Bruce Dickson Professor of Political Science and International Affairs George Washington University Updating the China Model

Creating national champions Emerging middle class Improved governance Global outreach and backlash

Creating National Champions Made in China Export Strategy without Chinese Brands

Creating National Champions Made in China Export Strategy without Chinese Brands LenovoHaier

Creating National Champions Government policies Favor state-owned enterprises (SOEs) Limit entry into Chinese market New innovation policy Challenges

Creating National Champions Implications for US Business environment in China Government focus on exchange rate and trade balance

Emerging Middle Class Recent trend: Less export driven, more domestic consumption Less based on cheap labor, more on skilled labor and urban middle class Motives Inequality Balanced growth Next phase of economic development

Emerging Middle Class Government policies Populism Urbanization

Emerging Middle Class Government policies Populism Urbanization Encourage rising wages Strike at Honda plant

Emerging Middle Class Government policies Populism Urbanization Encourage rising wages Suicide Nets

Emerging Middle Class Government policies Populism Urbanization Encourage rising wages Suicide Nets Happy Foxconn worker

Emerging Middle Class Government policies Populism Urbanization Encourage rising wages Subsidizing consumer goods

Emerging Middle Class Challenges Beneficiaries of export orientation Rising aspirations Implications for US Support for status quo Rising nationalism

Improved Governance Political reforms

Improved Governance Political reforms But not democratization Village election

Improved Governance Old strategy: hasten economic development Roads, railroads Telecommunications Education New Strategy: consequences of growth and reform Health care Pensions Environment Welfare

Improved Governance Challenges Consultation without accountability Rising demands

Improved Governance Challenges Consultation without accountability Rising demands Implications for US Democracy promotion But most Chinese are satisfied with status quo

Global Outreach and Backlash Security Resources Counter US influence

Global Outreach and Backlash Aid without linkage But still strings attached

Global Outreach and Backlash Aid without linkage But still strings attached

Global Outreach and Backlash Challenges International image Fears of dependence

Global Outreach and Backlash Challenges International image Fears of dependence Popular backlash Peru Kyrgyzstan

Global Outreach and Backlash Implications for US Defense against rising China Improved relations with a variety of countries Backlash may lessen Chinas appeal as international leader

Summary These four goals address Chinas basic goals Challenges and opportunities for China For US and other countries