Naturally, China drew a crowd. The takeaways? Yes, China is big, and growing fast, and you should probably figure out how to invest there. And, no, the country is not about to devolve into social unrest. But it may take time to solve the country's equally impressive challenges. Fortune's Clay Chandler (center) grilled Dr. David Li (right) of The Center for china in the World Economy and Victor Yuan of the Horizon Research Consultancy Group. The eloquent Dr. Li sumarized the thing well: "Let me argue there are two implications: we have to be patient with the Chinese situation. Indeed, the Chinese situation is not ideal, but the changes are in the right direction. Patience is one implication, and the second is that the external world has to be positively accomodating to the emergence of China."

UPDATE: Clay Chandler has files the following far better summary of the meeting.

SUMMARY:
China¹s torrid macroeconomic growth rates belie huge challenges to continued
expansion: How to keep generating jobs for China¹s vast population? How to
create a social safety net and minimize income inequality? How to avoid
fouling air and water, and gobbling energy and other natural resources at
such voracious pace that China overwhelms the rest of the planet? How to
transition from central planning to a political system better suited to a
market economy? For Hu Jintao, running the world¹s fastest growing economy
is turning out to be one the world¹s toughest jobs.

CLAY CHANDLER, FORTUNE ASIA EDITOR:
"Fortune 500 CEOs have come a long way in their understanding of China. At
the 1999 Fortune Global Forum in Shanghai they were still groping, trying to
figure China out. By the 2005 Global Forum in Beijing, they felt assured.
Many had socked billions of dollars into China operations and were visiting
China 4 and 5 times a year. Increasingly, CEOs like what they see in China:
a nominally socialist system where government leaders all want to talk
business, seem to genuinely Œget¹ the global economy and have the
administrative muscle to make things happen fast. A common CEO refrain:
³State-led capitalism ­ ya gotta love it.² Many draw a contrast between
can-do pragmatism in China and democratic malaise in India. But the reality
is a lot more complicated. China¹s leaders are scrambling to keep the
economy growing and hold society together. Topping China¹s development
agenda, the ŒFive E¹s¹: Employment, Equality, Enterprise, Energy,
Environment."


DAOKUI "DAVID" LI, PROFESSOR OF ECONOMICS, TSINGHUA UNIVERSITY, DIRECTOR, CENTER FOR CHINA IN THE WORLD ECONOMY
"Four paradoxes of China:
1) China is a huge economy, but it¹s also a poor economy, with per capita
GDP of $1700, barely half that of Russia....

2) China is an open economy, in the sense that it absorbs billions of
dollars in FDI, but in fundamental ways it remains essentially closed. Few
Chinese speak English, Chinese society is less open than that of India, and
ideologically, it¹s more insular. By comparison, India is a closed economy,
but an open society.
3) China¹s economy is highly centralized in the sense the central
government oversees all, appoints the political leaders and party
secretaries at the state and local levels. But the local officials have a
lot of power and the government often has difficulty enforcing its will
beyond Beijing.
4) Chinese development seems remarkable stable in the sense that after
more than 20 years of reform it is still a one-party state, in which the top
officials in the Communist party hold all the top government jobs. But at
the same time, Chinese economy has experienced change at a phenomenal rate
-- even changing fundamental aspecits of the official ideology -- under that
party structure.

China¹s five big challenges:
1) GDP is growing rapidly, but growth is lopsided. More than 44% of GDP
growth comes from investment. Consumption is just over 50% No other economy
has had such lopsided growth. Even in the periods of rapid industrialization
in Japan and Korea, investment never exceeded 35% of GDP.
2) Rising social tension. The current government has raised expectations for
greater equality and social justice.
3) Natural Resources: If China duplicates the lifestyle and consumption
patterns of the US, we will bankrupt the rest of the world in terms of
resources. We have to find new ways of enjoying the benefits of modern life
that won¹t add to the strain on global resources.
4)
Achieving a political Œsoft-landing¹: It¹s widely recognized among
China¹s elites that the current system isn¹t compatible with a market
economy. But the question is, how to liberalize? If China moves too fast we
may create internal problems.
5) Global Leadership: China¹s not used to being a world leader. Today
China¹s interests are embedded in the global economy, and yet we¹re
developing the leadership and negotiating skills commensurate with our
economic stature.

Two Implications:
1) Be patient: China is moving in the right direction.
2) The rest of the world needs to be positively accommodating to China¹s
emergence. We have to understand what happens in China matters for the rest
of the world."

VICTOR YUAN, CHAIRMAN, HORIZON RESEARCH CONSULTANCY GROUP
"China is a good destination for investment. The general public has more
confidence in the government¹s ability to develop the economy than develop
good social policy. Several big issues for China to tackle: employment,
social security, corruption. People aren¹t so confident about the
government¹s ability to root out corruption. About 90% of the public trusts
the central government, but maybe on 45% have confidence in the
egional/local governments.
But there are positive trends: The rise of a younger generation. Chinese
raised under Mao¹s one-child policy are active consumers. Call them
Generation S for single child. They¹ve created a new foundation.
Migration creates new challenges and opportunities. The migrants who come to
the cities are demanding equal treatment. Chinese move from the country to
the city, they move from city to city, there¹s more tourism enabling them to
see the outside world with their own eyes. This is changing the foundation
of Chinese social life."