A Chinese tradition that has been in existence for 4000 years could be under threat. The Chairman of Jilin Forestry Industry Group has suggested that the production of chopsticks is unsustainable, as it is no longer possible to continue chopping down 20 million trees a year to produce around 80 billion pairs of chopsticks a year. He stated that “we must change our consumption habits and encourage people to carry their own tableware”, he even mentioned an idea that metal knives and forks should be available in restaurants. This could prove a difficult part of the Chinese culture to change seeing as many people are opposed to the idea, however it could become necessary in order to help sustain the environment.
Archive | 2013
The New Era in Beijing
18 MarAs the China People’s Congress approves the new cabinet and Xi Jinping is sworn in as president, 14th March, a new transition has been completed in Chinese politics.
Xi Jinping is known as a political and economic reformer and has recently talked about a ‘renaissance’ in China’s future. However in his speech which closed the annual National People’s Congress, Xi Jinping stressed a nationalist tone which reinforces the view he will pursue an assertive foreign policy, stating that the military should improve its ability to “win battles and… protect national sovereignty and security”. Though reform did look to appear on the horizon as both Xi JInping and Li Keqiang talked of the corruption within the party and Li Kenqiang promised to reform the central government, citing the growing inequality gap and “extravagance” in government spending.
The Chinese media also focused on reform in the new era, the China Daily citied economic slowdown, corruption, healthcare and pollution as all issues in need of tackling through reform. Wen Wei Po also gave the territorial disputes as a new challenge to be faced by the leadership as well as increased US presence in the Asia-Pacific region, however Li Keqiang, when talking of Chinese-US relations, stated that “common interests far outweigh our differences”.
Economic growth was also a key topic as Li Keqiang said that the government was unlikely to reach its economic growth target of 7.5% for the year, while central government funds increases by only 1.6% over January and February. However this unlikely to affect reform as spending on social programs will only increase.
Greater democratic reform may also be part of China’s future, Xi Jinping in his speech stated “I will accept supervision and monitoring from the people”, which seemed to suggest more democratic tendencies maybe part of China’s political reform as public support for democracy grows within China. The Hong Kong Economic Journal also states that “the political structure of a one-party monopoly of power is no longer able to meet the diverse demands of society. The later the Xi-Li system embarks on political reform, the greater the pressure it will encounter”. Despite this, the Apple Daily warned that unless Xi Jinping was prepared to separate the Communist Part of China from the government then political reform looked unlikely, though Xi Jinping has urged for more competitive election for China’s elite by having more candidates than available seats. However small this may be, it could be the start of a new era for political reform in China.
The new leadershp:
Xi Jinping: President of the People’s Republic of China (also General Secretary of the Communist Party of China, Chairman of the Part Central Military Commission Chairman of the State, Central Military Commission)
Wang Yi: Foreign Minister of the People’s Republic of China
Lou Jiwei: Finance Minister of the People’s Republic of China
Zhou Xiaochouan: Central Bank Chief
Li Keqiang: Premier of the People’s Republic of China
Sources:
http://www.bbc.co.uk/news/world-asia-china-21797185
http://www.bbc.co.uk/news/world-asia-china-21819494
http://www.bbc.co.uk/news/world-asia-china-21812057
http://uk.reuters.com/article/2012/11/06/us-china-congress-idUSBRE8A50J420121106
http://www.cbsnews.com/8301-202_162-57574750/chinas-new-leader-rejects-hedonism-and-extravagance/
China’s economy
14 MarSince the reforms beginning in the late 1970’s, China’s opening up of its market to foreign investors has been a source of economic change and international praise. In 2012, China’s gross domestic product made up 12% of the Worlds GDP, and the country was responsible for 6% of all world outputs. However, following the financial crisis of 2007-2008, which saw a global downturn in the levels of economic growth, the Chinese economy has suffered. However, despite the global downturn in economic productivity, the Chinese economy continued to grow at unprecedented rates; In 2010 the target GDP growth was 10.3% and in 2011 it was 9.2%. However in 2012 the predicted and targeted GDP growth for the country fell to 7.5%, and in the second quarter, although higher than the target, the Chinese economy had a growth of only 7.6% (the lowest in 8 years). Economist Nouriel Roubini argued that this slow down in economic growth, although still significantly higher than that of the America and Great Britain, will have serious effects on the Chinese economy. “China needs to maintain at least a 9 percent growth rate just to handle its growing labor force and move farmers to the urban sector. China may be in for a hard landing,” Roubini writes.
