MAPPING CHINA S FUTURES. A SCENARIOS-BASED APPROACH TO ANALYSING CHINA S SOCIO- POLITICAL AND ECONOMIC DYNAMICS OVER THE NEXT DECADE

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in partnership with ACADEMY OF GLOBAL GOVERNANCE EXECUTIVE TRAINING SEMINAR SERIES European University Institute, Villa Malafrasca, Via Boccaccio, 151 - Firenze MAPPING CHINA S FUTURES.

wai Giorgia Giovannetti University of Florence and EUI WHAT IS THE ACADEMY OF GLOBAL GOVERNANCE?

1 in partnership with ACADEMY OF GLOBAL GOVERNANCE EXECUTIVE TRAINING SEMINAR SERIES European University Institute, Villa Malafrasca, Via Boccaccio, Firenze MAPPING CHINA S FUTURES. A SCENARIOS-BASED APPROACH TO ANALYSING CHINA S SOCIO- POLITICAL AND ECONOMIC DYNAMICS OVER THE NEXT DECADE Scientific Coordinators: Giovanni B. Andornino University of Torino and T.wai Giorgia Giovannetti University of Florence and EUI WHAT IS THE ACADEMY OF GLOBAL GOVERNANCE? May 2015 The Academy of Global Governance (AGG) is a unique executive training programme, where theory and real world experience meet. Trainers at the AGG are leading academics, former ministers, heads of international organizations and top executives. AGG trainees young executives, policy makers, diplomats, international organizations and public sector officials, private sector professionals, and junior academics have diverse backgrounds, operate in a wide range of contexts, and come from the different corners of the world, to share views and debate in the vibrant academic environment of the European University Institute. The AGG s trainees benefit from a network of academics and international top-level officials, and from an extremely stimulating discussion on topical issues relating to governance. INTRODUCTION This Executive Training Seminar brings together European and Chinese scholars with experience in strategic foresight consultancy for an intensive programme combining fresh insights into China s political and socio-economic dynamics with a highly interactive methodology challenging participants to translate acquired knowledge into applied policy analysis. In light of Beijing s growing footprint across all realms of global governance, it is essential for international institutions, governments and the private sector to pursue a holistic understanding of the interplay between the domestic determinants of the PRC s posture in world affairs, and the systemic constraints impacting on China s own stability and development. Over the first two days of activities, sessions will focus on the new wave of economic reforms launched in 2013 by the 3 rd plenary session of the CCP Central Committee, assessing their impact on world trade, regional and global macro-economic stability, international development, and the rise of post-bretton Woods institutions. The unique complexity and flexibility of the political process defining the Chinese Party-State will also be explored, including key instances of institutional

