Lee Sang 1 Tabitha Lee Sang Mrs. Tyree English IIIAP, Per.

7 24 January 2014
I.

Introduction a. China is rising to compete with the United States as the number one economic superpower. b. China will be an economic superpower in the next decade or two because of population growth, urbanization and government reformation that expand the economy and stabilize economic growth rates.

II.

History a. Britain's naval power lead to global dominance. b. After the Soviet Union crashed the United States stood as the sole remaining superpower. c. Now America tired from warfare in the East and a falling economy may be stepping down to the second largest economy as China rises to be the next economic superpower.

III.

Urbanization a. "Its urban populations has grown by about 480 million in 30 years, so more than half its people live in cities" (D) b. "the China price. A stampede from the countryside to China's new industrial boomtowns has created a vast low-wage army, working an average of 40 cents an

Lee Sang 2 hour, which can turn out consumer goods of every description even cheaper than Mexican or Malaysian factories can." (F) c. ""Lewis turning point", when the supply of cheaper labor from the countryside begins to dry up." (D) d. "Economic calculus and demographic realities are reportedly behind China's recent decision to relax its one-child policy to allow couples to have a second child if either parent is an only child." (K) e. "China's family-planning regime was put into place in 1980 amid fears that overpopulation would undermine economic growth." (K) f. "But today the policy has become a victim of its own success; a shrinking young labor force will be unable to support a growing elderly population." (K) g. "It is true that population of working age will peak by 2015 and then start to shrink The decline in the working-age population can offset by making it easier for surplus labor to migrate into cities."(J)
IV.

Economy a. "Building a world-class transportation system is part of what made us an economic superpowerAnd now we're going to sit back and watch China build newer airports and faster railroads?" (G) b. "China's dominance in 2030 will depend on.China's economy and trade outpacing those of the United States by nearly 50 percent." (I) c. "The latest Chinese figures put the value of its overall trade at $4.6 trillion last year." "The US will release its own 2013 data next month. But for first 11 months of the year its trade was worth $3.5 trillion." (C )

Lee Sang 3 d. "And as long as China's standard of living remains lower than those of Western countries, its wages will stay low. This will continue to make China an attractive destination for investments and exports and will spur more growth." (I) e. "China's creditor status does not make up for the fact that its economy is presently less than half the size of the United States' and its people are barely one-tenth as wealthy as Americans." (I) f. "Creditor status is also a misleading metric by which to judge China because it is usually used to describe financially open economies, and China largely closed." (I) g. "China's creditor status ... has delivered unprecedented rates of growth and consumption." (I) h. "China is already the world's No. 2 economy and will be No. 1 in 2017. And its military spending is racing ahead of its GDP growth." (H)
V.

Military a. "Its Communist Party is presiding over the world's largest military buildup." "annual defense spending rose from over $30 billion in 2000 to almost $120 billion in 2010. " "spending in 2012, based on the latest announcement from Beijing, will be around $160 billion" (V) b. "A2/ AD, or "anti-access/ area denial" capabilities use pinpoint ground attack and anti-ship missiles, a growing fleet of modern submarines and cyber and antisatellite weapons to destroy or disable another nation's military assets from afar." (V)

Lee Sang 4 c. "In 2010 the CSBA identified the essential military components that China, on current trends, will be able to deploy within ten years. Among them: satellites and reconnaissance drones; thousands of surface-to-surface and anti-ship missiles; more than 60 stealthy conventional submarines and at least six nuclear attack submarines; stealthy manned and unmanned combat aircraft; and space and cyber warfare capabilities." "The navy growing fleet of powerful destroyers, stealthy frigates and guided-missile-carrying catamarans enables it to carry out extended "green water" operations" (V) d. "Although "active defense is the essential feature of China's military strategy,an enemy offends our national interests it means that the enemy has already fired the first shot, I which case the PLA's mission is "to do all we can to dominate the enemy by striking first"." (V) e. "General Yao says the gap between American and Chinese forces is "at least 30, maybe 50, years"." (V) f. "They are "asymmetric"designed not to match American military power in the western Pacific directly but rather to exploit its vulnerabilities." (V)
VI.

US Relations a. "Sino-American relations are at their lowest ebb since a Chinese fighter collided with an American EP-3 spyplane a decade ago." (U) b. "While the US military will continue to contribute to security globally, we will of necessity rebalance towards the Asia-Pacific regionto credibly deter potential adversaries and to prevent them from achieving their objectives, the United States

Lee Sang 5 must maintain its ability to project power in areas in which our access and freedom to operate are challenged." (V) c. "The most plausible flash point for a serious US-China conflict is Taiwan." (T) d. "US government approved a $5.8 billion arms sale to Taiwan in 2011--a deal China objected strongly to." (S) e. "it is now engaged in a strategic maneuver of far-reaching consequences to contain China through an architecture of security alliances on the latters periphery. That is why the US has pledged to make India a major world player in the 21st century," (O) f. "US policy of restricting the export of certain US high-tech goods and technology to China, so-called dual-use items that have both civilian and military applications." "China and the US signed a broad agreement designed to toughen Chinese protections for intellectual property rights and for more enforcement against Chinese firms that violate those rights." (Q) g. "The Chinese are adept at copying and quite loose in their interpretation of intellectual property rights." (F) h. "50% undervaluation of the yuan, according to economist Ernest Preeg, "amounts to a 50% tariff on all Chinese imports and a 50% subsidy for all Chinese exports." (A) i. "A bill is pending in the US Senate that would impose a 27.5% tariff on all Chinese-made products entering the US if China fails to revalue immediately its currency by at least 10%." (Q)

Lee Sang 6 j. "China for its undervalued currency failure to halt counterfeiting and its blatant subsidies to industry--but in truth the US also benefits greatly from China's soaring economy" (A) k. "The evolving trade relationship between the US and China has worked to the advantage of American economic interests, offering huge opportunities for the US companies, especially in the fast-growing services sector." (A) l. "China's growing appetite for fossil energy resources in Africa, the Persian Gulf region, Latin America and elsewhere, which pits it against the demand by the US for the same resources." (O)
VII.

