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CHINA AND GLOBALIZATION
What is Globalization?
Why is it Important for China?
What are its Consequences: Structural?
and Spatial?
What about its timeline?
Spatial Shifts at the Global Scale!
Global Shifts in the Global Economy
• According to Dicken, the key is “the qualitative
transformation of economic relationships across
geographical space” and not their mere quantitative
spread.
Two Contesting Views of Globalization
• Neo-Liberal, Pro-Global View: Globalization based on
free markets will advance growth & benefit all!
• Anti-Global View: Growing Inequalities. Globalization of
markets increases scale and extent of inequalities!
Markets should be regulated. Return markets to local
control.
Importance of Past Economic Geographies
• Past Geographies had a simple (and perhaps simplistic)
core/periphery division of labor in world economies.
• This reflected the division between rich (developed) and poor
(undeveloped) countries or colonies.
• Terms of trade always benefited rich countries which took
resources from developing countries and used the developing
countries as their markets.
• Is this pattern visible today in any global relationships?
The New Global Economy
(post WWII)
• WWII brought fundamental geopolitical & economic
shifts
• Emerging sharp division between East and West
Key Realities of Last 50 Years
• Rise of China (post 1949 & especially after 1978)
• Decline & Collapse of the USSR, 1991
• Global Economy has been highly volatile with periods of
rapid growth interrupted by precipitous declines &
recessions. Volatile energy prices and regional economic
crises resulting from banking & credit issues.
• Despite volatility and recession of 2008, continued
dominance of U.S. economy
Growing Interconnectedness of Global Economies
• Trade Grows Faster than Production & Output.
• FDI increases rapidly (faster than trade).
• Role of Transnational Corporations (TNCs) (Implies
ownership not just investment) Rapid growth of
transnational corporations linked to FDI.
• TNCs account for perhaps 2/3s of global trade (1/3 of
which may be intra-firm trade across national
boundaries).
New Forms of Trade
• Intra-firm trade responds not just to traditional market
factors and principles of trade according to theory but
also to decisions made within firms.
• Now includes increased quantities of intermediate inputs
of manufactured products exchanged across borders
several times.
Results of Increased Globalization
• Great Increase in Trade Volume & Value.
• Both Merchandise and Services
• Current Accounts as Share of GDP.
• China & Japan increase.
• U.S. increases total, but declines as share of GDP
Shifting Geographies but Enduring Concentration of
Production & Wealth
• There are continuing shifts in global economy.
• Emerging Economies: E & SE Asia, Middle East (Oil), Turkey &
Israel, India, Latin America (Argentina/Brazil, Mexico, Colombia,
Venezuela) South Africa.
• Continuing Wealth & Production: Euro Area, N. America, Japan,
Australia
China is the big Growth Story in Global Shifts
of the last 35 years
• Scale of China’s Growth & Change is Huge!
• GDP annual growth 9-10% until very recently. Growth rate for
2016 and beyond may be 6.5% or lower.
• Merchandise Exports growth annually 13% (largest in world)
• Largest Agricultural Producer
• Enormous Consumer of Global Resources (1/3 or steel, ¼ of
aluminum, 23% of copper, 30% of zinc, 18% of nickel,31 % growth
in oil demand in short period.
• China is now a major exporter of capital through its huge current
accounts surplus
China’s Fast Growth
Critique on Chinese Economic Data
• China is now world’s 2nd largest economy. Rapid economic growth
is now slowing as China faces new challenges.
• Annual Economic Growth has been Rapid for past 30 years based on
high savings & high investment rate.
• 2007: $3.44T(USD);2010: $5.88T (passes Japan for #2) 2012:$8.22T;
2013: $9.4T (US is now approx. $17T)
• Premier Li Keqiang has raised questions about the accuracy of
Chinese Economic Data
• Premier Li relies on data on electricity usage; railroad loadings, and
banking information for his estimates of growth
Emergence of BRICS
Brazil, Russia, India, China
• Recent Hype on Role of BRICs as the new Market Leaders
of the Global Economy. Recent declines in all but India
especially as China’s economy slows and commodity
prices decline.
• Russia and Brazil: Big Commodity Exporters (Energy,
Raw materials, and Agricultural Products).
• China: Big Commodity Importer: Energy and many
metallurgical products for industrial production.
• India. Big potential but still a comparatively small role.
US still dominates Global Economy,
but share of total declines
• 20% of Global manufacturing
• 28% of Global Services Production (major exporter)
• 8% of Agricultural Production (major exporter)
• World’s largest FDI investor
• Increasing inward flow of FDI in recent years
• Source: All data are 2007
Great Shifts of Past 50 Years
(the story is East & SE Asia)
• Growth Model is on Exports of Mfg. products
• Japan: 1960-’80s, very fast growth, slowed in 1990s
• Tigers: Hong Kong, Taiwan, S. Korea, Singapore, 1970s+
• Thailand, Indonesia
• China begins in late 1970s, accelerates in 1990s, but is
now slowing
• Vietnam, Cambodia
Cities as Nodes & Clusters of Global Economic
Activity
• Major World Cities as Centers of Globalization
• Cities are the key nodes & clusters in the global economy
• Global Connectivity is articulated through the network of
great cities in the global system
• Money, information, transportation, distribution, & production of
goods & services
• London, New York, Hong Kong, Tokyo, Paris, Singapore, Beijing,
Chicago, Los Angeles & Shanghai, Seoul, Moscow (Toronto and
Sydney)
The Changing Dynamic Global Economic Map
• Continuing but declining dominance of older, core
economies
• New realities of emerging East Asia (China)
• Actual global shift of developing countries is limited.
• Enduring reality of Global Shift
• Only a small number of developing countries have
experienced substantial economic growth; others stagnate.
• New global economic map is multi-scalar – “a mosaic of
unevenness in a continuous state of flux.” PD