China do the plan cp ddi 2011 1 table of contents
Space exploration is key to jobs—technical education
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Space exploration is key to jobs—technical education Joan Johnson-Freese, chair of the Naval War College’s National Security Decision Making Department, IFRI, Summer 2007, “China’s Space Ambitions” Clearly, China is anxious to create the kinds of technical jobs that space activity affords and which also require technical education. Just as the United States experienced a clear surge of student interest in science and technical fields in conjunction with the Apollo program, China is experiencing the same phenomenon. While not all those trained in science and technology will work in the space sector, the work force will be available for other industrial sectors that will hopefully open and grow as a result of a stronger image of Chinese technical capabilities due to their space achievements. That 80% of the workforce involved with Project 921, their manned program, is under forty years old (many are under thirty) illustrates China’s success in attracting new talent to the field. Finally, China shares the views of many other countries, including many European countries, that investments in dual-use technology are desirable because the rate of return on an investment is very high.5
Given this background, Beijing's pursuit of a robust and long-term space program is actually a rational decision to garner economic, political and military benefits. Economically, the CASC employs more than 40,000 researchers, academics and other technical staff, preventing brain drain from the critical human resource sector. China hopes the success of Shenzhou V may trigger renewed interest in its commercial satellite-launch industry. The aura of technological prowess may also encourage direct foreign investment from countries such as Singapore and Taiwan. job links The space program is key to science and engineering interest—boosts the job market Joan Johnson-Freese, chair of the Naval War College’s National Security Decision Making Department, Spring 2004, Naval War College Review, Vol 58(2), “Space Wei Qi: The Launch of Shenzhou V” Education is important to China because a space program generally, and a manned program specifically, fits in with Beijing’s plans for economic development. In the late 1950s and early 1960s Europe joined the space race because it believed that space equaled technology, technology equaled industrialization, and industrialization equaled economic growth. China’s 2000 space white paper expresses much the same view. The Chinese government attaches great importance to the significant role of space activities in implementing the strategy of revitalizing the country with science and education and that of sustainable development, as well as in economic construction, national security, science & technology development and social progress. The development of space activities is encouraged and supported by the government as an integral part of the state’s comprehensive development strategy. 21 Education is a prerequisite for building an industrial base, and development in China requires jobs, skilled jobs. When it began Project 921 China wanted to develop a cadre of trained engineers and scientists, and it has come a long way in that regard. China is proud of the fact that 80 percent of the workforce involved in that project is under forty years old, many under thirty. 22 The China Aerospace Science and Technology Corporation (CASC), the organization primarily responsible for executing the manned program, employs over 150,000 people and has 130 subordinate organizations. The size of the Chinese space enterprise is not unusual. In the United States during Apollo, there was also the expectation that the nation would not only send a man to the moon and safely return him but do it while employing people in all fifty states. Although China does not have congressional pork-barrel politics to contend with, it does have a populace of over 1.3 billion to keep employed. While many of the large Chinese State-Owned Enterprises (SOE) are being privatized, a slow approach is being taken, in order to balance economic efficiency with the need to keep people working. Indeed, during a 1997 visit by the author to the Xichang launch site, an employee mentioned that several people shared his job, impeding his effectiveness. In some instances, that is the price paid for employment stability and providing on-the-job experience. The more numerous the experienced Chinese workers in skilled-labor jobs, the better the chance that the government will be able to attract global industries and achieve economic development. Employment, attracting industry, and selling high-tech products and services, including within the aerospace field, are all Chinese priorities. Postlaunch comments from Yan Xuetong, a political scientist at Tsinghua University, reflect those priorities: “Now,” he