Ann Lee: Fo­cus on eco­nomic re­la­tions BIO

China Daily (Canada) - - ACROSSAMERICA - By ZHANG FAN in New York fanzhang@chi­nadai­

The US fi­nan­cial com­mu­nity is closely watch­ing China’s shadow-bank­ing sys­tem, con­cerned whether it will cause China’s fi­nan­cial sys­tem to col­lapse, said Ann Lee, a leading ex­pert on China and US eco­nomic re­la­tions.

“I spent a lot of time try­ing to fig­ure out how large China’s shadow-bank­ing sys­tem is, in terms of whether China can ba­si­cally avoid the vul­ner­a­bil­ity caused by such a sys­tem, and I am more in­clined to say that it is not as se­ri­ous as what hap­pened here in the US,” said Lee.

“If China’s shadow-bank­ing sys­tem causes cri­sis of con­fi­dence in China’s fi­nan­cial sys­tem, the author­ity have enough tools in their mon­i­tor­ing tool box to cor­rect those things,” Lee said, adding that it is a “del­i­cate” is­sue that the govern­ment should “re­ally be care­ful on”.

Lee, a Chi­nese Amer­i­can born in Hong Kong, is ded­i­cated to the re­search of Chi­naUS eco­nomic re­la­tions, in­ter­na­tional fi­nance and trade, and China’s po­lit­i­cal econ­omy. She is a se­nior fel­low at Demos, a US-based think tank, and also an ad­junct pro­fes­sor at the New York Univer­sity.

In her most well-known book, What the US Can Learn From China (2012), Lee wrote about what the US can learn from China’s com­pe­ti­tion, es­pe­cially China’s ex­pe­ri­ence in boost­ing its eco­nomic growth and avoid­ing the in­flu­ence of the global eco­nomic melt­down.

Var­i­ous eco­nomic ex­perts and for­mer US govern­ment of­fi­cials praised the book, in­clud­ing Char­lie Kolb, pres­i­dent of the Com­mit­tee for Eco­nomic De­vel­op­ment and a for­mer deputy un­der­sec­re­tary of the US Ed­u­ca­tion Depart­ment.

Kolb said Lee’s book shows how the US can learn much from the coun­try that “will soon have the world’s largest econ­omy”, and people should “all lis­ten to her now as she de­scribes how China and the United States can work to­gether to shape a safer and more pros­per­ous world”.

“I wrote the book be­cause I felt that Western per­cep­tions of China in gen­eral were too lop-sided, de­cid­edly neg­a­tive, and pri­mar­ily su­per­fi­cial,” said Lee. “I had hoped to of­fer a mod­est coun­ter­weight to the overwhelming anti-China bias in the press and in Wash­ing­ton.”

She said the big­gest chal­lenge dur­ing her writ­ing came from the pub­lisher, who asked to limit the fi­nal man­u­script to 250 pages.

“I’m blessed that the book has caught at­ten­tion from around the world. I’ve al­ready been in­vited to speak in more than a dozen coun­tries. I hope it has had some ef­fect in rais­ing pub­lic dis­course to a higher level,” she added.

Lee said de­spite China and the US be­ing very dif­fer­ent, there are also many sim­i­lar­i­ties, and “there are cer­tain el­e­ments that are true for all so­ci­eties”.

“Learn­ing can be a two-way street. They have learned plenty from us, and we can learn from them. If we can find a way to put aside our prej­u­dice and take the best from the West and in­te­grate it with the best from the East, per­haps we can ad­vance civ­i­liza­tion and cre­ate a bet­ter world for all,” Lee said.

Ac­cord­ing to Lee, there are many prob­lems that China and the US can co­op­er­ate on to achieve a bet­ter world, such



New York Univer­sity

Born: Hong Kong • US Berke­ley, Prince­ton Univer­sity’s Woodrow Wil­son School of In­ter­na­tional Af­fairs Har­vard Busi­ness School (1995)

• as en­vi­ron­men­tal dam­age, pol­lu­tion and cli­mate change. All those is­sues are “clearly im­por­tant to both na­tions and nei­ther one can do it alone,” she said.

