Name Zhang Huie Liujun Wanghuaning Caohu Zhong

Weifeng

UID 226171209 226171239 226171258 226171221 226171215

Geopolitics and China's Geostrategic Choices

Mackinder proposed a new topic in the field of geopolitics at the Royal

Geographical Society in 1904. Mackinder believed that the world is
composed of several large islands, of which Eurasia and Africa are the
largest "world islands". The American continent is another island. Europe is
a smaller island. Because Eurasia is the concentration of major economic
power in the world, it is also a coherent area with a large population and a
huge area, and it is also a world cultural, religious and The birthplace of
values, so Eurasia has become the geographical hub of world development.
He believes that Eurasia is the heart of the land, that is, the most powerful
region, so Mackinder's control of Eurasia is regarded as a It is the
establishment of a world power. He believes that if Germany and Russia ally
or Germany conquers Russia, the foundation for ascending to the throne of
the world can be laid. Therefore, Mackinder summarizes his thoughts into
three famous words: Who rules? Eastern Europe, whoever rules the
hinterland of the continent; whoever rules the hinterland of the continent,
rules the world island; whoever rules the world island, rules the world.

Mackinder's entire geology theory is also known as Luxin theory. Its

important perspective is to recognize the pivotal position of the central
region of Eurasia, and to think that the struggle for the world is the struggle
for the heart of the world. Modification of Mackinder's Luxin theory
Speakman's is Speakman. Speakman's view is a fringe theory, relative to
Mackinder's heartland theory. He does not

Denies the importance of the theory of the central zone of Eurasia, but
believes that due to the sparse population of the central zone of the Eurasian
continent, the degree of social organization is difficult to achieve the level of
concentration of large-scale resources. On the contrary, the eastern and
western edges of the Eurasian continent are both It is an area with
concentrated population, rich resources and a high degree of social
organization. He believes that the core area of the world is the edge area on
the east and west sides of Eurasia. Therefore, his research conclusion is that
if there is sufficient integration in the western or eastern edge A country with
population and resource capacity, and can achieve a high degree of
organized industrialization, is very likely to become a powerful country.
"Whoever masters the most potential regions in the world is expected to
become a world power in Eurasia; whoever becomes Eurasia Whoever is the
world power on the mainland will become the challenger of the world
superpower America.

Russian President Vladimir Putin said: "The disintegration of the former

Soviet Union is the biggest geopolitical disaster in Eurasia in the 20th
century." With the disintegration of the Soviet Union, these regions in
Eastern Europe have become the target of certain countries, leaving a large
"power vacuum", the European Union, NATO is keeping an eye on these
countries, and almost all of their income is under their command, and the
Western camp has expanded unprecedentedly. A geopolitical "black hole"
has appeared in the "heartland" of traditional geostrategies, and the United
States and Russia have launched fierce competition for Central Asia. The
United States is using the banner of anti-terrorism to infiltrate Central Asia,
strengthen the military alliance between the United States and Japan, seek to
establish theater missile defense, and form a deterrent to Asian countries,
especially to curb the influence of Russia and China in the Asia-Pacific
region, while Russia pursues Taking into account the "double-headed eagle"
strategy at both ends of the Eurasian continent. Moreover, Eurasia's own
internal and external countries have also formed bilateral relations,
triangular relations and multilateral relations with Eurasian countries, and
various interest groups are intricate. The geography of Eurasia In the
evolution of the entire international pattern, the activities are the most
frequent, the evolution of geographical relations is the fastest, and the
competition for geographical interests is also the most intense, which has a
global impact on the world's geographical pattern. Eurasia itself has a unique
strategic position, and its population accounts for About 75% of the world's
population, energy resources account for 75% of the world's total reserves,
and gross national product accounts for about 60% of the world's total. The
subcontinent contains most of the politically confident and dynamic
countries in the world. The six world economic powers behind the United
States are all located in the Eurasian continent. Only one of the open nuclear
powers is not a Eurasian country, an undisclosed nuclear state. There is only
one country that is not Eurasian. The two most populous countries in the
world that intend to seek regional hegemony and global influence are also
Eurasian countries.
 In recent years, China's surrounding areas, generally the eastern side of
the Eurasian continent, are gradually forming the prototype of an arc-shaped
cooperation circle. This multilateral cooperation circle starts from the
junction of China, Russia and Central Asia. At the same time, the "Shanghai
Cooperation Organization" was established. The downward extension was
initiated by Primakov, and is currently under negotiation and promotion of
the "China, India and Russia Trilateral Strategic Partnership". Advocacy in
ASEAN The "10+3" framework was established. Since then, East Asia has
ended the history of no regional cooperation mechanism, and has gradually
entered the process of regional cooperation integration, and East Asian
countries have been calling for the establishment of an East Asian
cooperation mechanism. , Research scholars are also full of ideas for
cooperation in East Asia.

