China’s Glass Ceiling

Discussion in 'China' started by Yusuf, Apr 1, 2013.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    It's a good article.


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    "It's over for America," a Chinese academic told me in late 2008, two days after Goldman Sachs turned itself into a commercial bank in order to fend off possible collapse. "From here on, it's all downhill." Sitting in Beijing as American capitalism seemed to be hanging by a thread, it was easy to believe that one era was ending and another beginning.

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    The past half-decade should have been the glory years for the spread of Chinese influence around the world. After China's ravishing 2008 Beijing Summer Olympics, and its startling recovery from the financial crisis, it had a platform to push for a bigger voice in international affairs. At a time when the United States has been navel-gazing on its own deficiencies and beset by dysfunction and infighting in Congress, China has quickly become the main trading partner for a long list of countries, not just in Asia, which should give it all sorts of sway. And at the very least, many Chinese assume, the country should start to resume its role as the natural leader in Asia.

    Yet the years since the crisis have demonstrated something very different. Rather than usher in a new era of Chinese influence, Beijing's missteps have shown why it is unlikely to become the world's leading power. Even if it overtakes the United States to have the biggest economy in the world, which many economists believe could happen over the next decade, China will not dislodge Washington from its central position in global affairs for decades to come.

    China is certainly not lacking in ambition, even if many of its final goals are not clearly articulated. It is implementing plans which challenge U.S. military, economic, and even political supremacy. But on each front, the last few years have demonstrated China's limitations, not the inevitability of its rise.

    China's effort to gradually squeeze the U.S. Navy out of the Western Pacific did not start with the financial crisis in 2008. The financial crisis did, however, coincide with a new aggressiveness in the way China has pushed its territorial claims in the South China Sea and the East China Sea. Beijing has scored at least one victory, securing control of the Scarborough Shoal, a group of small islands in the South China Sea, from the Philippines in 2012.

    But among these tactical successes, China has been sowing the seeds of a strategic defeat. China's assertiveness is generating intense suspicion, if not outright enmity, among its neighbors. Its "peaceful rise" is not taking place in isolation. There may be echoes in today's Asia of the late-nineteenth century in Europe and North America, but this is the one critical difference. The United States came into its own as a great power without any major challenge from its neighbors, while Germany's ascent was aided by the collapsing Austro-Hungarian and Ottoman empires and Russian monarchy on its frontiers. China, on the other hand, is surrounded by vibrant countries with fast-growing economies, from South Korea to India to Vietnam, who all believe that this is their time, as well. Even Japan, after two decades of stagnation, still has one of the most formidable navies in the world, as well as the world's third largest economy. China's strategic misfortune is to be bordered by robust and proud nation-states which expect their own stake in the modern world.

    The last few years have shown that these countries have no desire to return to a Sinocentric Asia, as existed before the arrival of Western powers in the late-fifteenth century, and one where China is the undisputed leader. All the talk about the Obama administration's "pivot" to Asia has obscured the much bigger shift that has taken place in the region since the crisis -- almost all of China's neighbors are now deeply anxious about what a powerful, expansionist leadership in Beijing portends for their future. They still want to trade with China, but they also want protection from Beijing's bullying.

    Rather than undercutting U.S. influence in the region, the result of China's post-crisis assertiveness has been to push most of its neighbors closer towards Washington. Yet Beijing seems tone-deaf to the tensions it is creating, falling back instead on complaints about U.S. containment and trying to resurrect the specter of Japanese militarism. China's leaders should be asking themselves: why has every Asian leader, with the possible exception of Kim Jong Un, welcomed the pivot? The answer: in the last few years, Washington has become more relevant, not less, to Asia's future.

    On the economic front, Beijing is taking aim at another pillar of U.S. power: the dominance of the dollar. China is putting in place an ambitious long-term plan to turn the renminbi into one of the main international currencies. Chinese leaders often discuss the project in technical terms, about reducing currency risk for their companies, but they also do little to hide their frustration with the dollar's privileged status. One Chinese academic even likens the importance of the project to turn the renminbi into a major reserve currency to China's acquisition of a nuclear weapon in the 1960s.

    The politics of the currency plan are themselves an interesting sidebar to the over-hyping of Chinese influence. While American politicians have been worrying loudly about the risk of China owning so many Treasury bonds ("How do you deal toughly with your banker?" Hillary Clinton asked at a private lunch with then Australian Prime Minister Kevin Rudd in March 2009) China has been fretting about how little leverage its U.S. bond holdings give it. The desire to dethrone the dollar is partly rooted in China's frustration that it has absolutely no influence over the Federal Reserve. And yet it has few options other than buying American debt, because the U.S. Treasury bond market is the largest and most liquid in the world. "We hate you guys!" Luo Ping, a senior Chinese banking official admitted in 2009, only half-jokingly. "Once you start issuing $1 trillion-$2 trillion [in new debt]," he said, the dollar will depreciate, "but there is nothing much we can do."

