Test 2 China Flashcards
(28 cards)
The building blocks of Chinese society according to Martin Jacques
- China is not a nation state: most important political value is unity. Extremely diverse and decentralized
- Chinese have different conception of race, 90% think they belong to the same race- Han
- Relationship between state and society is different
the state is representative of Chinese civilization, spiritual role. power of Chinese state is never challenged
Describe the Chinese development model
Population control, strong government, pragmatic concern
Describe the “middle income trap”
This is the theory where a country that attains a certain income will get stuck at that level. they have borrowed all they can and need to start innovating but may fail. Their economies stop growing at the fast level. Springs at an income level equal to 10-30% of the income level of the worlds leading nation.
Describe the “middle income deceleration”
The economy slows down to a lower cruising speed even if they did not stop catching up entirely. $5000 is the highest number, share of manufacturing in GDP. Labor shortage, causes cost of labor to rise, focus more on capital and less on labor. Service has to rise
Use the numerical example to explain the statement “too big to grow fast”
A country with 1000 average person income only needs an additional 100 per person to grow 10%, but a nation with 10,000 average income needs an additional 1,000 per person. The richer the country the harder it is to grow fast
When Japan, Taiwan, South Korea faced “middle income deceleration” and why?
Japan- early 1970s
Taiwan- late 1980s
Korea- early 1990s
growth rates fell from 9 percent to 5 percent
Because the richer the country the harder it is to grow
Describe the labor situation in China: migrant workers supply, the wage rise of unskilled and skilled workers, wage inflation and productivity
Migrant workers supply: has slowed dramatically to about 5 million a year
Wage rise: Declining size of workforce has caused wages to rise at about 15% in 2011, wages growing faster for unskilled workers
Hourly wages rising twice as fast as productivity
The money supply and the real estate boom in China
To maintain growth Beijing ordered banks to open the tap on loans, issued 4 trillion dollars, used this money to sell 800 million square feet of real estate
Is consumption suppressed in China?
The suppressed Chinese consumer does not exist. for the last 30 years consumer spending has increased by a rate of 9 percent. They buy luxury goods
The investment expansion in China and how does it relate to the “middle income trap”
Over the past decade investment grew at annual rate of 15%, investment growth is bound to slow down, and consumption can’t grow any faster, this means the overall growth rate will move to a lower plane
the economic and social reforms by Deng Xiao Ping
- Freed rural households to farm their own plots and keep the profits, lead to farm income and productivity
- Allowed farmers to sell their own produce at markets in the city
- Introduced hukou- residency permits
- reform the cities while expanding in the countryside. Easing central control over state enterprises, opening the door to the rise of township and village enterprises, lifting regulations on prices for food and other goods
- opened China to the world with trade
- allowed increased inequality
What is Sharmas view on the rate of economic growth and democracy vs. democracy
It’s not the political system that matters, it is the stability of the system, and whether the leaders running it understand the basics of economic reform. the chance that any particular system will have a positive impact on a country’s breakout potential is about 50/50
The current value (exchange rate) of the Chinese Yuan to the dollar
1 Chinese Yuan equals .16 US dollars, or 1 us dollar equals 6 yuan
Why is China branded as a currency manipulator
China’s CA surplus would make the yuan appreciate, this would make exports more expensive, reduce employment and dampen economic growth. Instead china manipulates their currency to keep this from happening by buying US dollars
Is being a currency manipulator a fair statement considering the impact of the yuan appreciation on the Chinese exports and reserves
yes this is fair because if the yuan appreciated the cost to export would rise and they would lose Yuan value of the reserves
Is consumption rising in China to substitute for the loss of exports after 2008?
During the recession we stopped buying as many goods from china. China doesn’t have internal demand, they have high savings and don’t spend as much so they aren’t consuming, lower consumption than India and Brazil
Why the Chinese people and businesses save so much?
- Government doesn’t provide viable social security benefits
- Chinese families want their children to attend private schools
- Families save for medical care, surgeries not covered
- parents save for old age b/c only have one child
- use cash not loans or credit cards to buy goods
- farmers save to buy inputs and farm equipment, can’t put government owned land as colatteral
- state owned enterprises (80% of the economy) do not pay out dividends and retain their earnings)
the japanese economic model after ww11. what helped japan to grow so fast between the ends of WW11 and 1990?
- Clear national goal to rebuild japan’s greatness through economic means
- pro capitalist political leadership
- cooperating labor unions- unions accept seniority wage system
- low labor volatility
- lifetime employment - workers accepted wage cuts to avoid layoffs, guaranteed seniority based promotions
Why the Chinese savers receive negative return on their savings?
Because of interest rates below inflation rate and strict capital controls that prevent savers from investing money in more profitable investments abroad.
In what countries China is building oil and gas pipelines?
Controls oil and gas pipelines from Turkmenistan to China and from South Sudan to the Red Sea. They are building them from the Indian ocean to the Chinese city Kunming, running from Myanmar. Another from Siberia to northern China already been built.
What is the biggest Chinese investment on Africa?
Huge hydroelectric projects like the Merowe Dam on the Nile in Sudan
The Chinese investment in the EU
grew from less than a billion before 2008 to more than 10 billion in the past two years
Predicted Chinese Foreign Direct Investment in 2020?
as much as 1 trillion to 2 trillion by 2020
Why the trans pacific partnership is perceived as American led policy to contain china?
The club is thought to be restricted to countries that meet high american standards on issues like free competition, labor and environmental standards and intellectual property rights.
