China

Robyn Meredith The Elephant and the Dragon Prof. Peter Navarro Coming Wars of China

Mr. Eamonn Fingleton In the Jaws of the Dragon

Web Sources

Macro Indicators

As of 2012, second largest GDP $ 7.47 trillion ($ 11.32 trillion on PPP basis) Annual GDP growth of 10.5 % between 2001 and 2010 Chinas growth in 2007 -2011 equal to growth of G7 countries combined Inward FDI $ 106 billion in 2010

Macro Indicators (Continued)

29th in Global Competitive Index but 135th in the Index of Economic Freedom 14% of population below the poverty line of $ 1 a day, down from 64 % in 1979. Number of US $ billionaire second largest in the world at 271 Largest consumer of energy. 70 % from coal.

Macro Indicators (Continued)

One child policy ten million coerced abortions and ten million sterilizations a year. In absence of the policy, population would be 400 million more today. Highways: 1989 169 miles; 2004 21,500 miles; 2010 (projected) 40,000 miles, 2020 (projected) 55,000 miles (equaling US highway system) [India 3,355 miles, 1,600 under construction, 3,700 miles planned] Shanghai 15 skyscrapers in 1979; 2006 3,780 skyscrapers (more than Chicago and LA combined)

China Worlds Factory

Exports more in a day than did in a year in 1979 Export of 1.9 trillion in 2010 is four and a half times 430 billion in 2003 Exports more than EU, US 75 % of global new toys A third of global footwear exports

Behind Macro Indicators

Chinas trade surplus with the world in 2011 $ 280 billion against 32 billion in 2004 Chinas trade surplus with America in 2008 - $ 266 billion ($ 83 billion in 2001) Made in China for America EU trade deficit with China in 2006 - $ 92 billion Exporters are Western companies and/or their China partners. Only 4 out of 20 top exporters in 2005 were Chinese companies

The China Price and WMP

L

Low wages, high quality work done by disciplined, nonunion workers (reserve army of unemployed) Minimal worker health and safety regulations Lax environmental regulations and enforcement Catalytic role of foreign direct investment Highly efficient form of industrial organization network clustering (Adam Smiths division of labour at best. Network in Guangdong Province for toys)

Label Printing

Paint

Plastic Parts

Injection Molds

Electronic Components
Packaging

TOYS
Paper

Springs

Screws Nuts Fabric Trimmings Soft Fillings Synthetic Hair Radio Control Products

The China Price and WMP (cont)

Elaborate government sanctioned system of counterfeiting and piracy Undervalued currency Massive subsidy to target industries Protectionist trade barriers

Chinas surplus reflects savings

Surplus of nearly $ 3.3 trillion. Has made US vulnerable. China follows mercantilist policies. Exports are encouraged, imports discouraged. Chinese save over 40 % of GDP. Authoritarian regime is able to have controlled and targeted monetary and fiscal policy.

How does China Save

Demographic compulsions in absence of safety net for the aged Forced savings through controlled pricing Limited availability of consumer credit Limits on individual movements domestic and international High tariffs on imports Smaller living space. Wealthy spending on diamonds, jewelry and art

Piracy Wars

counterfeiting industry accounted for 8% of China's GDP Conniving local authorities whose revenue depend on local pirates Central government looks the other way because action would mean closure and increased unemployment. Mao belief that property is communal and any technology is the property of the masses.

Piracy Wars (cont)

Fake product for almost anything from baby food to shampoo, from auto parts to toilet seats, from hard drives to make up and perfumes Pharmacy products snake oil distributed through word wide web. Highly profitable venture. No R & D; no marketing cost, advantage of economies of scale fake of several companies. Lax legal system

Pollution War

Home to 20 out of 30 most polluted cities. Two third of large 100 cities (population above a million) fail to meet WHO air-quality standards. World leader in sulfur-dioxide emissions. Largest carbon dioxide emitter. Surpassed USA. Main culprit for acid rain in Japan and Korea. 400,000 die pre-matured deaths due to pollution related diseases. Over cultivation, overgrazing. Lax controls and implementation

Blood for Oil Wars

Growing oil thirst. Consumes 9.4 mn bbl a day Second largest consumer of petroleum products. Imports 40 % and projected to reach 60 % by 2020 High energy security concerns leads to befriending rogue states. Development support and arms against oil. Even Veto support. Iran, Sudan. Genocide support to Sudan in Darfur Chinese connivance leads to European support to rogue states. Corruption and looting in Angola

Imperialist War and Weapons of Mass Construction

China wars for minerals and raw materials Heavy industry leadership or model. Overtaken US and Japan in steel production. Largest buyer of copper, second largest of iron ore, third largest for alumina. Top customer for Thai rubber, Burmese teak, Chilean and Philippine copper, cobalt from Congo. Many other industrial material like limestone, phosphate rock Aid and construction against mining rights

Imperialist War and Weapons of Mass Construction (cont)

China presence through out Africa. Erecting dams, roads, supermarkets, stadium, palaces. China destroys local industry African countries in increasing debt of China Latin American tango Links with Chile, Bolivia, Argentina, Brazil, Venezuela and Cuba

Opium War

China produces annually 100,000 metric tons of acetic anhydride to transfer poppies of Golden Triangle (Burma, Laos and Thailand) into pure China white. Also conversion of poppies from Golden Crescent (Pakistan, Afghanistan and Iran) Second largest producer of potassium permanganate which turns coca leaves in cocaine. China active trader and transporter and has improved the old Opium Route in Central Asia. China chief Ecstasy (MDMA) logistic support provider China banking system is the launderer for Chinas criminal syndicate.

Damnable Dams and Water Wars

85,000 dams and counting Dying and dried up rivers Three Gorges symbol of Chinese damhappy strategy 30,000 dams in critical condition threatening over 400 cities and 150 million people. 3,484 dams collapsed between 1954 2003.

Damnable Dams and Water Wars (cont)

Massive destruction and displacement Damning Mekong river and starving down stream Burma, Thailand, Lao, Cambodia and Vietnam. Potential for starvation and war. 70% rivers polluted. Half of Chinas population gets contaminated water. High incidence of stomach and liver cancer. Rivers, industrial waste dumping grounds Massive fertilizer and pesticide runoff Politically dangerous water scarcity and excessive ground water extraction

What can go wrong for China?

Socio-political environment at home and globally Economic environment

Socio-political environment

The youth exposed to global media may seek greater political freedom, transparency and democratic processes Mounting social discontent with increasing individual and regional inequality may bring about destabilizing social movements. Human right may become a global issue forcing destabilizing change in China.

Economic environment

Inflation is a major threat. Rise in global commodity prices and fuel may put pressure on cost and prices. Inflation may result in appreciation of Yuan which will deprive China of its competitive environment. A rapid depreciation of US Dollar will have similar effect. A conservative backlash in the West may lead to raised tariff and hurt exports.

Huggable Panda
or Hungry Dragon