The Emerging ChinaThe Emerging China

Red Red MenaceMenace

OROR

Friendly Global Capitalist Friendly Global Capitalist Trading Partner?Trading Partner?

What the experts thinkWhat the experts think

Gou Jian of Yue & Fu Chai of Gou Jian of Yue & Fu Chai of WuWu

Background – 300 years of Background – 300 years of foreign dominationforeign domination

Opium Wars 1842-1858Opium Wars 1842-1858 Boxer Rebellion 1900Boxer Rebellion 1900 Japanese invastion 1937Japanese invastion 1937 Communist Victory 1949Communist Victory 1949 Tibet invasion 1950Tibet invasion 1950 ““Great Leap Forward” 1959Great Leap Forward” 1959 Cultural Revolution 1966Cultural Revolution 1966

Opening to the Opening to the West 1972West 1972

Deng Xiaoping begins economic reforms in 1978

The Emerging Threat?The Emerging Threat?

The economic threatThe economic threat– China holds a large part of U.S. public & China holds a large part of U.S. public &

private debt (1.4-2 trillion dollars)private debt (1.4-2 trillion dollars)– Our inter-reliance on trade with each otherOur inter-reliance on trade with each other– Foreign ownership within the United StatesForeign ownership within the United States– The cultural distortion of AmericaThe cultural distortion of America

Chinese Share of Global Chinese Share of Global GDPGDP

China is the world’s China is the world’s largest producer of largest producer of coalcoal

China is the 2China is the 2ndnd largest consumer largest consumer of energyof energy

Chinese share of Chinese share of global GDP global GDP estimated to pass estimated to pass the US in 2039the US in 2039

Chinese Economic GrowthChinese Economic Growth

China has grown 10% per year for 30 years

Growing US/Chinese TradeGrowing US/Chinese Trade

China’s China’s exports to exports to the US have the US have soared from soared from $39 billion $39 billion to $197 to $197 billion in the billion in the last 20 last 20 yearsyears

Chinese Share of the US Chinese Share of the US EconomyEconomy

China currently China currently holds about $500 holds about $500 billion in US billion in US treasury billstreasury bills

Japan still holds Japan still holds twice that manytwice that many

Trade imbalance Trade imbalance can be looked at can be looked at two waystwo ways

Chinese Currency ValueChinese Currency Value Chinese currency is Chinese currency is

currently 6.9-7.5 currently 6.9-7.5 YuanYuan to the dollar to the dollar

Most experts believe Most experts believe that is that is approximately 30% approximately 30% undervalued/i.e. undervalued/i.e. $2000 on a car$2000 on a car

Impact on trade? Impact on trade? Wages? Wages?

A limited float A limited float announced 2012announced 2012

Chinese Copyright Chinese Copyright ViolationsViolations

ChinaChina and the and the

WTOWTO

China: Rich or Poor?China: Rich or Poor? China has grown China has grown

at 10% per year at 10% per year growth rate for growth rate for 30 years30 years

China has moved China has moved 400 million 400 million people out of people out of poverty (<$1 per poverty (<$1 per day)day)

China has China has quadrupled the quadrupled the average incomeaverage income

China: Rich or Poor?China: Rich or Poor? More than 1 More than 1

billion Chinese billion Chinese still below the still below the world poverty world poverty lineline

150 million live 150 million live on less than $1 on less than $1 per dayper day

Unemployment Unemployment above ten per above ten per cent and growingcent and growing

Inequality and DisparityInequality and Disparity

One of the most economically One of the most economically unequal societies in the worldunequal societies in the world– The growing urban-rural gapThe growing urban-rural gap

The “two-class” systemThe “two-class” system The call for reform – protests and The call for reform – protests and

unrest have become commonplaceunrest have become commonplace

China: Rich or Poor?China: Rich or Poor?

