Overcoming the Great Recession: Lessons from China

Graham Allison and Lawrence Summers—who wrote the foreword for this paper—explain why they think Liu He's perspective is so valuable.

The US-China Strategic and Economic Dialogue being held in Beijing this week reminds us of the most important bilateral relationship in the world today. Americans are understandably concerned that the perspectives of American policymakers and scholars are understood broadly by elites and publics in other countries. We tend to be less vigilant, however, in listening to the perspectives of others.

Liu He is worth listening to. A rare combination of scholarly analyst and policy advisor, he has emerged as Chinese President Xi Jinping’s right hand man on economic policy. The Chinese press has named him the “Chief Architect” of the current economic program to transform the Chinese economy. As Head of the Office of the Central Leading Group on Financial and Economic Affairs in the President’s office, he plays a role not unlike that which one of us had in the Obama Administration’s first term.

In the aftershocks of the Great Financial Crisis of 2008, Liu led a research team that prepared an analysis of earlier financial crises to provide guidance for the Chinese government’s response. We arranged for that document to be translated and have published it here as a joint discussion paper of Harvard’s Belfer Center for Science and International Affairs and Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School.

As we note in a foreword to the paper, five years after the meltdown that threatened a second Great Depression, the Eurozone’s economic output has yet to reach pre-crisis levels.  The US is stuck in secular stagnation.  But China has averaged 7.5% annual growth, three quarters its previous rate. Indeed, the incandescent fact about the performance of the major economies since 2008 is that of all the growth that has taken place in the global economy, 40% of it has occurred in just one country: China.

Liu He’s analysis provides clues to the reasons why—claims worthy of discussion and debate in the wider policy-related community.

Download the full paper below: