Why is China so rich

Digirama

Along with Hong Kong, Shanghai is the most important economic metropolis in China and a sign of its economic boom. Photo: Peggy and Marco Lachmann-Anke / Pixabay

China's rise to world power
Political and economic developments in the "Middle Kingdom"

China developed from an agricultural state into the largest economy in the world. The “Middle Kingdom” achieved this status by reforming the economic system from a planned to a market economy. Between the years 2000 to 2010, economic growth was several times in the double-digit range. Domestically, the upswing has resulted in the emergence of a new middle class, while rural parts of the population continue to be affected by great poverty. The foreign policy picture of China is particularly determined by its economic strength, the country has developed into an economic power. The government wants to manifest its important position in the international system through the “Belt and Road” initiative, with which international trade relations in Asia, Africa and Europe are to be established and expanded. As a result, the USA, as the dominant economic power so far, sees itself increasingly challenged and regards the export nation China as a serious danger. With his China policy, Donald Trump is aiming for greater independence for the USA from imports. But the Middle Kingdom is also developing politically into a world power. With a permanent seat on the UN Security Council and the economic ties, it is also gaining importance in terms of foreign policy.

With this Digirama we present reports, studies and analyzes available online that convey assessments of the economic and (foreign) political development of China and their perception in the western world.

The articles are sorted in descending chronological order.



Hanns Günther Hilpert / Frédéric Krumbein / Volker Stanzel
China's controlled memory. How historical events are remembered, glorified, reinterpreted and concealed
SWP Comments 2019 / A 70, December 2019

“In 2019, China commemorates politically significant events in its recent history in several round anniversaries: the May 4th Movement (100 years), the founding of the People's Republic of China (70 years), the Tibet Uprising (60 years), the beginning of the Reform and opening up policy (40 years) and the massacre on Tiananmen Square (30 years). How China officially commemorates these events - or does not commemorate them - weighs heavily on the country in terms of domestic and foreign policy. The state-constructed interpretation of history, as a claim to power, is not only aimed at its own society, but also at the foreign partners interacting with China, in particular governments and companies. The concealment of problematic events from the past is not least because it increases the risk of historical mistakes being repeated. "(Abstract)

 

Adrian Zenz
China Didn’t Want Us to Know. Now Its Own Files Are Doing the Talking
The New York Times, Opinion, Nov. 24, 2019

The published internal documents of the Chinese government provide an important insight into the government activities of the Communist Party in the western Chinese province of Xinjiang. They would now prove what the official Chinese side has always denied: The ethnic minorities in the western Chinese province of Xinjiang would be hundreds of thousands locked in internment camp. Adrian Zenz, Senior Fellow in China Studies at the Victims of Communism Memorial Foundation in Washington, gives figures on this: Between 900,000 and 1.8 million people have been arrested and taken to camps or prisons. The largest ethnic minority group in the province is particularly affected: the Uyghurs, but Kazakhs and other ethnic groups are also exposed to discrimination. In the re-education camps, brainwashing is carried out during the teaching units and, contrary to official information, the detainees are not able to move freely. These practices tore families apart and several examples have shown that families are at risk of poverty and servile work from the loss of providers.

 

Peter Rudolf
The American-Chinese world conflict
SWP Study 2019 / S 23 October 2019

“The American-Chinese conflict syndrome is made up of several elements. It is based on a regional, but also increasingly global status competition. This competition for influence is mixed with an ideological antagonism that has meanwhile moved more into focus on the American side. Since the USA and China see themselves as potential military opponents and plan accordingly, the security dilemma also shapes the relationship structure. The strategic rivalry is particularly pronounced on the maritime periphery of China, dominated by military threats and the American perception that China wants to establish an exclusive sphere of influence in East Asia. The global competition for influence is closely interwoven with the technological dimension of the American-Chinese rivalry. It's about dominance in the digital age. For international politics, the intensifying strategic rivalry between the two states harbors the risk of condensing into a structural world conflict. This could set a de-globalization in motion and create two orders, one dominated by the USA, the other by China. "(Abstract)

 

Schmitz, Andrea
Anti-Chinese protests in Kazakhstan: what's behind it?
SWP in short, September 10, 2019

Anti-Chinese protests are on the rise in Kazakhstan and rallies have already taken place in several cities. This was triggered by reports that China would set up factories and Chinese workers in the Kazakh province of Mangystau. The region has the country's largest oil reserves, which are extracted with the help of foreign - including Chinese - investors. At the same time, the working conditions of the Kazakh workers, which are worse than those of the Chinese skilled workers, are being criticized. Looking at the entire economy of Kazakhstan, an increasing interdependence with the Chinese economy can be seen. Kazakhstan is of enormous importance as an energy supplier and transport corridor, especially for the Silk Road Initiative. Although this also brings many advantages, such as economic modernization through Chinese investments, Kazakh politics must face the task of losing political autonomy and economic dependence.