2 innovation, the on-going anti-corruption campaign, and the re-defined centrality of the Party and its evolving ideology. The Executive Training Seminar then culminates in a half-day long scenario-making exercise. Trainees are encouraged to identify and assess relevant macro-variables, isolating megatrends and critical uncertainties in order to articulate alternative futures and discuss appropriate policies to steer from the official future to the preferred scenario. PROGRAMME MAY 07 First Session - Global Outreach, Regional Ambitions: a Post- 韬光养晦 Posture for Xi Jinping s China Giovanni B. Andornino University of Torino and T.wai This session investigates the evolving political landscape in the Chinese Party-State, focussing on how domestic priorities reverberate on the foreign policy domain. The overarching goal set by President Xi Jinping upon effectively becoming the core of the fifth generation of the PRC s leadership the pursuit of the China dream is analysed against the on-going, vibrant debate about China s material constitution and its capacity to constrain rent-seeking discretional bureaucracy within an upgraded system of socialist rule of law, while allowing individuals in Chinese society to contribute to the development of their country. Whether or not the current leadership is willing and able to muster the required political capital to introduce structural reforms in the economic and societal realms, what is apparent is the Party s fresh resolve in rejecting any propositions advocating convergence with Western values. What are the implications of Zhongnanhai s increasing assertiveness in the normative sphere on China s role as a bargaining stakeholder of the international order? Are there enough political space and a sufficiently broad constituency for a pars construens to emerge in Beijing s approach to multilateral governance, beyond its global discourse and regional practices of resistance against US hegemonism? How should Europe engage with China s westward projection along the New Silk Road of the 21 st century? MAY 08 Giovanni B. Andornino is Assistant Professor of International Relations of East Asia at the University of Torino, Vice President of the Torino World Affairs Institute (T.wai), and Co- Director of the Centre for Italian Studies at Zhejiang University (Hangzhou, China). His research, focussing on China s domestic politics and foreign policy, Italy-China and EU- China relations has been widely published, including in China & World Economy, The International Spectator, and Mediterranean Quarterly. For Palgrave Macmillan he has recently co-edited Italy s Encounters with Modern China. Imperial Dreams, Strategic Ambitions, His latest chapter An Assessment of EU-China Relations in Global Governance Forums, features in The EU-China Relationship: European Perspectives. A Manual for Policy Makers (ed. Kerry Brown), Imperial College Press, Andornino is the editor of one of the world s most comprehensive research websites on Chinese politics, foreign policy, and political economy. Second Session Challenging Vested Interests: Perspectives for Domestic Reforms in Xi s China Liang Yabin Institute for International Strategic Studies, Party School of the Central Committee of the Communist Party of China: China s domestic socio-political challenges and the socialist rule of law

3 After 36 years of intense socio-economic development, while China has made great achievements in all areas, it has also accumulated vast and complex socio-political challenges. These include social polarisation, environmental degradation, corruption, and mass social protests, which currently are the main factors affecting the stability of the country and casting doubts on the legitimacy of the ruling Communist Party of China (CPC). Since coming to power in 2012, President Xi Jinping has spearheaded comprehensive actions to tackle these challenges, implementing a fierce anti-corruption campaign and launching a Party mass line education practice, which has laid solid power foundations for him to pursue a new round of political reforms in the realm of state governance. In October 2014, the fourth plenary session of the 18th CPC Central Committee has made the most significant achievements to date in institutions building, kick-starting the evolution of governance inside China. The socialist rule of law is being introduced in domestic governance together with new political and judicial institutions and a reinforcement of the constitution theme, with the aim of building a law-abiding government and hence maintaining social stability and the permanent ruling power of the CPC. In the context of such institutional evolution the role of the CPC will inevitably undergo important changes. Liang Yabin is currently an Associate Professor at the Institute for International Strategic Studies, Party School of the Central Committee of the C.P.C. His areas of research and teaching specialisation include International Politics, International Law, Sino-U.S. Relations, Smart Weapons and International Relations. He earned his Ph.D. in International Relations from Peking University (2011), holds a MSc. in International Relations from the University of Bristol, UK (2007), and a BA in English from North China University of Technology (2005). He has authored or contributed to numerous academic and analytical articles/chapters on American hegemony, Sino-US relations, Energy Security and Armed Unmanned Aerial Vehicles. Chen Chunhua and Fu Chenggang George Washington University and International Finance Forum: Dynamics and challenges of China s economic and political reform in the coming decade One year after the 18 th Third Plenary Session, global observers are watching what moves the Party and government will make, which might decide China s long-term economic prospects, social stability, the legitimacy of CPP s hold on power, and the overall credibility of the Chinese administration. Depending on how the current reform drive plays out, China might be set on different courses, leading to potentially very different outcomes, as each path entails risks and challenges in the economic, social and political realms. At this key juncture, slowing the reform momentum might lead to the outbreak of a real estate bubble crisis, with severe impact on local government fiscal viability, shadow banking solvency, and the management of economic overcapacity. Conversely, encouraging reforms in greater depth and width is expected to increase the likelihood of bankruptcy of LGVPs and local trust institutions, resulting in social unrest and toxic political pressure throughout the country. Pursuing reforms inefficiently will empower departments and local interests as they try to override reform efforts, resulting in greater failures in strategic areas. Beyond the economic realm, political reforms are of critical importance for China s economic transition and institutional advancement. The on-going anti-corruption drive is expected to have a positive impact on the image of both the CCP and government, enhancing their leadership and governance capacities. Concerns have been accumulating, however, in the intellectual and policy spheres: a failure to recognize the social value of justice and to embrace the substantive spirit of the rule of law in this critical phase might eventually cause greater damage to the institutional evolution in China. Chen Chunhua is a Ph.D Candidate in Political Science at George Washington University, Washington D.C. Her research focuses on Chinese politics, China s foreign policy, authoritarianism, social movements and nationalism; her dissertation analyses nationalist protests in contemporary China. A former Research Assistant for the James Martin Center for Nonproliferation Studies and for the Congress of the United States, Ms. Chen has received

