The Chinese century, the rising economy and its impact on the global economy, the balance of power, and your job, Oded SHENKAR, 2005

Résumé du document

China is at the heart of the present-day economic debate. China is indisputably booming economically. Its enormous growth rate attests of this evolution; all economists agree on this assertion. What seems more debatable at the moment is the impact this rise could have on the global economy, and its corollary, what response the States should bring to this economic change, if there is any. The answer to these questions could be easy, if studied in terms of economic ideologies: on the one hand, supporters of free-trade could consider this rise as beneficial to the whole economy, since it brings an enormous market and could entail a decrease of prices. On the other hand, for others, it could jeopardize the national economies, undermining the employment. But wouldn't it be naïve to think that way? The question, very complex, seems to transcend economic ideologies. Indeed, I agree with O. Shenkar when he intends to explain, in The Chinese Century, to what extent the rise of China is not similar to the forms of development which we have been able to observe up to now. What makes the case of China unique is its ability to both climb the technology ladder and keep a comparative advantage in activities requiring low-cost labour-force; therefore, we can imagine that the impact of China could be double-edged for the global economy.

Extraits

[...] I will first look at the traditional solutions suggested by economy, notably free trade and protectionism, and then I will try to display my vision of an appropriate way to response to the rise of China. Firstly, protectionism could be a seducing solution for any country jeopardized more or less by China. This consists in measures aiming at protecting the production of one country against foreign competition. These measures can be tariffs, quotas or administrative obstacles. Protectionism is often regarded as a means to defend the country against unfair competition. This strategy could be relevant to the case of China. [...]

[...] Not only should China give up all incentives and its current monetary policy, but the US and the EU should also abandon their subsidies, either direct or indirect. Consequently, the end of the CAP could be the start of a virtuous circle for the Third World, which could at last be competitive. The global economic structure could be re organised in a multi polar world, with China as the leader and the competitors like the US, India, the Asian Tigers, the EU, Japan The difficulty of such a policy is to determine the short term and the long term; in addition, countries may not easily abandon protectionism. [...]

[...] Indeed, in this perspective, trade would be a positive sum game, in which more participants, the better”[5]. The rise of China could therefore be seen as a windfall for western countries, since the huge Chinese demand would stimulate the global economy; the boost could be similar to the American one in the nineteenth century. In addition, the terms of trade could be improved because the price of products coming from China would decrease and the price of Chinese imports could increase. [...]

[...] List, and used by most of the big economic powers in the beginning of their expansion, notably the United States? If it is regarded as unfair competition, the protectionist response could be justified. Indeed, problem, however, is that if the other guy is doing it and you're not responding in the same way, you become part of its policy-a policy aimed at beating Consequently, protectionism entails protectionism. This is the reason why the US could use tariffs to counterbalance the under evaluation of the Yuan, in order to re-establish a certain parity in the exchanges between the two countries. [...]

[...] The comparative advantages China is benefiting from would not have any sense in such a global logic; China would therefore lose all its potential. Secondly, I think that the Chinese weaknesses should not be considered of second importance. Indeed, the demography of the country, at the moment one of the greatest assets of China, should be a burden in the future as the population gets older, since the Government does not seem to be willing to put into place a decent pension system in the country. [...]