CHINA UPDATE:

REPERCUSSIONS FOR RP
Prof. Reuben Mondejar
IESE Business School, University of Navarra (Spain)
mgreubenatcityu@gmail.com, RMondejar@iese.edu
Reuben MONDEJAR is Professor for Asian Programs and Initiatives of IESE Business School, University of
Navarre (Spain). He is also Professor for China Globalization for HK Management Association consortium
programs. He was formerly Associate Professor, Management Department, City University of Hong Kong, where
he served as Director of the Global Business Management program from 1995-2016. He is an occasional Asian
affairs commentator for international news providers CNBC, CCTV-China (CGTN), BBC, Bloomberg, CNN,
Reuters-Thompson, Voice of America, Aljazeera, and others. He has held visiting academic appointments at
Harvard University (Weatherhead Centre for International Affairs, and was Southeast Asian Studies Tutor at
Lowell House, Harvard College, 1987-1990), Oxford University (Balliol College), Cambridge University (St
Edmund's & Wolfson Colleges), the IFO Research Institute (Munich), and the Kiel Institute for World Economics
(Germany). He holds degrees in Economics, Finance, International Studies, and a PhD in Management
(Organization Theory). He was educated De La Salle University (Manila), Harvard University (USA), and IESE
Business School (Spain). Professor Mondejar is the author/co-author of eight books, among which are Business
Creativity (with A. Gogatz), Palgrave Macmillan, London, 2005 (Russian ed, 2007); and Introduction to
International Business & Globalization (with J. Onishi et al.) 2010. His articles have appeared in the popular
press as well as in academic journals such as Journal of Management, Journal of Management Studies,
Management International Review, Journal of Entrepreneurship, among others. His fields of interest are
International Business, Globalization, Geopolitics. Entrepreneurship, International Education, and Creativity. His 1
consultancies involve educational institutional development of other universities and entities, police training,
correctional and prisoner’s education, and other social/civic initiatives.
Structure of Presentation

● Part One: Foundations, Assumptions,

Perceptions
● Part Two: China prognosis: Flashpoints,
Tensions, Snapshots
● Part Three: China globalization: Projections
and Prognostications

2
The Growth Picture
China 2023 GDP to grow 5% (Oct
30 data):
4.9% GDP growth year on year
9.1% decline in property market
5% urban jobless rate
25% youth unemployment rate
300% of GDP debt
The Opportunities
● China can be a good big brother in friendly
times (e.g. Laos and Cambodia).
● Good source of foreign investment (e.g.
Maharlika Fund).
● Wonderful ally in international diplomacy.
● Very large market is super attractive

4
Potential effects on RP
● Macro: weaponization of trade, e.g. exports
will be squeezed (durian, papaya, bananas),
Chinese tourist flow could stop, investments
will dry up, other diplomatic repercussions.
● Micro: employment visas could tighten,
student and education especially university
exchanges could stop, other people to people
interaction could weaken.

5
Creativity: notions & concepts
● Rearranging what we see
● To look at things differently
● Ability to give new response to challenges
● Dictionary definition: “the human activity
that produces original ideas or
knowledge, frequently by testing
combinations of data to produce unique
results”
9
11
12
13
100 years ago - a sleeping dragon
Napoleon: “The world will shake once the dragon wakes up”

14
60 years ago - a weak dragon

15
1980s – a dragon now wakes up
(a result of Deng Xiaoping’s 1978 opening)

16
1990s – the dragon plays friendly

17
2000s “China Threat Theory” perception

18
The new China
China at present is a country that is socialist in
dynamics, running on capitalist market
economics, with a very respectable geopolitical
international weight, governed by a strong
authoritarian bureaucratic political regime,
pursuing a Confucian notion of a harmonious
society, and leaving behind a “Communist”
label theoretically, but not formally.

19
U.S. Capitulates to China (?)

20
Across various dynasties, there were
attempts to revise “Confucian principles”
whenever it suited prevailing societal
conditions. The attempt to explain
internationally Chinese principles through
“Confucius Institutes” has suffered a blow.
There were around 500 the world over by
2018. In April 2019, the Ministry of Education
forbid the Confucian teaching of the “Three
Obediences” (to father, husband, sons), and
the “Four Virtues” (work, appearance,
speech, and behavior).
21
Decline of Confucius Institutes
● In the US, only five Confucius Institutes are
left as of October 2023, from 96 in 2004
which were spread across universities in 44
states. Victim of US-China differing
understanding of academic freedom.
● Confucius Institutes are also being closed in
other countries, particular, the EU.

