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Conferences

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Conference 07/07/2015: CHINA’S ECONOMIC, SOCIAL AND POLITICAL ENVIRONMENT 
Professor YANG Laike, faculty of Finance & statistics, ECNU

 

Introduction: 
-    In China : everything goes fast (building/growth/reforms ...)
-    Trends of last 3 weeks: a kind of financial crisis, crash in Shanghai (in August stock market dropped of 8.5% in one day) 

 

Part I: The current situation of Chinese economy

 

-    1978: Revolution in the economy (initiated by Deng Xiaoping : opening of SEZs to boost exports + attract FDIs) gradual opening to the world and capitalism
-    Before: capitalism = Evil --> choice of SOCIALISM
-    Now: China is one of the most capitalist economy, even more than France! Nothing is free. It’s getting more expensive. The Chinese economy is growing extremely fast.

 

Economic Performance from 1980 to 2014 

                                      1980       1990       2000    2011-2014
GDP Growth rate                9.6%      10.3        9.8        7.4-8.2
GDP per capita (PPP)         In 1980 = 250$             In 2014 = 12900$
Export Growth Rate             6%        12%        >20%      10%
FDI inflows (Billions $)         1.5          29          20           100
FDI Outflows (Billions $)       0.04      2.49        44           100+
Savings Rate                     >35%    >38%           40%-50%
External Debt (%GDP)          8            16          13            9.5

Poverty Reduction                       >600 million since 1978

 

-    As opposed to France, China is not a welfare country; there is neither social security nor pensions that’s why people have to save money for the future (saving rate 31% in average). Primary education is free but a good education is very expensive. 
-    Culture is also important. Confucianism gives values : “you should never spend more than you can earn”
-    Poverty reduction = improving during the last decades 

 

Some contradictions 
-    Terracotta warriors --- 5000 years.
-    The traditional Chinese Garden in Suzhou --- over 1000 years.
-    Shenzhen --- 30 years, Pudong --- 20 years.
-    Most skyscrapers in Shanghai were built after 1995.

Before 1992, China didn’t have subways. Today it boasts of the most extensive network in the world (1000 km)

High-Speed railway network : 
-    By the end of 2013, China has 13 000 km high speed railway, it's the biggest network in the world with a  speed between 250km/h and 350km/h. 
-    By 2020, its lenght is expected to double 
-    By 2030, it is expected to reach 42 000 km.
It’s even possible to schedule a day trip between Shanghai and Beijing (4h30).

BUT in Shanghai, many people are still very poor, although there are no slums but very crowed apartments.

“In China, everything is possible, nothing is easy.” --> values hard work and determination

Some examples to understand these contradictions/contrasts/inequalities: 
•    new technologies in China : Taobao.com : “Ali Pay” (= Paypal in Europe) = online currency . You can pay for everything, but there are requirements,regulations : you have to have an office.
•    A building (Zhangsha) with 200 floors was planned to be built in 15 days ! Finally, it was too risky and there were “just” 49 floors.
•    A significant picture: a man who has no decent job. He doesn’t come from Shanghai. His son may not go to school. There is some discrimination due to the unique Chinese system : HUKOU. It is an identity system linked to the administrative area you are from. It determines what king of education or healthcare you can get --> very unequal (better in the biggest cities)

 

Macroeconomic situation after the Crisis
-    Growth is irregular.
-    In China, there are economic simulation plans. A lot of money is spent in short time. Risk = INFLATION which pushes up the price (cf. CPI : Consumer Price Index) and increases the Interest Rates

 

Part II : The economic and social challenges

 

1)    Economic structure : rebalancing the economy
-     It’s a long-term challenge. China needs a balance between consumption, Investment and Net Export. Domestic consumption is not enough (everybody saves money) :it is not good for China. (Problems are security, education…)
-    Manufacturing Industries VS services: Contrary to France or USA, services are not the major contributor of China’s GDP. The Chinese economy depends on the manufacturing sector --> dependant on the outer world