 

It was Prasad
Which country is better equipped to win a US-China trade war?
Brookings Institution, August 12, 2019

The US and China continue to do little to defuse the current trade war. Eswar Prasad therefore analyzes which of the two states is better equipped for the trade conflict. China has the advantage that the economy is controlled to a high degree and the political leadership is more resistant to crises. In addition, state-owned companies dominate the Chinese economy and the majority of banks are owned by the state. China's leadership would have easier access to cheap credit and could stimulate the economy through investment. In contrast, the US economy is roughly 50 percent larger than that of China and is also less dependent on exports. In this regard, China exports more goods to the United States than the United States imported. In the short term, the damage is higher in China than in the USA. As Prasad summarized, both sides had advantages that could ultimately result in neither country emerging from the trade war as winners.

 

Holger Görg / Halou Mao
Friends like this: The Impact of the US - China Trade War on Global Value Chains
Kiel Center for Globalization Working Papers No. 17, August 2019

Holger Görg from the Kiel Institute for the World Economy and Halou Mao examine the influence of the trade war between the USA and China on the world economy. The ever increasing tariffs have an indirect influence on goods in other countries, which therefore have to record a considerable increase in costs. This is due to the fact that the US and Chinese products are further processed and exported to third countries, which makes their new products more expensive. Over several export steps, the tariffs could increase and contribute to rising costs. This applies particularly to the tariffs on Chinese products, which is why Mexico and Canada are significantly affected by the trade war. Thus there is an urgent incentive for third countries to mediate in the trade war.

 

Heribert Dieter
China's debt and its foreign trade relations. Beijing exports a dangerous model
SWP Study 2019 / S 18, August 2019

Since 2008, China's economic growth has been based to a large extent on the country's debt policy. This policy poses a threat to economic stability in China, but the consequences of an economic crisis would have serious effects on the entire global economy. According to Heribert Dieter, an expert on global economic issues, China must choose either economic stability or growth, since both cannot be achieved at the same time. However, through the “New Silk Road” project, this dangerous model is being exported to many countries, which would then be burdened with new debts. European countries, especially Germany, could respond to the Chinese strategy with their own initiative and address the countries that are affected by China's policy. Ultimately, President Xi Jinping only has the choice between two evils: reducing debt and accepting a slump in growth or allowing debt to continue to grow.

 

It was Prasad
Which country is better equipped to win a US-China trade war?
Brookings Institution, August 12, 2019

The US and China continue to do little to defuse the current trade war. Eswar Prasad therefore analyzes which of the two states is better equipped for the trade conflict. China has the advantage that the economy is largely controlled centrally and the political leadership is more resistant to crises. In addition, state-owned companies dominate the Chinese economy and the majority of banks are owned by the state. China's leadership has easier access to cheap credit to stimulate the economy through investment. In contrast, the US economy is about 50 percent larger than that of China and is also less dependent on exports. The Middle Kingdom exports more goods to the USA than it imports from the United States. In the short term, the damage is higher in China than in the USA. Prasad sums up that both sides thus have their advantages, which will ultimately lead to the fact that neither of the two countries emerges as winners from the trade war.

 

Holger Görg / Halou Mao
Friends like this: The Impact of the US - China Trade War on Global Value Chains
Kiel Center for Globalization, Working Papers No. 17, August 2019

Holger Görg from the Kiel Institute for the World Economy and Halou Mao focus on the influence of the trade war between the USA and China on the world economy. The ever increasing tariffs exerted an indirect influence on goods in other countries, which as a result have seen a considerable increase in costs. This is due to the fact that the US and Chinese products are further processed and exported to third countries, which makes their new products more expensive. Over several export steps, the tariffs could accumulate and contribute to the increase in prices. This particularly applies to the tariffs on Chinese products, which is why Mexico and Canada are significantly affected by the trade war. Thus there is an urgent incentive for third countries to mediate in the trade war.

 

Max J. Zenglein / Anna Holzmann
Made in China 2025. How far China has already come on its way to global technology leadership
Mercator Institute for China Studies, July 2, 2019

“When the Chinese leadership presented their industrial strategy Made in China 2025 (MIC25) four years ago, it caused confusion around the world. The blueprint for China's path to industrial superpower has changed the way foreign companies, associations and governments view China. Since then, the People's Republic has been regarded as a systemic competitor and no longer just a partner.

Made in China 2025 has now disappeared from the official rhetoric of the Chinese leadership. However, Beijing is sticking to its goals and is already implementing the industrial strategy: By 2025, China wants to produce global leaders in ten key technologies. The country is expected to become a technological superpower by 2049.

