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2008 Bangkok Chinas Dev Challenges Jan 22
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2008 Bangkok Chinas Dev Challenges Jan 22


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Chris McNally's China presentation to the EastWest Center's Bangkok Media Conference

Chris McNally's China presentation to the EastWest Center's Bangkok Media Conference

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  • 1. China's Development Challenges Christopher A. McNally Research Program East-West Center January 2008
  • 2. Overview
    • Sino-Capitalism
    • Economics, Geopolitics and Ecology
    • The Quandaries of China’s Rise
  • 3. Sino-Capitalism
    • P olitical economy perspective
    • Sino-capitalism – a global capitalist system that differs from Anglo-American capitalism in important respects
    • Sino-capitalism relies on informal business networks rather than on legal codes and transparent rules
    • Sino-capitalism also assigns the Chinese state a leading role in fostering and guiding capitalist accumulation
  • 4. Sino-Capitalism Incomplete Transition and Imprints of History
    • China’s transition in its internal political economy remains incomplete  the maturing of capitalism
      • China still posses insufficient legal and institutional certainty
      • Dominant state // subservient capital and middle classes  no separate sphere of the “economy”
      • Some historical parallels to China’s imperial political economy during the late Song to Qing dynasties
  • 5. China’s Imperial Political Economy Tributary State Small-scale Merchant Capital $1 25 ¢ $1 50 ¢ $1
  • 6. Sino-Capitalism Networked Character
    • A highly networked system that gives Chinese firms enormous flexibility and global reach
    • Guanxi and common Chinese cultural norms support these networks, though the network character comes in many forms and shapes (e.g., some integration with high-tech networks in US and Taiwan in the Silicon Valley – Hsinchu – Kunshan Triangle)
  • 7. Sino-Capitalism State-dominated Capitalism
    • The capitalist logic of China’s development is being harnessed for the purposes of greater CCP legitimacy (for the time being)
    • PATH-DEPENDENCY: State dominant nature of China’s capitalism will remain for the foreseeable future!
    • In other words, if China’s present political economy is sustained, it implies a state-sponsored form of capitalism.
  • 8. Sino-Capitalism Globalization
    • China is already a large contributor to world GDP growth – A new motor for the world economy!
    • China and the West are truly in the same bed of globalization:
      • West: Low inflation // high corporate profits
      • China: Growing trade, technological sophistication, and rapid capital accumulation (for example, China’s foreign reserves of 1.45 trillion USD in Oct 2007)
  • 9. Sino-Capitalism Size and Speed
    • Never has the world seen such an important political economy rise within such a short time span with such global influence
    • 1.3 billion people  1/5 of humanity
    • China is already a major economic player at an early stage in her capitalist transition
    • China’s global economic influence is substantial and could shake the global economic system
  • 10. Capitalism versus Capitalism
    • This is not “THE CHINA THREAT” but rather frictions generated by Capitalism vs. Capitalism
      • Major conflicts between China and her major trading partners are brewing:
    • Problems in China’s legal system and governance capacity on the local level
    • Different business ethics
    • Role of the state in China’s political economy
    • MOST IMPORTANTLY: International currency policy, especially the value of the RMB/CYN
  • 11. The Geopolitical Equation
    • The geopolitical dimension, in which both systems will vie to govern the global political economy, promises to be contentious as China’s power increases
    • Q: Can East Asia absorb China’s rising power?
    • Q: What is the future role of the United States and Japan in Asia?
    • Q: How will China assure its access to Sea Lanes of Communication (SLOCs)?
  • 12. Ecology
  • 13. Ecology
    • The large and rapid developmental processes unfolding in China raise the specter of accelerating environmental degradation
    • Major ecological dilemmas loom if China continues to develop as she has and follows in the footsteps of other capitalist developers  increasing scarcity of certain global resources and massive impact on global ecology
  • 14. Ecology
    • China’s environmental crisis
    • Water – Pollution and shortage
    • Air – Pollution
    • Land (vegetation and soil) – Degradation and desertification
    • Greenhouse gases (CO 2 , etc.)  reliance on coal!
    • Impacts
    • Immediate human cost (health, economic & livelihood)
    • Long-term ecological damage
    • Global implications, especially re global climate change
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  • 19. Ecology Development Overpowers the Environment
    • Economic growth is “China’s state religion”
    • “ The CCP is addicted to economic growth”
    • “ GDP growth mania”
  • 20. The Quandaries of China’s Rise
    • Domestic challenges produced by China’s capitalist transition:
    • Widening income gaps (and the perception thereof)
    • Environmental degradation
    • Corruption and bad governance
    •  Political will to complete the transition in the political realm (lack of constitutionalism)??
  • 21. The Quandaries of China’s Rise Governance Capacity
    • Bad capacity to govern over a broad range of issues on a day-to-day basis
    • Insufficient feed-back loops and no checks on the CCP’s absolute power!
    • BUT: Enormous capacity to mobilize resources short-term: e.g., SARS campaign; smuggling campaign (in 1997/1998); reforestation campaign
  • 22.  
  • 23. The Quandaries of China’s Rise
    • Three external challenges:
    • The influence of China’s political economy on the rest of the world  international economic management will be more complicated, necessitating a new institutional architecture
    • Rising specter of politico-military conflict between the US and China  possibility of another round of great power struggles, be it a “cold” or “hot” war
    • China’s ecological impact  China becoming the world’s largest greenhouse gas emitter with massive implications for global climate change
  • 24. The China Quandary
    • The fundamental questions:
    • As Sino-capitalism becomes a new force in the global system to be reckoned with, can the world’s established powers adjust and adapt?
    • Can new leadership and management models be developed that can address the globe’s major challenges in the 21st century?
    • Ideally, the US and China should face their differences and work towards a mature partnership of equals that contributes to global management.
  • 25. Thank You! 谢谢