The Rise of China and Its Implications Fei-Ling Wang, Ph.D. Professor Sam Nunn School of International Affairs Georgia Institute of Technology Atlanta, GA , USA ; (fax) Fulbright Scholar and Visiting Professor Yonsei University, Korea Council on Foreign Relations-Hitachi Fellow University of Tokyo, Japan

China’s Rise Impressive Record: 9.6% annual growth rate since 1979; 2-3 times the LDCs and 3-4 times the OECD 9.6% annual growth rate since 1979; 2-3 times the LDCs and 3-4 times the OECD More than 10% annual growth since 2003 More than 10% annual growth since th largest economy; (or 2nd by PPP) 4th largest economy; (or 2nd by PPP) $500+ billion FDI; $860+ billion foreign currency reserve; largest foreign purchaser of US T-bonds $500+ billion FDI; $860+ billion foreign currency reserve; largest foreign purchaser of US T-bonds Great Potential: 38-42% savings rate 760 million cheap labor (2-10% of the US average wages) Developmental state Poised to over take the US in 20 years(?)

National GDP Sizes: Ranked by the CIA

National Powers: The Chinese Ranking

Problems Expansive growth v. intensive growth Lack of innovation: How and why? Taiwan issue Income, urban-rural, & regional inequalities million under- or unemployed Trust, credit, and rule of law A repressive society in the Internet age K protests/riots in Environmental destruction: water and Tibet Capital flight & a broken banking system

Make it or Break it: The Key Factors Governance & Socio-political Stability The CCP one-party regime The CCP one-party regime Will the economy boom forever? What to do about the 250+million underemployed? External Peace The explosive Taiwan Issue What the current world leaders will do? Scenarios Latin Americanization? Another Japan? (Prior to or post WWII)?

Implications Great opportunities and significant benefits Great opportunities and significant benefits New engine of world ’ s economic growth New engine of world ’ s economic growth Alternative norms and institutions Alternative norms and institutions Burden and cost-sharing-Public good provision Burden and cost-sharing-Public good provision Challenges and risks Challenges and risks Competition: jobs, market, energy, raw materials Competition: jobs, market, energy, raw materials Buying oil, selling shoes, and pirating Gucci and Prada Buying oil, selling shoes, and pirating Gucci and Prada Adaptations and clashes of values and ideas Adaptations and clashes of values and ideas Westphalia v. Tian-xia Westphalia v. Tian-xia Uncertainties and instabilities - new systemic challenger? Uncertainties and instabilities - new systemic challenger?

Security Implications Big Guns and More Missiles At least double digit growth of military budget Comprehensive military-industry complex Focused development of offensive capabilities New PLA Professionalizing Solid CCP control New strategies Immediate implications In the Taiwan Theater Sea lanes and territorial disputes Exporting weapons

Chinese Foreign Policy Conservative & reactive nature Conservative & reactive nature Good neighbor and enriching neighbors Good neighbor and enriching neighbors Pro status quo Pro status quo For how long? For how long? Post-taoguang yanghui already? Post-taoguang yanghui already? Growing assertiveness and new demands Growing assertiveness and new demands Panda, dragon, or wolf? Panda, dragon, or wolf?

China’s 3-P Motivation Preservation Preservation Prosperity Prosperity Power Power

Three-P Incentive Structure and Samples

Future: Three Choices To Hail Beijing as a New Leader To Hail Beijing as a New Leader To Subdue the PRC: External Constraints To Subdue the PRC: External Constraints To Mold and Free China: Internal Constraints To Mold and Free China: Internal Constraints

Mongolian Options: Some tentative thoughts Forward to the past Forward to the past Neutralization Neutralization Building alliances with other great powers Building alliances with other great powers To reconfigure the region To reconfigure the region Help to transform and constrain China peacefully Help to transform and constrain China peacefully

Some further readings By Fei-Ling Wang Organization through Division and Exclusion: China's Hukou System, Stanford CA: Stanford University Press China Rising: Power and Motivation in Chinese Foreign Policy, co-edited with Yong Deng of US Naval Academy, Lanham, MD: Rowman & Littlefield, In the Eyes of the Dragon: China Views the World, co-edited with Yong Deng of US Naval Academy Lanham,MD: Rowman & Littlefield, 1999.