Michael Schuman, writing for TIME magazine has argued that the problems China is facing can be seen in a number of ways across the country “Wind farms have been erected but not connected to the electricity grid. Hundreds of solar cell makers will likely go under. Shopping malls get built where no one shops”. Schuman argues that, in order for China not to fall into an economic recession that would not only challenge the country but will have adverse effects throughout the world economy, newly appointed president Xi Jinping, will have to introduce economic reforms that are as fundamentally important as those undertaken by Deng Xiaoping in the 1970’s. According to Schuman the ‘state-led, investment-driven growth model is running on empty’, and the economy instead needs to become more market-driven and better balanced, with an effective rule of law established. Schuman creates a list of reforms, he argues are needed to be pushed through by Mr Xi, in order to prevent an economic crisis occurring within the World’s (present) fastest growing economy:
- Scale back on State Enterprises
- Encourage the country’s consumers
- Develop a real financial sector
- Strengthen the rule of law
Whether you agree with Schuman’s suggested reforms or not, depends upon your view of the relationship between the state, the market and the economy. What is important here is that work must be done by the Chinese Government, led by XI Jingping, in order to pre-empt and reduce any severe economic downturns within the country’s economy, to ensure the continued growth to support not just China’s domestic market, but also the worlds.
Sources:
China targets 7.5% GDP growth- http://www.china.org.cn/business/2013-03/05/content_28130136.htm
China’s economic growth slows to 7.6% – http://www.guardian.co.uk/business/2012/jul/13/china-economic-growth-slows-gdp
Can China’s New Leader Prevent an Economic Crisis? – http://business.time.com/2012/11/07/can-chinas-new-leader-prevent-an-economic-crisis/
Google threatens to withdraw its service from mainland China
13 MarIn 2010, search engine Google threatened to close its service in China, after having accused the Chinese authorities of hacking its email system and customer accounts. They have also said that they are no longer willing to censor search results on google.cn, after the government refused to relax their laws on censorship.
Google’s chief legal officer stated “we have decided we are no longer willing to continue censoring our results on google.cn”, which they realize could lead to the end of its business in China, and seeing as the country has the largest number of internet users worldwide, this could mean a massive loss for Google, however this does not seem to be an influence in their decision. A professor at the University of Hong Kong expressed her opinion that the move “certainly sets an example in terms of a company trying to do what’s best for the user”.
However, unsurprisingly this decision has provoked anger within China, who has expressed its fury over Google’s attempts to make the Chinese government change their rules on censorship. One internet specialist pointed out “any company entering China should abide by Chinese laws. Google operates under its own laws”. When Google began providing its Chinese service in 2006 they were aware that they would have to censor search results, therefore China is claiming that the company has broken a “written promise”.
http://www.telegraph.co.uk/technology/google/7500917/China-angry-as-Google-stops-censoring-search-results.html
http://www.euronews.com/2010/03/23/china-angry-at-google-withdrawal/
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/7490223/Google-in-China-were-closing-tomorrow.html
http://www.guardian.co.uk/technology/2010/jan/12/google-china-ends-censorship
Image
qianhai1.jpg
12 Mar
Manhattan of the Pearl River Delta
China’s most recent development comes in the form of another “special Zone” , the “Qianhai experimental zone” will be China’s experimental move towards a more international yuan as well as more open financial sector with the introduction of Hong Kong’s international financial products. The zone is still in its conceptual stages having only recently been approved by the National Development and Reform Commission. At the heart of the development is the cross border Yuan lending from Hong Kong Banks with the sole purpose of investment into Qianhai infrastructure. The Hong Kong Banks have permission to loan up to 2 billion in Yuan a small amount to start with but with the scope for expansion. The cross border lending in Yuan is a move in line with China’s ambition to create an internationalized currency to compete with the dollar. The loans will have to be approved by the PBOC and abide by a number of other rules applied to the special zone. The loan rates will be determined between the lender and borrower, a move away from the state managed interest rate system currently in place. Hong Kong Banks are eager to put their surplus liquidity to use. As well as the loans Hong Kong firms will develop schools and hospitals as part of the agreement to invest in Qinghai’s infrastructure. China has offered a 15% corporation tax rate to entice development into the region. The hope is for developers and regional governing powers to be autonomous and “bold” in their approach to the development President Xi hopes to replicate the successes of the former SEZs to develop new models of growth for China.
