"China Has Globalized"
In 30 years, China has transformed itself from command economy inhospitable to overseas investors to emerging free-enterprise market that attracts the biggest share of global foreign direct investment. China is a key driver of globalization and one of its major beneficiaries. The world’s third biggest trader and the fourth largest economy, China combines geographic and demographic heft with purchasing power and manufacturing prowess. “China has globalized,” Winfried Vahland, President and Chief Executive Officer, Volkswagen Group China, told participants at the World Economic Forum’s China Business Summit 2006. “China is one of the fastest-growing economies and one of the engines of the global economy.”
Even so, China is still a developing country. China’s per capita GDP is above the Philippines’ but below Thailand’s. It is just 48th on the World Economic Forum’s competitiveness ranking. According to the World Bank, over the past two decades, China accounted for over 75% of the poverty reduction achieved in developing economies. Yet today more than 135 million people, mainly in China’s Western and interior regions, scrape by on less than a dollar a day, without the benefits of clean water, adequate healthcare and education.
Armed with increasing economic clout, China has become a leading player in the international community, both through roles it has sought such as its membership in the World Trade Organization (WTO) and those that have been thrust upon it. Beijing has emerged as something of a spokesman and role model for developing economies, its non-judgmental foreign policy serving as a counterweight to the ideology-laden line of Western developed countries, particularly the United States.
The recent agreement to increase China’s voting power in the International Monetary Fund (IMF), albeit by only a small percentage, is an acknowledgement of its rising profile – and mounting responsibilities. China’s participation in the six-party talks on North Korea’s nuclear programme has been pivotal. And as a permanent member of the UN Security Council, Beijing is playing a key behind-the-scenes part in the selection of the next UN Secretary-General, who is expected to be an Asian. “Anything that happens in China will have a global impact so we have to be globally responsible,” said Wang Jianmao, Professor of Economics and Associate Dean, China Europe International Business School (CEIBS).
Chinese diplomacy, however, has largely been driven by pragmatic economic motives, particularly the need to meet its burgeoning energy, raw materials and components requirements. China has been an enthusiastic driver of integration with Southeast Asia. It has also forged strong commercial links with resource-rich countries in Central Asia, Latin America, the Middle East and Africa, as well as Australia. Energy imports rose by 55% in the first four months of this year to US$ 21.3 billion. Meanwhile, China’s exports have increased to all-time highs, pushing its trade surplus to monthly records – US$ 18.8 billion in August 2006. This has inundated China’s economy with cash, boosting its foreign exchange reserves to nearly US$ 1 trillion.
Chinese enterprises, particularly industrial groups, have accompanied the country’s diplomats to far-flung countries from Venezuela to Sudan, as well as to developed markets in Europe and North America. While some companies, notably the state energy groups, have gone global for strategic reasons, many others are seeking to hone their competitiveness and, facing thinning margins at home, generate new business. “The reason for going global is simple: to create new opportunities to make profits today and in the future,” said Wang Jianzhou, Chief Executive, China Mobile Communications Corporation. Added Yang Yuanqing, Chairman of the Board of Lenovo Group, which went global through its acquisition of IBM’s personal computing division: “Internationalization is not an end in itself; it is a means to help you grow and develop.”
China’s value-neutral foreign policy, its rapid economic ascendancy and the adventures of its zealous enterprises have at times put Chinese ambitions at odds with the global establishment, particularly the US. Beijing has clashed with Washington over how to deal with Sudan and the conflict in Darfur, Iran and its nuclear programme, and Myanmar and its reluctance to adopt political reforms. The bid by a Chinese state firm to take over the American petroleum group Unocal alarmed many US politicians. And of course, China’s trade surplus with the US has fueled accusations that China manipulates its currency and led to enormous pressure on Beijing to move to a more flexible currency regime faster than it is willing to allow.
The frequency of such friction is likely to increase. For now, China has played the unassuming new kid on the block with benign intentions. At the same time, it basks in the acclaim of those who see its market as a glowing opportunity no sensible investor can resist. After all, China will be hosting an Olympic Games, what for the previous Asian hosts – South Korea and Japan – was something of a global coming-out party. China’s attempts to set its own industry and technology standards have raised concerns among some trading partners and investors. “Our policy of reform and opening up to the world means we embrace globalization,” said Wu Jianmin, President of the China Foreign Affairs University. “The most important feature of China’s rise is to share the growth with the rest of the world.”
The awkward vacillating between humility and what critics may perceive as hubris suggests that China is still feeling its way in a world where it has a leading part and may be counted on for solutions. The role China plays in the WTO in the aftermath of the collapse of the Doha Round will be an immediate indicator of its willingness to shoulder new responsibilities. Beijing could be instrumental in reviving the talks. China’s trading partners, meanwhile, will be assessing how well Beijing implements its WTO commitments, including the opening of the banking sector next year.
