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Rising importance of China

Page history last edited by Brian D Butler 12 years ago

see related pages: China 

More: Global Issues , Great Debates , and underlying trends that are shaping our world today

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Debate in the West -

 

Question: "Is the rise of China a threat? Or, a benign force that will improve the global economy, drive growth in emerging markets and help fix the economic crisis in the US and in Europe?"

 

  • The view that the rise of China could be benign was articulately presented by Fareed Zarkaria in his book "The Post-American World".  Zarkaria argued NOT that the US would fall, but rather that we would continue to see the trend by which emerging-world economies such as China (Brazil, India, etc) would continue to rise, and therefore the "relative power" of the US (as compared to the others) would be lessened.  
  • Arguing the "threat" - see the Op-Ed article in the Wall Street Journal from Mitt Romney, presidential candidate (Feb 2012)

 

 

Rising importance of China

 

  • "The biggest advances in developing nations are yet to come. 
  • "From 2007 through 2014, an estimated 1 billion people throughout Asia will enter the middle class for the first time, and middle class income levels will rise significantly."

 

Trends:

Article from McKinsey - ECONOMIC STUDIES
What’s in store for China in 2012? "Despite food price inflation and a stagnant housing market, China should maintain a rapid rate of growth, argues a director in McKinsey’s Shanghai office. Read his ten predictions for the country this year."

 

 

Some comments:

 

  • The massive industrialization of China and their subsequent entering of the global economic scene has had major impacts on markets around the globe. 
  • The Chinese ascent into the WTO and the move for china to essentially become a manufacturing shop for the world has had impact on many industries. 
  • On the supply side, Chinese products have kept inflation down in the developed world as consumers in the US and Europe have been able to see falling prices for most of their imported manufactured goods.  By keeping prices down, and inflation under check, this has allowed  central bankers around the globe to have freedom to set interest rates relatively low, which has spurred growth without the corresponding inflation.  One of the side effects of this mix has been a boom in asset prices as money has flown into stock markets (internet bubble) and into real estate (subprime lending).  
  • Internally, China has also been booming.  They say that 2 or 3 new cities the size of Manhattan are built in China every 5 years. 
  • This massive construction and economic boom has led the Chinese to search the globe for raw materials (oil, gas, minerals, commodities, etc).  As the Chinese demand for commodities has surged, the commodity producers around the world have enjoyed massive price increases. 
  • Also, as the Chinese consumers become more affluent, there has been a corresponding boom in Luxury goods industry and status products being sold in China, as well as a booming Automobile Industry.  
  • Overall, the rise of China is changing the nature of global business in unexpected ways. 

 

 

Students' resources (from CFR)

 

China on The World Stage

China on the World Stage (August 2010) contains essays that assess the geopolitical ramifications of China's rise to power, the development and environmental challenges China faces at home, and its relations with major players such as the United States, Russia, and Taiwan. Request Exam Copy »

 

 

 

 

Relative "Fall" of the US (and Western Europe)?

 

A recent article By Niall Ferguson outlines some of the challenges facing the USA (and Western Europe):

 

 

"I am not one of those people filled with angst at the thought of a world in which the average American is no longer vastly richer than the average Chinese. I welcome the escape of hundreds of millions of Asians from poverty, not to mention the improvements we are seeing in South America and parts of Africa. But there is a second, more insidious cause of the "great reconvergence," which I do deplore—and that is the tendency of Western societies to delete their own killer apps.

 

"Who's got the work ethic now? The average South Korean works about 39 percent more hours per week than the average American. The school year in South Korea is 220 days long, compared with 180 days in the U.S. And you do not have to spend too long at any major U.S. university to know which students really drive themselves: the Asians and Asian-Americans. The consumer society? 26 of the 30 biggest shopping malls in the world are now in emerging markets, mostly in Asia. Modern medicine? As a share of gross domestic product, the United States spends twice what Japan spends on health care and more than three times what China spends. Yet life expectancy in the U.S. has risen from 70 to 78 in the past 50 years, compared with leaps from 68 to 83 in Japan and from 43 to 73 in China.

 

"The rule of law? For a real eye-opener, take a look at the latest World Economic Forum (WEF) Executive Opinion Survey. On no fewer than 15 of 16 different issues relating to property rights and governance, the United States fares worse than Hong Kong. Indeed, the U.S. makes the global top 20 in only one area: investor protection. On every other count, its reputation is shockingly bad. The U.S. ranks 86th in the world for the costs imposed on business by organized crime, 50th for public trust in the ethics of politicians, 42nd for various forms of bribery, and 40th for standards of auditing and financial reporting.

 

"What about science? U.S.-based scientists continue to walk off with plenty of Nobel Prizes each year. But Nobel winners are old men. The future belongs not to them but to today's teenagers. Here is another striking statistic. Every three years the Organization of Economic Cooperation and Development's Program for International Student Assessment tests the educational attainment of 15-year-olds around the world. The latest data on "mathematical literacy" reveal that the gap between the world leaders—the students of Shanghai and Singapore—and their American counterparts is now as big as the gap between U.S. kids and teenagers in Albania and Tunisia.

 

"The late, lamented Steve Jobs convinced Americans that the future would be "Designed by Apple in California. Assembled in China." Yet statistics from the World Intellectual Property Organization show that already more patents originate in Japan than in the U.S., that South Korea overtook Germany to take third place in 2005, and that China has just overtaken Germany too.

 

"Finally, there's competition, the original killer app that sent the fragmented West down a completely different path from monolithic imperial China. The WEF has conducted a comprehensive Global Competitiveness survey every year since 1979. Since the current methodology was adopted in 2004, the United States' average competitiveness score has fallen from 5.82 to 5.43, one of the steepest declines among developed economies. China's score, meanwhile, has leapt up from 4.29 to 4.90.

 

Read more of Niall Ferguson's article here

 

 

 

 

Internal Links

see also our discussion on

 

 

 

 

Concepts to consider (external links)

 

 

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