At the same time, the diplomatic strategies of major countries and

regions in the world have a tendency to shift eastward. Russia has shifted
from a pro-Western diplomatic strategy when the Soviet Union first
disintegrated to a strategy that takes into account both the East and the West,
which has greatly enhanced the position of the Asia-Pacific region in
Russia's geopolitical strategy. ; The European Union began to focus on the
development of "new Asia-Europe relations" that were not controlled by the
United States; Japan and Australia began to "Brexit into Asia". The United
States began to shift its strategic focus from the European region to the Asia-
Pacific region since the late Clinton administration. After the current U.S.
President Barack Obama took office, Hillary Clinton, the Secretary of State,
chose four Asian countries for her first diplomatic visit. It has returned its
strategic focus to Asia, and implemented a high-handed policy on China
under the apparent slowdown of the Iranian region. Henry Kissinger once
said: "The focus of international affairs is shifting to the Asia-Pacific
region."

The integration of this region is already a basic situation among major

powers as the basis for future international competition, so China regards
strengthening the integration of East Asia as the top of its international
strategy. China's geographical situation is very complicated. Observe that
the western part of China's border line is China The best export in strategic
space. The "Stan" group of countries appeared on the border of the former
Soviet Union's stepped western China. These fraternal countries are not only
rich in oil and natural gas, which can provide extremely important energy for
China's national economy, but also important The five countries have the
Aral Sea, the outer border goes directly to the Caspian Sea, across the
Caspian Sea from Turkey and Georgia, the southwest is bordered by another
super oil-producing country, Iran, and the south is close to Afghanistan.

(1) Preventing the strategic ambitions of the United States. In terms of

geostrategy, Iran connects four important regions of the world, namely
South Asia, Central Asia, West Asia and Russia. Among them, the three
parties (Central Asia, West Asia and Russia) and Iran itself are the core of
the world Oil-producing areas hold the world's energy, especially the
lifeblood of oil, and are a must for the world's powers. Under the
circumstance that the United States has already occupied Iraq and
Afghanistan, if the United States plans to militarily occupy Iran in the future,
then the United States will have an unprecedented First, Turkey has a pro-
US government, and the US will use Turkey to face Russia and the EU
across the Black Sea. Second, in many Islamic countries in the Gulf, people
have strong anti-US sentiments, but most governments are pro-US. The pro-
American Arab regimes in the Sheung Wan Gulf, such as Saudi Arabia,
Kuwait and the United Arab Emirates, will make the entire Persian Gulf an
inland lake of the United States, and the Strait of Hormuz, the chokepoint
that ships transporting oil through the Persian Gulf must pass through, will
be easily blocked by the US military. Firm control, this will become the
most important strategic step for the United States to completely dominate
the world. Once the Strait of Hormuz is completely controlled, the United
States will also completely control the core channel of the world's energy,
not only China, but also the European Union and Japan. Subject to the
United States. American strategists will definitely take this view in their
hearts: "Whoever wins Iran wins the world". Right-wing strategists in the
United States fully understand a truth: today's world has the strategic hub
and the energy choke point, whoever wins world.

(2) Focus on cooperation mechanism. The Shanghai Cooperation

Organization is focusing on the current strategic environment, coordinating
the interests of China, Russia and the five Central Asian countries, thwarting
the United States from the west to subvert the five Central Asian countries
through color revolutions, isolating and eventually arming the five Central
Asian countries. Military occupation of Iran, and then to achieve the ultimate
domination of the world's energy control channel. On the Iran issue, both
China and Russia should make strategic decisions and coordinate and
cooperate.
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Starting from the western border, using bilateral and multilateral