said, “people will realize that we don’t only make clothes and shoes.” general links Shenzou proves—space exploration increased business and overall economic vitality Sun Dangen, senior research fellow at the Academy of Military Sciences, World Security Institute, 2005, “Shenzou and Dreams of Space” Benefits of Manned Spaceflight The economic benefits generated through manned spaceflight are evident, with great rewards on investment. According to the International Space Business Council's State of the Space Industry, a report published in August 2005, revenue from the space industry's global commercial services and government contracts totaled $103 billion in 2004. This figure is expected to surpass $158 billion by 2010. The ratio of financial input to output of the space industry is about 1:2, and the corresponding ratios of supporting industries range from 1:8 to 1:14. A manned space program, therefore, contributes to the goal of economic development that lies at the core of China's national development strategy. For China, the direct economic benefits of the successful Shenzhou VI flight are the revitalization of the country's business in the international satellite launch market. The Long March (LM) rocket has a track record of almost 50 consecutive successful launches, which, coupled with its comparatively lower cost, will provide China with growing numbers of satellite launch orders. Economic returns from Chinese industries related to the space program have already reached 120 billion RMB ($14.9 billion). Technologies developed for manned spaceflight have also filtered down through numerous Chinese industries into goods produced for daily civilian use. The civilian application of manned spaceflight technologies are found in many aspects of Chinese people's lives and work, including precision navigation, meteorological forecasting and disaster warning. As a vivid example, Chinese farmers living in remote areas gain significantly as seeds with drastically improved agricultural yields are tested in space. This has the potential of helping turn China's vast waste lands into arable fields, which will play an especially important role for a country like China with the majority of its population dependent on agriculture. Such benefits will have a far-reaching significance for improving China's social stability. General links Space is key to China’s economy—laundry list Erik Seedhouse, Aerospace Scientist, spent 6 months in a Parachute regiment, 2010, The New Space Race: China vs. the USA, pg. 4-5 Dr. Erik Seedhouse is an aerospace scientist whose ambition has always been to work as an astronaut. After completing his first degree in Sports Science at Northumbria University the author joined the legendary 2nd Battalion the Parachute Regiment, the world’s most elite airborne regiment. During his time in the 'Para's' Erik spent six months in Belize, where he was trained in the art of jungle warfare and conducted several border patrols along the Belize-Guatemala border. Later, he spent several months learning the intricacies of desert warfare on the Akamas Range in Cyprus. He made more than thirty jumps from a Hercules C130 aircraft, performed more than two hundred abseils from a helicopter and fired more light anti-tank weapons than he cares to remember! Upon returning to the comparatively mundane world of academia, the author embarked upon a master's degree in Medical Science at Sheffield University. He supported his master's degree studies by winning prize money in 100km ultradistance running races. Shortly after placing third in the World 100km Championships in 1992 and setting the North American 100km record, the author turned to ultradistance triathlon, winning the World Endurance Triathlon Championships in 1995 and 1996. For good measure, he also won the inaugural World Double Ironman Championships in 1995 and the infamous Decatriathlon, the world's longest triathlon, an event requiring competitors to swim 38km, cycle 1800km, and run 422km. Non-stop! Returning to academia once again in 1996, Erik pursued his Ph.D. at the German Space Agency's Institute of Space Medicine. While conducting his Ph.D. studies he still found time to win Ultraman Hawaii and the European Ultraman Championships as well as completing the Race Across America bike race. Due to his success as the world's leading ultradistance triathlete Erik was featured in dozens of magazines and television interviews. In 1997, GQ Magazine nominated him as the 'Fittest Man in the World'. Erik currently works as manned spaceflight consultant, author and triathlon coach. He plans to travel into space with one of the private spaceflight companies via Astronauts for Hire. As well as being a triathlete, skydiver, pilot and author, Erik is an avid scuba diver and has logged more than two hundred dives in more than twenty countries. His favorite movie is the director's cut of Blade Runner, his favorite science fiction authors include A.E. Van Vogt, Allen