Panel: China’s Shockwaves Rock World Economy More Than Ever

China’s economy seems to be weathering some of the most turbulent waters in recent memory.

Amid aggressive moves to halt plunging stocks, the devaluing of its currency, hundreds of billions of dollars in capital outflows and slowing growth, many observers wonder if China reached a pivotal crossroads.

On Sept. 10, the OPC hosted a forum to discuss recent developments with a panel of experts on China. During the panel, titled “China Shocks: How Serious? What Do They Mean?”, moderator William J. Holstein asked whether recent events are truly unusual, or if the world is simply taking more notice because of an increasingly globalized economy.

Gady Epstein, The Economist, who recently returned to New York after more than a decade in Beijing for The Economist and Forbes magazines as well as The Baltimore Sun, said rougher waters for China are likely ahead, and reverberations will reach farther than before.

“When China stumbles, the rest of the world feels it, and the rest of the world actually even knows about it,” he said. “These huge dislocations, from China’s perspective, have been happening over the course of all these several decades. There have been big ups and downs, and with the exception of 1989 wouldn’t say the rest of the world was paying attention.”

Gwynn Guilford, a reporter and editor for Quartz who spent six years in China, including three researching Chinese companies and macroeconomic developments for hedge funds, said China has an oversupply of money, but its efforts to keep the Yuan artificially cheap have started to backfire in recent years.

“With all of this money chasing a finite amount of goods, why isn’t inflation going up?” she said. “Because overcapacity is so bad, because there is so much slack, because factories producing at a loss and selling stuff overseas because no one in China is buying it – that is overwhelming this insane increase in money. That is keeping prices down worldwide, which is really bad for the global economy.”

Elizabeth Economy, C.V. Starr Senior Fellow and Director of Asia Studies at the Council on Foreign Relations, said China’s actions following the stock market crash reflect core shortcomings, such as a lack of transparency, accountability and rule of law.

“What did the Chinese do? They controlled information, arrested people, they froze assets, they did everything that you’re not supposed to do in a real market economy,” she said. “In my mind there is a much larger systemic challenge that they need to address, and those sort of issues they’re only prepared to take baby steps, because that speaks to for more fundamental political reform that this Chinese administration is clearly not prepared to undertake.”

Watch an archive of the entire live broadcast via Google Hangouts >>

Or click on the windows below to watch video clips from the forum.