CHINA AND GLOBALIZATION What is Globalization? Why is it Important for China? What are its Consequences: Structural? and Spatial? What about its timeline? Spatial Shifts at the Global Scale!

Global Shifts in the Global Economy According to Dicken, the key is “the qualitative transformation of economic relationships across geographical space” and not their mere quantitative spread.

Two Contesting Views of Globalization Neo-Liberal, Pro-Global View: Globalization based on free markets will advance growth & benefit all! Anti-Global View: Growing Inequalities. Globalization of markets increases scale and extent of inequalities! Markets should be regulated. Return markets to local control.

Importance of Past Economic Geographies Past Geographies had a simple (and perhaps simplistic) core/periphery division of labor in world economies. This reflected the division between rich (developed) and poor (undeveloped) countries or colonies. Terms of trade always benefited rich countries which took resources from developing countries and used the developing countries as their markets. Is this pattern visible today in any global relationships?

The New Global Economy (post WWII) WWII brought fundamental geopolitical & economic shifts Emerging sharp division between East and West

Key Realities of Last 50 Years Rise of China (post 1949 & especially after 1978) Decline & Collapse of the USSR, 1991 Global Economy has been highly volatile with periods of rapid growth interrupted by precipitous declines & recessions. Volatile energy prices and regional economic crises resulting from banking & credit issues. Despite volatility and recession of 2008, continued dominance of U.S. economy

Growing Interconnectedness of Global Economies Trade Grows Faster than Production & Output. FDI increases rapidly (faster than trade). Role of Transnational Corporations (TNCs) (Implies ownership not just investment) Rapid growth of transnational corporations linked to FDI. TNCs account for perhaps 2/3s of global trade (1/3 of which may be intra-firm trade across national boundaries).

New Forms of Trade Intra-firm trade responds not just to traditional market factors and principles of trade according to theory but also to decisions made within firms. Now includes increased quantities of intermediate inputs of manufactured products exchanged across borders several times.

Results of Increased Globalization Great Increase in Trade Volume & Value. Both Merchandise and Services Current Accounts as Share of GDP. China & Japan increase. U.S. increases total, but declines as share of GDP

Shifting Geographies but Enduring Concentration of Production & Wealth There are continuing shifts in global economy. Emerging Economies: E & SE Asia, Middle East (Oil), Turkey & Israel, India, Latin America (Argentina/Brazil, Mexico, Colombia, Venezuela) South Africa. Continuing Wealth & Production: Euro Area, N. America, Japan, Australia

China is the big Growth Story in Global Shifts of the last 35 years Scale of China’s Growth & Change is Huge! GDP annual growth 9-10% until very recently. Growth rate for 2016 and beyond may be 6.5% or lower. Merchandise Exports growth annually 13% (largest in world) Largest Agricultural Producer Enormous Consumer of Global Resources (1/3 or steel, ¼ of aluminum, 23% of copper, 30% of zinc, 18% of nickel,31 % growth in oil demand in short period. China is now a major exporter of capital through its huge current accounts surplus

China’s Fast Growth Critique on Chinese Economic Data China is now world’s 2 nd largest economy. Rapid economic growth is now slowing as China faces new challenges. Annual Economic Growth has been Rapid for past 30 years based on high savings & high investment rate. 2007: $3.44T(USD);2010: $5.88T (passes Japan for #2) 2012:$8.22T; 2013: $9.4T (US is now approx. $17T) Premier Li Keqiang has raised questions about the accuracy of Chinese Economic Data Premier Li relies on data on electricity usage; railroad loadings, and banking information for his estimates of growth

Emergence of BRICS Brazil, Russia, India, China Recent Hype on Role of BRICs as the new Market Leaders of the Global Economy. Recent declines in all but India especially as China’s economy slows and commodity prices decline. Russia and Brazil: Big Commodity Exporters (Energy, Raw materials, and Agricultural Products). China: Big Commodity Importer: Energy and many metallurgical products for industrial production. India. Big potential but still a comparatively small role.

US still dominates Global Economy, but share of total declines 20% of Global manufacturing 28% of Global Services Production (major exporter) 8% of Agricultural Production (major exporter) World’s largest FDI investor Increasing inward flow of FDI in recent years Source: All data are 2007

Great Shifts of Past 50 Years (the story is East & SE Asia) Growth Model is on Exports of Mfg. products Japan: 1960-’80s, very fast growth, slowed in 1990s Tigers: Hong Kong, Taiwan, S. Korea, Singapore, 1970s+ Thailand, Indonesia China begins in late 1970s, accelerates in 1990s, but is now slowing Vietnam, Cambodia

Cities as Nodes & Clusters of Global Economic Activity Major World Cities as Centers of Globalization Cities are the key nodes & clusters in the global economy Global Connectivity is articulated through the network of great cities in the global system Money, information, transportation, distribution, & production of goods & services London, New York, Hong Kong, Tokyo, Paris, Singapore, Beijing, Chicago, Los Angeles & Shanghai, Seoul, Moscow (Toronto and Sydney)

The Changing Dynamic Global Economic Map Continuing but declining dominance of older, core economies New realities of emerging East Asia (China) Actual global shift of developing countries is limited. Enduring reality of Global Shift Only a small number of developing countries have experienced substantial economic growth; others stagnate. New global economic map is multi-scalar – “a mosaic of unevenness in a continuous state of flux.” PD