Steele and Stanislav Lem and his favorite science fiction series is Red Dwarf. Prepare for Launch: The Astronaut Training Process is his fifth book. When not writing, he spends as much time as possible in Kona on the Big Island of Hawaii, Kauai, and at his real home in Sandefjord, Norway. Erik lives with his wife and three cats on the Niagara Escarpment in Canada. Economy Many observers have raised the question of why Beijing wants to send taikonauts into orbit when China has problems feeding and clothing its people. Given the economic challenges of rampant unemployment, extreme rural poverty, insolvent state banks, uncontrolled corruption, and China's penchant for environmental annihilation, it would surely seem more sensible to give priority to economic development and improve people's quality of life. Through the eyes of the leadership in Beijing. however, the rewards provided by pursuing a manned space program may provide the economic wherewithal to address some of the aforementioned problems. According to the International Space Business Council's State qt the Space industry, a report published in 2005. revenue from the space industry's global commercial services and government contracts is expected to surpass SI58 billion by 2010. The ratio of financial input to output of the space industry is approximately 1:2. so a manned space program contributes to the goal of economic development lying at the center or Beijing's national development strategy. In addition to the revenue generated by the sale of satellite launches, the deployment of weather and communications satellites provides platforms for tasks such as surveying crops. locating mining deposits. and measuring water resources. Already. satellite TV transmissions cover 8% of the population. and distance learning education has benefitted 20 million people. China's communications satellites have significantly improved disaster weather forecasting, reducing losses by several billion yuan every year, while its satellite communication network will have an annual value of 20 billion yuan, with more than 100 million people in remote areas benefitting. The manned space program also has the potential to affect China's domestic economic environment. A good example of how funding for the space program has led to spin-off products entering the Chinese domestic market is the Outer Space Cup. manufactured by the Shanghai Wensu Industry Trade Company. Ltd. The cup was designed to withstand high temperatures and to be leak-proof, thereby alleviating obvious problems in microgravity. Following Yang Liwei's return. the Outer Space Cup sold millions. demonstrating how even a low-tech item from the space program can strengthen the economy. The penetration of spin-off technologies such as the Outer Space Cup into the domestic market is likely to continue in the future. For example. China eventually plans to mine the Moon of I lelium-3 (Figure 1.1) an economic endeavor with the potential to make large profits for the space program. general links Space industry improves multiple indicators of economic progress—GDP, tech growth, aerospace workforce, and education Kevin Pollpeter, China Program Manager at Defense Group Inc’s Center for Intelligence Research and Analysis, previously worked at RAND, Strategic Studies Institute, March 2008, “ Building for the Future: China’s Progress in Space Technology During the Tenth 5-Year Plan and the U.S. Response” Economic Benefits. China has embraced its space program as a driver for economic and technological advancement. China’s 2006 white paper states: “Since the space industry is an important part of the national overall development strategy, China will maintain long term, steady development in this field.” China’s support for its space program lies in its potential to spark innovation. Innovation has been identified as a key factor for economic growth, yet much of China’s growth has come through increasing inputs rather than through productivity gains. Moreover, much of China’s technological advancement has come through the importation of foreign technology. As James Kynge writes in China Shakes the World, China’s technological advancement “is driven not so much by research as by commerce. Chinese companies, by and large, derive their technologies by buying them, copying them, or encouraging a foreign partner to transfer them as part of the price of access to a large potential market.” 70 A report by the RAND Corporation 29 notes that the most profitable defense industries, information technology, and shipbuilding are also the ones that have the most access to foreign technology. 71 China’s space industry hopes to not only follow in the footsteps of these industries, but also achieve success by indigenously developing technologies that not only spur development within the industry but also have spillover effects for the entire economy. Despite these hopes, the Chinese government acknowledges that it still has far to go. The vice chair of the Chinese Association for Science and Technology has acknowledged that China’s space technology is still in an experimental stage. 