The Rise of China and The Rise of China and Its ImplicationsIts Implications

Fei-Ling Wang, Fei-Ling Wang, Ph.D.Ph.D.ProfessorProfessor

Sam Nunn School of International AffairsSam Nunn School of International AffairsGeorgia Institute of TechnologyGeorgia Institute of TechnologyAtlanta, GA 30332-0610, USAAtlanta, GA 30332-0610, USA404-894-1904; 404-894-1900 (fax)404-894-1904; 404-894-1900 (fax)fw@gatech.edufw@gatech.edu

2005-2006Fulbright Scholar and Visiting ProfessorYonsei University, KoreaCouncil on Foreign Relations-Hitachi FellowUniversity of Tokyo, Japan

China’s RiseChina’s RiseImpressive Record:Impressive Record: 9.6% annual growth rate since 1979; 2-3 times the LDCs 9.6% annual growth rate since 1979; 2-3 times the LDCs

and 3-4 times the OECDand 3-4 times the OECD More than 10% annual growth since 2003More than 10% annual growth since 2003 4th largest economy; (or 2nd by PPP)4th largest economy; (or 2nd by PPP) $500+ billion FDI; $860+ billion foreign currency $500+ billion FDI; $860+ billion foreign currency

reserve; largest foreign purchaser of US T-bondsreserve; largest foreign purchaser of US T-bonds

Great Potential:Great Potential:38-42% savings rate38-42% savings rate760 million cheap labor (2-10% of the US average wages)760 million cheap labor (2-10% of the US average wages)Developmental stateDevelopmental statePoised to over take the US in 20 years(?)Poised to over take the US in 20 years(?)

GDP in 2003 World(by PPP method) Ranking(in million dollars)

_______________________________________________USA 10,871,095 1China 6,435,838 2Japan 3,582,515 3India 3,096,239 4Germany 2,279,134 5France 1,632,119 6United Kingdom 1,606,853 7Italy 1,559,321 8Brazil 1,371,655 9Russia 1,318,827 10Canada 963,550 11Mexico 934,553 12Spain 915,072 13Korea, S. 858,028 14________________________________________________

National GDP Sizes:National GDP Sizes:Ranked by the CIA Ranked by the CIA

1990 2000 2000 Economic Militaryscores ranking ranking

______________________________________________________USA 1 1 2740 1 1Japan 2 2 1851 2 2Canada 4 3 1608 5 7Germany 3 4 1570 4 9France 5 5 1525 6 6UK 6 6 1465 7 3

China 8 7 1462 3 4Russia 7 8 1297 8 5Australia 10 9 1282 9 10Italy 9 10 1243 10 11India 11 11 945 11 8Brazil 12 12 919 12 13South Africa 13 13 782 13 12

National Powers:National Powers:The Chinese RankingThe Chinese Ranking

ProblemsProblems

Expansive growth v. intensive growth Expansive growth v. intensive growth Lack of innovation: How and why?Lack of innovation: How and why?

Taiwan issueTaiwan issueIncome, urban-rural, & regional inequalitiesIncome, urban-rural, & regional inequalities

250-400 million under- or unemployed 250-400 million under- or unemployed Trust, credit, and rule of law Trust, credit, and rule of law A repressive society in the Internet age A repressive society in the Internet age

58-74-87 K protests/riots in 03-04-05 58-74-87 K protests/riots in 03-04-05 Environmental destruction: water and TibetEnvironmental destruction: water and TibetCapital flight & a broken banking systemCapital flight & a broken banking system

Make it or Break it:Make it or Break it:The Key FactorsThe Key Factors

Governance & Socio-political StabilityGovernance & Socio-political Stability The CCP one-party regimeThe CCP one-party regime

Will the economy boom forever?Will the economy boom forever?

What to do about the 250+million What to do about the 250+million underemployed? underemployed? External PeaceExternal Peace

The explosive Taiwan IssueThe explosive Taiwan Issue

What the current world leaders will do?What the current world leaders will do?

ScenariosScenariosLatin Americanization?Latin Americanization?

Another Japan? (Prior to or post WWII)?Another Japan? (Prior to or post WWII)?

