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发表于 2005-9-8 15:44:29
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III. The Economic Dimension
<br>To assess the economic change China has undergone it is useful to remember that in 1950 the GNP of Asia, including China and India, was equivalent to that of Africa, namely $50 per capita annually. U.S. economic involvement in East Asia in the past sixty years, especially in providing market access to Japan, Taiwan, South Korea, Southeast Asia, and China since the 1980s, has greatly boosted Asian development.
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<br>Currently, Japan leads Asia in GDP; China's GDP is half that of Japan and other Asian nations have also greatly increased their gross GDP and GNP. One answer to this disparity between Asian and African development is that there were centuries- old relatively effective regional and sub-regional political regimes in most of the area before colonial intervention. They included the Khmer Empire in Cambodia, the Sailendras Empire in Sumatra, the Modjopahit Empire in Java, the Malacca Empire in Malaya, Burmese and Siamese kingdoms and so forth. These ancient political systems existed within a trading system oriented toward China and India. 19th century Western imperialist intervention disrupted traditional regional trade patterns but overseas Chinese commercial communities, especially in Southeast Asia, kept active trade alive with the Chinese mainland.
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<br>Regional trade flourished in the American-dominated economic system in the 1950-2004 period. Japan was the chief beneficiary of this system and seemed prepared to take world economic leadership in the 1990s but fell into an economic recession that has lasted until the present.
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<br>The Communist Peoples Republic of China came to power in 1949. The initially doctrinaire Communist China broke with its Maoist past of market-antagonism and private sector condemnation by 1978. That year the Peoples Republic of China launched policies of modernization of agriculture, industry, science and technology and the military. Foreign Direct Investment (FDI) and technology transfer were encouraged.
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<br>In agriculture, large Maoist-inspired inefficient rural communes were dismantled and land was returned to peasants who were given long-term land-use contracts. Small-scale private industrial enterprises were encouraged.
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<br>Economic growth quickly mounted to an average of eight percent a year in the 1980s, reaching eleven-twelve percent or so annually in the mid-1990s. The basic economic plan was to integrate China more deeply into the globalizing economy. The key elements were to increase domestic demand by making heavy investments in infrastructure particularly to ease travel and enhance labor mobility; to speed up the development of all forms of industry, but especially heavy industry and to promote housing and other construction. FDI from the United States, Japan, Taiwan and elsewhere fueled this growth. China finally surpassed the United States as the largest recipient of FDI in 2003.
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<br>The trend in agriculture has been to sustain basic production, to achieve a decline in underemployment and to increase labor mobility. Underemployed farm workers have sought jobs in dynamic industrial centers. forty percent of the Chinese population now lives in cities. This shift took twenty-five years. A similar shift in America in the nineteenth century took fifty years.
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<br>Still, it needs to be remembered that sixty percent of the Chinese population lives in rural areas and will require careful attention by the Chinese leadership. There are already many signs of dissatisfaction of rural dwellers with the growing gap between their welfare and that of urban dwellers.
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<br>The Party has attempted to close this gap. Industrial development has spread inland hundreds of miles from such coastal dynamos as Shengzhen near the financial and commercial center of Hong Kong in the Pearl River delta. Equally dynamic development has surged in Shanghai and the Yangtze River delta.
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<br>Shengzhen has plans to develop a free trade area as far northeast as Shanghai and as far northwest as India. Shanghai-promoted development has reached inland as far west as the Yangtze River Valley and the hydropower grid created by the Three Gorges Dam.
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<br>Science and technology modernization has been greatly aided by FDI and technology transfers. China successfully launched and recovered its space vehicle "Shenzhou 5" in October, 2003. It made fourteen orbits. China plans to launch future missions to the Moon and to Mars. China obviously has the capability to launch nuclear-tipped intercontinental rockets.
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<br>On a no-less dramatic technological level, China is rapidly swallowing up U.S. low-tech industry, some of which was likely to migrate overseas anyway. Low-tech industry in Southeast Asia and Taiwan has also shifted to China. China-produced apparel, footware, electric appliances, plastic products, etc., now stock Target, Walmart, Home Depot and other outlets in the American market. At the same time, China is moving rapidly to challenge the United States and other producers in more advanced state-of-the-art production in automotive development, specialty steels, petrochemicals and plastics and microchips. These products are primarily aimed at the huge and growing 100 million-person or more domestic Chinese middle class market, but have obvious export implications. Chinese demand for resources is affecting markets worldwide, especially in oil. Chinese demand for steel has caused it to resort to a classic import substitution strategy; three huge new steel plants are to be built.
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<br>China already produces parts for locally assembled GM, Ford, Honda, Nissan, Volkswagen, and other automotive companies. thirty percent of these vehicles are presently exported. Honda and Nissan are planning substantial increases in Chinese production. automobile ownership by Chinese is rapidly growing. When the local market is satiated, American producers will be challenged as China turns vigorously to the foreign market.
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<br>Rapid economic growth has had heavy costs including severe issues of pollution, environmental degradation and unsafe working conditions in such sectors as coal mining. However, the political legitimacy of the CCP is highly dependent on continued growth. The Party is desperately trying to keep up with change and to cope with severe corruption problems involving lower and middle level party officials. The ambitious plans of the areas near Hong Kong and Shanghai to expand will require overcoming local, intra-provincial and intra-regional problems which the Party will have to adjudicate. The Party leadership will also have to find ways of cooling growth to avoid inflation. As noted, the Party will have find ways to satisfy the growing demands of the rural sector to participate more fully in the benefit of the economy. The Party will also have to find ways to meet growing demands for greater political and cultural freedom.
