Transcript China`s Globalization Drive

China’s Development
Trends, Issues and Progress
China’s Economic Nodes
Development Background
Even before economic reform began
in 1970s, China’s economy had large
share of industrial output—almost
50% of GDP
Unusual because vast majority of
people work land
Share of agriculture has gradually
fallen from 33% in 1985 to 15% in
2002
Structure of China’s secondary
industry changed fundamentally
during 1980s
Growing Role of Private and Collective
Enterprises
Until 1978 industry dominated by
large state-owned enterprises (SOEs)
Since then manufacturing output has
been produced by “collective”
enterprises under aegis of local
governments-particularly township
and village enterprises (TVEs)
But increasingly by private
entrepreneurs or foreign investors—
either wholly owned or in joint
ventures
Value of Chinese Exports and Received FDI,
1983-2002 (Billions of $US)
350
300
50
Exports
FDI
45
40
35
30
200
25
150
20
15
100
10
50
5
0
0
83 984 985 986 987 988 989 990 991 992 993 994 995 996 997 998 999 000 001 002
9
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
FDI
Exports
250
Hungry Dragon: China’s Demand for Raw
Materials
China’s booming
economy driving up
prices minerals and
metals
Oil imports rose by
30% in 2003
exceeding those of
Japan
Raises problems of
supply bottlenecks
and encourages local
growth of needed
resources
Transport Logjam
Strained by rapid growth China’s transport
system has bogged down
Railroads are so overburdened that power
plants in southern China have trouble
getting coal from the north
This has caused ‘brownouts’ forcing
factories to operate on limited schedules
Overloaded heavy duty trucks are breaking
down roads and enforcement of weight
limits forcing trucks to make more trips
Shipping Growth
Huge need for raw
materials and production
of finished goods has
fueled a new demand for
the world’s shipping
industry
This has produced a
major pressure on
China’s port system
Shortages of trucks and
rail cars are preventing
distribution of shipments
from overseas
Imported iron ore and
steel clog docks and new
arrivals are forced to wait
as long as a month at a
cost of up to $100K a day
per vessel
Other Impacts of Transport Congestion
But exports of shoes to furniture have not been
affected. Because these goods are
containerized and loaded on different trucks to
different specialized ports
China’s boom has pushed up global commodity
prices and freight rates all over the world
Rising freight rates have hurt competitiveness
of some US agricultural exports to China: grain
from Gulf Coast to China now costs $70/ton as
opposed to $18/ton in last two years
Collision between China’s booming private
sector benefiting from foreign investment and
older, less prosperous aspects of economy
Much recent investment in China has gone to
roads and not railways. Chinese railways are in
public sector and form monopoly
The Role of Ports
The cargo port in
Zhanjiang, a
southern city in
China. Foreign
investment in
China for the first
11 months of last
year totaled $47
billion; Chinese
officials had
predicted $57
billion for the entire
year.
Huge Need for External Resources
Despite the deep
energy resources,
such as coal, which
are available in
Shansi province, the
rapid economic
growth has forced
China to import coal. A
power plant in
Guangdong Province
in southern China is
importing coal from
as far as Australia
Shanghai’s Visionary Thinking
Grand vision- build it
and they will come!
1990 plan successful
to turn marsh and old
factories into new
financial districtPudong
Major financial and
retail complexes
World’s tallest hotel54 floors
Shanghai’s Maglev System
German produced
mass transitmagnetic levitation
World’s first in
commercial service
Reaching 270 mph
20 mile, 8 minute
journey to airport from
center of Shanghai
Cost of one way ticket
is $10 but only 4,000
passengers on a
typical day less than
1/6th of capacity
Problems of the Boom
Critics, even some Chinese leaders, are
saying that heavy state investment has led to
waste and has not improved incomes of vast
majority of Chinese people
Promise to overhaul urban and rural welfare
payments, improve grain production, reduce
rural taxes and improve education
Perhaps simply clever public relations for CP
but many of 800 million outside wealthy
coastal nodes have stagnant incomes