She es­pe­cially stressed the tech­ni­cal ex­change be­tween China and the US, such as in the clean-en­ergy in­dus­try, high-speed trains and clean in­fra­struc­ture, which she called “po­ten­tially low hang­ing fruit”.

“In all of these ar­eas, if they can come up to what they like to ex­port to each other and im­port, and fig­ure out a se­quence of what deals hap­pen first and last, that could be a great grand bar­gain that could help each other over trade,” said Lee, “that also can not only gen­er­ate jobs but also clean the en­vi­ron­ment, which would be big wins.”

• Se­nior Fel­low at Demos (2010-2012) Vis­it­ing Pro­fes­sor at Pek­ing Univer­sity (2007-2008) Pro­fes­sor at Pace Univer­sity (2006-2007) In­vest­ment banker at Bankers Trust and Alex. Brown & Sons (be­fore 2006)

A re­cent re­port pub­lished by the Rhodium Group shows that Chi­nese for­eign di­rect in­vest­ment in the US reached $14 bil­lion in 2013, with the aver­age size of projects in­creas­ing, dou­ble the amount of the pre­vi­ous year.

Among all the sec­tors, the food in­dus­try be­came a ma­jor re­cip­i­ent of Chi­nese cap­i­tal, ab­sorb­ing al­most $7.1bil­lion. Commercial real es­tate also be­came a hot sec­tor with $3.2 bil­lion in about 18 projects.

Such in­vest­ment, how­ever, aroused sus­pi­cion of the US pub­lic. A 2013 Hill+Knowl­ton strate­gies sur­vey shows that more than half of Amer­i­cans sur­veyed be­lieve China poses the great­est threat and about 34 per­cent were “not com­fort­able” with any in­vest­ment from Chi­nese firms.

Lee said over­all Chi­nese in­vest­ment in the US is a good trend since it “will cre­ate more job op­por­tu­ni­ties for Amer­i­cans” es­pe­cially when the US econ­omy is still re­cov­er­ing, though she said it is a com­pli­cated prob­lem in­volv­ing a lot of is­sues.

“Amer­i­cans used to worry about the Ja­panese. Now the Ja­panese in­vest a lot in car man­u­fac­tur­ing here and hired a lot Amer­i­can work­ers, so they no longer have a prob­lem with that,” Lee said. “I think it just takes a mat­ter of time and ad­just­ment for Amer­i­cans to get used to that idea and to un­der­stand that maybe their Chi­nese man­agers are just as nice to work for and not a threat.”

Chi­nese Pre­mier Li Ke­qiang said in 2013 that China needed to en­large its do­mes­tic mar­ket to achieve eco­nomic trans­for­ma­tion. In a newly re­leased re­port by China’s Cus­toms, the coun­try’s im­port and ex­port vol­ume in the first quar­ter of 2014 de­creased 1.2 per­cent and 6.1 per­cent, re­spec­tively.

Lee said China’s en­larg­ing do­mes­tic mar­ket should help eco­nomic re­la­tions be­tween China and the US be­cause the en­larged Chi­nese mid­dle class means a large mar­ket for the US.

“The whole world is look­ing at China to grow its do­mes­tic econ­omy, so that they can ben­e­fit through the co­op­er­a­tion,” Lee said. “Frankly, China’s ex­port mar­ket in Europe and the US has shrunk be­cause of eco­nomic-growth is­sues, so China can­not fol­low that model any­way.”

Lee said no one, in­clud­ing her, is able to pre­dict whether Chi­nese eco­nomic growth will con­tinue. The Chi­nese govern­ment should watch the fac­tors in­volved much more care­fully so they could avoid cer­tain bub­bles.

“Just be­cause you have a con­tin­u­ous growth in the past, it does not nec­es­sar­ily mean the fu­ture is go­ing to grow all over the same. What I have al­ways said is that no­body has a crys­tal ball on this. All you can do is make de­ci­sions with the best in­for­ma­tion avail­able,” she said.


Ann Lee, an ad­junct pro­fes­sor at the New York Univer­sity, is ded­i­cated to the re­search of China-US eco­nomic re­la­tions, in­ter­na­tional fi­nance and trade, and China’s po­lit­i­cal econ­omy.

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