22
Some Strategic Geopolitical Factors
Stories
Legends Folktales
Religion/ Symbols
Rites
History Language

Rituals Metaphors

Myths Values

Beliefs Sagas
Heroes / Heroines 23
 Part Two
China prognosis: Flashpoints,
Tensions, Snapshots

24
Manifestations of Geopolitics
Security/Military

Politics (local/non local)

Economics
i c a l
o li t
p
Geo alities
National re
Identity

25
 Issues for Asian Strategies
● Are Confucian principles a hindrance or
a help to East Asian geopolitics?
● Experience comparisons between
Mainland China vs Japan, South Korea,
Singapore, Taiwan, Hong Kong.
● Role of technology and globalization
(i.e. China and Google).
● Clash of cultures, clash of civilizations
(Samuel Huntington)
● End of History Theory (Fukuyama)
26
Some issues to consider when
dealing with China

● “Authoritarian Emperor” meets foreign

countries who have an “uninformed”
knowledge of the “Chinese way of
globalization”; meaning on “our terms”.
● Is China now ready for prime time
international engagement and diplomacy?
● Is China ripe to challenge both hard and soft
power of the US (and other Western
countries)?
27
General Asian flashpoints (I)
● “Asian model of benevolent
authoritarianism” is being severely
challenged by a desire for participatory,
open, governance.
● Political legitimacy and economic growth
go hand in hand, like “lips to teeth”.

28
Major Asian Flashpoints (II)
1. China and Taiwan: Possibility of armed conflict,
although unlikely.
2. North Korea a nuclear state??? Probably only
China has the leverage to contain N. Korea.
3. Spratlys, Scarborough and Second Thomas
Shoals, & Paracels: only China could cool
down the issue in the South China Sea.
4. China and Japan squabbles (East China Sea…)
5. China vs. India border disputes.
6. Mekong river disputes (China vs. Myanmar,
Thailand, Laos, Vietnam, Cambodia) 29
Considerations: China-effect
● China is no doubt the new regional and
global gravitational center, geopolitically,
economically, and perhaps in due time also
militarily.
● But the China effect on other countries can
be managed.
● Transitions in China are the windows of
opportunities for other countries (look for
niche matching, inter-dependencies &
“complementations”).
30
Traditional Engines of World Growth
● Growth Rates of Major Economies

Source: World Economic Outlook, IMF

31
 China as potential next centre of
gravity: some considerations (I)

● China has been the world’s largest economy

for most of the past 2000 years (18 centuries
out of 20), but has never become a centre of
international business activity
● Although China is soon to take over as the
world’s largest economy (already eclipsed the
US by PPP in 2014), but income per capita is
dismal (about US$1500), as distinguished
from GDP per capita at US$10000.
32
“The Chinese are very ingenious at imitation... they have imitated to perfection
whatsoever they have seen brought out of Europe. In the Province of Canton (廣
東/Guangdong) they have counterfeited several things so exactly, that they sell
them Inland for Goods brought out of Europe.” 33
Spanish missionary, Domingo Navarette, circa 1659-64.
Shares of world GDP, 2022

34
 China as potential next centre of
gravity: some considerations (II)
● China’s economy grew an average of 9.4% in
the last 30 years with a GDP in 2020 of around
US$14 trillion, the 2nd largest economy in the
world (after the U.S. --- Japan as 3rd). In Oct
2014, China became the world’s largest
economy by PPP measure. GDP growth in 2023
is 5%
● Foreign companies invested over US$700 billion
into China (1978-2019, ---much more than what
the U.S. spent rebuilding post-war Europe with
the Marshall Plan).
● China exports in one single day in 2020 what it
35
exported in the entire year of 1978.
● Asia “adds” a Germany every 3.5 years,
● 70% of this growth comes from China.
● Between 2016-2020, China’s trade grew by
nearly $4trn despite trade friction with the US.
● That’s more than an entire Germany (almost the
size of the entire offshore US dollar market)
● China and the world both will eventually need a
globalized RMB
● HK continues to intermediate a good part of
China’s trade growth.

