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China Resurgent in Last 60 Years

China Resurgent in Last 60 Years

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China Resurgent in Last 60 Years

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  1. China Resurgentin Last 60 Years • Group 9 • Matt Bright • Pei-lin Wu • SengYeow Lee

  2. Agenda • Introduction • China’s economic influence • China’s political influence • Conclusion • Q&A

  3. Introduction 1950’s~1970’s • Land reform • "Four Modernizations" program 1980’s~1990’s • "Open-door" policy to encourage Foreign Direct Investments. • Special Economic Zones • China become world factory 2000’s • China becomes a member of the WTO and G20 2010’s • Great purchase power • China is one of BRIC countries • China holds largest share of America’s national debt

  4. “中國市場一打噴嚏,即便是牛市也要遭殃” “Chinese market is so important that if it sneezes, even the bull market will suffer.”

  5. China’s economic influence • 1953 - Mao Zedong launches the first five-plan • 2011 - The 12th Five-year Plan

  6. EconomicResults • Extensive capital investment – financed by: • - FDI(100+B inbound, non-financial outbound 59B 2010) • - Domestic savings (32% in ’79 to 49% in ’04 / GDP) • Average annual growth between ’79-’05 of 9.6%

  7. World Trade Balances

  8. Economic Growth

  9. Purchasing-power parity theory. A theory which states that the exchange rate between one currency and another is in equilibrium when their domestic purchasing powers at that rate of exchange are equivalent Economics.about.com

  10. US Trade Deficit

  11. Chinese Holdings of US Treasuries and dependence on US Market • Chinese Interest: • Maintain US Economy for export • Keep interest payments rolling in • Maintain real value of debt principle • Maintain weak currency • US Interest: • Acquire more debt • Maintain AAA credit rating • Cheap goods • Maintain strong dollar (?)

  12. China’s National Interest • Prosperity and security • The Party needs economic growth to increase living standards and provide legitimacy for its one party rule • Hence, it is China’s priority to ‘play nice’ with U.S. and other countries • Example: U.S. military support of Taiwan frustrates China

  13. Primary objective is economic development not military supremacy China’s main soft power tools: diplomacy and economics (trade, investment & foreign aid) China’s diplomatic style: Pragmatic, mutual benefiting, non-imposing, non-confrontational & sensitive to local condition Example: China uses economic, diplomatic, and cultural soft power to deal with North Korea China’s Political Influence with Soft Power

  14. Political Influence Through Trade, Investment and Foreign aid • More engagement in Southeast Asia, Middle East, Africa & Latin America • Economic interdependence can also be used to bolster political demand • Example: China reminded South Africa that it would be ill-advised to host the Dalai Lama at a planned peace conference in Johannesburg.

  15. China at the World Stage • More assertive role in United Nations, the World Bank, the Asian Development Bank • Bilateral initiatives: Friendship & Cooperative Partnership Agreements, Free Trade Agreements and Strategic Partnership Agreements • Multilateral organizations: East Asia Summit (EAS), Shanghai Cooperation Organization (SCO), Forum on China-Africa Cooperation (FOCAC), China-Arab Cooperation Forum (CACF)

  16. U.S. or China’s Leadership?

  17. Approval Rating by Regions

  18. Conclusion • As a result of strong savings, inexpensive labor, favorable exchange rates, and open trade policies, China has become the world's second largest exporter and shows no sign of decline in the near future. • China is a reemerging superpower, yet it still needs to work on its reputation and gain the respect of the international community. • China’s priority is sustainability - economy - society - environment

  19. Q&A

  20. References • http://www.imf.org/external/pubs/ft/issues8/index.htm • http://www.econ.ucdavis.edu/faculty/woo/sources.pdf • http://www.china-profile.com/history/hist_list_1.htm • http://english.irib.ir/voj/news/economy/item/78985-us-government-debt-to-china-again-tops-$1-trillion • http://www.tradingeconomics.com/china/gdp • http://blogs.forbes.com/robertlenzner/2011/05/03/chinas-new-5-year-plan-could-mean-selling-treasuriesnot-buying-them/ • http://www.gallup.com/poll/118591/china-competing-political-influence.aspx • http://www.e-ir.info/?p=5804 • http://www.nowpublic.com/world/china-economic-investment-equals-political-influence • http://wws.princeton.edu/research/final_reports/wws591g.pdf • http://www.fas.org/sgp/crs/row/RL34620.pdf