Skip to Main Content
Have library access? Log in through your library
Rising China: Global Challenges and Opportunities

Rising China: Global Challenges and Opportunities

Jane Golley
Ligang Song
Volume: 2011
Copyright Date: 2011
Published by: ANU Press
  • Cite this Item
  • Book Info
    Rising China: Global Challenges and Opportunities
    Book Description:

    Where the last three decades of the 20th century witnessed a China rising on to the global economic stage, the first three decades of the 21st century are almost certain to bring with them the completion of that rise, not only in economic, but also political and geopolitical terms. China's integration into the global economy has brought one-fifth of the global population into the world trading system, which has increased global market potential and integration to an unprecedented level. The increased scale and depth of international specialisation propelled by an enlarged world market has offered new opportunities to boost world production, trade and consumption; with the potential for increasing the welfare of all the countries involved. However, China's integration into the global economy has forced a worldwide reallocation of economic activities. This has increased various kinds of friction in China's trading and political relations with others, as well as generating several globally significant externalities. Finding ways to accommodate China's rise in a way that ensures the future stability and prosperity of the world economy and polity is probably the most important task facing the world community in the first half of the 21st century. The book delves into these issues to reflect upon the wide range of opportunities and challenges that have emerged in the context of a rising China. Chinese Translation

    eISBN: 978-1-921862-29-8
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Tables
    (pp. vii-x)
  4. Figures
    (pp. xi-xiv)
  5. Abbreviations
    (pp. xiii-xvi)
  6. Contributors
    (pp. xvii-xx)
  7. Acknowledgments
    (pp. xxi-xxii)
  8. 1 Chinaʹs Rise in a Changing World
    (pp. 1-8)
    Jane Golley and Ligang Song

    Whereas the last three decades of the twentieth century witnessed China rising on to the global economic stage, the first three decades of the twenty-first century are almost certain to bring with them the completion of that rise, not only in economic, but also in political and geopolitical terms. China is now the second-largest economy in the world as measured by national accounts and is well on the way to becoming the largest economy in real terms in the not too distant future. The Chinese economy has contributed positively to world economic growth for decades, even during the global financial...

  9. 2 Chinaʹs Turbulent Half-Decade
    (pp. 9-28)
    Huw McKay

    The second half of the first decade of the twenty-first century was a turbulent one for China and the world. The period opened and closed with the macroeconomic policy stance tilted towards restraint. In between times, an immense stimulatory package was assembled, executed and withdrawn. The economy experienced two periods of uncomfortably high inflation on either side of a period of outright price declines. This chapter offers a framework for considering Chinese economic performance of recent vintage while tracing the shifting contours of policy in this volatile era.

    The chapter proceeds in the following manner. First, a framework for making...

  10. 3 Reform of the International Economic System: What does China want?
    (pp. 29-44)
    Yiping Huang, Weihua Dang and Jiao Wang

    The current international economic system, which was first established in the mid-1940s, contains three key features. First, the United States is a dominant leader in designing and enforcing the international economic rules. Second, the US dollar has been the cornerstone of the international monetary system, both before and after the breakdown of the Bretton Woods system. And finally, three international organisations—the International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO)—are responsible for maintaining international economic order.

    For more than half of a century, this system facilitated steady growth of the global economy. Recently, however,...

  11. 4 Why Does China Attempt to Internationalise the Renminbi?
    (pp. 45-68)
    Yin-Wong Cheung, Guonan Ma and Robert N. McCauley

    The global financial crisis shone a spotlight on the US dollar as a pivot in international finance as it gave rise to a dollar shortage in 2008 more acute than that of the 1950s (McCauley and McGuire 2009; McGuire and von Peter 2009). The US authorities relieved the dollar shortage by entering into dollar swaps with central banks on an unprecedentedly broad scale and, with major central banks, in unlimited amounts (CGFS 2010). Before long, market concerns switched to possible excess dollar liquidity as the US Federal Reserve carried out repeated programs of large-scale bond purchases (the second dubbed the...

  12. 5 The Technological Content of Chinaʹs Exports and the Need for Quality Upgrading
    (pp. 69-84)
    Kunwang Li and Ligang Song

    Over the past 30 years, trade liberalisation has gone hand-in-hand with domestic economic transformation in China. As a result, the Chinese economy has been increasingly integrated with the world economy. Chinaʹs ever-increasing exports have positively contributed to its rapid economic growth in the following ways: trade encourages investment, which confers externalities on an economy, particularly if the investment goods come from abroad; greater trade means larger volumes of output and greater scope for specialisation, leading to learning by doing; and trade also leads to technology transfer, which enhances the prospect of faster total productivity growth (Thirlwall 2006). Over the period...