36
Over 100 countries have China as their largest trading partner

37
 China as potential next centre of gravity: some
considerations (III)
● Since 1978 China has continually faced many
challenges (i.e. pollution, political/social unrest,
corruption), but none of these derailed China’s
economic growth, generally.
● One-child policy (1980-2016) means that China
has become a country of old people with less
creative energy; the young supporting a massive
unproductive elderly part of the population.

38
 China some considerations (IV)

● China is likely to grow old before it joins the rich

countries (if at all); by 2030 it will surpass Japan
as having the largest proportion of aged
population over 65 (China Academy of Social Sciences)

39
China flashpoints (I)
● China’s joining the WTO (in 2001 and other
global events, i.e. 2008 Olympics, 2010
World Expo, 2022 Winter Olympics) forced it
to “open the window” to the world with the
consequent “in-out” flow of influences
● Significance of 1978, 2001, 2008, 2013 BRI
● Deng’s “four modernizations” and Jiang’s
“three represents” have transformed China:
there are consequences as well
● Xi Jingping’s “Four Comprehensives” (build
moderately prosperous society by 2035;
deepen reform; rule of law; enforce Party
discipline) 40
China flashpoints (II)
● Increasing disparity among regional economies: rise
of blue-chip provinces
● Banking reforms still being resisted from within
● Uneven application of rule of law
● Downsizing of state-owned-enterprises and the
consequential fall out in state employment
● Industrial overcapacity (e.g. motor vehicles; real
estate overheating in key cities/regions
● Over 300 million migrant population could be a
roving social powder keg
● Sub/mini cultures (56 ethnic minorities) require
skillful maneuvering
41
China flashpoints (III): tensions to watch
● Between central and provincial governments:
tug-of-war over power, jurisdiction, resources
● Between state and private enterprises
● Between generational leaders
● Between current elites and aspiring ones
● Tensions caused by the various “Ts” (Tibet, Taiwan,
Tian-an-men 4th June 1989 event, Technology,
Telecommunications, Trade)
● Tension caused by revival of religious sentiments

42
China Snapshots - I
● China has the world’s highest number of
annual deaths triggered by air pollution
● Urban Chinese (officially put at 51% of
population since 2011) earn more than
three times as much as those in rural
areas, the highest income gap since
reforms started in 1978

43
China Snapshots - II
● China’s one-child policy (1980-2016)
created a generation of only children
currently numbering about 150 million.
● The number of unmarried young men
looking for a wife is estimated to be now
over 30 million.
● Beijing also enforces a one-dog policy
(must not be more than 14 inches high)
44
China Snapshots - III
● China has surpassed Japan as the 2nd
largest car market after the U.S. (is
expected to have more cars than the U.S.
by 2025)
● China’s defence spending in 2020 approx
US$280 billion (compared to US: approx
$670 billion)

45
China Snapshots - IV
● Public protests rose by 50 percent in 2008 and
spiraling year after year (including Covid and post
Covid)
● China has the world’s largest number of internet
users surpassing web-surfers in the U.S. --- over
one billion in 2019 (60% of population including
250m in rural areas) source: National Development Plan 2016
● Cell phones in China have grown from 87 million in
2000 to over 1 billion in 2020.

46
China Snapshots - V
● 70% of the world’s umbrellas is made in
China
● 72% of U.S. shoes
● 50% of U.S. Kitchen appliances
● 85% of U.S. artificial Christmas trees
● 80% of U.S. toys

47
China Snapshots - VI
● 35% of total China production exits through
Guangdong province (one of 24 provinces)
● For every shipping container bringing
materials into Guangdong’s port, nine go out
filled with exports
● Over 70% of Hong Kong exports come from
China

48
Current China Problems (I)
● 1. Ageing population
● 2. Shrinking workforce
● 3. Gender imbalance (114:100)
● 4. State dominated economy/fiscal system
● 5. high income inequality
● 6. Repression in civil society: dissent, religion
● 7. Severe control/censorship of media
● 8. Still high corruption and kleptocracy

49
Current China Problems (II)
● 9. Capital flight
● 10. Industrial overcapacity
● 11. Very high debt (300 percent of GDP)
● 12. Declining GDP growth
● 13. Middle income trap
● 14. Housing market bubble
● 15. Infrastructure overbuilding (ghost cities)

50
Current China Problems (III)
● 16. Environmental degradation
● 17. No leadership succession (leader for life)
● 18. Challenges coming from Taiwan and HK
● 19. Unimpressive “soft power”. Few Nobel
prizes, few reputable world-class universities,
among others.