The development has come under some criticism however, the scale of the development is relatively small and its effectiveness has come under question. There is also no established anti-corruption body to address the possible problems Hong Kong faced before the ICAC was established. Another point of criticism is whether this is a somewhat reckless plan in light of the recent housing bubble. With some property in Qianhai exceeding prices of places such as Manhattan and Paris, in a largely uninhabited under developed city is this speculation premature? The opportunity it would appear is ripe with eager Hong Kong firms to extend their financial expertise to the mainland and benefit from the first mover advantage. Some of the success of the development however may rest in the hands of the already successful Shenzhen officials. The question is whether they will willingly put themselves at risks considering they are already in a very comfortable position.
China is developing its economy in a distinctively unique way. It has the economic resources to embark on such “experiments”. The experimental formula that china has adopted with success has the advantage of drawing upon world history .China has some key issues to resolve that may stunt the development of such experiments mainly corruption. If it hopes to continue its international growth this is a key area for correction.
http://www.scmp.com/news/china/article/1173636/can-real-reform-take-root-qianhai
http://www.telegraph.co.uk/finance/personalfinance/expat-money/9437968/Chinese-city-of-Qianhai-could-be-the-next-Hong-Kong.html
http://www.telegraph.co.uk/finance/personalfinance/expat-money/9437968/Chinese-city-of-Qianhai-could-be-the-next-Hong-Kong.html
http://www.scmp.com/business/banking-finance/article/1158490/hong-kong-bankers-say-reforms-will-help-establish-qianhai
http://www.reuters.com/article/2013/01/28/china-loans-qianhai-idUSL4N0AX1AC20130128
China’s trains
12 MarChina’s leadership is about to change and so like any new leader there has to be a shakeup in order for them to show how they are in some way different. The changes that are about to come with Xi Jinping’s term in office include a decentralisation of some of the country’s infrastructure in order to focus on the bigger economic disputes that include squabbling with both Japan and Vietnam about territory disagreements.
The railway reorganisation was needed after a high speed crash in Wenzhou, a city found in Eastern China, which not only killed 40 people but highlighted flaws in the management of the railways. The railways will now be managed by Ministry of Transportation administratively and commercially by a new company, thus simplifying the set up.
In total the railways are worth a great deal to the Chinese economy, with annual spending on the railways, with total spending for 2013 expected to be in excess of 630million Yuan, which is an increase from the 610billion Yuan predicted in September last year.
Expansion of the railways is also a continuous thing as new projects that have been predicted to take place with investment up and confidence gradually being restored after the fatal crash and the removal of railway minister Mr Liu Zhijun after he was accused of corruption.
Before any project is scheduled to take place a cost benefit analysis has to take place. World Bank evidence suggests that not all the benefits are properly recorded as the flow of people, which creates a wider market place, is not well measured. The predicted flows from the new Beijing to Guangzhou line expect the 3million that currently travel the more convoluted route to rise to 28million. The line is also the world’s longest high speed rail route.
References
http://uk.reuters.com/article/2012/11/27/uk-china-economy-rail-idUKBRE8AQ03S20121127
http://www.railjournal.com/index.php/high-speed/chinas-high-speed-programme-back-on-track.html
China’s Response to the Global Financial Crisis
12 MarAmerica’s subprime financial crisis and the resultant dramatic global downturn after the Lehman Brothers fiasco hit the Chinese economy staggeringly. Following the sudden free-fall of the global economy, growth of the Chinese economy fell to 6.8% in the fourth quarter of 2008, down from 13% in 2007. Parallel to this was the imminent threat of deflation, contrary to the usual inflationary pressure that had pestered previous Chinese economies.
Clearly, the four main channels whereby the global financial crisis impacted the Chinese economy was:
– Direct losses in American capital market
– Changes in cross – border capital flows
– Reduction in growth of exports
– Safety of foreign exchange reserves.
Now, the Chinese government were forced into a prompt reaction to this sudden plummet. In November 2008, a 4 trillion yuan stimulus package was introduced. Acting in tandem, the central bank, the People’s Bank of China (PBOC) cut interest rates deeply, and the growth rate of credit and of broad money shot up. It seems that the economy started bottoming out as early as in the first quarter of 2009, owing to the stimulus package and the extremely accommodating monetary policy.
Focusing predominantly on this Stimulus Package which equated to 16% of the Chinese GDP, you can see the explicit spending breakdown here – Infrastructure: 45%, Post Earthquake Reconstruction: 25%, Rural Infrastructure: 9%, Ecology: 9%, Housing for Low Income Population: 7%, Technological innovation and Economic Re-structuring: 4% and Medical Services, Culture and Education: 1%.
