While this investment has flourished to this point despite strained cross-strait relations, deterioration in the China-Taiwan relationship would threaten Taiwanese investment in China. Taiwan's firms have already been warned by their Ministry of Economic Affairs to increase their level of risk assessment on account of increased risk that China's government poses to Taiwanese investments (Central News Agency, 2007). More important, however, are the damaging effects on total FDI that deterioration in China-Taiwan relations would have. While Hong Kong is the largest source of FDI, much of that is Western and Taiwanese money that is merely funneled through Hong Kong intermediaries, rather than bona fide HK-sourced capital (Ibid). Some of this money may even be China-sourced (Hou, 2001). If China loses substantial amounts of foreign investment as a consequence of turmoil with regards to Taiwan, its economic growth could stall. However, this remains a lower concern than some of the other threats, in particular as Taiwan has moved to a less adversarial approach to cross-strait relations (Lai, 2009). While this has not resulted in new, meaningful dialogue, it is a policy geared towards the maintaining the status quo. China has the capability for domestic investment at this point in its economic development. While it remains dependent on FDI for growth and foreign currency to purchase energy and mineral resources, it has built up reserves that would defray the impact of a decrease in FDI on account of the Taiwan issue.
China's economic growth faces serious challenges in the future. The most important of these are its lack of resources, in particular water. The country has strong foreign reserves that could help it offset fuel, mineral and even food shortages or a decline in FDI, but the nation has little defense against a shortage of water. Water shortages in the short-term will create goal conflicts between the needs of industry and the needs of a hungry populace. In the long-run, a shortage of water could devastate the northern half o the country, leading to massive starvation and internal displacement. Social upheaval -- already a concern for the CPC -- could threaten the regime and all of the infrastructure that depends on it. This includes the entire economic system, which to a significant extent is a fabrication of Communist Party policies.
For the next few decades, if China can resolve its water issues, the economic miracle is likely to continue. The large stock of foreign reserves will help alleviate resource shortages. The Communist Party is unlikely to jeopardize...
A generation from now, however, the nation is likely to be faced with multiple, converging catastrophes. Water and food shortages and income disparities will lead to increased social unrest. Internal unrest, particularly among the poor, mobile labor force represents a bigger threat to political stability than do external factors like Taiwan. Without political stability, China will a near-impossible time managing its resource consumption, which will only serve to increase instability. Thus, it appears that the China economic miracle, while sustainable in the short-term, will eventually collapse as the nation's water and food supplies dwindle to unsustainable levels, particularly in light of the goal conflict between food and industry.
Xiong, Tong. (2009). Beijing Reports 80% Blue Sky Days in First Quarter. China View. Retrieved August 2, 2009 from http://news.xinhuanet.com/english/2009-03/31/content_11108454.htm
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Kejun, Jiang. (2005). Management of Energy Resources in China. Energy Research Institute/World Bank. Retrieved August 2, 2009 from http://siteresources.worldbank.org/INTDECABCTOK2006/Resources/Kejun_Energy_China.pdf
No author. (2009). International Energy Outlook 2009. Energy Information Administration. Retrieved August 2, 2009 from http://www.eia.doe.gov/oiaf/ieo/coal.html
No author. (2004). Phosphorous Chemicals -- Shortage of Resources Promotes Industrial Reformation. China Chemical Reporter. Retrieved August 2, 2009 from http://www.highbeam.com/doc/1G1-117037123.html
Qiang, Xiao. (2009). Province Supplying Beijing Water Drying Up: State. China Digital Times. Retrieved August 2, 2009 from http://chinadigitaltimes.net/2009/03/province-supplying-beijing-water-drying-up-state/
Larmer, Brook. (2008). Bitter Waters: Can China Save the Yellow -- its Mother River? National Geographic. Retrieved August 2, 2009 from http://ngm.nationalgeographic.com/2008/05/china/yellow-river/larmer-text
No author. (2009). Country Profile: China. British Broadcasting Corporation. Retrieved August 2, 2009 from http://news.bbc.co.uk/2/hi/asia-pacific/country_profiles/1287798.stm
Graham, Edward M. & Wada, Erika. (2001). Foreign Direct Investment in China: Effects on Growth and Economic Performance. Institute for International Economics. Retrieved August 2, 2009 from http://www.iie.com/publications/wp/01-3.pdf
Hou, Jack W. (2001). China's FDI Policy and Taiwan Direct Investment (TDI) in China. California State University Long Beach. Retrieved August 2, 2009 from http://www.bm.ust.hk/~ced/Jack%20W%20HOU.pdf
No author. (2007). Taiwan FDI, China Investmetn Reach Record Highs in 2006. Central News Agency. Retrieved August 2, 2009 from http://investintaiwan.nat.gov.tw/en/news/200702/2007020601.html
Lai, Shin-Yuan. (2009). The Current Stage of Cross-Strait Relations and the ROC Government's Mainland China Policy. Mainland Affairs Council. Retrieved August 2, 2009 from http://www.mac.gov.tw/english/english/macpolicy/980716e.htm
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He said that the application for Hong Kong Airlines was to list as a so-called "red chip" (overseas registered Chinese company) that had been approved by the State Council. They way, Grand China, which just two years ago called off a share sale plan due to the global economic crisis, is also the parent company of China Xinhua Airlines, Changan Airlines, and Shanxi Airlines ("Two airlines target," 2010).. Hong Kong
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Other credit card issuers are proceeding more cautiously. MBNA, for example, the second-biggest card lender in the United States, after Citibank, said in April that it had set up an office in Shanghai to study the market (Kingson, 2004)." Many credit card providers are waiting until the restrictions are lifted in China before determining whether or not to open. It is important to study the impact that the lifting of
Origins, History of the IMF The International Monetary Fund was first conceived between July 1-22, 1944, at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The conference was attended by representatives of 45 nations, which were called together in order to plan and lay the groundwork for a cooperative economic framework to solve global financial crises before they occur. One key reason for the conference was to
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