51
Seven Tensions: fear over Western
Influence (Document # 9 of the Central Committee General Office
2013)

● Constitutionalism (Western version of the

constitution undermines the supreme
superiority of the Communist Party).
● Universal values as defined by the West.
● Human rights as understood by the West.
● Media independence and press freedom.
● Civic participation (NGOs don’t exist).
● Neo-liberalism.
● Criticisms of the Party’s traumatic past.
 China policy against IT rougues
since September 2013)
● “Libelous” online postings must not be
forwarded 500 times, or be viewed 5000
times
● Postings are “libelous” if they lead to:
● Mass public protests
● Ethnic clashes
● Religious clashes
● Damage China’s image
● Cause a bad international effect on China
China’s 2017 “National Intelligence Law”
Chapter 1, article 7

“All organizations and citizens, if asked, shall

support, cooperate with, and collaborate in
national intelligence work, whenever and
wherever.”

54
China’s Policy as regards
internet

● China does not allow Google, Facebook,

Twitter, Youtube, Line, Whatsapp,
Instagram. It has a homegrown equivalent,
which is popularly used called “Weibo”
and “Wechat”.
56
China Post-WTO Entry
● China still lacks immediate trade software and
people skills to deal with outside world. Too
much opening, perhaps too soon.
● China continues to be in transition politically,
economically, socially, demographically,
technologically. Too much to handle.
● Baggage of 50 years (‘58-’78 has yet to
completely simmer down (Great Leap Forward 1958,
Hundred Flowers Bloom 1964, Cultural Revolution 1966-76).

57
Way Ahead for China Post-WTO

● China’s leaders need to sustain the reform and opening

up process.
● Elimination of artificial barriers, e.g. exchange controls,
--- shall reveal both hidden strengths and hidden
weaknesses.
● China’s problems are now mostly exposed for all the
world to see. Increasing pollution problems.
● China will need to continue to be willing to learn and
adapt (including learning from mistakes).

58
 Part Three
China globalization: Projections
and Prognostications

59
China and Northeast Asia
Geopolitics
Taiwan, Japan, The Koreas, Hong Kong

60
61
Hong Kong:
Prospects and Retrospects
● Update: since 1997 handover (return of
sovereignty) and Asian Financial Crisis 1998,
Global Financial Crisis 2008.
● Beijing-Hong Kong Relations
● HK Problems and Opportunities
● HK is Crises-Friendly: Organizational
Memory
● The Way Ahead: Belt and Road; Greater Bay
Area Project
62
● Hong Kong Update (the Negatives)
● Underemployment
● Real estate, construction, retail,
import/export: slowly recovering
● Democracy, Universal Suffrage very
much a talking point after electoral
reforms in 2020
● Wish to please Beijing by Establishment
● Only 17% of population consider
themselves as “Chinese citizens”

63
● Hong Kong Update (the Positives)

● Banking system continues to be solid

● High local confidence in the HK$;
70% of bank deposits are in local currency
● Low mortgage default rate--- less than 3%
● Political front: stable relative to the region
● Social front: relatively stable
● Community peace: holding up. Corruption and
petty crimes under control.

64
● Beijing-HK Relations

● One country-two systems formula is under

severe test
● General irrelevance of official government
● Modernization in China should be good for HK
● What is good for HK should also be good for
China

65
66
● HK’s Supposed Problems
● Compromised independence: politics,
judiciary, economics
● High cost of living
● Threat of 3 S’s
[Shanghai, Singapore, Shenzhen]
● Inadequate knowledge economy skills:
language, spoiled-brat attitude of the
young.
● Erosion of traditional role after China’s
WTO entry in 2001
● Tension with one-country-two systems
67
● HK’s Opportunities

● State of one country-two systems formula

● General irrelevance of official government
● Modernization in China is good for HK
● What is good for HK is also good for China
● WTO entry reveals China’s inefficiencies which
are windows of opportunities for HK

68
● Hong Kong is Crises-Friendly

● Recent history shows a crisis every 10

years (since 1949)
● Schumpeter’s “Creative destruction”
has played well in HK
● In fact, HK needs a constant crisis to
prosper

