Saturday, 12 April 2014

10 Points on China

China’s contribution to the world economy and scientific research continues to grow.  It is filing huge numbers of domestic and foreign patent applications.  It is major investor in the US and Europe and is a vast market hungry for Western goods and services.  The purpose of this article is to provide general background on China.  It is based on a review in the Guardian of ‘The Contest of the Century: The New Era of Competition with China’.

1.  China’s economic development has been the most important global phenomenon since the end of the Cold War, fundamentally altering the balance between East and West.

2.  China has been predicted to dominate the 21st century due to its economic prowess, its civilisation state, its Confucian heritage and its one-party political system capable of managing and coordinating sophisticated policies.

3.  However others have predicted a collapse for China given the debt build-up that happened after the 2008 stimulus program and the explosive growth of ‘shadow banking’ that happens in state banks.

4.  A third view believes China’s growth is unlikely to come to a juddering halt, but it faces a range of problems including the nature of its financial system, vast excess capacity in key industries (such as steel), backward agriculture coupled with rising food demand, and competition from the world’s other cheap manufacturing centres.

5.  China’s rulers have poor record on economic balance, wealth disparities, capital allocation, the legal system, human rights and democracy.

6.  China’s foreign policy is fragmented and lacks cohesion. Whilst Beijing complains at having to live by rules made by others it has failed to put forward alternatives or evolve a global approach.  Its claims in East Asia have pushed neighbours into the arms of the US and it faces being isolated by a US promoted free trade zone in the Pacific and a US-EU pact.

7.  China’s ‘soft power’ is a failure.  There is instead a lot of Westernisation happening in Chinese cities.

8.  The Chinese authorities do have some sense of realism.  Wen Jiabao, prime minister from 2003 to 2013 described the economy as unstable, unbalanced, uncoordinated and ultimately unsustainable.  The Chinese government also seem to realise that corruption is a major problem.

9.  A 60-point reform program was set out in the Communist party plenum last November, but it faces opposition from vested interests, and ultimately represents a change to a system.  The regime is wary of anything that may weaken its grip on power.

10.  The party newspaper, Global Times, has itself admitted that it is too early to see the world at the dawn of a Chinese century.  Thus the Chinese government does seem to realise the serious nature of domestic issues.

The Guardian review can be found here.

No comments:

Post a Comment