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POLS 459 Politics of POLS 459 Politics of East AsiaEast Asia

China’s Economic RiseChina’s Economic Rise

Regional and Global Regional and Global ImplicationsImplications

Professor Timothy C. LimProfessor Timothy C. Lim

California State University, Los AngelesCalifornia State University, Los Angeles

tclim@calstatela.edutclim@calstatela.edu

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“The rise of China as a major player in the capitalist world economy is likely to become one of the most significant developments in the first half of the 21st century”

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

There probably would be little or no debate from anyone about this statement,

but there would be a great deal of debate about implications of China’s economic rise, both regional and

globally …

There probably would be little or no debate from anyone about this statement,

but there would be a great deal of debate about implications of China’s economic rise, both regional and

globally …

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The Rise of China: ImplicationsSome scholars, such as Nanto and Chanlett-Avery focus primarily on the military-strategic, diplomatic and (narrow) economic implications. They ask questions such as …

How will China’s growth reoriented international trade patterns?

Will Chinese development lead to greater interdependence and regional cooperation?

Will a richer China try to dominate the region and theworld?

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

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The Rise of China: ImplicationsOther scholars, such as Minqi Li, focus on the deeper, structural implications of China’s rapid development. They ask such questions as …

How is China’s internal structure likely to evolve as China

assumes different positions in the existing world system?

Will China’s rise “save” or “destabilize” the global system?

Can China replace the United States as global hegemonic

power?

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

Let’s focus on this set of questions

Let’s focus on this set of questions

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The Rise of China: Larger ContextTo properly assess the implications of China’s rise, according to Li, we must understand the larger context within which China’s ascendance is taking place

This “larger context” is a concept about which we are already familiar …

Neoliberalism

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

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The Rise of China: Larger ContextUnder neoliberalism, contradictory processes take place in the system of global capitalism

Neoliberal policies put downward pressure on wages in

order to maximize profit

Global capitalism requires constantly increasing consumption

in order to maintain system equilibrium

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

Resolving this contradiction is not easy, but one way the global economy has been able to avoid a full-scale downward spiral is through the actions of a hegemonic power: for most the postwar period, the US has played this role by pumping demand into the global economy through huge and rising deficits

…

Resolving this contradiction is not easy, but one way the global economy has been able to avoid a full-scale downward spiral is through the actions of a hegemonic power: for most the postwar period, the US has played this role by pumping demand into the global economy through huge and rising deficits

…

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The Rise of China: Larger Context

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

This chart illustrates the increasing level

and scale of deficit spending

in the United States. Starting

off at about $500 million in

1940, the accumulated

national debt is now (in 2007) more than $9

trillion in in real terms,

about $30,000 for every man, woman and child

in the U.S.

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The Rise of China: Larger Context

Deficit spending by the global hegemon, however, is inherently unsustainable: for

the world economy to resume sustained, long-term expansion, global effective demand must

have a more stable base

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

geographicHistorically, the key

base has been _________________

expansion, which allows access to new reserves

of cheap labor and natural resources, and

new markets for consumption

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The Rise of China: Larger ContextIn one respect, then, China represent the last major geographic source of expansion for global capitalism

China’s economic rise, therefore, raises China’s economic rise, therefore, raises the question: the question: Can the existing world Can the existing world system (and humanity) survive without the system (and humanity) survive without the rise of China?rise of China?

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

How does Li answer this question?How does Li answer this question?

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The Rise of China: Different ScenariosBasic answer: It depends.

Li gives us 4 different scenariosLi gives us 4 different scenarios

Significantly, though, underlying Significantly, though, underlying his scenarios is another question, his scenarios is another question, namely …namely …

“Can the existing world system survive with the rise of China?”

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

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The Rise of China: Different ScenariosThe Four Scenarios

China may fail (to rise)……………………………..

China rises, but in so doing “peripheralizes” the

rest of the semiperiphery ………………………….

China rises, but in so doing it catches up with other semiperipheral states in terms of wages …..

China rises, which has an uneven impact on between-country inequality ………………………

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

1.1.2.2.

3.3.

4.4.

What are the implications of each scenario?What are the implications of each scenario?

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The Rise of China: ConvergenceKey points from the four scenarios

None of the four scenarios is particularly promising

The basic reason: China’s rise will have a necessary impact on the internal dynamics of the system--this is largely a product of the sheer economic size of China, which has a labor force larger than the total labor force of all core states combined or of the entire semiperiphery

China’s huge size, therefore, will necessarily bring a process of convergence, either upward or downward: Neither is good

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

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The Rise of China: ConvergenceQuestion: So, what’s the problem with convergence?

Downward convergence: Puts downward pressure on wage levels in the rest of the semiperiphery, which could deprive the capitalist world-economy of major source of effective demand; the “peripheralization” of the semiperiphery also threatenspolitical stability

Upward convergence (of Chinese wages): Reducesthe total surplus available for the rest of world; profitrates are reduced, competition increases, growthin many economies will come to a grinding halt

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

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The Rise of China: Other ImplicationsEven if the problem

convergence is overcome, another problem remains …

The “rise of China” in the sense of China increasingly becoming the center of world capitalist industrialization, is likely to place increasingly greater pressure on the ________________________.

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

global environment

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The Rise of China: Other Implications

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications

This short segment from CNN provides a general, but telling overview of the environmental threat China’s development poses, both to China and the rest of the worldFrom YouTube

Video intentionally removedClick on YouTube link to view

video online

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The Rise of China: Summing Up

China’s economic rise has serious, but paradoxical implications

Paradoxically, the world-capitalist system “needs” China as the last major outpost of global expansion, but China’s rise could also threaten the stability and ultimately the survivability of the system as a whole

Still others see China’s rise as a potential strategic and politico-economy threat, and, in particular, as a threat to American dominance

Not everyone agrees, of course. Mainstream economists and other liberal scholars generally applaud China’s economic rise: it represents the triumph of capitalism and last big step towards the “end of history”

China’s Economic RiseRegional and Global Implications

China’s Economic RiseRegional and Global Implications