69
 Organizational memory of crises
(every ten years)
● 1949 Communist victory in the Mainland
● 1959 Great Leap Forward disaster
● 1969 Cultural Revolution effects
● 1979 Second Oil Crisis together with rumblings
concerning 1997
● 1989 Tiananmen event
● 1999 Asian Financial Crisis
● 2008/09 Effects of US Sub-prime Financial Crisis
● 2019 Protests and demonstrations asking for
universal suffrage (Basic Law promise)

70
● Ten Factors in HK’s Favour (International
Business Model of Hong Kong)

● Low Taxes: 15% personal; 16.5% corporate

● Trade Policy: few tariffs
● Low Government Consumption: approx 8%
● Monetary Policy: historically low inflation
● Open Capital Flows
● Banking: stable, independent, competent
● Wage & Price Controls: generally absent
● Property Rights: highly/legally protected
● Business Regulations: low level
● Black Market: virtually non-existent

71
● The Way Ahead for Hong Kong

● Take advantage of Catastrophy Theory: China’s

flashpoints are windows of opportunities (5-Ts)
● Continue with Drucker’s Innovation/Change: high value
added services (language skills, state of the art
technological skills, leverage advantage of familiarity
with MNE practices)
● Foster Maslow’s Special Talent Theory: lenient
immigration especially the despised, the poor and
God-forsaken, --- they will unleash McClelland’s N-Ach
power
● Refine Rule of Law (human rights, copyrights,
arbitration)
● Capitalize on HK’s geography/location, colonial history

72
 TAIWAN
Economic integration & political unity???

● Since 2003, China is Taiwan’s largest trade

partner.
● Without trade surplus with China, Taiwan would
have registered foreign trade deficit since
1992-3.
● Taiwan has invested up to US$100 billion in
China. More than 50% of Taiwan outbound
investment goes to China.
● Brain drain: over 1 million Taiwanese reside in
China.

73
Argument for
interdependence
● Over 50,000 Taiwan companies employ
millions of Mainland Chinese workers.
● Taiwan companies account for up to
25-30% of Chinese exports and 60% of
China’s hi-tech exports.
● Vested interests exist in China to protect
stable economic relations with Taiwan.

74
 Likelihood of war
● Since the early 1990s, China has been
modernizing its military with the Russian
assistance.
● China’s defense budgets increased by
double digits in the last 15 years, while
Taiwan’s defense budget declined after
1994.
● Political infighting inhibits Taipei’s military
modernization programme, although
sinceTrump era has helped improve in this
aspect.

75
 China’s missile threat
● the number of missiles that China has
deployed across Taiwan Strait increased from
over 200 in 2000 to around 2500 in 2022.
● 100 to 120 missiles each year added to the
Chinese arsenals.
● If Taiwan is unable to implement its major
military procurement projects, China enjoys a
nearly 3-to-1 advantage in total combat
capabilities over Taiwan (Source: Taiwan’s Ministry of
Defence).

76
Can China win the war?
● China’s doubtful capacity to achieve and
maintain air superiority
● China’s unproven record of staging
surprise invasions
● The unknown reaction of foreign powers
(the US, the EU)
● The unknown domestic consequences for
China in case of protracted conflict with
(and over) Taiwan

77
Most likely scenario: status quo
● Given China’s domestic developmental goals
and successful Olympics in 2008; World
Expo in 2010; Winter Olympics 2022 ---
Beijing won’t push for any radical changes.
● Taiwanese public does not want any changes
in the current situation (survey after survey).

78
Unlikely scenario:
one country, two systems
● The experience of Hong Kong convinced the
Taiwanese of the inferiority and unsuitability
of the HK model.
● The model doesn’t give Taiwan anything that
the Taiwanese don’t already enjoy.
● The Taiwanese public consistently oppose
the formula (70%-80% against).

79
 Predictions

● Reunification with Taiwan is unlikely to happen

in the foreseeable future.
● Beijing is unlikely to use force against Taiwan,
unless Taipei declares independence.
● Taiwanese identity will continue to gather
strength.
● Economic interdependence will deepen.
● The US and EU will stay committed to the
defense of Taiwan.