    There is no doubt that China's currency will start to play a larger role in the international financial system, just as the euro and yen do. But toppling the dollar is a different matter. For a start, there is a huge amount of inertia, which means that big shifts in reserve currencies tend to happen only in the event of a major crisis. Admittedly, U.S. Republicans have flirted with the idea of default in order to win a congressional argument, but the likelihood remains that the dollar will only lose its leading status if the United States lets it happen.

    For the renminbi to assume a central role, China would also have to make massive reforms to its own economy. The key to Chinese state capitalism is control over a relatively closed financial system, which allows the Communist Party to funnel huge volumes of cheap credit to select projects, industries, and companies. But to have a truly international currency, one that the world's central banks want to hold, China would have to let investors from around the world buy and sell large volumes of Chinese financial assets. As a result, Beijing would have to dismantle that system of controls. It would need to permit capital to flow freely in and out of the country, let the market set interest rates and allow the currency to float. An independent legal system and transparent economic policymaking would also be useful. China has a choice. It can have an international currency that might challenge the U.S. dollar or it can keep its brand of state capitalism that has driven the economy and kept the Communist Party in power. But it cannot have both.

    On the third front, China is mounting a political challenge to the United States. Beijing is not looking to export its economic and political model around the world, but it has become obsessed with soft power -- the idea that countries can get their way through the attractiveness of their society, rather than just by force or money. China is opening hundreds of Confucius Institutes around the world and spending billions to send its main state-owned media groups overseas, including launching a cable news channel in the United States. At the very least, Beijing hopes these investments can shift the way the world thinks about China, and maybe even chip away at the cultural influence the United States enjoys.

    That won't work. China treats soft power as a problem that can be solved by bureaucrats -- by throwing money at it, in the way that it has with high-speed rail or wind power. But modernity is not something that can be acquired off-the-shelf. Soft power is generated by society rather than the Ministry of Culture. The effort to shift its image is constantly undermined by the way that China actually treats its more awkward and interesting citizens -- from well-known figures like Nobel Peace Prize winner Liu Xiaobo and artist Ai Weiwei to the writer Yu Jie, who has been living in the United States since shortly after he wrote a critical book about former premier Wen Jiabao.

    Its media companies will not prosper abroad because the one thing they really have to offer -- the inside story on what is really happening in China -- is the one thing they cannot report. China hopes its soft power investments will blunt criticism of its political system, but it is the political system that is holding back its soft power. Even favored artists suffer. I once asked Zhang Yimou, the film director and creative genius behind the Olympics opening ceremony, why his recent films had all been period pieces that shunned the fascinating complexities of contemporary China. If I made a film about today's China, he answered, I would have so many problems with the censors that it would not be worth my trouble.

    If Beijing will struggle to displace Washington, where does this leave the United States? It will come as a huge psychological shock when the Chinese economy eventually overtakes the United States, which will be felt again perhaps even more powerfully when China also overtakes Washington with the world's largest military budget. (According to the International Institute for Strategic Studies, this could happen as soon as 2025.) The United States will have to get used to a different status.

    But the one huge advantage it will continue to hold is its ability to organize and sustain alliances, coalitions, and important friendships. The balance of influence between the United States and China over the coming decades will hinge to a large degree on which nation can mobilize other nations to its cause. This is an area where Washington is far more skilled. The new bursts of free trade projects in the Pacific and with the European Union are one example, even if they are far from being completed, and its long-lasting military alliances in Asia and Europe another. (When the Berlin Wall fell, who imagined that NATO would still exist more than two decades later?) And China? It's only real ally is the mercurial, dangerous North Korea.

    Of course, managing such a group of friends and allies in Asia will be extremely difficult in the years ahead. The distances across the region are huge and few of its allies have common interests, even if their anxiety about China is collective. The United States will find itself asked to pick up parts of the security bill that others could pay, and to intervene in squabbles in which it does not want to get involved. It will also require a big shift in attitude, with more emphasis on understanding the politics of its friends and allies, and less on shows of military power. Some might even be moved to describe the approach as leading from behind. But it's the United States, and not China, that has the capacity to shape the future of Asia and the world for decades to come.

    http://www.foreignpolicy.com/articles/2013/03/28/china_glass_ceiling_number_two?page=full
     
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  3. badguy2000

    badguy2000 Respected Member Senior Member

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  4. drkrn

    drkrn Senior Member Senior Member

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    first i would like to thank yusuf for such nice article.

    all these days i always wondered why and how soft power mark can help to fulfill our nations ambitions on world stage.by understanding that even ccp is trying to bring china a soft power status i now realize what advantage it conferred us.