 
2)    Income disparities
-    Overall Chinese people benefit from the fast economic growth, however the urban-rural income disparity has been increasing recently. 
-    Unlike in France, there is no middle-class

 

3)    Macroenomic stability : goes fast !
-    Stock market – still far from a mature market. Problem = not well regulated! Accounts for Shanghai's comparatively low importance in the stock exchange sector. 
    •    Speculation VS investment : 
In China speculation can make no sense (Anecdote: in 20 years : $5000 --> $6000). It is because of Shanghai A share index which changes too fast or doesn’t change! Today: from 2013 to June 2015, it increased very quickly and last 3 weeks it has dropped for 30%.
    •    Real estate market : “like crazy” : 
Cf. housing prices in Shanghai: 2000: 2000-5,000 RMB/M² ; 2013 : 35,000-200,000 RMB/M²
    •    Transparency (false information exploded) 
    •    Policy influence
    •    Less supervised
Consequences: Chinese people save money more and more (even for their kids)

 

4)    Intellectual property rights
IPR infringement: not only hurt the foreigners 
•    Between 15% and 20% of the products made in China are fake, accounts for around 8% of China’s Annual GDP
•    It is estimated that China’s domestic industry lost about $1.5 billion to piracy in 2006. About 50% of pirated films in China are Chinese movies.
Copies? Where are they?
•    From Xiangyang market to 
     o    Science and technology museum; Huaihai Rd, Hongmei Rd, Fabric market
     o    Beijing: silk market 
•    “Shanzhai” Industry

 

Lacoste = French family name 
NuoManDiEYu = Normandy Crocodile =  kind of forgery of the French brand 

•    The lions that barks 

 

5)    Labor issues : labor cost and labor protection
- Now labor cost is increasing it is the end of "cheap China". 
- On average, the migration workers work 6.3 days/week, 8.8 hours/day. 33% work more than 10hours per day.
- >50% migration workers do not have formal contracts.
- Most cities do not have social security for migration workers (due to the Hukou system) 
- Average wage : 2049 RMB/month (about 325$)

 

6)    Pollution = BIG ISSUE in China.


7)    Demographic problems: China’s Achilles’ heel?
-    “Getting old before getting rich”
-    Disaster of one child policy: “only but lonely” children suffering from isolation in the family (noone to play with / to confide in ...)
-    Who looks after our parents: the empty nest problem (4-2-1) (too many people to look after for only one person)
-    Young men and women: those lonely hearts (lack of women in the society)
-    Abortion if a woman is pregnant with a girl

 

Part III: The economic and social challenges

 

•    New Focus
  -    Rebalance the economy
  -    Technology and innovation (to sustain growth // USA and silicon valley)
  -    Environment

    The New Normal (term coined to describe China's current situation)
  -    Growth rate (5-7%)
  -    Services contribute more than manufacture
  -    Dependency on Real Estate
  -    New slogan: “stabilize the growth, adjust the structure, and balance the trade” 

•    Social security 
  -    Cover all rural areal
  -    Urban and rural Hukou (harmonisation policies)

•    Fighting the Corruption
  -    “Naked officials” some politicians or business men send their money and family abroad so that they have a back up plan if hings turn bad for them. 
  -    The emerging middle class and the new capitalists

•    SME Financing
  -    State Owned by Enterprises and State Owned Banks
  -    SME financing difficulties

 

 

 

Anchor 2

Conference 08/07/2015

Social Transformations and Major Issues in Chinese Society: Changes and Continuities

by Dr. Limei Li

 

   The key word for China’s history is transformation. In the last three decades, this country has been through a lot of changes, and made a lot of progress. In 2013, China became a high human development country. The life expectancy increased from 42 year old in 1960 to 75 year old in 2012. The significance of Chinese emergence can be compared to Italian Renaissance or British Industrial Revolution. But China is still in the progress of catching us.

