Foreign Policy Blogs

Stephen Roach on U.S.-China Economic Relations


In this virtual roundtable of six podcasts hosted by Professor Sarwar Kashmeri, the Foreign Policy Association aims to shed some light and serve as a catalyst for developing awareness, understanding and informed opinions on the key issues that face American policymakers as they seek to peer over the horizon to manage the U.S.-China relations.

In the fifth installment of the virtual roundtable, Stephen Roach—former Chairman of Morgan Stanley Asia and the firm’s chief economist, and senior fellow at Yale University’s Jackson Institute of Global Affairs—discusses the commercial and financial relations between the two biggest economies in the world.

When asked about the strategic significance of the shift in wealth from the West towards Asia—with China’s GDP overtaking that of the U.S. according to the IMF—Roach replied: “On a per capita basis there is still an enormous disparity, with China still qualifying as a high income developing economy.”

Roach counterbalanced this view, noting that: “Strategically, scale is important—China, because of its aggregate GDP, dominates many flows in finance, in trade, in the commodity markets, oil, natural gas, automobile demand. The strategic significance of China’s scale certainly cannot be minimized in Asia and in the broader global economy.”

On a slowdown of China’s economic growth, Roach explained: “There has already been a disruption: the manufacturing economy is clearly going more slowly in a weak global environment. The external demand for Chinese-made products has slowed dramatically, and the lagged impact of a stronger Chinese currency over the last ten years has taken a toll on Chinese competitiveness as has mounting wage costs of workers in export-intensive industries. That shock is already there.”

For more analysis on the U.S.-China relationslisten to the other podcasts of the virtual roundtable.



Sarwar Kashmeri

Sarwar Kashmeri is an adjunct professor of Political Science and Applied Research Fellow at the Center for Peace and War at Norwich University; and a Fellow of the Foreign Policy Association. He is recognized on both sides of the Atlantic as a specialist and commentator on U.S.-European relations. His latest book is “NATO 2.0: Reboot or Delete?” (

Applied Research Fellow