ImplicationsImplications Great opportunities and significant benefitsGreat opportunities and significant benefits

New engine of world’s economic growthNew engine of world’s economic growth Alternative norms and institutionsAlternative norms and institutions Burden and cost-sharing-Public good provisionBurden and cost-sharing-Public good provision

Challenges and risksChallenges and risks Competition: jobs, market, energy, raw materialsCompetition: jobs, market, energy, raw materials

Buying oil, selling shoes, and pirating Gucci and PradaBuying oil, selling shoes, and pirating Gucci and Prada Adaptations and clashes of values and ideas Adaptations and clashes of values and ideas

Westphalia v. Tian-xiaWestphalia v. Tian-xia Uncertainties and instabilities - new systemic Uncertainties and instabilities - new systemic

challenger?challenger?

Security ImplicationsSecurity Implications

Big Guns and More MissilesBig Guns and More MissilesAt least double digit growth of military budgetAt least double digit growth of military budgetComprehensive military-industry complexComprehensive military-industry complexFocused development of offensive capabilitiesFocused development of offensive capabilities

New PLANew PLAProfessionalizingProfessionalizingSolid CCP controlSolid CCP controlNew strategiesNew strategies

Immediate implicationsImmediate implicationsIn the Taiwan TheaterIn the Taiwan TheaterSea lanes and territorial disputesSea lanes and territorial disputesExporting weaponsExporting weapons

Chinese Foreign PolicyChinese Foreign Policy

Conservative & reactive natureConservative & reactive nature Good neighbor and enriching Good neighbor and enriching

neighborsneighbors Pro status quoPro status quo

For how long?For how long? Post-Post-taoguang yanghuitaoguang yanghui already? already?

Growing assertiveness and new Growing assertiveness and new demandsdemands Panda, dragon, or wolf?Panda, dragon, or wolf?

China’s 3-P MotivationChina’s 3-P Motivation

PreservationPreservation

ProsperityProsperity

PowerPower

PLA, UN WTO

Prosperity Trade Power/Prestige

Preservation

Political reform

Taiwan US

Three-P Incentive Three-P Incentive Structure and Structure and Samples Samples

Scenarios of Beijing's Motivations__________________________________________________________________________________

Scenarios Three Incentives Implication Uncertainties

Political Economic Nationalist China's foreignpreservation prosperity power pursuit policy

1. Status quo Threatened but Top priority Increasing but Risk-averse &manageable controlled conservative For how long?

2. Democratiza- Acute threats Top priority, Strong More active Leads totion & challenges less political surge & risk-taking scenario 3 or 5?

3.Democratized No longer No more Strong More assertivesuccessfully a concern urgency & demanding Ally of US?

4. CCP-led Not much No more Strong More assertive world power a concern urgency & demanding Challenger to US?

5. Regime Failed Ignored & Desperate Aggressivecollapsed & chaos acrificed & militant Worst scenario?

_____________________________________________________________________________________

Yong Deng & Fei-Ling Wang eds., China Rising: Power and Motivation in Chinese ForeignPolicy, 2005.

Future: Three ChoicesFuture: Three Choices

To Hail Beijing as a New LeaderTo Hail Beijing as a New Leader

To Subdue the PRC: External ConstraintsTo Subdue the PRC: External Constraints

To Mold and Free China: Internal To Mold and Free China: Internal ConstraintsConstraints

Mongolian Options:Mongolian Options:Some tentative thoughtsSome tentative thoughts

Forward to the pastForward to the past NeutralizationNeutralization Building alliances with other great Building alliances with other great

powerspowers To reconfigure the regionTo reconfigure the region Help to transform and constrain China Help to transform and constrain China

peacefullypeacefully

Some further readingsSome further readingsBy Fei-Ling Wang Organization through Division and Exclusion: China's Hukou

System, Stanford CA: Stanford University Press. 2005. China Rising: Power and Motivation in Chinese Foreign Policy,

co-edited with Yong Deng of US Naval Academy, Lanham, MD: Rowman & Littlefield, 2005..

In the Eyes of the Dragon: China Views the World, co-edited with Yong Deng of US Naval Academy Lanham,MD: Rowman & Littlefield, 1999.