72 The space industry is still too immature to make large contributions to China’s economic development and makes up less than 1 percent of China’s gross domestic product (GDP). China’s space technology is also recognized as still developing while other industries in China rely on mature technology. Because of this, the space industry has not been able to realize the spin-off benefits other industries have experienced since Chinese companies favor foreign technologies over domestically produced technologies. Given these challenges, the space industry is expected to have difficulty making a meaningful impact on China’s economy in the near term. 73 Nevertheless, a foundation has been laid for the space program to benefit other sectors of the economy. In regards to human capital, China’s space industry keeps large numbers of engineers employed and motivates others to become involved in high technology fields. The Beijing University of Aeronautics and Astronautics (BUAA), for example, has 23,000 students, about one-third of them directly involved in aerospace. In 2001, space-related research and educational programs at BUAA were reported to have increased by 20 percent. 7430 The training of so many highly skilled workers can also benefit the entire economy. It is possible that some of these engineers either directly after graduation or later in their careers may be employed in non-aerospace jobs. In fact, maintaining a large pool of aerospace engineers and scientists presents a strategic advantage for China and a long-term challenge for the United States. China’s increasing number of engineers and scientists coincides with the drop in the number of U.S. citizens graduating with advanced technical degrees. If these trends continue, it will become increasingly difficult for the United States to maintain its technical advantage. Space is key to a multitude of other industries—it’s the lynchpin for innovation and growth People’s Daily, Chinese State-run newspaper, 10-15-2005, “Peaceful use of space resources drivens China's space program,” originally from Xinhua Experts say China has benefited from the dividend of its investment in space sector. Space technology has become an indispensable part of people's daily life, such as weather forecast, telecommunications, disaster reduction, and resources prospecting. Striving hard to feed its 1.3 billion people and more in the future, China has been developing improved species of crops on the basis of space technology, mostly through recoverable satellites and spacecraft. Gu Yidong, chief designer of the spacecraft application system of China's manned space program, said the information obtained from Shenzhou-3 and Shenzhou-4 in Earth observation has been used for maritime pollution control and desertification control projects, which is useful for China and other parts of the world. Experiments in new materials, pharmaceutical products and life sciences have been conducted as part of manned space programs in many countries, said Xu Dazhe, deputy general manager of the China Space and Technology Group, developer of China's spacecraft and Long March carrier rockets. general links Space program is key to Chinese economy—growth and tech innovation—also key to internal stability Ashley Tellis, senior associate at Carnegie, Quaderni di Relazioni Internazionali, October 2008, “China’s Space Capabilities and U.S. Security Interests” It has been clearly recognized in China that a space program helps to advance all these three goals simultaneously. As in the United States, Chinese investments in space are judged – correctly – to contribute to enhanced economic growth in multiple ways: they stimulate innovation; they produce technology spinoffs that can be utilized in diverse sectors far removed from their origins; they create demand for new derivative technologies and services; and, they produce fresh opportunities for export. Since space contributes to accelerating economic growth in this way and, by implication, helps China meet its vast developmental challenges, it also aids the state in maintaining internal stability. China’s space programs advance this goal either through the direct application of space-related technologies for discharging law-and-order functions or for providing disaster relief, or through the more indirect, but nonetheless equally important, means of sustaining the “social contract” that enables continued Communist rule. China’s space achievements also providing the requisite symbolic gains that enable China’s rulers to justify their continued rule. Finally, space technologies have become critical to the successful conduct of military operations: they enable China to use its armed forces more effectively either because they permit better collection, transmittal and exploitation of information or because they support the development of new weapons such as responsive directed energy and other nonkinetic technologies.
