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impending chinese century?

Thursday 31 December, 2009

The Chicago Council on Global Affairs hosted this event THE CHINESE CENTURY? A NEW AGE IN U.S. – CHINA ENGAGEMENT Here’s what they have to say:

Niall Booker of HSBC said there may be a financial bubble in China because there are some toxic assets there, but the authorities are aware of the risks.  There is some indiscriminate credit, but the government controls the flow of credit & they’ve seen it before, but there is still the potential for asset bubbles.  There is not yet a flight of manufacturing back to the US because cheap Chinese goods have subdued inflation here & manufacturing flight to China benefited service industries here.  There could be shortages of skilled workers.

Cheng Li of Brookings China Center admitted wireless could be a solution for healthcare in China.  How much Chinese can contribute to the world economy depends on the government’s plan.

Evan Osnos, formerly of the Chicago Tribune & now of The New Yorker, piped in on healthcare, saying ther have been cases of violence against doctors exhibiting the gap in care for the rich & poor.  It’s politically volatile as babies are 7X as likely to die in the provinces compared to Beijing.  Bad pollution ratings are 100;  forest fires are 300; Beijing rates 500.  He also described a media personality (Pu So Li?) who started a publication (Tai Jing?) which became too provocative & profitable & was ultimately shut down.

On Brazil, Booker indicated devaluation is not the way to go.  Consumption in China, Japan, & Germany combined is still only $6.5B while in the US it’s $10B.

Li said Obama has changed bilateral & trade relations profoundly.  He wants dialogue & no longer points fingers.  Cooperation is not a choice, rather a necessity.  Osnos chimed in that the Chinese did not expect Obama to get elected because he had so little experience, although he did win the American Chamber of Commerce election by a greater margin than in the US.  Bush asked China to be” a responsible stakeholder,” while Obama is more productive conducting talks behind closed doors.

In wrapping up, Booker noted in 1820 China comprised 1/3 of the world’s GDP, so their sway is not new to them, but they do have a huge infrastructure to build, so we shouldn’t demonize them.  Li reiterated there are 6 major divisions in China, including intellectual, geographical, & social.  China is not monolithic, so we need to keep their domestic situation in mind when dealing with them.  Osnos countered that they are promoting clean energy & has increased it energy research 50X.

Q&A

  • re:  modernizing the military,Li said there are transparency issues & China is still critical of military sales to Taiwan.
  • Osnos said investments in the law are resulting in the poor being able to access the courts to fight pollution issues.  The problem remains that successful lawyers are sometimes disbarred.  Li contributed that we have too many lawyers here in the US while in China they had too many engineers, but are now producing 100K lawyers/year.  The rising generation has law degrees rather than engineering degrees.
  • Osnos maintained that innovative new ideas still come from the US & offered evidence that while the # of research articles has increased from China, they are rarely cited.  Osnos informed us that China is working diligently to secure oil & water supplies, & is seeking alternative energies.  Li popped in that there are many books on innovation in Chinese bookstores.  Their need for water is increasing 30X because of industrialization.  Booker encouraged Americans to invest more in education to maintain our edge.  Although China holds 10+% of US debt, they never take more than 20% of any single issue.  China is leading an evolving model of centralized direction in the world.
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