1. 0 Advisory Statement Professor Lim’s PowerPoint presentations are optimized for the Mac (OS X). Windows-based PC users may find some or all of the slides unviewable due to formatting incompatibilities. These slides have not been tested on Vista. This presentation is the intellectual property of Professor Timothy C. Lim Most images, pictures and charts are from third party sources

2. POLS 459 Politics of East Asia China’s Economic Rise Regional and Global Implications Professor Timothy C. Lim California State University, Los Angeles tclim@calstatela.edu Last slide

3. 2 “The rise of China as a major player in the capitalist world economy is likely to become one of the most significant developments in the first half of the 21st century” China’s Economic Rise Regional and Global Implications There probably would be little or no debate from anyone about this statement, but there would be a great deal of debate about implications of China’s economic rise, both regional and globally …

4. 3 The Rise of China: Implications Some scholars, such as Nanto and Chanlett-Avery focus primarily on the military-strategic, diplomatic and (narrow) economic implications. They ask questions such as … How will China’s growth reoriented international trade patterns? Will Chinese development lead to greater interdependence and regional cooperation? Will a richer China try to dominate the region and the world? China’s Economic Rise Regional and Global Implications

5. 4 The Rise of China: Implications Other scholars, such as Minqi Li, focus on the deeper, structural implications of China’s rapid development. They ask such questions as … How is China’s internal structure likely to evolve as China assumes different positions in the existing world system? Will China’s rise “save” or “destabilize” the global system? Can China replace the United States as global hegemonic power? China’s Economic Rise Regional and Global Implications Let’s focus on this set of questions

6. 5 The Rise of China: Larger Context To properly assess the implications of China’s rise, according to Li, we must understand the larger context within which China’s ascendance is taking place This “larger context” is a concept about which we are already familiar … Neoliberalism China’s Economic Rise Regional and Global Implications

7. 6 The Rise of China: Larger Context Under neoliberalism, contradictory processes take place in the system of global capitalism Neoliberal policies put downward pressure on wages in order to maximize profit Global capitalism requires constantly increasing consumption in order to maintain system equilibrium China’s Economic Rise Regional and Global Implications Resolving this contradiction is not easy, but one way the global economy has been able to avoid a full-scale downward spiral is through the actions of a hegemonic power: for most the postwar period, the US has played this role by pumping demand into the global economy through huge and rising deficits … Resolving this contradiction is not easy, but one way the global economy has been able to avoid a full-scale downward spiral is through the actions of a hegemonic power: for most the postwar period, the US has played this role by pumping demand into the global economy through huge and rising deficits …

8. 7 The Rise of China: Larger Context China’s Economic Rise Regional and Global Implications This chart illustrates the increasing level and scale of deficit spending in the United States. Starting off at about $500 million in 1940, the accumulated national debt is now (in 2007) more than $9 trillion in real terms, about $30,000 for every man, woman and child in the U.S.

9. 8 The Rise of China: Larger Context Deficit spending by the global hegemon, however, is inherently unsustainable: for the world economy to resume sustained, long-term expansion, global effective demand must have a more stable base China’s Economic Rise Regional and Global Implications geographic Historically, the key base has been _________________ expansion, which allows access to new reserves of cheap labor and natural resources, and new markets for consumption

10. 9 The Rise of China: Larger Context In one respect, then, China represent the last major geographic source of expansion for global capitalism China’s economic rise, therefore, raises the question: Can the existing world system (and humanity) survive without the rise of China? China’s Economic Rise Regional and Global Implications How does Li answer this question?

11. 10 The Rise of China: Different Scenarios Basic answer: It depends. Li gives us 4 different scenarios Significantly, though, underlying his scenarios is another question, namely … “Can the existing world system survive with the rise of China?” China’s Economic Rise Regional and Global Implications

12. 11 The Rise of China: Different Scenarios The Four Scenarios China may fail (to rise)…………………………….. China rises, but in so doing “peripheralizes” the rest of the semiperiphery …………………………. China rises, but in so doing it catches up with other semiperipheral states in terms of wages ….. China rises, which has an uneven impact on between-country inequality ……………………… China’s Economic Rise Regional and Global Implications 1. 2. 3. 4. What are the implications of each scenario?

13. 12 The Rise of China: Convergence Key points from the four scenarios None of the four scenarios is particularly promising The basic reason: China’s rise will have a necessary impact on the internal dynamics of the system--this is largely a product of the sheer economic size of China, which has a labor force larger than the total labor force of all core states combined or of the entire semiperiphery China’s huge size, therefore, will necessarily bring a process of convergence, either upward or downward: Neither is good China’s Economic Rise Regional and Global Implications

14. 13 The Rise of China: Convergence Question: So, what’s the problem with convergence? Downward convergence: Puts downward pressure on wage levels in the rest of the semiperiphery, which could deprive the capitalist world-economy of major source of effective demand; the “peripheralization” of the semiperiphery also threatens political stability Upward convergence (of Chinese wages): Reduces the total surplus available for the rest of world; profit rates are reduced, competition increases, growth in many economies will come to a grinding halt China’s Economic Rise Regional and Global Implications

15. 14 The Rise of China: Other Implications Even if the problem convergence is overcome, another problem remains … The “rise of China” in the sense of China increasingly becoming the center of world capitalist industrialization, is likely to place increasingly greater pressure on the _______________________ _. China’s Economic Rise Regional and Global Implications global environment

16. 15 The Rise of China: Other Implications China’s Economic Rise Regional and Global Implications This short segment from CNN provides a general, but telling overview of the environmental threat China’s development poses, both to China and the rest of the world From YouTubeYouTube Video intentionally removed Click on YouTube link to view video online

17. 16 The Rise of China: Summing Up China’s economic rise has serious, but paradoxical implications Paradoxically, the world-capitalist system “needs” China as the last major outpost of global expansion, but China’s rise could also threaten the stability and ultimately the survivability of the system as a whole Still others see China’s rise as a potential strategic and politico-economy threat, and, in particular, as a threat to American dominance Not everyone agrees, of course. Mainstream economists and other liberal scholars generally applaud China’s economic rise: it represents the triumph of capitalism and last big step towards the “end of history” China’s Economic Rise Regional and Global Implications