China In Transition
Speakers:
Moderator: Toni Landis
Chinese Military Transition: Mazza
PLA Recent Past:
Chinese Economic Transition: Coxhead
Political Transitions:
Question/Answer
Question: TPP - How would the TPP change China’s interests militarily? What will TPP do?
Points Raised:
Question: How do cyber abilities impact its military strength?
Points Raised:
Question: Will trend of wealthy chinese leaving country affect the economy?
Points Raised:
Question: Will environmental regulations impede the economic growth of China?
China contains largest collection of Coal, could shift to cleaner energy affect Chinese economy?
Points Raised:
Question: What advantage does China have from a strictly regulated inner migration in China?
Points Raised:
Question: How does China’s economic slowdown affect Chinese military build up
Points Raised:
Question: Why does China want to expand?
Points Raised:
Question: Is the international community concerned about Chinese Expansion?
Points Raised:
Speakers:
- Michael Mazza - AEI
- Dr. Ian Coxhead - UW Professor
Moderator: Toni Landis
Chinese Military Transition: Mazza
PLA Recent Past:
- 1996 Taiwan - Free and Open Democratic Elections Starts Conflict
- Beijing fired missiles off of Taiwan’s two major ports, signifying that a vote for democracy favoring president would entail conflict
- POTUS Clinton sent two aircraft carriers into Chinese waters to show US will stand behind Taiwan
- Taiwan Crisis was concerning for the Chinese President and has led to build up of Naval Force
- PLA capabilities improving in recent years
- Will be able to “solve Taiwan issue” by 2020
- New anti ship missiles
- Increased naval presence and reach, stretching throughout East Asian Region from Japan to Singapore
- Pursues asymmetric means to counter United States dominance
- China is pursuing greater strategic space
- China’s coastal regions are its most vulnerable
- In order to provide China with necessary means to protect its financial centers on the coast - lack of depth after the coastal region is a concern for China
- Interested in stable energy crisis
- Interested in defending against terror
- China is engaged in joint counter-terror exercises with neighboring states
- China will not reach military/naval capabilities of the United States anytime soon
- China will continue to increase capabilities to ensure projection of will in accordance with its region - will not expand globally
- this will create more difficulties for the United States and its ability to protect its interests
- This will lead to an arms competition between China and US
- Nuclear modernization effort - If PLA cannot deter US attacks on mainland (if Taiwan conflict escalates) a responsive attack on the US homeland will be appealing while using nuclear strikes as well as cyber-attacks.
- Military innovations such as precision long range missiles have made the use of a nuclear weapon much less likely
Chinese Economic Transition: Coxhead
- Emergence of China as a regional/global trading and investment power
- Cannot study economic qualities and situation of one Southeast Asian Country without studying its Connection with China and the comparative advantages between the two.
- Chinese Income: 5% of world average income vs. 50% of world average income
- incredible growth from impoverished to dynamic middle income economy
- Managed process to economic growth
- extremely high savings rate
- family planning policies
- restructuring economy - Command economy to authoritarian capitalism
- Isolation to international integration (closed to open)
- Rural to urban and industrial economy
- Introduction of markets that didn’t exist two decades ago
- technological change and innovation (not one time)
- These changes have produced massive gains, but economy is still incomplete.
- Market Growth is slowing down
- natural process and not a cause for concern
- fear is not a slowdown of growth, but a stoppage of growth or shock
- Demand and Supply for Human Capital
- “human capital investment”
- Skill to innovate and try new things is critical for a growing and competitive free market economy
- Role of education in transforming economies
- Educated unemployment (wealthy educated, and unemployed)
- Rural population is undereducated
- 150 million who are in workforce and have quit their education by the age of 15 - future ramifications
- Dynamic Mismatch between skills, education and economy
- “human capital investment”
- Demographic transition
- much more rapid decline in death rate than birth rate - huge influx in population - projected to hit a peak at 2030 and decline thereafter
- growth in pop slowing down currently
- Tax base is going to narrow - demands on public spending (services) will start rising - fiscal crunch
- Completing the process of reforms
- Factor Markets
- It is difficult to open factor markets with an authoritarian regime - unlike the authoritarian markets ability to establish product markets
- incomplete reform of labor market is holding growth back
- extreme inequalities in wealth distribution
- Land markets are incomplete - rural farmers hesitant to use land as collateral when making investments/getting loans
- state banking system is barred from lending to risky individuals/companies
- lends to state owned organizations
- Zombie Banking
- Limited by China’s constitution
- Future:
- Will China’s factor markets be allowed to function properly?