4 grants from the Monterey Institute of International Studies, the Institute of Qualitative and Multi-methods Research of Syracuse University and, most recently, the Sigur Center for Asian Studies Grant for Field Research. Fu Chenggang is Assistant Secretary-General of the Beijing-based International Finance Forum (IFF) and Project Director of the IFF Institute. His research focuses on China s economy, financial reforms, governance and regulation, as well as the role of and think tanks in China. As a senior executive and policy professional, he previously worked for Boyuan Foundation, Hongfan Institute of Legal and Economic Studies, and the China Finance 40 forum on multiple policy and consulting projects at the national and international level. Third Session The Economic Transformation of China Fabrizio Zilibotti University of Zurich A recent wave of economic research has studied the transformation of China from a poor country in the 1970s to a middle income economy today. Based on this literature, we discuss the factors driving China s development process. We provide a historical account of China s rise, fall, and resurgence. We then discuss the stylised facts associated with China s growth process and review a comprehensive theory of its economic transition. Finally, we discuss China s future. In particular, we review some recent studies about technological and politico-economic factors that may foster or hinder its future economic performance. Fabrizio Zilibotti holds the Chair of Macroeconomics and Political Economy of the Department of Economics at the University of Zurich. He is a former Professor of Economics at University College London and at Stockholm University. He is the President Elect of the European Economic Association. He is the Scientific Director and Deputy Director of the UBS International Centre of Economics in Society. He is a joint recipient of the Yrjo Jahnsson 2009 award from the European Economic Association and of the Sun Yefang 2012 Award from the Chinese Academy of Social Sciences (prize granted for the paper "Growing Like China"). He has been the chief editor of the Journal of the European Economic Association, a former director and managing editor of the Review of Economic Studies, and an Associate Editor of the Journal of Economic Growth. He is a director of the NBER Economic Fluctuations Group on Income Distribution and Macroeconomics. He is a Fellow of the Econometric Society, CEPR and CESifo. His research interests include economic growth and development, political economics and macroeconomics. He has published papers in all top-five journals in economics: American Economic Review, Econometrica, Journal of Political Economy, Quarterly Journal of Economics, Review of Economic Studies. Giorgia Giovannetti University of Florence and European University Institute: "Recent Dynamics in International Trade and Investments: the role of China (with a focus on EU-China relations) The rapid growth of China in the last thirty years has had a very strong impact on the world economy. Having gone through a brisk process of structural transformation as well as international integration, China has recently improved quantity and quality of its exports. Its market share has increased dramatically, to become the first world exporters of goods (second importer). A recent ample literature has been discussing the likelihood of this upgrade resulting in a change in Chinese comparative advantage towards more sophisticated productions and, therefore, whether there are countries/sectors more subject to increased Chinese competition. Following China s entry into the WTO, the possible impact on trade performance of different groups of countries, mainly East Asia has been investigated. There is evidence that the upgrading of Chinese exports and the consequent changes in its trade specialisation threatened both the mature tigers and