The two MERICS authors Max J. Zenglein and Anna Holzmann characterize Made in China 2025 as an attempt to optimize hybrid Chinese state capitalism. In their study "Evolving Made in China 2025: China's industrial policy in the quest for global tech leadership" they outline how Beijing has repeatedly adapted its industrial strategy in recent years, reacting to setbacks, launching pilot projects and doing massive research and development of strategically important industries. "(Summary)

 

Rana Mitter
How the one-party state may shape our future
Chatham House, The World Today, July 2019

China is currently striving to shape the future according to its understanding. While the party maxim of socialist values ​​is in the foreground at the national level, the country is struggling for economic, political and military influence in foreign policy. For this, however, China needs the dynamism that has brought it into an economic and political position of power. To this end, according to Rana Mitter, professor of the history and politics of China at the University of Oxford, the country must open up, especially in the social and economic areas. Freedom of speech and economic activities would be particularly affected. Such a development is unlikely, however, since Xi Jinping has not yet promoted any liberalization of the country. The demographic 'time bomb' of the one-child policy, on the other hand, could trigger a political rethink.

 

Jonathan D. Pollack / Jeffrey A. Bader
Looking before we leap: Weighing the risks of US-China disengagement
Brookings Policy Brief, July 2019

In recent years there has been an increasingly contradictory development in American views of China (especially among elite circles of opinion). Even if this was due in part to China's behavior and the policies of the Trump administration, these changes in US thinking would reflect greater unease about the impact of Beijing's rise as a world power. Jonathan Pollack and Jeffrey Bader, fellows at the Brookings Institution's John L. Thornton China Center, believe that China is seen as an ever greater threat to US commercial, political, and security interests. For many, therefore, the dominant question is how the Chinese rise can be stopped and less how the new relationship should be shaped. However, this is the wrong way to go, as China will by no means easily give up its new position as a world power. For this reason, the USA should carefully build the relationship and mitigate the disadvantages of globalization in their own country in order to again take an advantageous position in an open, globalized world.

 

Annegret Bendiek / Nadine Godehardt / David Schulze
The age of digital geopolitics
IPG-Journal, July 5, 2019

The group of authors sees the current conflict between the USA and China over the technology group Huawei as the beginning of a new era in digital geopolitics. In addition to Huawei, other Chinese companies in the supercomputer industry have been placed on the sanctions list of the US Department of Commerce, which is equivalent to an embargo. While the political leadership of China refrains from protectionist measures, they recognize a hostile act in the exclusion from the US market move politically fixed locations. A new trend is the intertwining of the two developments, which was particularly evident in the dispute over Huawei. The European single market threatens to become a place of a technological proxy war between the USA and China.

 

Tim Rühlig / John Seaman / Daniel Voelsen
5G and the US-China Tech Rivalry - a Test for Europe’s Future in the Digital Age
SWP Comment, June 29, 2019

For a long time, Huawei was just one of many smartphone manufacturers for many Europeans, but in the past few months the tech giant has become a symbol of high-level competition between the United States and its increasingly ambitious and capable challenger China.As the authors show, the upcoming expansion of the 5G infrastructure is becoming an important battlefield in a broader battle for control over the industries of the future. Europe is now on the retreat and urgently needs to develop a strategy that will lead it not only through the current 5G debate, but also through the technological rivalries that are still to come.

 

Sebastian Horn / Carmen Reinhart / Christoph Trebesch
China’s overseas lending
Institute for the World Economy, Kiel Working Papers 2132, June 2019

"The Kiel Working Paper No. 2132 'China’s Overseas Lending" shows for the first time a comprehensive picture of the loans and other financial flows from China. Scientists Sebastian Horn (University of Munich, IfW Kiel), Carmen Reinhart (Harvard University) and Christoph Trebesch (IfW Kiel) brought together data from over six decades from numerous public and non-public sources. Thousands of loans to 152 countries and the resulting interest and repayment obligations are recorded. "(Medieninformation IfW)

 

Tarun Chhabra et al.
Rethinking US-China competition: Next generation perspectives
Brookings Institution Interview, June 2019

This transcript of an interview between the Vice President and four China experts from the Brookings Institution deals with the relationship between the USA and China and picks out assumptions that were made after the end of the Cold War. Among other things, it is discussed to what extent China could take the former position of the Soviet Union in a Cold War. The growing weight of China and its effects are becoming increasingly evident in Asia and around the world. Due to the interdependence, more and more subject areas are also affected by the relationship between the USA and China. This strategic competition between the old and the new world power would require concentrated efforts of the USA that go far beyond security issues. This competition does not have to result in a conflict, but the authors urge attention and long-term care in this regard.

