Former Federal Reserve chair Ben S. Bernanke at Brookings looks at shifts in economic growth in China. The country is moving away from a top-down approach that owes its heritage to Communist central planning with a focus on heavy manufacturing. It’s moving toward a bottom-up approach with a focus on services. He cites World Bank figures showing services make up half of the Chinese economy compared with four-fifths of the U.S. economy.
Bernanke says U.S. rust-belt cities such as Chattanooga and Pittsburgh can provide a model for how China can adapt. Chattanooga, he said, saw public/private efforts to revitalize the downtown, develop tourist attractions and conference facilities, clean up the environment, improve transportation and infrastructure, improve education, and attract clean business sectors—including medicine and technology.
For its part, Pittsburgh’s redevelopment was spurred on by universities including Carnegie Mellon and University of Pittsburgh. “Emblematic of Pittsburgh’s transformation,” Bernanke writes, “is that the U.S. Steel building, the largest in downtown Pittsburgh, now bears a UPMC sign, for University of Pittsburgh Medical Center—the region’s largest employer.”
He notes that China faces significant problems, including building a strong middle class that constitutes the primary market for sophisticated services. He concludes, “In considering models for reinvention, China could do worse than to contemplate the experiences of Chattanooga and Pittsburgh.”