This position operates on several faulty premises. The first is that the United States is the only country that has national interests at stake in space, implying that China does not have deep national security interests in space or that China’s space assets do not need to be protected. The Chinese government has expressed its desire to develop space peacefully on many occasions, and has pursued treaties to ban weapons and weapon-testing in space. But China also has deep interests, both now and in the future, to exploit space, which are vital to its comprehensive national power and its economic and scientific development and therefore its greater national security. Leaving aside the issue of using space for military purposes, China cannot entrust the protection of its interests in space to another country, no matter their rhetoric or intentions. If the security of the United States requires the absence of that same security for China, then the logic is inherently imbalanced, unfair and one that China cannot accept. The peaceful use of space should not be confused with a lack of national security interests or the deep underlying need to protect them. a2: china will militarize
satellite industry k And, that’s key for China’s market dominance throughout East Asia Eric Hagt, Director of the China Program at the World Security Institute, Sino-US Relations researcher, China Security, 2006, Vol 1(2), “Mutually Assured Vulnerabilities” Beyond the domestic sphere, China’s current strategy for space is to dominate the Asia-Pacific market and become the market leader in the developing world. 38 As satellites and launch costs decrease, access to space will expand, including to countries with lesser economic means. 39 China is jointly engaged in developing a number of satellite programs, including an Earth observation constellation, with Bangladesh, Indonesia, Iran, Mongolia, Pakistan, Peru and Thailand. The burgeoning regional relationship in the area of space has been codified with the Asia-Pacific Space Cooperation Organization treaty, signed in October 2005 and the first treaty of its kind in Asia. 40 Further afield, contracts have also been concluded with Nigeria and Venezuela, in December 2004 and November 2005, respectively. 41 These latter two projects are particularly important because they are China’s first so-called ‘turnkey projects,’ in which it will provide all segments of the project from design and production to launch and servicing the satellite on-orbit. China naturally has ambitions to become a real player in the lucrative international market, after having been excluded from it in 1999 and only recently reentering, as of April 2005, with the launch of Apstar 6, of APT Satellite Holdings Ltd. 42 Building a strong domestic satellite and launch industry is a key to China’s aims in space, which are centered on its overarching goal to become a technological and scientific powerhouse. This larger goal, in turn, is the foundation for China’s long-term sustainable development. To achieve these goals, the government is nurturing a new generation of scientists and engineers. In the 10th FYP, China’s space industry increased its workforce with newly graduating engineers by roughly 10 percent while paring down the total employed by an equal percentage. China’s goal is to reproduce this feat during the 11th FYP by providing incentives in salaries and benefits for its space sector two to three times higher than the national average for comparable professions. 43 As a result, 70 percent of space sector employees are under the age of 35, far younger than NASA’s aging workforce. foreign investment k Foreign investment is key to China’s economy Organization for Economic Cooperation and Development, an organization that works with the Chinese government do economic research, Working papers on International Investment, December 2K, “Working Papers on International Investment “Main Determinants and Impacts of Foreign Direct Investment on China’s Economy” *FDI=Foreign Direct Investment Since the early 80s FDI has made a determinant contribution to domestic capital formation. The ratio of FDI to GDP has increased from 0.31 per cent in 1983, to 1 per cent in 1991, 6.22 per cent in 1994, and staying around 5 per cent in the second half of 1990s. FDI inflows also rose to 15.1 per cent of domestic gross investment in 1994 and stayed around 13 per cent from 1995 to 1998. FDI inflows have stabilised around 11 per cent of China’s domestic gross fixed capital formation in the late 1990s. While the shares of FDI inflows in China’s GDP and gross capital formation have increased rapidly, only around 60 to 70 per cent of FDI inflows have been actually used in fixed capital investment. This may suggest some inefficiency in the use of FDI because it seems unlikely that foreign investors used 30-40 per cent of their total capital in inventory or as working capital.