    the article clearly shows the ambitions of china and the hurdles it faces but misses one major point-economy

    American 14trilion$+ economy is predominantly self centered while of china's is export oriented.if suppose china overtakes us economy at this moment what happens????
    exports from china dwindle as its not economical to buy from them.that's the reason why many foreign companies opened their manufacturing hubs in developing world.soon or later china's dominance in being worlds factory will be challenged by other developing nations .
    in my opinion as china doesn't have cardinal relations with fellow neighbors the rise of china always gives a perception of threat rather than comfort pushing them more towards USA. best example is India -a traditional Russian ally now having warm relations with us.

    nevertheless no one wants a bully to lead them right
     
  5. mylegend

    mylegend Regular Member

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    What I believe to be the real glass ceilling for China is the conflict of the interest. The interest of CCP elites made itself enemy of the people. A ruling dynasty of CCP founding families are against the interest of the people.
     
  6. Ray

    Ray The Chairman Defence Professionals Moderator

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    It is true that the attitude that China has adopted towards the region has pushed it into the arms of the US.
     
  7. badguy2000

    badguy2000 Respected Member Senior Member

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    it is false that CHina is a export-driven economy,while its net export is only 2.75% of its GDP( 0.23 trillion trade surplus/8.36 trillion GDP)

    in fact, CHIna is a economy based on imported resource...
    Based on those imported resource, China prouduced much more real industry products than USA, the nominal largest economy

    however ,Most of those industry products are not for export, but consumed by CHinese domestic market:

    Some of them are used to upgrade CHinese infrastructures,such as highways, railways, seaports,airports ,subways and millions of news buildings.. Now, the scale of infrastructure upgraade is more massive than the combination of the rest world....which is corelated that CHina produce more steel and concrete than the combine one of the rest world.

    some of them are consumed by CHinese families and public administration,such as household appliances, auto...

    only a small part of those are exported for earning hard cash,with which China imports enough resourses for its massive industry products.
     
  8. drkrn

    drkrn Senior Member Senior Member

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    Exports of goods and services (% of GDP) | Data | Table
     
  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    Exports of goods and services (% of GDP)


    Country name 2008 2009 2010 2011

    China 35 27 31 31


    I wonder which is the false report.

    Maybe the Chinese population is given a different picture by the Chinese Govt than what is the reality as seen by the World Bank and hence this dichotomy?

    Or have I missed something?
     
    Last edited: Apr 2, 2013
  10. ice berg

    ice berg Senior Member Senior Member

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    How many times do I have to tell your ignorant people that China is investement driven, not export oriented. What is the percentage of net export in China?
    The path China has taken is not unique, it is the same one that Japan, Singapore, South Korea etc has taken decades before.
    All those countries moved up the ladder from just manufacturing cheap goods.
    What worries China is not her position as the worlds factory been challenged, but how she can move up the ladder.
    You may take a closer look at what she actually exports these days.

    China Exported Goods by Category of Commodities

    China’s major exports consist of machinery and transport equipments constituting to nearly half of the total exports. Another major portion of the exports comprise of textile, rubber and metallurgical products constituting to 18%. Chemical products, food, mineral and fuel materials made of up 10% of the total exports. There is an exponential increase in the machinery and transport equipments segment of the exports from a mere 5% to 47% in 2007. With reference to Organization for Economic Cooperation and Development, China has surpassed US to become the world’s largest exporter of IT goods. This is largely attributed to China’s strong capabilities in grasping labor-intensive sectors of the worldwide marketplace. Other factors include China’s strategies in building its technical manpower and Research and Development capabilities.


    [​IMG]

    Btw it is funny listening you talking about cardinal relations with fellow neighbors.
    I know most american kids lack real knowledges of their own country. Here:
    Cambridge Journals Online - Abstract
    Do some readings, kid. It will do wonders for you.

    Ha Us leacturing China on cardinal relations. hahahaha.
     
  11. badguy2000

    badguy2000 Respected Member Senior Member

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    do you know the difference of "net export" and "export"
    ?

    "net export" = export-import =trade surplus or deficit.....
     
  12. badguy2000

    badguy2000 Respected Member Senior Member

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    it is false that CHina is a export-driven economy,while its net export is only 2.75% of its GDP( 0.23 trillion trade surplus/8.36 trillion GDP)
     
  13. Ray

    Ray The Chairman Defence Professionals Moderator

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    If China is a surplus country, then it is export driven.

    Or it that a wrong surmise?