You can see clearly how the majority of this package was spent on infrastructure such as railways and highways with 1800 billion yuan spent on ‘expenditures in transportation network and construction. One would assume this was a deliberate ploy by the Beijing Government in order to get the ‘country running again’. Highways, railways are essential for transport in China exacerbated by its huge size. This can be seen currently by the money being poured in to the building of the Bullet Train Network. Furthermore, vast amounts of money was spent on the construction of highways et al because they provide jobs. Take the Bullet Train Network again – up to 10, 000 workers are employed on just one particular line of this rail network highlighting how the construction of these transport links can provide jobs which provide workers with capital which can then be spent in the local community. Therefore more money is pouring into the local economy as people are spending their earned money in the community eliciting economic growth etc.
Table 3. Breakdown of the 4 Trillion Yuan Stimulus Package
(billion yuan)
| Construction of houses for low-income urban households |
280 |
| Increased spending on rural infrastructure and boosting rural incomes |
370 |
| Expenditures in transportation network construction | 1800 |
| Increased investment in medical services, culture and education |
40 |
| Increased spending on ecological protection |
350 |
| Technical innovation and economic restructuring |
160 |
| Sichuan post-earthquake reconstruction | 1000 |
| Total | 4000 |
Source: NDRC.
The Economist, ‘The World in 2009’ China’s Stimulus Package, November 12th 2008. http://www.economist.com/blogs/theworldin2009/2008/11/chinas_stimulus_package
Yu Yongding, TWN Global Economy Series, The Impact of the Global Financial Crisis on the Chinese Economy and China’s Policy Responses, 2010.
2.800 decomposing pigs found in a Shanghai river
12 MarMore than 2,800 decomposing pigs have reportedly been pulled from the upper reaches of Shanghai’s Huangpu River which is already hugely polluted and a source of drinking water for some of the mega-city’s 23 million inhabitants. It remains a mystery where the pigs have come from, even though this is not the first time pigs have been found in this river.
Although there was no trace of foot and mouth, blue-pig ear disease or swine fever there was traces of porcine circovinus, a disease that affects pigs but is not believed to infect humans. There was good effort by the government in clearing the river of all the dead pigs, however this is another case of serious pollution of its rivers, possible caused by large corporations and lack of environmental regulation. Last year Chinas vice-minister for water resources, Hu siyi, admitted that 20% of his country’s rivers were “too toxic for human contact” while 40% were severely polluted.
Has China’s economy hit a BRIC wall?
11 Mar
Back in 2003 Jim O’Neill from Goldman Sachs made a prediction that would soon project him to worldwide fame as the creator of the term BRICs and thus the predictor of the future economic world order.
In his prediction, O’Neill forecasted that the BRIC countries (Brazil, Russia, India and China) would overtake the US by 2050 to become the top economic powers in the world, with higher GDPs than the US.
Currently, China is in second place globally, whilst the others are somewhat lagging behind. This is obviously, much sooner than predicted, and other economists have suggested that China will overtake the US much sooner than the original 2050 date, Martin Jacques believes that this will happen by 2020, a mere 7 years away!
Since the economic crisis China has become a global creditor and thus an economic powerhouse with the largest foreign exchange reserves in the world (currently $3.3 trillion) and buying up American debt like there’s no tomorrow. It has also been one of the largest contributors to the International Organisations, thus increasing its economic standing with in these global institutions (Woods 2010).
However how much this will be able to hold and whether they will meet the predictions of economists such as Jacques and O’Neill rests with the new leaders who will have to decide which course of action to take to prevent china slipping down. China’s economic growth reached a 13-year low at the end of 2012 at 7.8% (still much higher than the US’ 2% though!)
Furthermore China’s inflation levels in the New Year have skyrocketed past the national target of 3.5% with some food prices increasing to 6% – a new 10-month high. Although Chinese officials have claimed that the Lunar New Year always causes high inflation.
However, this all seems very familiar for many analysts when back in the 80’s many predicted that Japan would overtake the US as the number one economy in the world. However Japan was then plagued by crises. Will china follow the same route?
The similarities between the two countries economically in terms of their relationship with the US are startling, however the media are already reporting an increase in economic growth for China in the first part of 2013 and a recent report has claimed that China is now number one in the world in terms of world trade.