 

Janis Kluge
Sino-Russian Chimera
Berlin Policy Journal, June 27, 2019

In the wake of Western European alienation from Russia through the Crimean crisis, the relationship between Russia and China has improved enormously. An important factor here is the personalization of the relationship between the two countries with the heads of state Waldimir Putin and Xi Jinping. Janis Kluge, an expert on Eastern Europe and Eurasia, sees a country friendship that is particularly fixated on people as a risk, as the bilateral relationship could head in a different direction through a change in leadership. Another component of Russia's relationship with the Far East is economic cooperation and the Siberia pipeline, which will supply China with Russian natural gas. Critical issues also exist, however, especially in the area of ​​Chinese investments. Chinese companies would avoid investments because of the stagnating economy in Russia, which is why the Chinese investment volume currently only accounts for 0.9 percent of all direct investments in Russia. Kluge closes with a council for the EU, which must analyze in this foreign policy development at which point its interests are at risk. In any case, the western states are participating in the new Russian-Chinese friendship because China is benefiting enormously from the poor relations between the West and Russia.

 

Joel Sandhu
What’s at Stake Amid Hong Kong’s Extradition Protests?
Global Public Policy Institute Interview, June 15, 2019

Joel Sandhu, project manager at the GPPI in Berlin, does research on China's security policy and explains in this interview the background to the protests over the extradition law in Hong Kong. Particularly controversial about the draft, which probably came from Beijing, is the subsequent possibility of extradition to mainland China. Hong Kong citizens, business people and even tourists are affected by the consequences. The protesters would receive support from judges who see the independence and integrity of Hong Kong at risk. In addition, the economy could suffer considerable damage from the restrictions on freedom, as Hong Kong is no longer perceived as a safe and free market.

 

Frédéric Krumbein
China in competition with the USA for global influence
SWP Comments 2019 / A 27, April 2019

“Since head of state and party leader Xi Jinping came to power in 2012/2013, a fundamental change has taken place in China's domestic and foreign policy. Two central motives determine Xi's course: on the one hand, the concentration of power on the Chinese Communist Party (CCP) and his person, combined with intensive control of society; on the other hand, the strengthening of Chinese nationalism. In foreign policy, Xi has set ambitious goals: The regional and global influence of the People's Republic is to be further expanded. Forty years after the establishment of diplomatic relations between Beijing and Washington, the US increasingly sees China as a threat to its global power and democratic values. ”(Summary)

 

Michael Paul
Alliance on the high seas? China and Russia joint naval maneuvers
SWP Comments 2019 / A April 24, 2019

“On the occasion of the 70th anniversary of the founding of the national navy, a fleet parade with more than thirty Chinese ships will take place off the coast of Qingdao on April 23, 2019. Thanks in part to decades of Russian armaments aid, China's navy has become the largest in Asia; Moscow 'fed the kite'. From Beijing's point of view, however, the Chinese armed forces have a serious shortcoming: a lack of operational experience. Here, too, the Kremlin supports. Since the first joint maneuver in 2005, cooperation has increased on many levels. Sino-Russian sea maneuvers now also serve as a threat to China's claims to property in the South China Sea or in the Sino-Japanese disputes in the East China Sea. Moscow and Beijing are using the joint naval exercises to send geopolitical signals. Despite all the mistrust, the cooperation seems to rest on a relatively stable foundation of partnership relationships. But is that an alliance? "(Summary)

 

Michael Paul
China's nuclear deterrent. Causes, means and consequences of the stationing of Chinese nuclear weapons on submarines
SWP Study 2018 / S 17, September 2018

“Compared to the big nuclear powers USA and Russia, China has a modest nuclear deterrent. Beijing does not strive for the ability to conduct nuclear warfare, but rather seeks to deter aggression at a low level with an assured second strike capability. In contrast to the case of rapid conventional armament, China has modernized its nuclear weapons systems only slowly and in small numbers in the past. This suggests that Beijing is in principle not aiming for parity with the nuclear weapons capacity of the USA or Russia and that it wants to avoid a symmetrical arms race. However, the Chinese leadership has recently been operating an increasingly ambitious asymmetric nuclear armament. Submarines are now also being equipped with strategic nuclear weapons. The stationing of nuclear weapons on submarines is associated with great effort, complex challenges and high costs. Why did China choose this solution and what other consequences are associated with it? Does it possibly represent a turning point in the Chinese nuclear strategy? How can China stick to the policy of non-first use of nuclear weapons, especially under the conditions of the vulnerability of strategic systems? Since the strategic submarines, equipped with long-range ballistic missiles, are stationed in the South China Sea, the international dispute over the Chinese claim to ownership of this Pacific marginal sea is becoming more politically explosive. "(Summary)