‘China, Trade and Power’ book unveiled at AmCham Shanghai

Author of the book Stewart Paterson gave a detailed presentation on the book. He engaged the audience with the unexpected outcome of a Western policy of engagement with China, which led to the country’s accession to the WTO in 2001 without critical economic reforms, such as a floating exchange rate and open capital account.

Paterson explained how the supply-side shock created by China’s increasing and deflationary exports, coupled with the inflation-targeting response of Western central banks, led to a fall in real incomes for the many in the West and a rise in asset prices for the few, raising questions about the effectiveness of Western liberal economic models.

“By flooding the world with cheap labour, the pricing power of labour in the West was diminished. MNCs captured the benefits of this through outsourcing. The 5 million manufacturing jobs lost saved companies at least $100 billion per year in wages alone. Longest decline in real median incomes since the war. In the UK since Victorian times,” Paterson noted in his presentation.

He explained that the need for a deep market-oriented economic reform in China was avoided by the country’s export success which helped raise the living standards and cemented the position of the Communist Party of China domestically. The internal success led to Beijing’s economic model being held as an alternative to Western liberalism.

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