Below is a short valuable interview. We are a fan of Stephen Roach as a ‘China watcher’. His book, The Next Asia: Opportunities and Challenges for a New Globalization (2009), is a must-read for all corporate affairs practitioners and CEOs who want to understand what is happening in China.
In this McKinsey Quarterley interview he explains, simply, the progress of China’s five-year plan and why it is good for all of us, and why the US (and the rest of us) must see China as an opportunity, rather than a threat (“China is reactive to American belligerence…”).
A year ago, the National People’s Congress enacted China’s 12th five-year plan, which included three main building blocks: a greater focus on jobs, urbanization to boost wages, and financing a social safety net that encourages families to spend rather than save. Stephen Roach, a professor at Yale University and former nonexecutive chairman of Morgan Stanley Asia, says that this document’s implementation is marking a major shift in China’s model, away from exports and investment and toward internal, private consumption. Therein lies a huge opportunity for other nations to benefit from the emergence of the world’s largest consumer population.
China, currently the biggest and most rapidly growing US export market, is well on its way to “create a consumption dynamic that will outstrip the growth of any consumer market in the world,” Roach asserts—“and shame on us if we’re not a part of that.” In this video, Roach explains how China must turn to internal demand to drive economic development and prosperity and why improving the testy China–US bilateral relationship is so critical for the economic future of both countries. McKinsey Publishing’s Rik Kirkland conducted the interview at the World Economic Forum, in Davos, in January 2012.