China and Global WarmingChina and Global Warming

Failure to initially join the Kyoto ProtocolFailure to initially join the Kyoto Protocol China passed the U.S. in December of China passed the U.S. in December of

2007 as the world’s largest emitter of 2007 as the world’s largest emitter of greenhouse gasesgreenhouse gases

China is the world’s second largest oil China is the world’s second largest oil consumer with crude oil imports consumer with crude oil imports increasing at 18% per year. China’s increasing at 18% per year. China’s demand is driving up global crude demand is driving up global crude pricesprices

Product SafetyProduct Safety March 2007 – Warnings and recalls on March 2007 – Warnings and recalls on

Chinese produced pet foodChinese produced pet food May 2007 – Chinese toothpaste (some May 2007 – Chinese toothpaste (some

counterfeit) found to contain poisonous counterfeit) found to contain poisonous chemicalschemicals

June 2007 – Chinese toys discovered to June 2007 – Chinese toys discovered to contain high levels of lead paintcontain high levels of lead paint

July 2007 – Chinese tires found to have July 2007 – Chinese tires found to have major defectmajor defect

20% of all Chinese products produced for 20% of all Chinese products produced for domestic consumption were declared domestic consumption were declared substandardsubstandard

Chinese Chinese Military Military

ExpansionExpansion Chinese interventions Chinese interventions

in Vietnam (1979) & in Vietnam (1979) & the Spratley/Paracel the Spratley/Paracel IslandsIslands

Influence with North Influence with North KoreaKorea

Military spending Military spending increases have kept increases have kept pace with GDP growthpace with GDP growth

US 600 B v. China 100 US 600 B v. China 100 BB

Quemoy and MatsuQuemoy and Matsu

•Chinese declaration to intervene if Taiwan declares independence

•Truman & the Sino-American Mutual Defense Treaty -

•“The attack upon Korea makes it plain beyond all doubt that communism has passed beyond the use of subversion to conquer independent nations and will now use armed invasion and war.”

Spratley Spratley IslandsIslands

•Senkaku/Diaoyu Islands•ADIZ

Chinese Cyber AttacksChinese Cyber Attacks

•PLA unit 61398•Operation “Shady Rat” 2002-11

Chinese DemocracyChinese DemocracyTienanmen Square 1989Tienanmen Square 1989

Chinese DemocracyChinese DemocracyTienanmen Square 1989Tienanmen Square 1989

May 1989, over a May 1989, over a million protesters million protesters gather over what gather over what started as a protest started as a protest on dorm foodon dorm food

June 3June 3rdrd 1989, 1989, hundreds of hundreds of students gunned students gunned down or arrested down or arrested

Chinese DemocracyChinese DemocracyTopicsTopics RangeRange

ResultsResultsWorld Democracy overall rank1-1501-150 126126Political Rights 1-71-7 77Civil Liberties 1-71-7 66Press Freedom 0-1500-150 135135Corruption 0-1450-145

5757

Chinese Development v. Chinese Development v. Chinese DemocracyChinese Democracy

In 2003, 3 In 2003, 3 million people million people participated in participated in 58,000 protests58,000 protests

The number The number increased to increased to 74,000 in 200474,000 in 2004

Can you have Can you have development development without without democracy?democracy?

The 2008 Summer OlympicsThe 2008 Summer Olympics

Opportunity for Opportunity for influence missed?influence missed?

Chinese oil Chinese oil purchases in Sudanpurchases in Sudan

Chinese spending Chinese spending over 40 billion on over 40 billion on Olympic Olympic infrastructureinfrastructure

Pollution during the Pollution during the OlympicsOlympics

DiscussionDiscussion

Is the United States entering a pact of Is the United States entering a pact of mutually assured destruction with mutually assured destruction with China by linking the two economies so China by linking the two economies so closely?closely?

Is China a threat militarily? Is China a threat militarily? How could the United States counter How could the United States counter

any potential military threat posed by any potential military threat posed by China? China?

The Discussion Strikes The Discussion Strikes Back…Back…

So far, China has been successful in So far, China has been successful in suppressing the discontent from suppressing the discontent from much of its rural population. Will much of its rural population. Will China be able to continue this China be able to continue this successfully in the future?successfully in the future?

Can a nation liberalize economically Can a nation liberalize economically without liberalizing politically? without liberalizing politically?