Gregory Chow, Prof. Emeritus of Economics at Princeton, previously a visiting professor at Harvard, Cornell, Rutgers, and MIT, Associate editor of the American Economic Review and the Chinese Economic Review, 2007, China’s Economic Transformation, pg. 327 Foreign investment has provided to China capital, new technology, managerial skill, and training for labor. It has introduced modern managerial systems, business practices, and a legal framework for conducting business transactions. In addition it has provided competition in the domestic market, and competition has forced domestic enterprises to become more efficient. China's entry into the WTO makes China's door even more open. Both foreign investment and foreign trade are expected to increase because of it. Foreign firms will begin to penetrate China's financial and telecommunications sectors. Trade will increase in both directions. The Chinese government has committed to lowering the tariffs on both agricultural and industrial products which will lead to an increase in imports. Chinese exports will also increase because Chinese goods will have better access to world markets open to members of the WTO. Investment key—recent policies open up the economy Nodir Egambardiev, Head of Representative Office for Ansher Holdings Limited, an economic advisory and investment organization in Asia, No Date, “ China Welcomes Foreign Investments, Western China Gets Investment Boost” For 2010, inbound foreign direct investment into China surpassed US$ 100 billion for the first time, while overseas investments by Chinese companies in non-financial sectors totaled US$ 59 billion. During his recent visit to Italy, Visiting Vice-President of China, Xi Jinping, pronounced that China welcomes foreign investments and that China offers “equal treatment” to domestic as well as international investors. Xi Jinping noted that with China’s 10 year membership in the WTO, policies which favor foreign investors have been created, boosting their investment confidence in China. Xi Jinping particularly noted that China will further seek foreign investments into its economy in order to continue expanding its domestic demand. “Overseas investments are encouraged, generally in China’s immeasurable executive and western regions and in mergers with and reorder of Chinese enterprises by corner batch holding”, he said. He also vowed to raise coercion of egghead skill rights laws to strengthen authorized interests of overseas-funded enterprises. “China will resolutely belong to a jointly profitable and win-win plan of opening up,” Xi Jinping underlined. Under the new rules, foreign investment into high-tech industries, the service sector, energy-efficient as well as environmental protection projects are now encouraged along with other industries, especially in China's central and western regions. Moreover, qualified foreign-funded companies will also be allowed to go public, issue corporate bonds or medium-term bills in China. As a result, a total of 5,459 overseas-funded ventures were established in the past 3 months across Mainland China, up 19.9% from the corresponding period last year. With the new regulations, China is streamlining to create a more open and friendly environment for overseas firms. china aerospace k2 global aerospcae China aerospace is key to the global aerospace industry—production and consumption Doug Nancarrow, editor of the newspaper Aviation Business for Asia-Pacific, Aviation Business, 4-11-2011, “China's aerospace industry on the rise,” lexis The highlights of the 162-page report include: While some of this progress can be attributed to rapidly growing governmental support for China’s aerospace sector, China’s aerospace capabilities have also benefited from the increasing participation of its aerospace industry in the global commercial aerospace market and the supply chains of the world’s leading aerospace firms... Chinese airlines, which today operate about 1400 large commercial aircraft and regional jets, are projected to purchase roughly 4000 new jetliners over the next 20 years. Actual purchases could be more or less than this projection, depending on whether China’s economy grows at the expected rate and on the availability of alternative forms of transportation such as high-speed rail. Chinese air freight companies will likely purchase another 100 to 200 cargo aircraft, but many of them may be converted aging passenger planes. In September 2009, there were about 200 civil helicopters in China, and approximately 1,200 additional civil helicopters are expected to be purchased by 2018. China’s general aviation market may be set for an explosion of growth. As of late 2009, the nation’s severely restrictive airspace management regime had limited the number of fixed-wing general aviation aircraft in China to about 800 (compared with 230,000 in the United States). Reforms are under way, however, and the number of fixed-wing