 

History

   China used to be the largest economy and a leading country in the world. But after the war with the United Kingdom, it became a British colony and the Chinese society started to decline during the ascendance of western countries.

   Mao Zedong won the civil war, and restored peace but set up a strict control of Chinese people. After that Deng Xiaoping reopened the country to the outside world which permitted a high increase of China’s GDP percentage of the world total. During the second half of the 20th century, the population exploded. Thereby, the government set up the one child policy in 1978.

 

Geography

   China is cut by the “Aihui-Tengchong Line” which goes from north-east to south-west China. Only 6% of the population lives in the western part of China, and 4, 3% of China’s GDP comes from the western side.

 

Economic transformation

   China is a big agrarian country. This sector was the largest employer with 37% of the workers in 2010. But the service sector is more and more growing up. Here are the proportion of workers by sector in 2013:

 

Demographic transition

The scale, scope and speed of Chinese demographic transition make it special. In fact, between 1964 and 1974, over two hundred million people were added to the initial population. Today we can say that China has completed its demographic transition. As a consequence of industrialization, China reached a low death rate and a low fertility rate, which leads to a slow demographic growth. In 2014 Chinese woman had an average of 1, 55 children.

The Chinese population is getting older and older, the working population is increasing which can be a problem because China is becoming old faster than it is becoming rich.

 

Urban transformation

In 2011, China crossed the 50% mark of urbanization. It’s speed, scale, spectacle, sprawl, segregation, sustainability make it unique. From 1978 to 2010, the number of cities of one million inhabitants increased from 29 to 140.

 

Transition from low to high inequality

China is the fourth country with most inequalities in the world. Its Gini coefficient rose from about 0, 3 in the early 1980s to more than 0, 45 in the 2000s. In the last three decades, low incomes increased but high incomes increased much faster. We can also notice an urban-rural divide. In fact, the urban incomes represent about three times the rural incomes.

 

China’s mobility

In 2014, 18, 5% of the Chinese population moved to the city. The migrants are divided into two kind of migrations: de facto population migrants and hukou migrants, with a wide gap between those two categories. This phenomenon caused a lot of social disaster like left-behind children and migrant children who are about 60 million.

The hukou system prevent children from going to school anywhere else than in there hukou city. And it is very difficult to change a hukou. So migrant children have to leave cities to go back to their hukou city to attend senior high school.

 

Education transition

 China has become a much more educated nation. The average is about 8 years of education in 2010 for women and 9 years for men. The 9-year compulsory education system became universal around 2010.

   In 1999, China decided to shift from an elite to a mass higher education system. The college entrance exam (Gaokao) increased a lot between 1977 and 2012.

   We can also notice an urban-rural divide in education.

 

Chinese youth

   Chinese youth is divided into categories like post 80s people (17% of the population) or post 90s people (13% of the population). The ratio of only child among young generation is different between rural and urban population: 18, 9% of only child in rural area and 61% in urban area.

   Marriage rate remains high in China: it is cultural, it is a family duty.

   China becomes more and more individualized: for example, the percentage of homeowners increased from 20% in 1980 to 75% in 2012.

 

So the question that can be asked today is : could China be an alternative model to develop a market economy, and a singular cultural society ?

Anchor 3

Conference 13/07/2015 : China's place in the world

by Professor ZHANG Tiejun

 

 

China is reemerging as a soft power country

 

Two series of historical scenes:

  • Britain was the most powerful country in the world, and Japan was interested in China so they took contact with each other. In the XVII century, Britain took contact with China.

  • The end of 18th century: a British delegation visited China (the then Qing Dynasty) – “Central Kingdom” self-sufficient.

  • 1840: The British Empire waged war against the Qing Dynasty – Starting the “century of humiliation” in early modern Chinese history

  • 1982: British Prime Minister Thatcher met Deng Xiaoping on Hong Kong future – sliding on the stares – fall of British Empire.