cooperation mechanisms to develop good-neighborly and friendly country
relations is China's strategic choice. Since the founding of Central Asian
countries, China has been actively developing friendly and cooperative
relations with Central Asian countries, and has continued Deepen
cooperation and enhance strategic relations. Today, Central Asia is not only
a key geo-strategic region in China, but also plays an important role in
stabilizing the unification of borders. In 2006, China proposed the
establishment of a harmonious region during the SCO summit, which was
Unanimous praise from all participating countries. In recent years, China has
participated in international peacekeeping, and through various channels
such as development and financial assistance, it has consolidated and
established a new type of China-Africa model of equality, win-win and
mutual trust in all aspects of politics, economy and culture. Strategic
relations. In 2007, the chairman paid a state visit to Africa, and the idea of a
harmonious world has been deeply rooted in the hearts of the vast number of
developing countries. In short, the concept of a harmonious world is the first
time China has made a global perspective on the ultimate goal of the
historical development of human society. Humanistic care is not only a
theoretical elaboration of promoting the establishment of a fair and
reasonable new international political and economic order, but also China's
beautiful vision for building a future world, and it also enhances China's
international image and international status.

Land is the carrier of human existence and a necessary condition for the
existence of a country. The ocean not only has huge natural resources, which
is the most effective way to create wealth, but also shoulders the important
task of connecting the world and protecting the interests of overseas
markets, resources and shipping. Therefore, land and sea Combining
geographic strategies can resist the possible joint attack of powerful enemies
on land and sea, and avoid being attacked by the enemy. In the new era of
China's peaceful rise, we must realize that a nation that has lost control of
the sea must not be a powerful nation, especially today. May become the
geographic hub underpinning China's rise, we must turn our strategic focus
to the ocean.

(1) The South China Sea issue. With the deepening of economic
globalization, the strategic position of the South China Sea and the Nansha
Islands has become increasingly apparent. Many countries coveted the South
China Sea oil resources, which is the main reason for the intensification of
disputes in the South China Sea. In recent years, China has been
emphasizing full or partial sovereignty over the Nansha Islands, relying on
the huge wealth of oil and gas resources in the South China Sea to
continuously expand its armaments and accelerate the pace of construction
in the future battlefields of the South China Sea.
 How to deal with the exchanges with different countries in ASEAN has
become the main aspect of solving this problem. Although the ten ASEAN
countries are bound by the charter, there are still some internal omissions,
and there are often conflicts of interests with my country. Our country needs
to choose the right time. Focus on strengthening cooperation with one or
more countries, focusing on striving for Myanmar, Laos, Cambodia. At the
same time, actively seek to reach an understanding and joint cooperation
with Taiwan.

At present, with the birth of my country's aircraft carrier, the

spontaneous development of the J-15 reflects the real result of "keeping a
low profile" and improving the conditions for my country's maritime
operations. It not only impresses the world, but also enhances China's
military status. my country's National Defense Strategy The pattern has also
been adjusted. We must establish the idea of that we can win a local war
under high-tech conditions, speed up military preparations, and use strong
military strength to check and balance each other.

(2) The Diaoyu Islands dispute. Sino-Japanese relations have been

complicated since ancient times. Since the 1990s, the continuous growth of
China's economy has created ambiguity in the normal competitive
relationship between the two countries. The mainstream in Japan believes
that China is "rising". It will definitely change the order in East Asia, and
thus hold a pessimistic attitude towards the future Japan-China relations.
Therefore, it is strategic to hope that China will occupy the strategic
commanding heights before China's comprehensive national strength
exceeds that of Japan, and the intention to bring the Diaoyu Islands under
the management of the Japanese government is strategic. Consider, rather
than territorial disputes.

China should be extra cautious when dealing with its strong neighbors in
East Asia. From a broader perspective, as China increasingly participates in
international politics as a major power, in the Asia-Pacific region, China is
not only related to Japan, the actual It is also inevitable that there will be
more strategic frictions with the United States. When the United States
returned Okinawa to Japan in 1972, it packaged the Diaoyu Islands together
regardless of China’s objection, which has become a security risk today. In
fact, it should be considered as the United States’ own strategic tradition A
deliberate arrangement in East Asian geopolitics, the two countries in the
East Asian world that are most likely to pose a strategic challenge to the
United States are caught in a fight with each other over the Diaoyu Islands
issue, and the United States can reap the benefits.

Therefore, when dealing with the complex relationship between China

and Japan, especially the recent dispute over the Diaoyu Islands, China still
needs to avoid the deepening and deterioration of the relationship between
the two countries, so that the issue of the Diaoyu Islands will affect China's
entire strategic layout. Therefore, we should adhere to the overall situation
and insist on peaceful cooperation. relations, and take stability of bilateral
relations as the basic pursuit.