  13. 6 The Development of Chinaʹs FDI Laws and Policies after WTO Accession
    (pp. 85-98)
    Chunlai Chen

    Policies and reforms relating to foreign direct investment (FDI) have been among the most fundamental aspects of Chinaʹs economic reforms. During the past three decades, Chinaʹs change of attitude from restricting to passively attracting and then to actively selecting inward FDI has been fully reflected by the evolution of its FDI policies, laws and regulations. Given Chinaʹs global ranking as an FDI destination and the vast quantity of FDI inflows into its domestic economy (accumulative FDI inflows of about US$1000 billion during the past three decades), this reform process relating to FDI appears to have been extremely successful.

    After Chinaʹs...

  14. 7 Chinese Manufacturing Firmsʹ Overseas Direct Investment: Patterns, motivations and challenges
    (pp. 99-120)
    Bijun Wang and Huiyao Wang

    The widespread perception of industrialised countries as homes of multinational corporations (MNCs) and emerging markets as hosts of MNCs has been firmly rooted. These were, however, MNCs in the past, which were nowhere near as active or visible as they are today. In recent years, China and India, major Latin American economies such as Brazil and Mexico, and South Africa have all spawned their own MNCs (Dunning et al. 2007).

    The well-established explanation for the emergence of MNCs from developing and transitional economies is the investment development path—a concept first proposed by Dunning (1981a). This put forward the idea...

  15. 8 Chinaʹs Petroleum Predicament: Challenges and opportunities in Beijingʹs search for energy security
    (pp. 121-136)
    Andrew B. Kennedy

    If Chinaʹs rise is one of the most important stories of this new century, Chinaʹs growing appetite for energy is one of its most striking subplots. Between 2000 and 2009, Chinaʹs energy consumption more than doubled as its economic growth went into overdrive. By one estimate, China accounted for 63 per cent of the worldʹs new energy demand during that period (BP 2010:40). China now consumes 47 per cent of the worldʹs coal, 19 per cent of its hydroelectric power, and 10 per cent of its oil (BP 2010:38). In 2009, according to the International Energy Agency (IEA), China surpassed...

  16. 9 Promoting Global Carbon Equity and Low-Carbon Growth: Chinaʹs role in combating global climate change
    (pp. 137-148)
    Yongsheng Zhang

    Climate change has emerged as one of the greatest crises of the world today, and calls for global efforts to reduce greenhouse gas emissions and the dependence on traditional fossil fuels. The final solution to global climate change will require a greater reliance on a pattern of low-carbon growth based on renewable energy, which will represent the most profound transformation of the development model since the Industrial Revolution.

    Two severe obstacles, however, stand in the way. First, effective international governance is absent, as the existing international order most reflects the interest of industrialised countries, yet handling the issue of climate...

  17. 10 Chinese–US Economic Relations After the Global Financial Crisis
    (pp. 149-172)
    Geoffrey Garrett

    The global financial crisis has had three profound effects on Sino–American relations. First, China and the United States have become a de facto Group of Two (G2), largely by default, as Europe and Japan have fallen on even harder times than the United States and because Indiaʹs development path is at least 15 years behind Chinaʹs. Second, the speed with which China is catching up to the United States has increased, with the mid-2020s projected as when China will pass the United States to become the worldʹs largest economy—though it will then still be a much poorer and...

  18. 11 The Importance of Being Earnest in Defusing US–China Trade Tensions
    (pp. 173-180)
    Wing Thye Woo

    It was no April Foolʹs joke when the Wall Street Journal of 1 April 2011 carried the headline ʹChina meeting highlights currency conflictʹ. The list of crimes against the US economy caused by the large US–China bilateral imbalances has now expanded from the loss of US jobs (Scott 2007) to the destabilisation of the US financial market (Guha 2009). The ʹbad Chinaʹ feeling is so strong that even The New York Times (17 March 2010) stooped to oxymoronic rhetoric, calling the fixed RMB–US dollar exchange rate ʹa textbook example of the beggar-thy-neighbor competitive devaluationʹ (emphasis added).

    The English...