Foreign Relations a. When asked if Chinas demand for Venezuelan oil could push the United States out of Venezuelas market, the ambassador asserted that China has the potential to do it. He then quickly added, Though I dont see the necessity for any of the countries involved. (R) b. "Overtime, China's trade and investment relations with key trading partners that hold strategic value like Germany, Brail Saudi Arabia and Indonesia might allow Beijing greater influence in their policy making decisions." "Germanycould give China a stable foothold into European markets and a means of better aligning European economic policy with Chinese preferences; countries like Brazil, Saudi Arabia and Indonesia provide China with much-needed commodities." (L) c. "It has achieved little of what policymakers call "capture," a condition in which economic or security dependence of one country on another allows the more

Lee Sang 7 powerful to drive the other's policy making." "Only in countries like North Korea, Cambodia and Laos does China have that kind of heft;" (L) d. "A hard landing is defined as a decline in GDP growth to 5%" "Many Taiwanese businesses have developed strong economic ties to the Chinese market and a rapid decline in economic activity across the Taiwan Strait could weaken credit profiles in key Taiwanese industries" (R ) e. "Britain is in dire need of foreign direct investment, in order to bolster energy security and grow various sectors, to usher in a new era of economic growth." "Prime Minister David Cameron, Chancellor George Osborne and London Mayor Boris Johnson, all unveil various deals with the economic superpower ranging from major nuclear investments, to relaxing rules for China's banks setting up shop in the UK." (M) f. "Yet, beyond the inaccessibility of China's language for most foreigners and their indifference to its social trends, China's political and economic system have little appeal in other countries. Its state capitalist economic model attracts political leaders looking to build wealth and micromanage markets, but it offers little for the ordinary citizen." (L)
VIII.

Government a. "Leninist Capitalism" "The 2270 delegates to the 18th national congress of the Chinese Communist Party, which started on Thursday, "elect" 370 members of the Central Committee which stands at the pinnacle of the party-state." (D) b. "But many were concerned about whether the new leadership could manage the restructuring needed to keep growth going beyond the next couple of years- a

Lee Sang 8 shift from export industries and infrastructure investment to consumption and services for a rising middle class." (E) c. "China's further "ascent" will depend on dismantling such classic communist policy icons as public asset ownership, population control and financial repression." (H) d. So far there is scant evidence that China's leaders are considering such steps; repression of political dissidents has increased in the last year and censorship of expression on the Internet was recently tightened." (E)\ e. "the country appears headed toward an economic and political crash sometime in the next five years," "the elite grasps that danger, and is talking fairly openly about the far-reaching change that will be needed to prevent it."(E) f. "Communist Party analysts acknowledge that, in China's own long-term national interest, the changes will need to go in the direction of more rule of law, accountability, social security and ecologically sustainable development."(D) g. "Chinese state has a staggering degree of barely controlled decentralization and a no-holds-barred hybrid king of capitalism," "The result is dynamic but deformed economic development in which, for example, cities have run up mountains of bad debt with financial institutions ultimately controlled by the party-state." (D) h. "accelerate the reform of governance, so that such cases will be delt with at the regional level rather than top level, and in a rule of law way rather than a diplomatic way, said Chen Dangxiao of the Shanghai Institute for International Study"(E)

Lee Sang 9 i. "he assumes that Beijing will soon rewrite its balance-of-payments rules and become an open economy. This assumption underestimates the Communist Party's antipathy to change." (I) j. "But implementing market reforms would also allow China to keep growing at its blistering pace and surpass the United States in GDP. If China insists on maintaining government control over development...its long-term growth prospects will be dim." (I) k. "China's transportation investment is aimed more at building the infrastructure for a wealthy economy than at trying to change travel behavior" "Because adequate accounting procedures weren't in place tracking revenues has been especially difficultBut not the Chinese-system faces a real risk of default, as revenues fail to cover operating and debt-service costs." (G)\
IX.

Predicted Economy a. "China's economic success has been based on the essential ingredients of growth: high savings, openness to trade, good education and strong productivity growth. This means its long-term prospects remain strong, although its trend growth will inevitably slow as its economy matures and its labor force starts to shrink." (J) b. "China's growing technology sector and its ability to absorb new advances. But a true economic leader must create, not absorb Moreover the quality of the Chinese higher-education system is poor and not necessarily improving." (I) c. " China's economy, so dynamic on the surface, but so rickety underneath. The huge stimulus of 4 Trillion Yuan (S, $807 Billion) in November 2008sustained China's growth in the face of global recession." (H)

Lee Sang 10 d. "some economists have long predicted that overinvestment as a result of an artificially cheap cost of capital will lead to China's downfall. Sooner or later, it is argued, over capacity will lead to a plunge in capital spending bringing the economy crashing to earth." (J) e. "China's economic growth has long been driven by various sectors. But most of those sectors--ranging from coal mining to solar panel production--now suffer from severe oversupply." (B) f. "it is entirely possible that Chinese GDP growth will simply stop. Growth depends on land, capital, and innovation. China has depleted its ecology, its labor surplus will soon begin to erode, and vast overspending has driven down the return on capital--all discouraging trends from the standpoint of growth" (I)
X.

Conclusion

The note cards were a huge help in planning the paper. They allowed me to focus on the information I need for my paper. They made it easier to sort information. They were a bit tedious to make. I also had to retype what I already wrote on the cards.