Review China’s economic transformation & growth. Identify & describe key issues in US-Chinese relations. Deconstruct the “currency war” Evaluate speeches.

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Presentation transcript:

Review China’s economic transformation & growth. Identify & describe key issues in US-Chinese relations. Deconstruct the “currency war” Evaluate speeches to determine how perspective influences policy.

How did a subprime mortgage crisis lead to a downturn in the global economy? Lending houses bundled mortgage-backed securities & lost $ with high foreclosures Credit-default swaps by AIG insurers threatened massive losses Collapse of Bear Sterns & Lehman Bros led to global market panic & credit crunch

Mao Zedong Command econ Great Leap Forward Collective farming Crash Course China’s Communism Deng Xiaoping (1978) Decollectivization farms Lifted price controls Allowed private enterprise Opened foreign investment Privatized industry Socialist or free-market? FAIL! SUCCESS!

TermBrief DefinitionSignificance Budget Deficit Trade Imbalance Tariff WTO Intellectual Property Laws Recall Currency War In small groups you will define the assigned economic terms Then you will research how these terms relate to China

TermBrief DefinitionSignificance Budget DeficitUS got spends > earns, borrow $ to fund spending China funding up to 10% US debt…undue influence Trade ImbalanceUS buys more goods than it sells to China US pushing China to change policies to close gap TariffTax on importsUS free trade, China protectionist WTOGoverns global tradeBoth benefit from drawing China into internatl system, both critical of others practices Intellectual Property Laws Protect rights of businesses over their creations China pirates US music, film, and software products RecallRemove dangerous products from shelves Lack oversight & safety in Chinese manufacturing put Americans at risk (toys, pet food, medicines) Currency WarCompetitive devaluation of currency Makes goods cheaper, long-term decline in profit & trade

Currency Wars Explained During recession a weak currency can stimulate econ growth Weak currency = cheaper exports = lower prices to consumers = increased demand = more jobs = more income = economic recovery Chinese Govt “pegs” currency– sets fixed exchange rate (rate at which bought/sold on foreign exchange markets) Currently no demand for RNB/Yuan = weak value = cheaper goods US Govt wants China to “float” RMB – allow rate to be determined on open market through supply & demand Stable econ = high demand = increase value = Chinese goods more expensive = US goods more attractive on global market = smaller trade deficit.

Watch- scholarsonline/erickson/ae4.php scholarsonline/erickson/ae4.php scholarsonline/erickson/ae2.php scholarsonline/erickson/ae2.php scholarsonline/erickson/ae3.php scholarsonline/erickson/ae3.php In groups of 3 or 4: read the 2 speeches & answer the questions that follow. How does each side describe conflicts or areas of cooperation? What issues seem to be most important to each side? Why might the two sides convey a different tone? Is one side more right than the other? How might different perspectives & communication styles impact US- China relations?

2001 Goldman Sachs Paper Economic & Political Reforms Fast growing economies (investment potential)! Significant influence regional affairs? BRICS Forum 2011 Brazil Raw materials Russia Raw materials (oil & n.gas) India Cheap services China Cheap manufactured goods South Africa/South Korea?

Can you think of other areas over which the US & China disagree? Taiwan Tibet Human Rights Military modernization (nuclear) & arms markets North Korea Role of UN Security Council (diplomatic vs. economic/military sanctions & intervention)