China

The Rise of China

The World Bank raised China’s growth forecast from 6.5% to 7.2% in 2009. This figure was better than expected by analysts. A £356 Billion stimulus package has helped the economy in this growth, but exports are still down as the world accommodates the cut backs of the financial crisis.

The rest of the world, excluding China, is expected to shrink its aggregate GDP by 3%. Chinese growth is expected to remain respectable this year and next.

 

The Problems with China’s Growth

China’s economic growth in the last 30 years comes to huge environmental cost. Damage occurs to both the people in China, and the country’s reputation.

Recently, China overtook the USA as the biggest carbon dioxide emitter in the world. It is also the world’s biggest consumer of coal – the cheapest yet most polluting form of energy. ¼ of global coal reserves are found here, and the nation depends on it to provide more than 2/3 of its energy needs.

How Pollution affects China:

  • 2/3 of the world’s most polluted cities are found in China
  • 400000 people die of pollution related diseases each year
  • 1/3 of China is affected by Acid rain.

Environmental damage costs the country approximately 5% of its economic output each year.

 

Impact on the rest of the world

China’s growth within the BRIC’s and the rest of the world has lead to it having a range of influence in different areas.

The Shanghai Co-operation Organisation is a group made up of China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan. The organisation, created in 2001, was set up to curb extremism in the region.

China submitted a £6Billion loan to the organisation in 2009, in an attempt to assist the other nations with their economic growth. In addition to this, President Hu also offered to send delegations to SCO nations to assist with trade and investment. As the second largest economy in the world, Chinese expertise could be very useful in these nations.

Since the creation of the SCO, its objectives have changed. It is now being used as a base for economic co-operation and advances, rather than to tackle problems. The idea of a single energy market is being discussed, with some analysts believing China is trying to increase its influence in these highly strategic ex-Soviet nations of Central Asia. In recent months, China has increased lending to Russian companies. China is Russia’s second largest trade partner after Europe, with total trade between the two nations being over $80Billion. These increased links are being seen as an attempt to increase influence, regarding energy and China’s energy security.

China (National Water Transfer Scheme)

-   North to South

-   380,000 people moved

-   Water clean upstream, polluting factories only allowed downstream

-   Water shortages in Chinese cities such as Chongqing and Shijiazhuang

-   Rapid urbanisation and industrialisation has meant increased demand for water

-   Northern China receives far less precipitation than the south

-   In 2008, 300 Chinese cities faced water shortages and groundwater in the north was drying up

-   Alarmingly high rates of economic growth suggested problems ahead with water supply

-   The same amount of water needed to generate $200 from farming could generate $14,000 if used for industry

-   Many of China’s rivers drying up, but many have also become so polluted

  • 80% of Chinas river no longer support fish
  • The Yellow River contains so much toxic waste and heavy metal that these poisons are entering the human food chain through the contaminated water
  • Arsenic, lead, cadmium and chromium have all been found in rice and vegetables grown using contaminated river and groundwater. They have been linked to developmental diseases, mental retarding and stunted growth in children

Growth of Mobile Technology

In China, a surge in mobile telephone usage due to the laying of the country’s infrastructure of landlines has been too slow to keep up with its huge economic growth and the demand for better communications.

In Kenya, a low cost mobile telephone service, called M-Pesa, allows Kenyans to send and receive money via text messages. The service is a popular, because it removes the need to travel long distances to deliver or receive cash.

Within rural Rwanda, healthcare workers use mobile phones with special software, which allow them to enter data into the phone about drug stocks and AIDS patients and then transmit the information via text to health officials.

The Village Phone Initiative in Uganda has opened up telecommunications in the country.

China’s Development – Government Intervention

As a nation, it was extremely backward economically before 1949. Since then its development strategies have lead to growth, with it now being an emerging global superpower.

