Power Of China From The Research Paper

Length: 15 pages Sources: 15 Subject: Economics Type: Research Paper Paper: #80129768 Related Topics: Investment Portfolio, Ts Eliot, China, Robert Frost
Excerpt from Research Paper :

We must not forget, however, that, like most countries, China's economic leaps are tied to her political security. China's new model shows the world that economic security is as important as military security. Presently, though, based on the economic and political model of the world, China is focused on domestic economic issues and a slow but steady rise to socio-political power and role as a strategic player in global issues (Zakaria 2008 86-94). China has even begun to realize, possibly after the unfortunate events in Tianamen Square, that human rights are often tied to global economic issues. They can perhaps not understand why the West would act so emotionally on issues that occurred, say, during the Olympic Events China hosted, but they are aware that the world's public opinion is worth dollars -- both imported and exported. China still remains authoritarian, however, cracking down on Internet access, access to certain films and literature -- but far less heavy handed and more as a benevolent parent knowing what is right and wrong for its children, and protecting them from that which might be harmful (MacKinnon 2010).

Foreign Direct Investment -- FDI is the investment into production in a country by another country -- either by purchasing a company in the target company or by expanding operations in that country. FDI is done for many reasons -- cheaper wages, tax exemptions, incentives into the market, or the eventual control over an economic sector that has strategic financial implications. Largely because of China, the United Nations Conference on Trade and Development found that FDI grew in 2011 and 2012, after being flat in 2009 and 2010. It would be a misnomer, though, to say that China is the only country investing into the United States, which has typically been the world's largest recipient of FDI, over $200 billion annual, coming primarily from Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the Netherlands, Canada and China. The typical paradigm is that foreigners hold larger shares of their investment portfolios in the United States if their own countries have less developed or varied financial markets, or if their countries have fewer capital controls that make it easier to invest more into U.S. equity and bond market positions (Forbes, 2008). This is particularly true for China because China has relatively underdeveloped domestic debt markets.

Looking at the above figure, we can see some interesting trends, particularly in the last few years. Since 2008, the number of actual deals has risen, until 2012, but the proportion of the deals to the total value of investment varies. For instance, in H2 2010 there were a large number of deals but they did not result in as great a fiscal investment. However, in H2 2012, deals were down, but value fiscally was up. This, in particular, shows

China's New Role -- in comparison to the Western nations, Asians are more strategic and patient. In the late 1950s and 1960s Japan quietly endured disparaging remarks about transistor radios perceived as "cheap" and the phrase "Made in Japan" was not at all complimentary. Of course as their economy grew, they became not only giants in the electronics world, but also in automobiles -- so much so that many Japanese brands are now considered top of the line products (Engelman 2008).

China seeks to attract investment so that it can restructure its economy - moving from low-cost manufacturing, which has been the most rapid and robust in growth over the last three decades, to higher and more value-added enterprises. In addition, as China experiences structural adjustments in the FDI flows, they can further invest more into the United States and move towards market niche control over certain organizations. In particular, as China invests in U.S. real estate and import-export companies, there is a dual benefit that allows them to earn money from their investment into a U.S. company as well as from investments made into China into companies that produce products for the U.S. (China Tops U.S.., 2012).

Similarly, China is aware that they must maintain good relations with the developed world, and acknowledges that they are still developing. Under Chinese scrutiny and influence, Asia is now more stable than it has been in over a millennium. Only two states are unsure about their survival -- North Korea and Taiwan, both inexorably tied to China's dominance in the 21st century. China's ties with the European Union, for instance, are dramatically improving. Exports are up, delegations and diplomatic relations cordial and now that the...


Europe is unique in that it is less threatened by China because it is no longer an Aisan power. For the European Union, the most fundamental objectives are to court China as an investment and trade partner, to have China act as a responsible and coherent player in world affairs, and to take responsibility to help maintain global security and a strategy of peace (Crossick and Reuter 2007).

The United States, of course, is a major importer of Chinese goods which, in turn, ties China to the economic health and recessionary policies of the American Administrations. China has a vested interest in seeing economic stability and has been investing heavily in U.S. interests. While many in North America tend to focus on China's human rights record and the authoritarian nature of the Party mechanism, there is cautious optimism about the future. Scholars and politicians are unable to form a consensus on whether the West can cope with this future -- knowing that at present, the U.S. And China still remain the dominant powers in Asia. As China's power grows, does this then constitute the strategic threat of a modern China? (Blankert 2009).

China's Internal Issues- as we noted, the economic health of a region is tied to several aspects of its societal, cultural, and demographic/psychographic make up. This is also true of China, in which the success of her economy over the past three decades still leaves Chinese leadership with a number of internal issues that affect the way foreign relations are managed. Chief among these problems is the holdovers of state ownership within the economy. These monolithic entities still employ over 25% of the urban Chinese workforce and are typically not profitable. The Chinese government, though, facing massive unemployment and social unrest, continues to prop up these organizations, at least until workers can be organized to subsume control over the businesses and turn them into viable market operations (Do Rosario, 1993, p. 15).

Chinese population growth is yet another problem that extends into the economic and political sphere. The continued population explosion taxes resources (from social and educational to industrial), creates unemployment, and diverts needed capital investment from industry into less economically viable sources such as housing. Similarly, more mouths to feed engenders higher expectations, more personnel must be trained to supply these services, and the loop continues (Peng and Guo 2000 185-92).