- Will key economic institutions be capable of reforming?
- Will China be able to undertake investments that lead to productivity growth?
Political Transitions:
- Steps to take to lead to a more capitalistic - free market economy
- Involves the gov’t resigning its powers in certain areas of the market
- The government knows how to do this but there are governmental disadvantages to making these reforms
Question/Answer
Question: TPP - How would the TPP change China’s interests militarily? What will TPP do?
Points Raised:
- Will not lead to shift in its efforts to pursue own interests
- Hopefully encourages China to adopt reforms within TPP
- TPP is meant to cement US leadership and presence in the Southeast/East Asian Economies
- cements existing trade agreements
- No major changes for China - no advantage for China to be in the TPP
- May divert some trade away from China and towards the US - such as textiles (e.g. cotton)
- Right of foreign firms to sue governments
- China would not want to comply with these policy agreements
Question: How do cyber abilities impact its military strength?
Points Raised:
- Assists in operational level of military action
- Cyber could be used to blind and deafen the US military
- US weakness lies within reliance on satellites
- Also greatest strength
- May use cyber attack to prompt a “Cyber-Pearl Harbor attack”
- Chinese hackers have been probing U.S. infrastructure
- can Chinese hackers shut down a power grid or the NY stock exchange
Question: Will trend of wealthy chinese leaving country affect the economy?
Points Raised:
- no, reflects portfolio diversification
- Chinese do not leave China with nothing behind, they just increase their assets (such as purchasing a home in Australia)
- When wealthy citizens of a country leave, does that raise the questions as to why they seek other places? Do they see negative future?
Question: Will environmental regulations impede the economic growth of China?
China contains largest collection of Coal, could shift to cleaner energy affect Chinese economy?
Points Raised:
- Effects of environmental damage, wipe about 3% of GDP off Chinese GDP each year
- Tremendously costly to deal with effects of pollution
- Chinese government is very serious about cleaning up
- displayed as altruistic act
- China is moving in the right direction
- These are costly investments, but in the long term are more beneficial - China building capability to switch to cleaner energy
Question: What advantage does China have from a strictly regulated inner migration in China?
Points Raised:
- Serves the planning goals of the big cities
- large cities face huge obstacles when attempting the provide services to all the residents
- preventing mass migration from rural to city helps alleviate this issue
Question: How does China’s economic slowdown affect Chinese military build up
Points Raised:
- China’s defense spending surpasses economic growth for first time
- It has not slowed down military increase
- Building military is a top priority of the current government and has been for years
- will be priority until CHina faces severe military restraints
Question: Why does China want to expand?
Points Raised:
- China claims that it is not expansionary action
- China wants to exert control over land that they believe belong to China
- Strategic military advantages can be attained by Chinese expansion to islands
- If china were able to gain control islands in South China Sea, and islands near Japan, it would allow China to ease into accessing the Pacific as well as the Indian ocean
Question: Is the international community concerned about Chinese Expansion?
Points Raised:
- The US, Indonesia, Japan, Taiwan, Malaysia, Vietnam, all have overlapping claims
- Different nations approach difference in claims in different ways
- Indonesia is suing China
- Philippines has kept relatively quiet
- No countries have taken actions that have deterred China from continuing this behavior
- there is a limit to what can be done
- no one is suggesting that the US physically destroys or dismantles the new man-made islands built by China
- US can only sail where they believe they should sail, and should generally avoid military conflict as of now