (IU). From 2007 to 2014, he was the director of the Research Center for Chinese Politics & Business, and he was the founding academic director of IU's China Office. From 1993 to 1997, he worked at the Brookings Institution. Kennedy received his Ph.D. in political science from George Washington University and his M.A. in China studies from Johns Hopkins School of Advanced International Studies. Follow him on twitter @KennedyCSIS.

Since the liberalizing economic reforms implemented by Deng Xiaoping in 1978, the Chinese economy has grown at an average annual rate of nearly 10 percent. However, as the returns of rapid industrialization and urbanization begin to diminish, this growth has begun to slow. At the same time, massive state-driven investment in manufacturing and infrastructure has contributed to overcapacity problems, and most worrying, the ratio of public and corporate debt to GDP has ballooned to unprecedented levels (260% and 169% respectively). Historically, this kind of debt is generally followed by crisis or sudden slowdown in growth. The Cipher Brief spoke with Scott Kennedy, Director of the Project on Chinese Business and Political Economy at the Center for Strategic & International Studies (CSIS).

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