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<br>Perhaps the most daunting problem faced by the Party will be to ensure continued, even growing access to energy sources such as oil and natural gas. China is the fifth largest producer of such resources in the world but the third largest consumer of hydrocarbons after Japan and the United States. Chinese consumption is growing annually.
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<br>Existing oil resources in Eastern China have limited growth potential so Beijing is making a determined effort to gain control of such resources in Xinjiang on its western frontier. This has meant flooding this hitherto isolated Muslim area with Chinese immigrants from elsewhere. Chinese immigrants have also poured into Tibet, which has oil potential in the Qingzhang Highlands. Such immigration has created problems of resistance by local peoples.
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<br>China has also aggressively sought ties with such oil and natural gas producers as Kazakhstan, Sudan, Peru, Venezuela, Iran, Iraq, Australia, Indonesia, and anywhere such resources exist. This has brought it into collisions with Japan over offshore resources and Southeast Asian nations such as Vietnam, the Philippines, Brunei, and Malaysia in the South China Sea area.
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<br>China and Japan have longstanding disagreements over control over hydrocarbon resources near disputed island territories. A new development occurred recently when a Chinese nuclear submarine was detected in Japanese waters south of Okinawa and caused a diplomatic flap that finally resulted in a reluctant Chinese "apology."
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<br>In a spectacular nuclear energy development, the Financial Times reported on February 8, 2004, that China is poised to begin construction of a commercially operated "pebble bed" nuclear reactor in the eastern province of Shandong. The gas-cooled reactor would produce 195 megawatts of power and is scheduled to come on stream in five years. The Financial Times has commented, "If successfully commercially the pebble bed reactor would be the first radically new reactor design for several decades. It would push China to the forefront of development of a technology that researchers claim offers a ‘meltdown-proof’ alternative to standard water-cooled nuclear power stations."
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<br>Pebble bed reactors are fueled by small graphite spheres the size of billiard balls, with low-enriched uranium cores. The fuel is dispersed in hundreds of thousands of such spheres which supposedly would prevent a meltdown.
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<br>The method reportedly offers the hope of cheap, safe and expandable nuclear power stations. They can be made in small sizes appropriate for rural areas. The technology is reportedly also secure from proliferation fears because of the small amount of fuel in each sphere which are heavily encased in graphite.
<br>South Africa is working on a similar technology and is seeking cooperation with China.
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<br>This, of course, is economic diplomacy and China has used such diplomacy adroitly in most areas of the world including the Caucasus, Southeast Asia, and Africa. China has devoted special trade and financial attention to Burma, which has allowed Chinese use of potential bases in the Andaman Sea. Similar diplomacy has enabled China to attempt to cool the North Korean nuclear crisis. China has handled North Korea gingerly, however, out of fear the regime might collapse and flood the region with refugees.
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<br>China views globalization as an inevitable fact of life in the current world situation to which it has no alternative other than to adjust. It has a positive view of participation in the multilateral organizations including the WTO and WTO Trade Rounds as a means of promoting its influence. Its particular aim is "democratizing" the international order by reducing American hegemony. Latin America, especially Brazil, Peru, Venezuela, and Cuba in the Caribbean, have been responsive to Chinese trade-based diplomacy.
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<br>In Africa, China has sought oil in Sudan but it has made no apparent moves to date to involve itself in the deep water oil deposits off the West African coast.
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<br>China largest diplomatic coup has been to reposition itself as a friendly neighbor to Southeast Asia rather than a menace. It gained friends as a result of keeping a steady course of currency stabilization in the 1997-1998 Asian financial crisis. This encouraged the region's ten-member multilateral organization, the Association of Southeast Asian Nations (ASEAN), to begin a policy of cooperating with China, Japan and South Korea of Northeast Asia in the so-called ASEAN Plus Three arrangement. Such negotiations resulted in the signing of an ASEAN Plus Three Free Trade Area Agreement to be effective by 2015 at the recent 2004 ASEAN Summit in Laos. Tariff reducations are to begin in 2005. China's courting of ASEAN has been warm and persistent.
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<br>Meanwhile, China's military development proceeds. It has a fleet of nuclear subs with missile launch capabilities. It is endeavoring to modernize its unwieldy million-person army; however it does not presently have a blue water surface capability. It also lacks a modern air force. China is petitioning the EU vigorously to have its fifteen-year restriction on arms exports lifted.
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<br>Nevertheless, China is on the verge of achieving a renewed Great Power status it once had in the Ming Dynasty from the fourteenth to the seventeenth centuries. Napoleon once spoke words of warning about dormant China, saying, "When she awakes, she will shake the world."
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<br>I'll end this section of the paper by citing the December 6, 2004, cover of Business Week. It reads
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<br>"The Three Scariest Words in U.S. Industry: The China Price: Cut your price at least 30 percent or lose your customers. Nearly every manufacturer is vulnerable. The result: a massive shift in economic power is underway."
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<br>We should remember finally that China and Japan hold huge amounts of U.S. Treasury Bonds. These have been helping finance the growing U.S. trade deficit of recent times. Facing a continuing decline in the value of the U.S. dollar, China, Japan and Europe may decide that U.S. bonds are no longer a good investment. The consequences would be historic.
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