    Is China surplus or deficient?
     
    drkrn likes this.
  14. badguy2000

    badguy2000 Respected Member Senior Member

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    GDP= investment+consumption+ trade suplus/deficit

    compared with CHina's 8 trillion+USD GDP,China's 0.23 trillion trade surplus is quite minor

    the powerhouse of CHina GDP is investment and consumption....epecially China's investment is extreme massive,I think,mainly due to the massive infrastructure upgrade.
     
  15. Ray

    Ray The Chairman Defence Professionals Moderator

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    The question is asked is China surplus or deficient.

    Just state that.

    No economic diatribe please!
     
  16. badguy2000

    badguy2000 Respected Member Senior Member

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    China does has trade surplus,
    but the surplus is soooo minor to it huge GDP( in fact, only 2.7% of GDP)...which can hardly lable CHina's economy "export driven""
     
  17. Ray

    Ray The Chairman Defence Professionals Moderator

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    Every penny counts to be labelled.

    So the report is not false ;)
     
  18. Virendra

    Virendra Moderator Moderator

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    China's economy was export driven, until only recently when the domestic demand has gained momentum and export growth rate is tumbling down.
    It will take some time before the "export driven" tag can be removed completely.
    And as far as India-China comparisons are concerned, Indian economic reforms have been more than a decade behind China right from the beginning.
    There's catching up to do and China's needling + use of Pakistan against us is not helping the cause either.
    China's aggression in the region specially with smaller neighbors is not helping their own cause as well.
    They've started blowing hot and cold a bit too soon. Sometimes it is called 'punching above one's weight'.

    Regards,
    Virendra
     
  19. drkrn

    drkrn Senior Member Senior Member

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    regarding china's massive 3trillion dollar foreign exchange as reserves, no country is near to them and even combined reserves of many nations too is not near to it.

    how come is it possible unless they have robust trade with massive trade surplus--it itself shows Chinese exports indirectly

    as virendra have said it could be possible that china's internal consumption is increasing or could be misleading by its govt
     
  20. ice berg

    ice berg Senior Member Senior Member

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    It is just one of the DFI myths that never die cause DFIs like to read ToI and street gossip.

    Year 2009:
    Three Myths About Business In China - Forbes.com

    For a while after China entered the World Trade Organization, in 2001, exports did take up that much of the economy. The government was green-lighting practically every project proposed to it in a rush for economic development. That fast-growing capacity couldn't be used to make things to sell to Chinese consumers; they were still too poor. So companies just set up factories for export.

    That situation changed dramatically even before the financial crisis. My firm, the China Market Research Group, estimates that by 2008, exports accounted for just 20% of the economy.

    Year 2008:
    Economics focus: An old Chinese myth | The Economist

    Contrary to popular wisdom, China's rapid growth is not hugely dependent on exports.

    MOST people suppose that China's economic success depends on exporting cheap goods to the rich world. If so, its growth would be seriously dented by a stuttering American economy. Headline figures show that China's exports surged from 20% of GDP in 2001 to almost 40% in 2007, which seems to suggest not only that exports are the main driver of growth, but also that China's economy would be hit much harder by an American downturn than it was during the previous recession in 2001. If exports are measured correctly, however, they account for a surprisingly modest share of China's economic growth.

    The headline ratio of exports to GDP is very misleading. It compares apples and oranges: exports are measured as gross revenue while GDP is measured in value-added terms. Jonathan Anderson, an economist at UBS, a bank, has tried to estimate exports in value-added terms by stripping out imported components, and then converting the remaining domestic content into value-added terms by subtracting inputs purchased from other domestic sectors. At first glance, that second step seems odd: surely the materials which exporters buy from the rest of the economy should be included in any assessment of the importance of exports? But if purchases of domestic inputs were left in for exporters, the same thing would need to be done for all other sectors. That would make the denominator for the export ratio much bigger than GDP.

    Once these adjustments are made, Mr Anderson reckons that the "true" export share is just under 10% of GDP. That makes China slightly more exposed to exports than Japan, but nowhere near as export-led as Taiwan or Singapore (which on January 2nd reported an unexpected contraction in GDP in the fourth quarter of 2007, thanks in part to weakness in export markets). Indeed, China's economic performance during the global IT slump in 2001 showed that a collapse in exports is not the end of the world. The annual rate of growth in its exports fell by a massive 35 percentage points from peak to trough during 2000-01, yet China's overall GDP growth slowed by less than one percentage point. Employment figures also confirm that exports' share of the economy is relatively small. Surveys suggest that one-third of manufacturing workers are in export-oriented sectors, which is equivalent to only 6% of the total workforce.

    [​IMG]

    I dont blame you though. The myth was debunked before your forum went online. Oh wait....:rolleyes:
     
  21. ice berg

    ice berg Senior Member Senior Member

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    Instead of asking silly questions and conspiracy teories, you can try........................Google!
    China's Mountain of Foreign Exchange Reserves
     

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