Historically, the foreign policies and behaviors in the process of the rise
of great powers have shown strong shadows of geopolitical ideology. This
fully shows that geopolitical ideology has played an important guiding role
in the pattern and strategic orientation of the rise of great powers. At the
same time, geopolitical factors are Gradually replacing ideology, it has
become an important factor for a country to consider in its foreign
exchanges. As analyzed above, the changes and status quo in the geostrategy
of China's neighboring countries and major powers have prompted China to
pay more attention to the strategic significance of geopolitics, and in the
protection of territories On the basis of the integrity of sovereignty, it not
only pays attention to the strategic bad environment of land, but also pays
attention to the maintenance of the geographical significance of sea power.
These changes are in line with the fact that "the world has formed a civilized
system in which geopolitics, geoeconomics and geoculture are intertwined.
The realization of national interests requires a stable framework of regional
and global international relations, coordination and cooperation among
countries, and a joint response to the challengeChina is a traditional land
power, and in the process of historical development, it has formed a
"concentric circle" system of East Asian Chinese and Barbarians centered on
itself. The core of this model is the central Central Plains dynasty, which is
politically, economically and culturally advanced, and the periphery is the
neighboring countries that communicate with the Central Plains dynasty,
study, accept canonization, and pay tribute. of wasteland. Owen Lattimore, a
well-known American geopolitical and ethnologist in the 1920s and 1930s,
wrote in his famous book "China's Inland Frontiers in Asia" through the
interaction between the farming civilization of the Central Plains and the
Mongolian steppe civilization. The analysis of the relationship has extracted
the characteristics of China's so-called "inner-Asianness".

The Middle East and the deep inland Central Asia have become the
"vehicles" of various civilizations in the Eurasian continent, where the
intersections occurred in different periods of ancient history. Therefore,
Toynbee refers to the "Syria and the Wuhu River-Yaosha River Basin". "The
area is called "Traffic Roundabout". As an ancient civilization in the East
Asian continent, China has had direct and indirect exchanges with South
Asia, West Asia, and Europe through the inland "Silk Road" and "Prairie
Road", which reflects the ancient "Continental Age" background of Asia.
Characteristics of Interactions among Civilizations in Continental Europe.
At the same time, China sailed around the Eurasian continent through the
"Maritime Silk Road" (or "Porcelain Road"), which also directly connected
East Asia, South Asia, West Asia and even Africa.

In a word, from a macro perspective, the ancient international society

was based on the interaction of Eastern and Western civilizations on the
Eurasian continent, and formed a large framework of inter-regional
interaction across the Eurasian continent. Continental or continental-coastal
interactions, with the continental yellow civilization as the main body,
jointly constructed the form of ancient international relations in the
"Continental Age". Since modern times, with the opening of new shipping
routes by Western countries and the discovery of new continents in North
and South America, Europe has colonized and expanded the world, building
an international system dominated by Western countries, and changing the
pattern of the ancient international society dominated by continental
civilizations. , ushered in the "ocean age" of international relations
dominated by the West.

Whether Portugal and Spain in the early 16th century divided the world
with the "Pope's Meridian", or "sea coachmen" galloping across the world's
oceans, and then to the control of the entire ocean by the so-called "Empire
on which the Sun Never Sets", and even after the Cold War The only
superpower, the United States, supports its global leadership by controlling
the world's major ocean passages, while the Western powers support a
European-centered world and a Western-dominated international system
through ocean development, ocean expansion, and ocean domination.
Western countries, as "the marginal countries or maritime countries of
Eurasia on the world island", have conquered the other side of the continent
and the world with industrialized power from one side of the coast, across
the ocean, and then conquered the world; while the United States on the
North American continent has After World War II, it controlled the edge of
the Eurasian continent across the Atlantic and the Pacific, curbed the
expansion of land power from the heart of the continent, and tried to build a
hegemonic-led unipolar international system.

In this "ocean age" world, the logic of Western countries' behavior is to

control the land by the sea, that is, by grasping the "power of the sea" and
curbing the power of the land, so as to dominate the world. Western colonial
powers and hegemonic powers, through the ocean, the "vast common land
leading to all directions", can easily extend the tentacles of power to the
world, rapidly expand and conquer all continents, and realize the
international "ocean age" based on the ocean. relationship construction. This
is a form of flat international relations, in which the East and the West are in
an unbalanced state, and the West once dominated and dominated the world.

