China’s prospects in the next decade are very good, Dollar says.

David Dollar: I think prospects for continued growth in China are very good for the next decade or so. All the fundamentals that have led China to grow well remain in place for another decade or so. After that things start to change. Because of China's one child policy, the labor force is actually going to start to shrink as early as 2020. So I think once you get past 2020, it's gonna be very hard for China to grow rapidly. Because when your labor force is declining, it's very hard to keep up high growth. But 2020 is 13 years away. I think prospects for growth are good. To me the biggest single issue or challenge that China faces is natural resource scarcity and environmental degradation. So while China is growing well, there are a lot of environmental problems. Some of those are getting worse. The people are very concerned about this. So the government has started doing attitude surveys or household surveys to get people's  input into what they think the government should be doing. When they did this in Beijing, the two biggest issues on people's mind were air pollution and traffic. So I think there's a lot of pressure on Chinese government at a central and local level to try to improve environmental conditions, to try to improve the quality of life. And it's a big challenge to keep up that eight to ten percent growth, and also improve environment at the same time. So I really do see that as the key challenge that the country faces in the next 15 years or so.

Recorded on: 7/3/07