China and Globalization Three Research Questions on Essay
- Length: 10 pages
- Sources: 7
- Subject: Economics
- Type: Essay
- Paper: #63390502
Excerpt from Essay :
China and Globalization
THREE RESEARCH QUESTIONS ON FACTORS INFLUENCING CHINA'S RISE TO SUPERPOWER STATUS
In evaluating China's prospects for achieving superpower status, especially during this economic crisis, the first research question would take into consideration whether and to what degree the United States is in decline as a superpower, and if it is, then whether China is simply going to achieve superpower status by default. This is what happened to the British Empire after decades of economic decline and then bankruptcy as a result of the Second World War: the U.S. took its place as the leading world power. Certainly the U.S. position seems far shakier today than it did in the 1950s and 1960s or in the 1990s after the collapse of the Soviet Union. Even the predominant economic model that it has been propounding worldwide since the 1980s, that of free trade and free markets is no longer sweeping all before it as it did after the Cold War.
A second research question should consider some of the factors that are holding back or limiting China's potential as an emerging superpower, particularly corruption, nepotism, and an unresponsive, authoritarian political system. To be sure, during any period of rapid economic growth, a certain degree of corruption, bribery and fraud is inevitable, and the Chinese government has taken harsh measures against it -- up to and including the death penalty. Even so, its lack of modern and efficient institutions of law and government are not enhancing its prospects for replacing the U.S. As the world's leading power.
Finally, the third research question would consider the pros and cons in Chinese-Confucian culture in advancing or retarding its prospects in becoming a superpower. On the one hand, China is a very ancient civilization with customs and traditions that are widely shared in the Asian nations, and by overseas Chinese communities. By the same token, this culture is also collectivist, paternalistic and authoritarian, rather than individualistic and innovative like many of the Western nations, which may also become a factor inhabiting its rise.
THE QUESTION OF AMERICAN DECLINE
In 1989-91, with the fall of the Berlin Wall and the United States and its free trade, free market model of capitalism appeared to be triumphant worldwide, but this is not the case today. Because of the massive economic collapse of the past few years and trillions of dollars in government bailouts, resulting in the worst economic crisis since the 1930s, the U.S. no longer appears to be such a confident superpower compared to China and other authoritarian nations (Trompenaars and Hamden-Turner, 2010, p. 6). During the current recession, in fact, the fiscal and monetary policies of John Maynard Keynes have been revived after being largely discredited and ignored for the past thirty years.
This is also true in China, which has been using government spending to stimulate the economy and employment, increased social welfare spending and started formulating policies based more on internal development than overreliance on trade. This type of Keynesianism was also the dominant economic policy in the Western world from the 1945 to the 1970s, and no major depression or financial crash occurred in the period from 1945-73. Even though Keynesianism did not abolish the business cycle, it bottom phases were not so low and its recessions not as long as in the 1930s, the 1980s or the present (Minsky, 2008, p. 160). Governments had to ensure full employment to maintain maximum aggregate demand, while on the supply side taking action to ensure that monopolies and oligopolies did not keep prices artificially high. From 1945-70 "full employment was maintained, real wages rose constantly, economies were relatively stable, and wealth and income inequalities were reduced," which was definitely not the case in the 1920s and 1930s or in the last thirty years (Skidelsky, 2010, p. 164).
In the present recession, the parallels with the situation in the 1930s are all too obvious, and had Keynesian measures of deficit spending, stabilization and fiscal stimulus not been undertaken promptly the entire economic system would have collapsed. These included a Troubled Assets Relief Program (TARP) designed to aid banks and other corporations facing bankruptcy, an $800 billion stimulus passed in 2009, extensions of unemployment and health care benefits, and new regulations on bank holding companies through the Federal Reserve. If they are withdrawn too quickly, a collapse may still occur, along with radical deflation, mass unemployment and extreme political unrest. Given the present weakness and dysfunction of the global capitalist economy, the stakes could not be higher, but the American model of the last thirty years has been widely discredited, even in the U.S. itself and almost certainly in the developing world.
China continues to manipulate the value of its currency to stimulate exports, and therefore does not have a true floating exchange rate. No gold standard has existed in the world since 1971, and the policy of the Federal Open Market Committee (FOMC) under Alan Greenspan and Paul Volcker was to achieve a stable currency anchor and "an expectation of a low, stable trend inflation unaffected by macroeconomic shocks" (Hetzel, 2008, p. 2). Given the huge shock of 2008-09, however, this was no longer possible and under Ben Bernanke, the Federal Reserve has been using its emergency powers to carry out FOMC policies not seen since the crisis years of the Great Depression and Second World War. Its policies have been expansionary and inflationary, lowering the value of the dollar to stimulate the economy, setting interest rates as zero, direct loans and subsidies to corporations, two rounds of Quantitative Easing, and direct purchase of two trillion dollars in U.S. Treasury notes. As with the fiscal stimulus, this Keynesian policy was designed to prevent radical deflation and a general collapse like the 1930s. Under these circumstances, China is running not only a trade surplus with the U.S. bit also become one of its most important creditors, and both of these facts are yet more evidence that America is in relative decline while China is a rising superpower.
Companies like Wal-Mart have become world leaders by taking advantage of low wages in China, and the free trade agreement that allows almost unlimited cheap exports into the United States. Wal-Mart policy of underselling their smaller competitors and driving them out of business and "blitzing out the competition by setting up chain-store 'clusters'" (Klein, 2009, p. 132). By 1998, Wal-Mart had become the biggest retailer in the world by following these policies, with over $137 billion in sales. It always builds stores two or three times larger than its competitors and they buys its products in bulk from low-wage countries like China, reselling at prices with rich smaller retailers cannot match. Suburban malls and discount centers have now drained "community life and small businesses out of the town centers," and smaller retailers cannot even buy their products wholesale for the same price that Wal-Mart sells them retail (Klein, p.134). Sam Walton's style of retailing has also created depersonalized, dehumanized suburban sprawl, with stores that can only be accessed by car, lacking any distinctive design features or individual identities. While all this has been highly beneficial for China and for the Walton family -- which is one of the richest in the world today -- it has also had a very damaging effect on American manufacturing and retailing.
At the same time, China is also expanding its economic influence greatly in Asia, Latin America and Africa in competition with the U.S. And other Western powers. Latin America is also becoming a major source of raw materials and agricultural commodities for China, and also a market its manufactured goods. In the past, the U.S. was the dominant economic power in this region, although today the Latin American countries have more options for trade and investment. China in particular has been on a buying spree all over Latin America during the recent recession, buying up access to the natural resources it needs for its rapidly growing economy. Of course, Latin America still has a great deal of poverty and underdevelopment and does not have large numbers of middle class consumers. Wages are low there, wealth and incomes highly unequal, and this is not likely to change because of foreign trade and investment. In Thailand, Indonesia, Malaysia, Vietnam and the Philippines, the Chinese already have large ethnic minority communities that control much of the trade, commerce and investment in those countries. They are not always a popular minority because of this, and ethnic tensions have always been common in the countries between the Chinese minorities and the majority, and sometimes flare up into violence in Malaysia and Indonesia. Even in Vietnam after the end of the war in 1975, the majority of those expelled as 'boat people' were ethnic Chinese, while the Malays have a type of affirmative action and positive discrimination policy to benefit their own people over the Chinese.
CORRUPTION AS A LIMITING FACTOR FOR CHINA
According to the U.S. Foreign Corrupt Practices Act of 1977, companies are not allowed…