  • 2014: The UK was the 1st EU member to join AIIB (Bank in China)

 

Japan (the once most powerful country in East Asia)’s contracts with China:

  • The 7th century: Japan sent dozes of delegation to China (Tang Dynasty)

  • The 16th century: Japanese pirates raided southeastern coast of China

  • The end of the 19th century: to challenge the dominant position of China in East Asia, Japan waged war against China

 

Constructing blocks of the Chinese identity:

  • The central Kingdom Complex

    • Generated by the ancient history when China was the center of East Asian civilization,

      • Implying that the Chinese elites see the country’s rise […]

  • The strong China Complex:

    • Resulted from Chinese “humiliated” experience in the early modern era

      • Which has been a crucial impetus behind the strong will of the Chinese elites and ordinary people to catch up the West and Japan.

  • International Changes:

    • Disappearance of Sino-US-USSR strategic triangle and the problem between the US and China (from the end of 1980s onward)

  • + Contemporary factors : International and domestic changes in the post-Cold War era

 

Four faces of the officially constructed national identity of China:

These would shad lights on the current Chinese foreign relations and foreign policies.

 

FACE 1: A socialist country with Chinese characteristics

Two dimensions of Chinese socialism = market economy and authoritarian regime :

Three powers at work:

  • The unchallenged political power of the CCP

  • Economic power is allowed to be share

    • Between the center and localities

    • Between the government organizations and enterprise

    • And even between Chinese firms and foreign firms

  • The power of traditional Chinese culture

 

FACE 2: A sovereign state in the strict Wesphalian sense

Especially territorial integrity and “non-interference” policy

 

FACE 3: A developing nation in the globalization era

  • China is a poor and developing country

  • “Globalization is a double-edged sword for developing countries like China”

  • Thus “development as the hard fact” (Den Xiaoping)

 

FACE 4: A world power asserting its position in the region and the world

  • The World Power attribute

    • China is half a world power ( with some WP indicators)

    • China needs WP mentality

    • China should secure its world power interests in the region and in the world 

 

The Asian model (evolved between 1970s and 1990s)

  • Asian value: collectivism, and state sovereignty (“national rights”) over human rights (individual rights)- Inn contrast to humanitarian intervention

  • Active state intervention in economic development

  • Authoritarianism (conceived as conducive to political stability)

 

The China model:

  • Pragmatism

    • The cat theory

    • “Practice is the sole criteria for truth”

  • Experimentalism

    • “Feeling the stone while crossing the river”

  • Gradualism (as contrast to “shock therapy)

  • Rural reform first, followed with urban reform

    • In urban reform, starting from SEZs

  • Selective learning

    • Learning from the American new liberal economic model (the central role of the market; but not so much the ownership

    • Learning from the Singaporean model of civil servant system

    • Learning from some European countries (Spain, UK), the medical care system, etc…

  • Political reforms lag far behind economic

 

 

The case of South China Sea: TERRITORAL POLICY OF CHINA

 

South China Sea territorial disputes are essentially between China on the one hand and Vietnam/the Philippine on the other, with the US supporting Vietnam and the Philippines. Therefore, it is also a competition between the US and China.

 

Different priorities of China and Russia

  • Point 1: Respective and military endowment and potentials of the two countries.

    • Economically, China is the second largest economy of the world and its GDP (as of 2013) was […]

    • Militarily, Russia maintains the largest nuclear arsenal and a formidable conventional force especially its land force (Crimea is primarily threatens for land force […]

  • Point 2: Different degrees of interconnection to the world economy

    • As compared to Russia, China’s much stronger position in the world economy appears to be a double edges sword,

      • In relation to its territorial disputes especially, that of maritime ones.

      • Being a more influential player in the world economy, China’s economic interdependence with other big economies of the world is also substantially greater than that of Russia.

 

Russia’s Strategic Priorities

  • Both China and Russia are re-emergent powers, but their respective re-emergence is with different nature.

  • Putin once said that the greatest geopolitical tragedy of the [….]