China’s grace, diplomatic skill, sense of responsibility and capacity to lead will be tested further. How it shapes its relations with Africa and its poor Asian neighbours could be especially telling. Some in the aid community worry that the generous, no-strings and lecture-free financing offered by the Chinese government and enterprises to support contracts to build infrastructure might induce countries to relax their commitment to governance reform. The question is: Would China the responsible stakeholder insist on transparency?
Even so, China is still a developing country. China’s per capita GDP is above the Philippines’ but below Thailand’s. It is just 48th on the World Economic Forum’s competitiveness ranking. According to the World Bank, over the past two decades, China accounted for over 75% of the poverty reduction achieved in developing economies. Yet today more than 135 million people, mainly in China’s Western and interior regions, scrape by on less than a dollar a day, without the benefits of clean water, adequate healthcare and education.
Armed with increasing economic clout, China has become a leading player in the international community, both through roles it has sought such as its membership in the World Trade Organization (WTO) and those that have been thrust upon it. Beijing has emerged as something of a spokesman and role model for developing economies, its non-judgmental foreign policy serving as a counterweight to the ideology-laden line of Western developed countries, particularly the United States.
The recent agreement to increase China’s voting power in the International Monetary Fund (IMF), albeit by only a small percentage, is an acknowledgement of its rising profile – and mounting responsibilities. China’s participation in the six-party talks on North Korea’s nuclear programme has been pivotal. And as a permanent member of the UN Security Council, Beijing is playing a key behind-the-scenes part in the selection of the next UN Secretary-General, who is expected to be an Asian. “Anything that happens in China will have a global impact so we have to be globally responsible,” said Wang Jianmao, Professor of Economics and Associate Dean, China Europe International Business School (CEIBS).
Chinese diplomacy, however, has largely been driven by pragmatic economic motives, particularly the need to meet its burgeoning energy, raw materials and components requirements. China has been an enthusiastic driver of integration with Southeast Asia. It has also forged strong commercial links with resource-rich countries in Central Asia, Latin America, the Middle East and Africa, as well as Australia. Energy imports rose by 55% in the first four months of this year to US$ 21.3 billion. Meanwhile, China’s exports have increased to all-time highs, pushing its trade surplus to monthly records – US$ 18.8 billion in August 2006. This has inundated China’s economy with cash, boosting its foreign exchange reserves to nearly US$ 1 trillion.
Chinese enterprises, particularly industrial groups, have accompanied the country’s diplomats to far-flung countries from Venezuela to Sudan, as well as to developed markets in Europe and North America. While some companies, notably the state energy groups, have gone global for strategic reasons, many others are seeking to hone their competitiveness and, facing thinning margins at home, generate new business. “The reason for going global is simple: to create new opportunities to make profits today and in the future,” said Wang Jianzhou, Chief Executive, China Mobile Communications Corporation. Added Yang Yuanqing, Chairman of the Board of Lenovo Group, which went global through its acquisition of IBM’s personal computing division: “Internationalization is not an end in itself; it is a means to help you grow and develop.”
China’s value-neutral foreign policy, its rapid economic ascendancy and the adventures of its zealous enterprises have at times put Chinese ambitions at odds with the global establishment, particularly the US. Beijing has clashed with Washington over how to deal with Sudan and the conflict in Darfur, Iran and its nuclear programme, and Myanmar and its reluctance to adopt political reforms. The bid by a Chinese state firm to take over the American petroleum group Unocal alarmed many US politicians. And of course, China’s trade surplus with the US has fueled accusations that China manipulates its currency and led to enormous pressure on Beijing to move to a more flexible currency regime faster than it is willing to allow.
The frequency of such friction is likely to increase. For now, China has played the unassuming new kid on the block with benign intentions. At the same time, it basks in the acclaim of those who see its market as a glowing opportunity no sensible investor can resist. After all, China will be hosting an Olympic Games, what for the previous Asian hosts – South Korea and Japan – was something of a global coming-out party. China’s attempts to set its own industry and technology standards have raised concerns among some trading partners and investors. “Our policy of reform and opening up to the world means we embrace globalization,” said Wu Jianmin, President of the China Foreign Affairs University. “The most important feature of China’s rise is to share the growth with the rest of the world.”
The awkward vacillating between humility and what critics may perceive as hubris suggests that China is still feeling its way in a world where it has a leading part and may be counted on for solutions. The role China plays in the WTO in the aftermath of the collapse of the Doha Round will be an immediate indicator of its willingness to shoulder new responsibilities. Beijing could be instrumental in reviving the talks. China’s trading partners, meanwhile, will be assessing how well Beijing implements its WTO commitments, including the opening of the banking sector next year.
China’s grace, diplomatic skill, sense of responsibility and capacity to lead will be tested further. How it shapes its relations with Africa and its poor Asian neighbours could be especially telling. Some in the aid community worry that the generous, no-strings and lecture-free financing offered by the Chinese government and enterprises to support contracts to build infrastructure might induce countries to relax their commitment to governance reform. The question is: Would China the responsible stakeholder insist on transparency?
posted by globophobe at 12.12.06
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