China adopts the ‘five year plan’ strategy for economic development, with the 2011-2015 plan currently being implemented. The plan sets out:

  • Population will be controlled below 1.39 Billion
  • Urbanization rate will reach 51.5%
  • A new airport will be built in Beijing
  • Implement prudent Monetary Policy

In 1987, China set out its overall Three-Step Development Policy:

  1. To double the 1980 GNP and ensure people have enough food and clothing
  2. To quadruple the 1980 GNP by the end of the 20th century (achieved in 1995)
  3. To increase per capita GNP to the level of medium developed countries by 2050

Key National Projects:

  • The “West to East Electricity Transmission”
  • “West to East Gas Transmission”
  • “South-North Water Transfer Project”

These projects aimed to realign overall economic development and achieve rational distribution of natural resources across China.

Pollution in China

Main contributors:

-          Large scale working of coal and other minerals

-          Coal fired power stations which discharge huge amounts of pollutants into the air

-          Heavy industry, creates other forms of pollution

  • The World Bank says that Chinese steel makers, on average, use 1/5 more energy per tonne than the international average.
  • China aluminium industry alone consumes as much energy as the country’s commercial sector
  • China’s economic growth mirrors its environmental problems. It’s set to get much worse due to reliance on heavily dependent industry. Politicians are reluctant to do anything that’ll curve their economic growth.

Most obvious impact as the health of the Chinese people

  • 300,000 people die per year from air pollution
    • Mostly from heart disease and lung cancer

Disney in China

  • Rapidly expanding schools programme aiming to teach English to 150,000 children a year by 2015.
  • Shanghai is the location of its next theme park
  • First western media company to operate schools in China, starting in Shanghai and expanding to Beijing
  • Expanding from 11 to 148 schools across China in the next five years
  • “It’s a very sizeable opportunity, something that can deliver operating earnings of well over $100m in the next five years”
  • Curriculum focuses around Mickey Mouse, Little Mermaid and Other Disney Characters
  • Growing Chinese middle class means there is no shortage of parents willing to pay $2,200 a year for tuition two hours a week.
  • Government media controls and quotas restricting the number of films shown in cinemas have prevented Disney from establishing its brand in China as it has in Europe and the US.
  • The success of the programme has convinced them to explore other markets such as Brazil.

Source: Financial Times 2010

Russia’s Energy as an Economic Weapon

The relationship between Russia and China is vital. They share a 4300km border, and are both suspicious of each other. Russia sees China as a potential threat and therefore has been reluctant to commit too heavily in terms of energy supply for China.

Gazprom

-          Controls about 1/3 of the worlds gas reserves

-          Provides 25% of the EU’s natural gas

-          Is the world’s third largest corporation (annual earnings in 2006 was £31.55

-          Has very close ties to the state, with 50.002% of shares owned by Russian Federation.

-          Employer of 432,000 in 2006.

Effects of Russia’s Energy:

-          Helped reassert Russia’s power and influence over former Soviet nations

-          Increased Russia’s power within the region

-          Given Russia a way to restore its international position and regain geopolitical importance

Suggestions that it is being used as a weapon

-  Ukraine got rid of its pro-Russian government in favour of a pro-Western government, and a year later its gas prices were quadrupled – and Russia cut its supplies when the new pro-Western government refused to pay.

- Later, when Ukraine was trying to join NATO and the EU, Gazprom again cuts its supplies to 50% – suggesting it was regarding debt.

Russian critique states that it is a misconception that Gazprom use energy as a weapon and that it is an instrument of foreign policy. The same way that American oil companies are instruments of American foreign policy. They state that if Russia was to blackmail countries regarding energy, then they wouldn’t have special deals with European nations who are eager to have long term deals with Gazprom.

China Energy

  1. Consumption of energy has soared with economic growth
  2. Were self sufficient until 1993
  3. Relies of coal for 70% of its energy generation
  4. Builds an average of three new power stations per week
  5. In 2006, added the capacity of France to its national grid
  6. Will continue to rely on fuels for the foreseeable
  7. Causing serious environmental problems
  8. New projects to clean up gas has been commissioned