  19. 12 Australia–China Economic Relations
    (pp. 181-202)
    Christopher Findlay

    Chinaʹs growth and change are driving dramatic structural change in Australia. Despite the fact that Australiaʹs per capita income is much higher than Chinaʹs, the continuation of rapid growth in China is exposing a series of policy challenges for Australia, particularly matters of regulatory reform. Many of these are directly related to key areas of interest in the relationship with China, and the manner in which Australia responds will affect the evolution of this relationship. There is also a risk that the boom conditions will not last and the opportunities created by growth in China will be wasted.

    That China...

  20. 13 Chinese Development Aid in Africa What, where, why, and how much?
    (pp. 203-222)
    Deborah Brautigam

    Chinaʹs development aid to Africa has increased rapidly, yet this might be the only fact on which we have widespread agreement when it comes to Chinese aid.¹ Analysts disagree about the nature of Chinaʹs official development aid, the countries that are its main recipients, the reasons for providing aid, the quantity of official aid, and its impact. Why does this matter? Knowing more about Chinese development aid is important for understanding Chinese foreign policy and economic statecraft: how and to what ends does China use its government policy tools? It is also important for more accurate comparisons between Chinese practices...

  21. 14 Clash of the Titans Chinese and Indian growth compared
    (pp. 223-244)
    Peter E. Robertson

    Both China and India emerged from World War II as shattered giants embroiled in civil conflict. By 1962 they were at war with each other over their shared Himalayan border. Upon these shaky foundations, both countries took different paths through the hostile Cold War environment—India with its market-based socialism and China with communism and collectivism.

    The aim of this chapter is to ask what growth theory can tell us about the similarities and differences in Indiaʹs and Chinaʹs respective growth experiences and future prospects. This is important for several reasons. First, despite many popular explanations for Chinaʹs success, or...

  22. 15 The Effects of Institutions on Migrant Wages in China and Indonesia
    (pp. 245-284)
    Paul Frijters, Xin Meng and Budy Resosudarmo

    According to Bell and Muhidin (2009) of the UN Development Programme (UNDP), ʹ[i]nternal migration is the most significant process driving changes in the pattern of human settlement across much of the world, yet remarkably few attempts have been made to compare internal migration between countriesʹ. They estimate that nearly 800 million individuals are internal migrants who live in a different region than the one in which they were born, compared with ʹmerelyʹ 200 million migrants who have moved countries. The World Bank Development Report 2009 calls this internal migration one of the key drivers of world economic prosperity.

    One important...

  23. 16 Chinaʹs Demographic Challenges from a Global Perspective
    (pp. 285-300)
    Zhongwei Zhao

    One of the most significant events in recent history has been the worldwide demographic transition. The role of this transition ʹin the creation of the modern worldʹ has been so important that some scholars have argued that unless the demographic transition is put at centre-stage, the modern process of development cannot be understood (Dyson 2010:viii). Population changes taking place in China have also been closely related to its historical development and will greatly influence the countryʹs future. This chapter describes Chinaʹs demographic transition in a global perspective, and examines the major demographic trends and challenges that it will face in...

  24. 17 Population Ageing, Domestic Consumption and Future Economic Growth in China
    (pp. 301-314)
    Yang Du and Meiyan Wang

    In the newly released Twelfth Five-Year Plan (2011–15), increasing the role of domestic demand as a driver of economic growth is identified as one of Chinaʹs major priorities in the years ahead. According to the most recent statistics from the National Bureau of Statistics (NBS), final consumption accounted for 48 per cent of gross domestic product (GDP) in 2009, which included 35 percentage points from household consumption. In most industrialised countries, consumption accounts for more than two-thirds of GDP, and the share of government consumption in final consumption is not as high as in China either. Given that the...

  25. 18 The Route of Urbanisation in China from an International Perspective
    (pp. 315-328)
    Xiaolu Wang

    This chapter examines Chinaʹs urban development strategy from an international perspective. There are ongoing debates as to whether the Governmentʹs plan for urbanisation should focus on the development of small and medium size cities and towns, or whether instead China should allow, and encourage, more large cities to emerge to accommodate the large scale of urbanisation. This has been a highly controversial issue in China and raises the more general issue of whether, and to what extent, the Chinese Government should intervene in the process of urbanisation, which has hitherto been driven largely by market forces. A cross-country econometric analysis...

  26. Index
    (pp. 329-338)