The Rise of China and Its Implications

1. The Rise of China and Its Implications Fei-Ling Wang, Ph.D. Professor Sam Nunn School of International Affairs Georgia Institute of Technology Atlanta, GA 30332-0610, USA 404-894-1904; 404-894-1900 (fax) fw@gatech.edu 2005-2006 Fulbright Scholar and Visiting Professor Yonsei University, Korea Council on Foreign Relations-Hitachi Fellow University of Tokyo, Japan

2. China’s Rise Impressive Record: • 9.6% annual growth rate since 1979; 2-3 times the LDCs and 3-4 times the OECD • More than 10% annual growth since 2003 • 4th largest economy; (or 2nd by PPP) • $500+ billion FDI; $860+ billion foreign currency reserve; largest foreign purchaser of US T-bonds Great Potential: 38-42% savings rate 760 million cheap labor (2-10% of the US average wages) Developmental state Poised to over take the US in 20 years(?)

3. National GDP Sizes:Ranked by the CIA

4. National Powers:The Chinese Ranking

5. Problems Expansive growth v. intensive growth Lack of innovation: How and why? Taiwan issue Income, urban-rural, & regional inequalities 250-400 million under- or unemployed Trust, credit, and rule of law A repressive society in the Internet age 58-74-87 K protests/riots in 03-04-05 Environmental destruction: water and Tibet Capital flight & a broken banking system

6. Make it or Break it:The Key Factors Governance & Socio-political Stability The CCP one-party regime Will the economy boom forever? What to do about the 250+million underemployed? External Peace The explosive Taiwan Issue What the current world leaders will do? Scenarios Latin Americanization? Another Japan? (Prior to or post WWII)?

7. Implications • Great opportunities and significant benefits • New engine of world’s economic growth • Alternative norms and institutions • Burden and cost-sharing-Public good provision • Challenges and risks • Competition: jobs, market, energy, raw materials • Buying oil, selling shoes, and pirating Gucci and Prada • Adaptations and clashes of values and ideas • Westphalia v. Tian-xia • Uncertainties and instabilities - new systemic challenger?

8. Security Implications Big Guns and More Missiles At least double digit growth of military budget Comprehensive military-industry complex Focused development of offensive capabilities New PLA Professionalizing Solid CCP control New strategies Immediate implications In the Taiwan Theater Sea lanes and territorial disputes Exporting weapons

9. Chinese Foreign Policy • Conservative & reactive nature • Good neighbor and enriching neighbors • Pro status quo • For how long? • Post-taoguang yanghui already? • Growing assertiveness and new demands • Panda, dragon, or wolf?

10. China’s 3-P Motivation • Preservation • Prosperity • Power

11. Three-P Incentive Structure and Samples

13. Future: Three Choices • To Hail Beijing as a New Leader • To Subdue the PRC: External Constraints • To Mold and Free China: Internal Constraints

14. Mongolian Options:Some tentative thoughts • Forward to the past • Neutralization • Building alliances with other great powers • To reconfigure the region • Help to transform and constrain China peacefully

15. Some further readings By Fei-Ling Wang • Organization through Division and Exclusion: China's Hukou System, Stanford CA: Stanford University Press. 2005. • China Rising: Power and Motivation in Chinese Foreign Policy, co-edited with Yong Deng of US Naval Academy, Lanham, MD: Rowman & Littlefield, 2005.. • In the Eyes of the Dragon: China Views the World, co-edited with Yong Deng of US Naval Academy Lanham,MD: Rowman & Littlefield, 1999.