In the maritime age, "the ability to enable troops and caravans to pass
through the vast ocean between home, allied, and wartime desired territories,
while at the same time deterring such actions by the adversary," is
particularly important, a capability known as for sea power. It should be said
that sea power has an important relationship with the ocean age. The country
that masters the sea power can become the leader of the ocean age, and the
ocean is the core platform for the realization of international power. As a
result, the so-called "Mediterranean Era", "Atlantic Era" and "Pacific Era"
have formed the cognition of the international relations system basically
established by academic circles. Western academic circles once used the so-
called "Mediterranean era" to describe the fact that Spain dominated the
European international society through foreign expansion and conquest.
After that, the Netherlands, France, the United Kingdom and other countries
successively expanded overseas through the Atlantic Ocean to the world. In
the end, the United Kingdom won and established the "Empire on which the
Sun Never Sets". For this first emerging global hegemon, "if the British
Empire loses control of the seas, everything will be lost". This is an
"Atlantic era" dominated by Western colonialism.

It is based on the experience of European countries' ocean expansion

that American scholar Alfred Mahan proposed the famous "Sea Power
Theory", which clearly advocates controlling the ocean to dominate the
world. The British scholar Julian Corbett combined national strategy with
marine comprehensive capacity building and naval strategy, and proposed a
British maritime strategy design that dominates the world. In the early 20th
century, the writings on the theory of sea power had a great influence on the
then US President Theodore Roosevelt, so much that he predicted that the
Pacific Ocean would be a region that could provide massive expansion, the
main arena for world power competition, human society It is bound to enter
the "Pacific Age". In the process, in the early 20th century, American
scholars were considering the ultimate construction of an "American
Empire" by pursuing maritime power.s faced.

On October 5, Hua Chunying posted on social media to jointly build a

better world - China has fulfilled this promise and recorded it through the
banknotes issued by its friends and partners around the world. . There are
also 13 pictures attached to the post, which are the symbol projects built and
developed by China that appear on the banknotes of 13 countries.

From these 13 landmark projects, we can see that the basic logic behind
China's economic rise is that infrastructure investment promotes the
country's economic development.

First, transportation infrastructure. In China's development in the past,

everyone has a mantra, that is, "If you want to get rich, build roads first".
The first and most important infrastructure investment in China's economic
rise is transportation infrastructure, from the initial national and provincial
highways, to highways, to the national railway network trunk line, and then
to the high-speed rail network covering every province in the country.The
ports in Pakistan, the bridges in Thailand, and the bridges in Congo in the 13
photos are the symbolic projects of China's cooperation with these countries'
transportation infrastructure.

Second, energy infrastructure.Whether it is an agricultural economy or

an industrial economy, industrialization and urbanization cannot be achieved
without energy. In particular, there must be energy security for economic
take-off. China now ranks first in the world in the construction of energy
infrastructure, including hydropower, nuclear power, thermal power, wind
power, photovoltaic power plants and so on. In 13 pictures, we see thermal
power plants in Sri Lanka, hydropower plants in Laos, dam power plants in
Sudan.

Third, water infrastructure.Every country has to face the problem of

uneven distribution of water resources or lack of water resources in the
process of economic development. China is a country with a large water
conservancy infrastructure. There are large water conservancy dam facilities
and irrigation systems in small agricultural production bases, which
constitute a support for China. The resource base for economic development.

In 13 pictures we see three dam water facilities in Sudan.

Third, urban public service facilities.Urban public service facilities are

the growing demand for supporting public services in the process of
economic development and urbanized lifestyles. China’s past development
experience shows that urban public service facilities not only drive
investment, but also enhance the city’s brand image, such as gymnasiums,
religious facilities, Landmark buildings, etc.

In 13 pictures, we see the parliament building in Malawi, the university,

the stadium in Qatar, the bank headquarters building in Kuwait, the mosque
in Algeria, the library in Tajikistan.

Fourth, communication infrastructure. After the rise of China's

economy, the most important infrastructure to support economic
transformation and upgrading is communication infrastructure. Under the
condition of perfect network communication infrastructure, China's
economy has successfully achieved the breakthrough of network
informatization and seized the development of global network digital
economy. strategic opportunities. Now China has the country with the most
5G communication base stations, the 4G network covers every corner of the
country, and the satellite communication Beidou navigation system.

