Changing East Asia and the U.S.

What/where is East Asia?

• China• Japan• South Korea• North Korea• Taiwan• Hong Kong-Geographical proximity- Historical/cultural

connectedness

Important Trends

• Shifting balance of economic and military power in Asia—rise of China

• Growing intra-regional/Asian trade• Shifting concerns and strategic interests for

Asian countries and the U.S.

Three terms to understand China

1. Developmental state2. Rapid, global industrialization3. Hegemony

China’s Developmental State

• IDEOLOGY: rapid economic development on behalf of society (follow examples of Japan, South Korea, Taiwan)

• LEGITIMACY: based on success of economic development and nationalism

• UNITY: prevent domestic disruption e.g. ethno-nationalist aspirations of Tibetans or Uighers in Xinjiang

• POINT: China’s government will keep promoting this ideology and its policies to protect itself

Rapid Global Industrialization →Manufacturing Center of the World (still)

- #1 producer of coal, steel and cement

- produces 70% of the world’s toys

- #1 producer of electronic goods

- 3rd largest producer of autos- 400 of the top 500

companies operate in China- Leads the world in ship

building

Growing Center of Technology Development & Production

• U.S. companies and universities establishing research centers in China

• Growing Chinese research presence with nanotechnology, gene technology

• Alternative energy—largest producer of wind turbines

Domestic Impact of China’s Industrialization

• Growing middle class, about 150 million (US$10-20/day); huge reduction of poverty

• Growing domestic market• Huge migrant labor pool• Rapid urbanization: about 50% in 2020• Growing income and wealth gap• Enormous water, air, soil pollution• Fake products• Developing capitalist “can do” culture

Modernization/urbanization

Rural Poverty, Pollution, Scandal

Chinese Nationalism & Pride

International/Regional Impact of China’s Industrialization

• 2nd largest economy in the world, will surpass the U.S. economy in 2019-2020– China’s GDP :10.09 T (PPP, 2010, CIA) [GDP/capita? $7,900]– US GDP: 14.66T (PPP, 2010, CIA) [GDP/capita: $48,000]

• 2nd largest exporter in the world• 2nd largest trade partner with the U.S.• Represents 14% of world’s economy (PPP)• Holds nearly 2.8 trillion in foreign currency (2010)• China’s proposal: Asian economic integration EAFTA +

Japan, South Korea + ASEAN

China and the Carolinas

• High-tech textiles to China

• Lenovo Group in Research Triangle & Morrisville

• Production of Haier in South Carolina (Haier is the largest appliance manufacturer in the world)

Issues and Constraints

• Resource needs and costs• Economic slowdown—impact of interdependence• Inflation• Housing bubble and banking woes• Population growth• Political challenges:– Human rights: peasants, ethnic groups, workers– Corruption– Thousands of demonstrations each year

China’s Energy and Resource Challenge

• China is #2 in oil consumption

• By 2020 China will import 70% of its oil needs (now 50%)

• Coal provides 70% of energy• Number of autos in China

expected to increase 5-fold

China’s “Charm Offensive”

• to get resources and political support:– Offer “alternative” to the U.S. human rights

approach– Provide investment without “strings”– Build physical infrastructure and schools– Promote cultural knowledge and exchanges– Example: deal with Kazakhstan (holds 3%of

world’s oil reserves)

“Outreach” to Oil Producers

China’s Population & Workforce Challenge

• China’s population will peak in 2030 and begin to decline

• China’s rapid aging population problem– 2010 Census: people aged 60 or more = 13.3% of the

total population [U.S. 65 or older = 12.9% of population]– 2050: aged population = 1/3 of population– Aged population greatest in rural areas– “4-2-1” phenomenon: one child supporting 2 parents

and 4 grandparents– Increased need for medical care; decline of workers

Human Rights

• Increased personal freedom, up to a point• Crackdown on any attempts of autonomy• Arrest of any opposition or political critics

Rising Hegemony?

• Hegemony = economic, political, ideological and cultural power of a state in the world system– Historically China has not been expansionist BUT it

was the CENTER (中国 ) of an Asian tributary system– Hegemons do not recognize their rise or decline– Key to hegemony is economic power followed by

military power– Hegemons try to change the “rules” of the world

system in their favor: economic, political, cultural

China’s Military Challenge• 3rd largest nuclear power• largest conventional army

& modernizing• Modernizing airforce—

J20• Building an aircraft carrier

—blue water navy capability in the Pacific

• Naval bases in Indian Ocean

• Military spending?– Big increase 2008-2010– 2011 Official: US$91.5 B

South China Sea Issues

• Spratly Islands—oil and territorial control

• Vietnam, Philippines, Malaysia, Indonesia lay claim to the islands

• Recent Vietnamese military exercises & China’s response

East China Sea Issues

• Diaoyutai or Senkaku Islands– Small, uninhabited

islands– Contested by Japan,

Taiwan and Mainland China; historical animosity b/t Japan and China

– Possible oil nearby

China’s Challenge to the U.S.• Intellectual property rights & industrial espionage• Cyber warfare• China’s military in the Pacific—how to maintain

U.S. superiority? Japan’s role?• China’s relationship to non-democratic states &

Russia• the RMB exchange and role in global finance?• Future educational challenge? Engineers?• Transfer of Taiwan to mainland China

Japan’s Troubles

• Domestic problems lack of a dynamic

economy lack of effective

leadership spiraling social costs of an

aging society Rising nationalism and

threat of militarization nuclear power and energy

needs

• Regional challengesChina’s growing

military powerControl of Senkaku

islandsNorth KoreaEconomic

interdependence with China

North Korea: Stalemate and Tensions

What NK wants?• Peace treaty with South

Korea and U.S.• Diplomatic recognition by

the U.S.• Economic aid• Keep its ties to China• Ability to threaten SK

without a major response• Return of defectors

South Korea• Booming economy• Strong military w/ help of

U.S.• President Lee Myung-bak

willing to talk with NK but NK needs to:– Admit its attacks on SK– Cease any future attacks