BY ARIEL MARTINO

In print | Published January 29, 2009

Last Thursday, University of California Davis Economics Professor Wing Thye Woo ’76 gave a lecture on the economic past, present and future of China sponsored by the economics, political science and history departments and the Asian studies program.

History Professor Lillian Li introduced Woo’s lecture with a recapitulation of Woo’s time at Swarthmore. Li stressed the virtual non-existence of Asian and Asian-American students on campus during Woo’s time here and recalled Woo asking difficult questions from the back row of one of her history classes.

Woo began his lecture by contrasting the privatization of China’s economy with that of the former Soviet Union’s. China underwent incremental reform, beginning its market transformation with gradual privatization of the agriculture industry. He then went on to explicate the difference between the experimentalist school of reform and the convergence school. While the experimentalist school seeks to find non-capitalist innovations to transform markets, such as agricultural collectives or profit-oriented government supervision, the convergence school looks to integrate the changing market into the capitalist global market and emulate large WTO countries like the United States, Great Britain and Germany. Woo pointed out that the convergence school of market reform is responsible for China’s successful transformation.

Woo addressed the growing trade tensions that China is currently experiencing despite its recent admission into the World Trade Organization. In 2007, legislation was proposed to promote tariffs against China, which both Obama and Clinton said they would sign. Woo also discussed the European Union’s calls for China to allow its currency to appreciate, which would allow the U.S. dollar to rise against the euro.

Finally, Woo hypothesized about the future of China’s economy. “We must always predict disaster,” he said. He compared China’s economy to a speeding car and estimated that the Chinese economy can fail in one of three ways: “Hardware failure,” a failure in economic mechanisms such as fiscal mismanagement or banking sector failures; “Software failure,” a failure in governance such as corruption or incompetence; or a “Power Supply failure,” the economy’s inability to move forward, which could include environmental collapse or a collapse in China’s exports due to trade war.

Woo said that he hoped his talk could dispel some of the misconceptions about the Chinese economy. “There is a lot of fear surrounding the emergence of China as a global power, but there is more optimism necessary. We must remember that the U.S. acted as a stabilizing force for many years after its emergence — until Iraq anyway,” Woo said.

Another major goal of the lecture was conveying the significance of China in the context of a global economy. “I think Professor Woo did a fantastic job of putting China’s past and present situation in perspective, giving students an idea of China’s huge importance to the global economy and the challenges that it faces,” Economics Professor Stephen Golub said.

While the lecture was well-received by the audience, there was some concern that students enrolled in lower-level economics classes may not have been completely prepared for some of the topics Woo discussed in his lecture. “Students at the introductory level may have had trouble following some of the talk due to the breadth and detail of the coverage, but it’s still good that they are exposed to these ideas,” Golub said.

Chair of the Economics department John Caskey believed that despite the complicated economic concepts discussed in the lecture, there was still a great deal for introductory-level students to take away from the talk. “I hope that they get some background on what contributes to economic growth. This is always discussed in ECON 001, and it helps for students to enter the discussion having thought some about the issues and being familiar with one concrete example, in this case, China.”
Caskey added that “it is key to understand the factors that contributed to China’s rapid economic growth and whether that growth can be sustained.”

Woo is also a Senior Fellow at the Brookings Institute and Director of the East Asia Program of the Earth Institute at Columbia University.

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