Therefore it appears that the year of the snake may not be as slow as many had predicted but only time will tell whether China will fall, reach or exceed expectations…
Sources:
US role to fade with China calling shots as creditor – economist:
http://rt.com/news/china-dominance-us-subramanian-006/
chinas growth shows signs of pick up form 13 year low:
http://www.bbc.co.uk/news/business-21071546
will china fall flat on its face just like japan?
http://www.bbc.co.uk/news/business-19948730
Global governance after the financial crisis: a new multilateralism or the last gasp of the great powers? (Ngaire Woods 2010)
China overtakes the US in world trade:
http://www.guardian.co.uk/business/2013/feb/11/china-worlds-largest-trading-nation
Chinas inflation hits 10-month high in February:
China’s increased global involvement: a double edged sword?
10 MarSince the late 1970s China has increased its involvement in the international community, and whole-heartedly embraced globalisation. This has been the premise that building closer relationships within the international community will enable China to achieve its goal of modernizing and becoming a strong global economic power.
According to the CIA World Factbook, as of July 2012, China was either involved with or a member of 73 international institutions; including the United Nations, the World Trade Organisation, the G-20, APEC and ASEAN. Moreover, the list of institutions does not take into account the various trade relationships that China has established with individual states since 1978 – a notable example being the United States.
Such a high level of international involvement was unheard of for China before its economic reform programme. Yet globalisation has provided China with a vast global market to facilitate rapid export-led growth, aswell as substantial FDI inflows.
In the last three decades, China’s economy averaged 9.6% GDP growth per year. Such a figure is unprecedented for a country which is categorised as “developing,” as China still is. Through international involvement, China has managed to lift 300 million people out of poverty, (albeit with a questionable poverty line.) China is now the World’s second largest economy, and it is projected to overtake the United States in the not-so distant future if it continues on its current growth path.
A rapid economic expansion has also provided China with an extraordinary level of influence in international affairs. Prior to the institutional reforms, China was a small and relatively insignificant player in the international arena. Yet today, a discussion of international relations would be incomplete without a mention of China. In the United Nations Security Council, China has become a permanent member with the power to Veto. This has furthered China’s international leverage. China’s global economic rise has enabled China not only to become more economically powerful, but also, by extension, politically powerful. Some realist scholars even question whether the rise of China will lead to the demise of the United States in coming years.
However, despite the considerable benefits from involvement in the international community, China has repeatedly come up against the notion of sovereignty.
Many of the international organisations that China has become a part of, such as the United Nations, contain conventions which aim to bestow Western liberal human right values on the Chinese. These include the International Covenant of Civil and Political Rights (ICCPR), and the International Covenant on Economic Social and Cultural Rights (ICESCR). Chinese leaders are concerned that, whilst international involvement is fundamental to China’s economic stability, the incorporated rights and regulations can inhibit China’s development potential.
Furthermore, actors such as the United States have attempted to condition trade relations on China abiding to Western human rights standards in the past. Yet for China this is an intervention in its domestic sovereignty, and it has rigorously rejected any conditionality. China sees the imposition of Western values as an extension of imperialism.
For developing countries, argues China, the most important thing is to ensure a continued rise in GDP per capita and living standards; the “luxury” of human rights comes second. Yet this conflicts with the Western values held by many of the actors than China has become integrated with. Thus China is currently in a position where it agrees with the human rights resolutions set out by international organisations in abstract, in order to maintain trading co-operation, yet it rejects the applicability of Western human right standards to China in practice on the basis of the “developmentalist” arguments. It is questionable how long China will be able to continue this contradictory practice.
Ultimately unless China is able to reshape the Western norms of the international arena towards non-intervention in domestic affairs, the closer China’s involvement within Western dominated institutions and actors (for economic purposes), the greater the potential threat on China’s sovereignty in its domestic affairs.
Sources:
A. Kent (1993) Between Freedom and Subsistence, Oxford University Press: New York
A. Kent (1999) China, the United Nations and Human Rights: The Limits of Compliance, University of Pennsylvania: Philadelphia
J. Ikenberry (2008) Rise of China and the Future of the West-Can the Liberal System Survive, Foreign Affairs 87 (23)
A. Nathan (1994) Human rights in Chinese foreign policy The China Quarterly 139(1) pp.622-643.
Y. Deng, and T. Moore . (2004) China views globalization: Toward a new great‐power politics? Washington Quarterly 27(3) pp.115-136.
R. Keith (2004) China as a Rising World Power and its Response to Globalization The Review of International Affairs 3(4) pp.507-523.
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
Understanding Modern China 