general aviation aircraft in China is expected to increase by 30 percent per year over the next five to 10 years, resulting in more than 10,000 new aircraft by 2020. Except possibly in the case of helicopters, China’s current ability to meet demand with indigenous aircraft is limited. Its indigenous regional jet, the ARJ21, will begin deliveries in 2011, but the regional jet market in China is small. China’s indigenous large commercial aircraft, the C919, will not begin deliveries until the middle of the decade, at the earliest, and it will be a narrow-body aircraft that competes only with the Boeing 737 series and Airbus A320 series. All wide-body aircraft will be imported at least through 2020. Although Chinese airlines will apparently be required to buy at least some C919s, their preference, and that of their customers, will continue to be for Boeing and Airbus aircraft with proven safety and reliability records. If the C919 can establish a comparable safety and reliability record, however, and can offer improved comfort and fuel efficiency, it is possible that, over time, it will begin to take market share away from Boeing and Airbus (provided, of course, that Boeing and Airbus do not bring to market even better aircraft in the meantime). Chinese manufacturers already produce light utility helicopters and medium transport helicopters, and a medium utility helicopter and possibly a heavy transport helicopter are in development. Given China’s limited civil helicopter market, its domestic manufacturing capabilities may be sufficient to satisfy demand, although specialized types of helicopters may be imported. If the fixed-wing general aviation market in China grows as rapidly as projected, much of the demand will be filled by imported aircraft, as the variety of domestic offerings is extremely limited. The Chinese government has attempted to leverage airliner purchases in exchange for arrangements that it hopes will lead to technology transfers into China’s aviation manufacturing industry. In the ARJ21 regional jet and C919 airliner projects in particular, a condition for foreign aerospace firms to be selected as suppliers has often been that a local production facility be established. Partly as a result of these policies, US and other foreign aerospace manufacturers are engaged in numerous joint ventures and other technology transfers with China’s aviation industry. In many cases, however, foreign aerospace manufacturers have established joint ventures in China not to sell products there but to acquire access to China’s low-cost, high-quality labor for manufacturing products that are sold throughout the world. China aerospace industry key to global aerospace—including American industries Mary Saunders, Deputy Assistant Secretary of Commerce for Manufacturing and Services, Department of Commerce, 5-20-2010, Testimony for the U.S. China Economic and Security Review Commission “China's Emergent Military Aerospace and Commercial Aviation Capabilities” China is also a growing contributor to the global supply chain for aircraft and parts. Many U.S. and foreign aerospace firms have significant relationships with Chinese aerospace manufacturers, particularly in metal components. These relationships are not a recent development. U.S. companies have worked with Chinese suppliers for many years. While most of the interaction is on the component side, some Western firms, Airbus and Embraer, for example, have set up aircraft assembly facilities in China to provide commercial aircraft to the Chinese market. econ collapse inev The Chinese economy is slowing down—multiple indicators prove John Xenakis, mathematician, historian, developed a demographic theory called Generational Dynamics, 6-4-11, “China’s Economy Slowing, With Possible Worldwide Consequences” International commodities markets are “starting to look a lot like 2008,” according to Standard & Poors analyst Scott Sprinzen, quoted by Bloomberg. Recall that China’s overheated economy was sucking up commodities early in 2008. But as the Beijing Olympics games approached in August, China’s economy sank and China’s commodities purchases fell. By the end of the year, trade and transportation had collapsed around the world, and the Baltic Dry Index (a measure of commodities shipping) had fallen an incredibly 95%. As I described it at the time, it was like the science fiction movie, “The Day the Earth Stood Still,” except that it wasn’t science fiction. (See “World wide transportation and trade sink farther into deep freeze.”) A slowdown in China’s economy would have a similar effect today. Commodities prices could esily fall 25-40%, and might fall as much as 75%, according to Sprinzen. And a slowdown IS occurring. Two surveys released Wednesday reveal that Chinese manufacturers expanded in May at their slowest pace in nine months, according to the Globe&Mail. CBS Business News blogger Constantine von Hoffman has provided a list of some of the signs that China’s