5 the new tigers in more advanced segments of production. More recently, also the impact of China on other developing countries in Latin America and Africa has been analysed. Conversely, little attention has been paid to the possible impact on developed countries, whose productive structures were considered to be less at risk, due to the relatively less sophisticated exports from China. This session will highlight the possibility for Chinese exports to crowd out exports by developed countries (namely Germany and Italy), even in developed mature markets and discuss the possible consequences. It will also discuss the role of foreign direct investments and the changes in trade and investment policy. MAY 09 Giorgia Giovannetti is full Professor of Economics at the University of Florence (since 2001), part-time professor at New York University (Florence, since 2006), and Visiting Fellow at the European University Institute. She has acted as Scientific Director of the European Report on Development in 2009 and 2010, Director of the Development research Area in the Global Governance Programme ( ), Director of the Research Centre of the Italian Trade Institute ( ). In the past ten years she has been advising the EU Commissioner for Development ( ), the President of ICE (2004- to date), the Italian Treasury ( ) and the Italian Ministry of Foreign Trade ( ). She is scientific coordinator of the Fondazione Manlio Masi, member of the globalisation team at OECD, fellow of the Foundation for International Development Study and Research-FERDI, (University of Auvergne at Clermont Ferrand) and Fondazione Luca D Agliano (Turin) and of a Group for the Reform of the Rome Agencies of the Center for Global Development in Washington. She holds a PhD and an MPhil in Economics from Cambridge University, and a Laurea cum laude in Statistics from the University of Roma la Sapienza. In the past she has been a fellow of Trinity College- Cambridge and lecturer ( ). Furthermore, she has been a visiting Professor in several universities (UPF, NYU, Hoover Institution- Stanford, Universitat Torcuato de Tella- Buenos Aires). Her research interests include international trade, political economy and development. After studying the China- Africa relationships, her recent research has also focussed on China-EU trade and Investments. Her work has been published in leading academic journals and presented in main international conferences. Fourth Session Scenario-making exercise Giovanni B. Andornino University of Torino and T.wai A joint session with the participation of Chen Chunhua & Fu Chenggang George Washington University and International Finance Forum Liang Yabin Party School of the Central Committee of the Communist Party of China Giorgia Giovannetti University of Florence and European University Institute Fabrizio Zilibotti University of Zurich This day-long session is designed to challenge trainees to leverage their critical thinking, consolidated knowledge and the newly-acquired insights discussed in the previous sessions with the aim to chart three plausible alternative futures for China. Trainees are divided into groups and tasked with identifying STEEP macro-variables that are relevant to the following central question: To what extent could China s re-emergence impact on perspectives for global governance by 2022? Macrovariables are subsequently assessed in terms of their degree of impact and level of uncertainty, leading to the definition of critical uncertainties and megatrends. Based on this set of especially salient macro-

6 variables, trainees operationalise a scenario matrix and articulate the narrative of the official future the one that would ensue projecting current trends in linear fashion. Two alternative scenarios are then extrapolated and policy options discussed that may allow for the transition from the official future to the preferred scenario. Register on the Academy webpage: The Global Governance Programme (GGP) of the European University Institute (EUI) does not charge a participation fee for the Academy of Global Governance Executive Training Seminars. Accommodation and travel costs, to and from Florence (Italy), and transport within Florence are at the expense of the participant or his/her institution. The GGP will provide transport information and directions to reach the European University Institute. A welcome dinner and lunches included in the programme of the Executive Training Seminar will be organised and offered by the GGP. For more information: Academy of Global Governance European University Institute Villa La Fonte GlobalGovernance.Academy@eui.eu The Global Governance Programme receives financial support from the European Commission through the European Union budget.

Scientific Coordinator: Petros C. Mavroidis European University Institute

ACADEMY OF GLOBAL GOVERNANCE EXECUTIVE TRAINING SEMINAR SERIES GLOBAL GOVERNANCE PROGRAMME STANDARD-SETTING IN INTERNATIONAL TRADE Scientific Coordinator: Petros C. Mavroidis European University Institute