Because China is such a vast country, the increase in industrialization continues to place a huge burden on energy needs. Both to maintain and increase its agricultural production and to modernize and rebuild outdated industrial infrastructures require extremely high amounts of fossil fuels. China's cities now have more drivers than ever before, with the demand for personal transportation also continuing to rise. China, however, is running out of oil and must depend on Middle Eastern imports. China depends a great deal on coal reserves, which may be vast, but are labor intensive to remove, extremely environmentally unfriendly, and not very efficient. This results in two conundrums: China is also dependent upon oil reserves in other countries (which may help stabilize the region), and China's rapid development has environmental consequences. China, however, gives lip-service to its environmental issues but makes the cogent point that the Western world already had its Industrial Revolution, and therefore hundreds of years with no environmental regulation (Yu 2008 138-42).

Strategically, China expects continued economic development to provide the key to enhancing political and natural power. China must, however, manage this growth carefully to avoid inflation, price and wage disparity, and a sense of divergence between rural and urban populations. China is very well poised for global economic integration, but sees efforts of the West, particularly the United States when under a Republican administration, to attempt the imposition of economic principles and political democracy. This, China believes, could be destabilizing to the developing world in the long-term, and a threat to China's own political regime (How China Views America 2010).

The reality of China's growth and global importance has not gone unnoticed in the upper eschelon's of the Western democracies. Australia and New Zealand, like Europe, are cautiously optimistic about China's emergence as an economic superpower. Geographic proximity makes China an idea trade partner, and relations continue to improve and move in that direction (Fung 1997). The EU is trying desperately to retain…

Sources Used in Documents:


China Tops U.S. As Investment Target. (October 2012). Reuters. Retrieved from: http://www.reuters.com/article/2012/10/24/us-china-us-investment-idUSBRE89N0EZ20121024

Global Security Engagement: A New Model for Cooperative Threat Reduction (2009), National

Academies Press, Washington, DC. Retrieved from: http://www.nap.edu / openbook.php?record_id=12583&page=R1

How China Views America (2010). Globalresearch. Retrieved from:
http://www.cia.gov/library/publications/the -world-factbook/geos/ch.html .
Feitler, David. (January 2012). Will China Outsmart the U.S. BLOINC Retrieved from: http://bloinc.ninesigma.com/post/2012/01/11/Will-China-Outsmart-the-U.S.-.aspx.
Forbes, K. (October 2008). Why Do Foreigners Invest in the United States? Federal Reserve Bank of San Francisco Working Papers. Retrieved from: http://www.frbsf.org/publications / economics/papers/2008/wp08-27bk.pdf
Retrieved from: http://www.csmonitor.com/World/Asia- Pacific / 2010/0917/Why-some-economists-see-a-looming-U.S.-China-trade-war
From: http://connection.ebscohost.com/c/articles/9410267600/prying-open-secret-army
http://www.washingtonpost.com/wp-dyn/content/article / 2008/08/19/AR2008081902256.html
Trifunov, D. (2012). China Surpasses U.S. When it Comes to Foreign Direct Investment. Global Post. Retrieved from: http://www.globalpost.comdispatch/news / business/121026/china-surpasses-us-when-it-comes-foreign-direct-investment
Von Mises, L (2008). Economic Causes of War, Retrieved from: http://mises.org
Wan, M. (2008). Engaging China: The Political and Geopolitical Approaches of the United States, Japan and the European Union. The Asia-Pacific Journal: Japan Focus. Retrieved from: http://www.japanfocus.org/-ming-wan/2576

Cite this Document:

"Power Of China From The" (2012, October 16) Retrieved July 3, 2022, from

"Power Of China From The" 16 October 2012. Web.3 July. 2022. <

"Power Of China From The", 16 October 2012, Accessed.3 July. 2022,

Related Documents
China's Growth and Its Effect
Words: 3337 Length: 10 Pages Topic: Economics Paper #: 19567311

China's Rise: The strategic Stake While we have so far discussed the positive economic impact of a growing China from the perspective of Australia, there are also some concerns about China's growing stature and the changing strategic balance. As a communist nation, the U.S. And its allies including Japan have always viewed China with caution. China has repeatedly claimed that it is fully committed to peaceful economic growth as Zha Peixin,

China and Europe on Trade Religion and Others
Words: 592 Length: 2 Pages Topic: History Paper #: 17749723

China and Europe have taken divergent views of religion, commercial exchange, and politics. However, there have emerged various points of commonality and intersection. Chinese and European society have both evolved through periods of feudalism and "warring states," and both have generally preferred centralized systems of power. China and Europe have both participated robustly in global trade, and have each developed profitable and enduring routes of trade that facilitate the movement

China's Cultures and Politics Affect
Words: 2248 Length: 8 Pages Topic: Government Paper #: 6803629

The fact that communism still dominates affairs in the country can limit or discourage foreign investors. This is probably one of the main reasons for which large corporations are hesitant about investing large amounts of money in China (Weatherbee & Emmers 42). The masses no longer express interest in U.S. cultural values because it appears that the U.S. has experienced significant problems consequent to the 9/11 events. This enabled China

China's Influence in Africa Though
Words: 3416 Length: 10 Pages Topic: American History Paper #: 65527726

This is true not only in African countries with "dictatorial or authoritarian regimes but in fact China's […] commonly shared roots with African nations […] has struck a chord even with those democratically elected leaders in Africa," allowing China access to even those countries that might at first glance appear to natural allies to the United States due to their democratic form of government. Thus, Africa's colonial past has simultaneously meant

China and Globalization Three Research Questions on
Words: 3146 Length: 10 Pages Topic: Economics Paper #: 63390502

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

China Sample the China Fallacy Provides an
Words: 1277 Length: 5 Pages Topic: Military Paper #: 10329216

China Sample The China Fallacy provides an interesting perspective between American perception and that of economic reality. The book illustrates, how in many instances, a disconnect between truth and reality has the potential to create unnecessary conflicts between parties. The China Fallacy is no different in this regard. Within the book, the author Donald Gross illustrates how the notions of security, economic turmoil, and political instability are skewed within the general