 

China’s Strategic Priorities

  • China’s re-emergence, on the other hand is from far more remote ancient time, and president Xi Jinping’s “China dream” is

    • Essentially for the rejuvenation of the Chinese nation

    • Implicitly implying making China once again the center of East Asia.

 

SCO = (Shanghai Corporation Organization)

  • As such, the Chinese re-emergence does not lead to a rush for territorial expansion but imply a longer term historical vision to become a true world power of multi-dimensions

  • Thus China’s highest strategic priority is still maintaining a peaceful environment conducive to China’ economic growth.

 

China’s dilemma

  • China’s rapid rise vs. increasingly difficult position of China in South China Sea

  • China proposing “shelving disputes and joint development” vs. Vietnamese “self developing” South China Sea Oil and gas.

  • China’s insistence on bilateralism vs. US urge for “internationalization/multilateralization”

Thus, China’s commentators questioning: “Taoguang yanghui” still relevant, esp with regard to the South China Sea?

 

The interests involved

  • Acquiring fishing areas aroung the two archipelagos Paracel and Spratly [….]

 

  • United Nations Conventions on the Law of the Sea (UNCLOS) giving a country sovereignty overseas up to 12 nautical miles (22.2km/13.8 miles) from it coast, including islands.

  • There is also a 200 nautical mile Exclusive Economic Zone.

 

DOC

  • Declaration of Conduct of Parties in the South China Sea (DOC) (2002)

A non binding agreement between China and the Association of South East Asian Nations

(ASEAN)

 

Vietnam’s moves

  • Demonstration against China in Hanoi and Other cities in Vietnam

 

Philippine moves

  • Accusing China violation DOC

  • Asking the US to help (the US ambassador said yes)

  • Joint military exercise with the US

  • Brought the disputes to International Court of the Hague in 2014

  • Comparing China with Nazi Germany

 

Moves of the US and its allies

  • Joint military exercise between  the US, Japan and Australia (first time in South China Sea)

  • Japan showed supports to Vietnam and Philippines, and insists that China needs to be balanced

  • US intruded into the 12 nautical miles of the islands

 

Non interference and China’s engagement with Africa

 

Five principles of peaceful coexistence

  • Mutual respect for sovereignty and territorial integrity

  • Mutual non-agression

  • Non-interference in each others’ internal affairs

  • Equality and mutual benefits

  • Peaceful coexistence

 

Main motives of Chinese engagement with Africa

  • Firstly, access to raw materials is perhaps the key motive for China

  • Secondly, to a lesser extent, Chinese investments in African countries provide job opportunities for China’s own surplus labor supply

  • Lastly, China has also very important political objectives.

 

Scope of China’s engagement with Africa

  • Chinese FDI in Africa : accumulated Chinese FDI in Africa by 2012 was 14.7 billion USD (in comparison, US accumulated FDI to Africa was 87.8 billion by 2012)

  • China’s trade with Africa: China-African trade reached the record of $200 billion in 2013 (in comparison, US trade with Africa was $96 billion in 2013, and European trade with Africa reached $137 billion in 2013)

 

Impacts of China’s non interference practice in Africa

  • When providing aid to African countries, unlike Western countries, China attaches no political purpose except that the receiving countries should not recognized Taiwan diplomatically) therefore :

  • China unconditional aid to Africa provides an alternatives to African countries an alternative to African countries and

  • Western countries worry that this Chinese practice would undermine their “good governance” agenda in Africa.

 

 

China’s engages East Asia—the East Asian policy of the reemerging dragon

 

China’s promotion of East Asian regional cooperation since the late 1990s

 

One Belt One Zone Strategy—China’s attempt to reshape the international order

 

Announced in 2014, this strategy of the current Chinese leadership shows China’s dissatisfaction with the existing international economic and financial order, i.e. the Bretton Wood System (existed since the end of World War II and dominated by the US).

 

 

 

 

 

 

 

 

 

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