Across Australia, mining towns like Emerald are hurting as China’s appetite for resources exports wanes. What does the future hold for locals? Photo/Video: Paolo Bosonin
WHILE things continue to heat up in the South China Sea, one academic has highlighted exactly what China has to lose from annoying its neighbours.
Dr Xiang Bing, the founding dean of the Cheung Kong Graduate School of Business in Beijing, China, said China had been globalised and peace had been indispensable for China’s economic progress since 1978.
“China is more dependent on global trade today and has every incentive to ensure free navigation,” he said.
“I would like to think China has no incentive or motivation to disrupt the safe passage of sea lanes and to pick a fight with any country. To commit a ‘crime’, you need some incentives.”
To highlight what’s at stake for China, Dr Xiang pointed out the country’s reliance on global trade.
Prior to 2012, more than 50 per cent of China’s exports were generated by foreign companies based in China.
While this dropped slightly in 2012, foreign invested companies in China still contributed 49.7 per cent of its total exports.
Dr Xiang also pointed out that Japanese companies had invested $527 billion (US$400 billion) in China in the past 10 years or so.
“For me, that’s a sign of economic openness,” Dr Xiang told the Sydney China Business Forum last week.
“You go to China and you see American companies doing well, the Europeans doing well and Australians doing well.”
He pointed out that the South Korean company, Samsung had racked up $39 billion (US$30 billion) in exports from China. “China’s economy has been globalised,” he said.
In 2008, Dr Xiang said trade made up 70 per cent of China’s GDP. While this had declined to 41 per cent in 2015, it was still higher than in the US (28 per cent) and Japan (37 per cent).
RELATED: How China has eclipsed Australia in trade links
RELATED: Should be concerned about the East China Sea dispute?
While there were some limitations to the economic model that China had created, Dr Xiang it had been very successful.
“By 2049, China’s GDP per capital may reach half of the US GDP per capita,” he said.
“So peace has been important for China,” he said. “Peace will be more important for China because China is more dependent on global trade.”
He also noted the role of social media in constraining the Chinese government.
“It’s not a perfect substitution for rule of law but definitely it has a huge impact,” he said.
It was now possible for posts to reach 500,000 people easily through using apps like WeChat, even if the government decided to delete posts it didn’t like.
“So social media has a huge impact on how government functions.”
Dr Xiang said while there were still many differences between China and the US, including their political systems and ideologies, China was embracing new liberalism, a new wave of globalisation and social media.
“They are three major forces sweeping the global economy the past 20 years.”
With so many technologies now disrupting economies around the world, Dr Xiang he thought this could turn out to be one of the best times in human history.
“This could be the beginning of the new renaissance … I hope so, for the future.”