8/3/2019 The Growing China Threat

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 THE  THE 

GROWINGGROWINGCHINACHINA

 THREAT  THREAT Prepared

&Presented

by:

PARTHVI TRIVEDI DHRUV 

AMIT NAGAR RAJESH

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Is China the Answer?Is China the Answer?

y To Many Countries and Citizens Around the World, to the

Problems International Economy Is Facing the Guilts Are

Being Pointed to China.

y Weather Its the Escalating Price of Oil, the Scarcity of Raw

Products or the Increase in the Number of Companies

Bankruptcies China Is Said to Be the Main Reason.

y

But to What Extent Is It Really to Be Blamed?

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Centrally planned Economy 

Private businesses and capitalism

 were suppressed

Privatization of Farmland

Promotion of foreign investment 

Flourishing small scaleentrepreneurs

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The Chinese ThreatThe Chinese Threat

For thousands of years, China has been what is known asa continental power. That is, it had everything it neededright at home and was not dependent on sea borne tradeto survive.

But now China is an Oceanic Power, with over half of its

GDP coming from exports to foreign nations.

China has been undergoing a process of industrializationand is one of the fastest growing economies in the world.With real gross domestic product growing at a rate of 8-10% a year.

Chinese growth is not a recent issue, as it was widelyknown that a country with such potentialities, supportedby a mentality that encourages entrepreneurship was towake sooner or later.

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Current Situation Current Situation 

In 2004, the curtain went up on China's performance. That year China's import andexport volume reached $1.1 trillion, double its 2001 volume. China became the world'sthird-largest trading nation, next to the United States and Germany.

China now accounts for 13 % of the world's gross domestic product, based onpurchasing power parity exchange rates.

In 2001, the Chinese purchased 2.2 million cars. By 2004, its domestic automobilemarket exceeded 5 million. In the next 15 years, China's car market is expected tosurpass 20 million, exceeding that of the United States.

China, however, is in the midst of its Industrial Revolution and is already the top marketfor consumer goods multinationals such as Proctor & Gamble.

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Chinese Market Evolution Chinese Market Evolution 

Although in 1980 only 5.4 % of Chinese exports wentto the US, in 2001 the percentage had risen to 20.4 %,with a strong tendency to rise further.

Chinas imports from its smaller East Asian neighborsrose from 6.2 % in 1980 to 40.9 % by 2001.

Exports have shifted away from agriculturalproducts and raw materials to manufacturing.

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In 1985, agricultural products, 14.92 % and raw materials 35.61 %accounted for about half of Chinese exports. Basic manufactures(leather, wood, paper , textile yarn, iron and steel, nonferrous metals,etc.) and chemicals were another 21 %.

I

n the year 2001 the percentage of machines, transport equipment, andmiscellaneous manufacturing goods, (clothing and accessories,precision instruments, photo and optical equipment) has risen to almost70 %.

Farming methods have been improved.

Only 15 percent of the total land available in China can be cultivated.

more than 75 percent of the total cultivated land is used for producingfood crops.

Chinese Market Evolution Chinese Market Evolution 

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Chinese CommerceChinese Commerce

China, like the United States, is becoming anindispensable partner, wants to buy rawmaterials with no value added and to exportconsumer goods.

Chinese exports are one of the major factorsof the outstanding economical growth. Thereason for this success is the relatively easinessin which their products enter the markets.

I

t is not only this privileged access to themarkets that makes it work, the products aremuch more cheaper than those producedlocally even though the quality might in somecases be inferior.

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Chinese CommerceChinese Commerce

Nevertheless a great deal of these price advantagesare blamed to the social dumping as the socialconditions of the workers producing the goods inChina are inferior to those in the other countries,

therefore making labor costs inferior.

Their currency, which according to analysts is at an

artificial low value, also helps making their goods moreappealing.

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Exports OutlookExports Outlook

As seen before there was a greatchange in the products that Chinacurrently exports from agriculturaland raw products to machines,transport equipment, andmiscellaneous manufacturing goods,and today the most rapidly growingChinese exports are middle-tech - andincreasingly high-tech - manufacturedgoods.

But basic manufactures andchemicals still account for the vastmajority of exports. China runs a hugeand growing trade surplus with theUnited States.

The position of Japan has changedradicall from bein a net ex orter to

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Imports OutlookImports Outlook

Also in the imports scenario there were changes but they were in the oppositedirection.

Chinese imports of primary products and industrial raw materials faced a sudden

increase.

Basic manufactured products have seen a significant downturn in demand asChinese industry started to replace that sort of imports.

Today China reports large import surpluses with the ASIAN group and other rich

natural resources countries.

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y Chinese manufacturing sector ranks 4th inthe world after US, Japan, & Germany.

y China has 50% share of worldwide cameramarket.

& 30% of Air conditioners .

y 25% of Washing Machines & 20% of Refrigerators.

y China¶s crude steel production rose by

28.25%.

y Investment in chemical industry grew by35.9%.

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Chinese Diplomatic EffortsChinese Diplomatic Efforts

To secure the resources their economy demands, Chinese diplomacy isdirecting towards countries rich in natural resources, such as those in theA

frican continent and to those countries that have long standing issues withAmerica.

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The Oil SituationThe Oil Situation In 2004, China's oil consumption rose by 40 %, to 6.5 million barrels a day. U.S.domestic demand is 20 million barrels a day. U.S. demand is rising by about500,000 barrels per day per year. China's is increasing by about 1.5 millionbarrels per day per year.

China has become increasingly dependent on Middle East oil. Today, 58 % of

China's oil imports come from the region. By 2015, the share of Middle East oilwill stand on 70 %.

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The WTOThe WTO

The world trade organization is the institution incharge of regulation and monitoring of thecommercial relations between the organizationmember countries.

It is based on the principle that all member countries are equal and what is done towards onemust be done to all. Its members are free to exportto the other members according to the same rulesas others do.

On the first of January of 2005 China officiallybecame a member of the WTO and had direct andnearly unconditional access to other markets withhigh income that previously defended themselvesagainst its cheap products.

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GDP ² real growth rate:

9.8% (2008) country comparison to the world:

13% (2007)

11.6% (2006)

GDP-Per capita (PPP-Purchasing power parity):

$6,000 (2008)country comparison to the world:

$5,500 (2007)

$4,900 (2006)

note: data are in 2008 US dollars

GDP ² composition by sector:

agriculture: 10.6%

industry: 49.2%

services: 40.2% (2008)

China ² Economic Fact Sheet

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The FutureThe Future

The current upturn in the Chinese economy is unchangeable as China ispredicted to become the next superpower alongside with USA.

China will gradually change, as it is already happening, from an intensive labor force industry to a more technical intensive sort of production.

This status is predicted to be achieved by around 2030

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ConclusionConclusion

China is no longer a developing country. Instead it is an emerging economicalsuperpower that it is writing economical history.

If the last century was the American century the 21st century will be theChinese century.

New threats have risen and many more will continue to show up.

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