80
 Southeast Asia Geopolitics
(and the China Effect on them)
The ASEAN countries

81
82
S.E. Asia and China
● Ten countries comprising the ASEAN
organization has become a new force in the
equation. Has reduced bilateral approach of
PRC.
● Some distrust of China remains.
● Asian Crisis of 1997-98 made China the
undisputed regional leader, sidelining Japan.
● There is a “Little China” in practically every
ASEAN country.

83
The ASEAN countries (600m)
● Indonesia (300m population), Philippines,
Thailand, Malaysia, Singapore, Brunei,
Vietnam, Cambodia, Laos, Myanmar/Burma.
● The rich ones are the small countries; the
poor ones are the larger economies.
● Very culturally diverse from each other.
● All were previous colonies (except Thailand).
● Graft and corruption a perceived endemic
problem for most (except Singapore).

84
VIETNAM --- Asia’s new tiger
● Progressing fast economically.
● China’s competitor in several products for
cheap labour.
● Has put behind successfully the ghosts of the
Vietnam War debacle (ended in 1975).
● Remains a socialist country with psuedo
dictatorship exercised by one-party system.

85
Vietnam (cont’d)
● Had a successful integration between North
and South.
● Hardworking people (making up for lost time).
● Now one of the world’s top coffee producers,
among other agricultural commodities.
● Is attracting substantial FDI. Expat friendly.
● Companies are moving there as China
becomes expensive.

86
Vietnam (cont’d)
● The only country to really stand up to China
engaging China in small wars.
● Had a brief border war with China in 1979
which China “lost”.
● Continues to engage China in sea and
off-the-coast islands claims (the Paracels).
● Reputed to be self-respecting independent
and doggedly determined in pursuing its
economic goals.
87
Black spots---
Asian geopolitics destabilizers
● US underperforms for ten years. Eastern Europe
crisis; (re-run of Asia 1997-98).

● Ukraine war; Israel-Palestine conflict expands.

● Emerging markets demand continue to decline (no

more of ever increasing exports)

● China recession.

● Asian domestic political troubles accelerate

(Malaysia, Thailand, Myanmar, Indonesia,
Philippines). Host for terrorism cells.

88
 Two theories of significance

● Clash of Civilizations Theory: proposed by

Harvard professor Samuel Huntington.
Modernization brings along westernization and has
led to a fractured world. Bad for international
business and globalization.

● End of History Theory: proposed by Prof Francis

Fukuyama. Liberal democracy and free markets are
now universal and this makes the world harmonious.
Good for international business and globalization.

89
Clash of Civilizations (I)
● 9/11 terrorist attack was a result of this.
● The more the non-Western societies are
modernized, the more fundamentalist (e.g.
Islam) some sectors in those societies
become. Alienation emerges.
● Fault lines. (religions, nations, culture,
common history: Islamic, Chinese, Indian)
● West vs. Islam; West vs. China.
90
 Clash of Civilizations II
● Nationalism rises: China vs. Japan. Pockets
within China. The Balkans. Northern Ireland.
Kashmir issue.
● Differing value systems and ideologies defy a
political solution.

91
 End of History Theory
● New world order following the collapse of
Communism. Only one superpower, the U.S.
● Now at the end point of mankind’s ideological
evolution. Western liberal democracy is the
final form of human government. War of ideas
has ended. Democratic regimes will multiply.
Free markets will flourish worldwide.

92
The Borderless World (K. Ohmae)
written in 1993 for projection in 2005 and beyond

● Interlinked economies.
● Downsizing centralized governments
(diminishing sovereignties of nations).
● Unlimited criss-crossing of goods/services.
● Address concerns of conservationists &
environmentalists (climate change); aid to
underdeveloped economies; greater stress
on human rights and dignity.

93
Is India the next China?

2022
Source: CEIC, UBS estimates

94
Is India the next China?

2022

Source: CEIC, UBS estimates

95
Comparison of China and India (I)
China India
Population 1.34 billion in 2011 1.23 billion in 2011
1.30b in 2050 1.70b in 2050
800m in 2100 1.55b in 2100

Median age 35 26

Literacy 92% 71%

Imports $1.5 trillion $1 trillion

GDP (ppp) $14 trillion $6 trillion

Internet Users 1 billion 800 million

Labor Force 850 million 850 million

Military Exp. 6% of GDP 2.5% of GDP

Foreign Reserves $3.2 trillion $0.3 trillion 96

 Comparison of China and India (II)
China India
Political System Nominally Communist Parliamentary democracy