In terms of geopolitical global influence, there is no change comparable

to the shift in Sino-US relations from strategic cooperation to strategic
competition. This shift has changed the outlook for China's economy for
many, who presumably believe that its impact on China will be significant
and that China will have to deviate from a successful development path. The
European and Global Economic Governance Laboratory predicts in a report
that China will be forced to leave the developed economic world and embark
on a path of self-reliance. There is uncertainty about this model. Indeed, in
addition to using tariffs and non-tariff barriers to prevent Chinese exports to
the United States, the United States has also increasingly restricted Chinese
investment in the United States, especially targeting Chinese companies
acquiring some companies in key US technology areas, setting up more
barriers . The Trump administration has also sought to curb the rise of
Chinese tech companies by expanding the "entity list." In addition, the
United States has also forced Chinese companies to delist from the United
States with unreasonable demands for data, while restricting the access of
American capital to some strategic industries in China. However, I don't
think these containment policies will have a lasting impact on the Chinese
economy, and it's hard to stop the rise of the Chinese economy. Realities in
the field of trade and investment have shown that these containment policies
have also hurt the U.S. economy, let alone the Chinese economy and the
advanced economies. Because China has already become an important
player embedded in the global production system and has formed a highly
complementary relationship with the United States and other developed
economies. China's economy is second only to the United States in size, and
the actual impact of those attempts to decouple China from Western
economies is very limited. More importantly, as measured by the
accumulated value of physical capital and human capital, China has already
crossed the threshold on the technological upgrading channel, and it is only
a matter of time before closing the overall technological gap with the United
States and advanced economies. This is crucial for predicting China's future
development model, because only in terms of the need to transform and
upgrade its economic structure and enhance its scientific and technological
innovation capabilities, it is impossible for China to abandon its existing
economic model. It is naive to think that US containment policies will force
China to return to a state-led planned economy. In fact, Chinese leaders are
well aware of how best to deal with U.S. containment. In some areas of
security, China will undoubtedly strengthen the country's leading power. But
the U.S. containment has also made China more aware of the shortcomings
of its own system in higher education and technology research and
development, and decided to change it. China will encourage and devote
more resources to strengthening its autonomy in basic and strategic fields
such as education, science and technology, agriculture and new energy. As
an economy with a scale of more than 17 trillion US dollars, this is not just a
response to the containment of the United States, it is also an endogenous
need for economic transformation and upgrading. China has included the
smooth internal circulation in its national strategy to ensure the connection
of the two circulations of the international and domestic markets. At the
same time, strong policies have been introduced to support the rapid
development of big data, computing power, 5G and artificial intelligence,
and increased investment in new infrastructure and the promotion of digital
economic transformation have been written into the "14th Five-Year Plan".
According to statistics from the Ministry of Industry and Information
Technology, by the end of 2021, China has built and opened 1.425 million
5G base stations, accounting for more than 60% of the world's total. More
than 650,000 5G base stations were built last year. In terms of promoting
economic liberalization, in recent years, China has been committed to
improving the business environment, accelerating financial opening, and
intensively setting up free trade zones. Therefore, US containment and
geopolitical changes have made China more aware of its weaknesses and
speed up the process of improvement. Of course, in addition to geopolitical
influences, China's economy also faces challenges from within. Including
the slowdown in the growth rate of the working-age population and the
aging of the population. Although the Chinese government has adjusted its
fertility policy to encourage fertility, the experience of East Asia suggests
that fertility declines may be delayed but not reversed. To hedge against the
negative impact of aging on economic growth, more fundamental policies
are to provide better education to improve population skills and labor
productivity. As an economy that still has great growth potential, China is
committed to structural reforms to continuously improve productivity and
maintain economic dynamism. The slowdown in total factor productivity
growth is almost inevitable in East Asian high-growth economies after high
growth. The core of the problem is how the government should respond
correctly. The lesson to be learned from East Asian economies is that
political pressure governments have to allocate resources to less productive
areas to close the gap, or for the same reason to encourage capital in policies
that do not contribute much to productivity Overinvestment in areas such as
real estate threatens productivity growth. Severe resource misallocation not
only undermines productivity growth, but is also a source of macro
instability, keeping economic growth below potential. The Chinese
government faces a thorny task of structural reforms in correcting resource
misallocations and securing productivity growth prospects. One of the
reforms is that China needs to open more areas to private capital. From the
cross-country comparison of per capita capital and per capita GDP, China's
economy still has room and potential to improve productivity. However, to
take full advantage of these potentials, China must accelerate structural
reforms, as it did in the 1990s, and use a more fair competition and freer
market system to allocate factors and scarce resources to more productive
enterprises. Home-led departments, improve the efficiency of resource use,
and stimulate the creativity of enterprises.

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