THE GROWING CHINA THREAT

Prepared & Presented by: PARTHVI TRIVEDI AMIT NAGAR DHRUV RAJESH

Is China the Answer?

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To Many Countries and Citizens Around the World, to the Problems International Economy Is Facing the Guilts Are Being Pointed to China. Weather Its the Escalating Price of Oil, the Scarcity of Raw Products or the Increase in the Number of Companies Bankruptcies China Is Said to Be the Main Reason. But to What Extent Is It Really to Be Blamed?

Centrally planned Private businesses

Economy and capitalism

were suppressed
Privatization of Promotion of

Farmland

foreign investment scale

Flourishing small

entrepreneurs

The Chinese Threat

For

thousands of years, China has been what is known as a continental power. That is, it had everything it needed right at home and was not dependent on sea borne trade to survive. now China is an Oceanic Power, with over half of its GDP coming from exports to foreign nations.

But

China

has been undergoing a process of industrialization and is one of the fastest growing economies in the world. With real gross domestic product growing at a rate of 810% a year. growth is not a recent issue, as it was widely known that a country with such potentialities, supported by a mentality that encourages entrepreneurship was to wake sooner or later.

Chinese

Current Situation
2004, the curtain went up on China's performance. That year China's import and export volume reached $1.1 trillion, double its 2001 volume. China became the world's third-largest trading nation, next to the United States and Germany.
In China

now accounts for 13 % of the world's gross domestic product, based on purchasing power parity exchange rates.

2001, the Chinese purchased 2.2 million cars. By 2004, its domestic automobile market exceeded 5 million. In the next 15 years, China's car market is expected to surpass 20 million, exceeding that of the United States.
In China, however, is in the midst of its Industrial Revolution and is already the top market

for consumer goods multinationals such as Proctor & Gamble.

Chinese Market Evolution

in 1980 only 5.4 % of Chinese exports went to the US, in 2001 the percentage had risen to 20.4 %, with a strong tendency to rise further.
Although China

s imports from its smaller East Asian neighbors rose from 6.2 % in 1980 to 40.9 % by 2001.

Exports

have shifted away from agricultural products and raw materials to manufacturing.

Chinese Market Evolution

In

1985, agricultural products, 14.92 % and raw materials 35.61 % accounted for about half of Chinese exports. Basic manufactures (leather, wood, paper , textile yarn, iron and steel, nonferrous metals, etc.) and chemicals were another 21 %. the year 2001 the percentage of machines, transport equipment, and miscellaneous manufacturing goods, (clothing and accessories, precision instruments, photo and optical equipment) has risen to almost 70 %.

In

Farming methods have been improved. Only 15 percent of the total land available in China can be cultivated. more

than 75 percent of the total cultivated land is used for producing food crops.

Chinese Commerce
China,

like the United States, is becoming an indispensable partner, wants to buy raw materials with no value added and to export consumer goods. exports are one of the major factors of the outstanding economical growth. The reason for this success is the relatively easiness in which their products enter the markets.

Chinese

is not only this privileged access to the markets that makes it work, the products are much more cheaper than those produced locally even though the quality might in some cases be inferior.
It

Chinese Commerce
a great deal of these price advantages are blamed to the social dumping as the social conditions of the workers producing the goods in China are inferior to those in the other countries, therefore making labor costs inferior.
Nevertheless

currency, which according to analysts is at an artificial low value, also helps making their goods more appealing.

Their

Exports Outlook
seen before there was a great change in the products that China currently exports from agricultural and raw products to machines, transport equipment, and miscellaneous manufacturing goods, and today the most rapidly growing Chinese exports are middle-tech - and increasingly high-tech - manufactured goods.
As

basic manufactures and chemicals still account for the vast majority of exports. China runs a huge and growing trade surplus with the United States. position of Japan has changed radically from being a net exporter to
The

But

Imports Outlook
Also

in the imports scenario there were changes but they were in the opposite direction. imports of primary products and industrial raw materials faced a sudden

Chinese

increase.
Basic

manufactured products have seen a significant downturn in demand as Chinese industry started to replace that sort of imports.

Today

China reports large import surpluses with the ASIAN group and other rich natural resources countries.

Chinese manufacturing sector ranks 4th in the world after US, Japan, & Germany.
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China has 50% share of worldwide camera market. & 30% of Air conditioners . 25% of Washing Machines & 20% of Refrigerators. Chinas crude steel production rose by 28.25%. Investment in chemical industry grew by 35.9%.

Chinese Diplomatic Efforts

To secure the resources their economy demands, Chinese diplomacy is directing towards countries rich in natural resources, such as those in the African continent and to those countries that have long standing issues with America.

The Oil Situation

In 2004, China's oil consumption rose by 40 %, to 6.5 million barrels a day. U.S.

domestic demand is 20 million barrels a day. U.S. demand is rising by about 500,000 barrels per day per year. China's is increasing by about 1.5 million barrels per day per year.

China

has become increasingly dependent on Middle East oil. Today, 58 % of China's oil imports come from the region. By 2015, the share of Middle East oil will stand on 70 %.

The WTO
The

world trade organization is the institution in charge of regulation and monitoring of the commercial relations between the organization member countries.

is based on the principle that all member countries are equal and what is done towards one must be done to all. Its members are free to export to the other members according to the same rules as others do.
It On

the first of January of 2005 China officially became a member of the WTO and had direct and nearly unconditional access to other markets with high income that previously defended themselves against its cheap products.

China Economic Fact Sheet

GDP real growth rate: 9.8% (2008) country comparison to the world: 13% (2007) 11.6% (2006)

GDP-Per capita (PPP-Purchasing power parity): $6,000 (2008)country comparison to the world: $5,500 (2007) $4,900 (2006) note: data are in 2008 US dollars

GDP composition by sector: agriculture: 10.6% industry: 49.2% services: 40.2% (2008)

The Future
The

current upturn in the Chinese economy is unchangeable as China is predicted to become the next superpower alongside with USA.

China will

gradually change, as it is already happening, from an intensive labor force industry to a more technical intensive sort of production.

This status is predicted to be achieved by around 2030

Conclusion
is no longer a developing country. Instead it is an emerging economical superpower that it is writing economical history. the last century was the American century the 21st century will be the Chinese century.
If New threats have risen and many more will continue to show up. China