Rule of Law Weak, bureaucratic Weak, inconsistent

Corruption Widespread (72th ranked) Widespread (85th ranked)

Econ. Structure MFG world workshop Excellent IT, software, BPI

Infrastructure 10 times paved roads, 10 Poor, power black-outs,

times lower power cost, inadequate transport
phone lines 6 times
higher, impressive high
speed train network
Public Sector Large and loss making Large and loss making

Banking Sector Continuously developing Weak, underdeveloped

Income distribution Impressive poverty Some poverty reduction;

reduction; high income potentially destabilizing
97
inequality (rural vs. urban; income inequality
coastal vs. inland areas)
Is China a new global leader?
In favor
1. Economic policies
have proven successful
during various crises.
2. Social policies
have transformed a poor
nation into the world’s 2nd
largest in one generation.
Against
1. Government is a ruthless
dictatorship that denies its
citizens basic rights,
imprisons its critics.
2. World’s worst
environ-ment polluter.
98
 Is China a new global leader?
In favor
3. UN has hailed the
government as having
reversed five centuries of
national decline and lifted
millions out of poverty, all
within 50 years. In 1999, only
2% of the population was
regarded as middle class. In
2022, this is now estimated to
hover around 35% or beyond.
4. Has been a leading force
for reforms in the World Bank
and IMF. Has signed up to
most inter- government
organizations. A signatory to
Against
3. Rewrites history in its
favour, manipulates global
trade rules including its
currency, and bullies its
neighbouring countries.
Indirectly punishes
organizations that awards its
citizens for defence of human
rights not to its liking. Ignores
international rulings not in its
favour.
4. Corruption remains
endemic at many levels of
officialdom despite 99
anticorruption campaign.
Is China a new global leader?
In favor
5. Has been calling for
peaceful non-violent ways
in dealing with global
crises (Afghanistan issue,
Iraq, Iran, Syria,
Israel-Hamas, Ukraine, etc.)
through its seat in the UN
Security Council. Is the
least user of veto power
(usually abstains rather
than vote against).
Contributes over 20K
troops to UN
Against
5. Wealth gap is among the
worst in the world (Gini
coefficient).
6. Greed and commercial
immorality prevails leading
to poisoned milk and
tainted food sales, fake
goods, and some defective
(even toxic) consumer
products, as well as sale of
expired vaccines. 100
If China and India
hold together, the
future of Asia is
assured.
 Belt and Road Initiative
Ground Silk Road
Maritime Silk Road
 October 2013
President Xi Jinping

(1) Economic Belt of the Silk

Road
(2) 21st Century Maritime Silk
Road
● The BRI is a super mega project involving
an estimated 400billion to 3trillion US$
across 30 years (up to around 2050). It is
targeting 4.4 billion people in Asia,
Europe, Africa comprising around 130
countries. About 400B $ has been
released as of 2019 distributed among
others:
● 1. Asian Infrastructure Investment Bank (AIIB)
● 2. Silk Road Fund
● 3. China Development Bank
● 4. All PRC State-Owned Banks
105
The ancient silk road was neither a
creation of China, nor did it require
China to understand the cultures of
other civilizations.
People
Essentially
Empty
People
People

People
 Perhaps the most spectacular
development is the high speed rail in
China.
st
In the past 16 years (in this 21
century), China constructed some
16,000 kilometers of high speed rail.
China High-speed Rail
 To render BRI successful, China must
ensure its profound understanding of
the politics, economy, and culture of at
least, if not all, some of the nations,
countries, and regions along both
“ROADS”.
 Perhaps the most severe demand BRI
places on China is how it can on the one
hand preserve its rich and robust
culture, and on the other hand truly
understand other civilizations’ culture
and behavior.
What China Critics and Cynics say
about BRI

1. It is a benign geopolitical extortion by China done

through economic bribery with China’s initial pledge
of $200B to fund infrastructure projects.

2. It could somehow become reminiscent of Japan’s

Asia Co-prosperity Sphere in the first half of 20th C
which became Japan’s platform for invasion/war.
This time it is “Asia-Europe Co-Prosperity Project”.
There is a lurking anxiety of Chinese expansionist
intentions.

112
What China Critics and Cynics say
about BRI

3. BRI could be China’s way to solve its industrial

overcapacity problems by exporting them through the
infrastructure projects.

4. The infrastructure projects could be China’s way to

hedge in solving its future needs in food and other
resources by building access to obtain them.

113
What China Critics and Cynics say
about BRI
5. Despite China’s claim to its “peaceful rise”, its
neighbours remain wary of its perceived coercive
behavioural past: annexation of Xinjiang in 1949,
occupation of Tibet in 1951, involvement in Korean
War in 1950-53, border invasion of Vietnam in 1979,
self-proclaimed ownership of the South China Sea
since 1949 (with continuous disregard for the 2016
judgement by the UN-backed Permanent Court of
Arbitration in The Hague which declared China’s
90% claim of the sea invalid), building of artificial
islands in the South China Sea and their increasing
militarization.
114
What China Critics and Cynics say
about BRI
6. The declared BRI intention of shared win-win
benefits with the participating countries is generating
doubt. As of 2021, ---- 90% of the BRI-funded
construction/infrastructure projects were awarded to:

90% to Chinese companies/contractors

7% to local companies
3% to foreign companies

There seems to be very little space for non-China

companies to be involved in BRI infrastructure
projects. (Source: FT Jan 2021; CSIS)
115
Chinese Culture and Worldview
Additional Relevant Bibliography

Allison, Graham. Destined for War: Can US & China Escape Thucydides’s Trap?. Houghton Mifflin, NY, 2017.

Bell, Daniel. The China Model: Political Meritocracy and the Limits of Democracy. Princeton Univ Press, NJ, 2015.

Bickers, Robert. Out of China: How China Ended the Era of Western Domination. Random House, London, 2017.

Brahm, Laurence. China As Number One. Butterworth-Heinemann, Singapore, 1996.

Cheng, Joseph (ed). China: A New Stage of Development for an Emerging Superpower. City Univ of HK Press, HK, 2012.

French, Howard. China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa. Random House, UK, 2018.

French, Howard. Everything Under the Heavens: How the Past Helps Shape China’s Push for Global Power. Knopf, NY, 2017.

Hawksley, Humphrey. Asian Waters: The Struggle Over South China Sea and The Strategy of Chinese Expansion. Duckworth, London,
2018.

Hayton, Bill. The South China Sea: The Struggle for Power in Asia. Yale Univ Press. NH, 2014.

Lam, Willy Wo-Lap. Chinese Politics in the Era of Xi Jinping. Routledge, London, 2015.

Manuel, Anja. This Brave New World: India, China, and the USA. Simon and Schuster, NY, 2016.

McGregor, Richard. Asia’s Reckoning: The Struggle for Global Dominance. Random House, UK, 2017.

119
Midler, Paul. Poorly Made in China. John Wiley, NJ, 2011.

Midler, Paul. What’s Wrong with China. John Wiley, NJ, 2018.

Mulhahn, Klaus. Making China Modern: From the Great Qing to Xi Jinping. Harvard Univ Press, 2019.

Paulson, Henry Jr. Dealing With China. Hachette Publ, NY, 2015.

Peyman, Hugh. China’s Change: The Greatest Show on Earth. World Scientific, London, 2018.

Pillsbury, Michael. 100-Year Marathon: China’s Secret Strategy to Replace USA as Global Superpower. St Martin’s, UK, 2016.

Pomfret, John. Beautiful Country and the Middle Kingdom: America and China, 1776 to the Present. Henry Holt, NY, 2016.

Rachman, Gideon. Easternisation: War and Peace in the Asian Century. Random House, UK, 2016.

Schell, Orville and Delury, John. Wealth and Power: China’s Long March to the 21st Century. Little Brown, London, 2013.

Schell, Orville. China Reader (several vol): Imperial China, Republican China, Communist China, Reform Years, Little Brown, UK, 2000.

Schelle, Orville. Mandate of Heaven: A New Generation Lays Claim to China’s Future. Little Brown, London, 2015.

Shambaugh, David. China Goes Global. Oxford Univ Press, UK, 2014.

So and Chu. The Global Rise of China. Polity Press, Cambridge UK, 2016.

Xu Zhiyuan. Paper Tiger: Inside The Real China. Head of Zeus Publ, London, 2015.

Ye, Fei, Wang (eds). China: 5000 Years of History and Civilization. City Univ of HK Press, HK, 2007.

120
121