economy is melting down: We’ve reported on a major drought in China’s heartlands, and it’s taking its toll. Vegetable and rice prices have risen 16-20% in the last month, and prices of crab, shrimp and river fish have also surged up in the past week. As in the U.S., high food prices leave less money for consumers to spend on manufactured goods. MarketWatch The worst power shortage in seven years has caused China to raise electricity prices by about 3%, in an attempt to reduce demand. The drought is one cause of the shortage, while another cause is high costs of coal. Coal-fired power plans generate 80% of China’s electricity. Reuters China’s housing bubble is much worse than America’s ever was, with many ghost cities, and enough commercial real estate to give every man, woman and child in the 1.4 billion population country a 5×5 cubicle, all funded by massive bubble price rises. (See “5-Feb-10 News – China’s nationalism and real estate bubble grow.”) Now real estate prices are falling, and land prices have fallen 20-50% this year alone. This indicates the housing bubble is finally collapsing, with potentially devastating consequences. Market Watch As in the U.S., local and regional governments are heavily in debt, and threatened with bankruptcy. China’s regulators plan to pay off some $400 billion in local government debt, forcing the state-run banks to take some of the losses. Reuters For every yuan that China’s banks have loaned, there are many times more yuan loaned by informal or underground banks, totalling trillions of yuan. This has created a huge credit bubble similar to the credit bubble created by mortgage-backed CDOs a few years ago, and it makes the real estate bubble many times more lethal than it is anyway. FT Blog America and China, two great civilizations that are almost completely foreign to one another, are now locked together, arm in arm, in a death spiral downward that will leave both countries, and all of their neighbors, completely devastated. china economy k2 global economy China’s economy is key to the US economy and global recovery Toon Van Beeck, senior analyst with IBIS World, September 2010, “The Implications of a China Slowdown” There is a lot of talk surrounding a double-dip recession. Having recently come out of the worst economic crisis in decades, the scars have not yet fully healed and it is natural for consumers and businesses to remain cautious in these very uncertain times. Market volatility has returned and economic concerns are arising from all parts of the globe. European sovereign debt issues could push the globe back into a fiscal crisis if contagion spreads. Meanwhile, the United States is experiencing a downward slide in GDP growth; it reached a high of 5.0% in the fourth quarter of 2009, only to fall to 1.6% in the second quarter of 2010. And now, a third sizeable economic concern has emerged: China’s economy is showing signs of slowing. As long as these fears remain, the global appetite for riskier assets will remain volatile. Consumers and institutions will move to safer investments, in fear of a second global financial crisis, and then back to those riskier assets as news subsides. China was instrumental in pulling the global economy out of the most recent recession. China’s GDP growth climbed from a low of 6.2% in the first quarter of 2009 to a peak of 11.9% only a year later. Confidence grew across countries, retailers re-stocked their shelves, manufacturing improved, mounting unemployment levels seemed a thing of the past, and consumers looked to spend again. However, this massive turnaround strangely prompted concerns that the Chinese economy was overheating. Phenomenal growth is not uncommon in China; average quarterly expansion over the past 20 years has been about 9.5%. china economy impacts Chinese economic decline causes adventurism Susan Shirk, Deputy Assistant Secretary of State for Relations with China, 2007, “An Interview with IGCC Director Susan Shirk”, http://igcc.ucsd.edu/publications/books/shirkinterview.php) BJ: From the general public's perspective China looks like an economic powerhouse. Yet in your book you argue that from the inside China is actually a weak country. How can these two opposite perceptions be reconciled? Shirk: China has lots of economic and political internal problems. It has growing inequality. It has frequent protests in the countryside, and the cities, over a whole range of issues and the political system doesn't have a way for these grievances to be channeled. It has massive environmental problems. The public health system and the educational system are greatly underfunded. To the extent that these problems translate into social unrest they become political problems, raising questions of poor leadership. The leaders' domestic predicament could drive them into risk taking vis-à-vis the issues of Taiwan and Japan. Chinese economic decline causes Taiwan War Dan Lewis, Director of the Economic Research Council, World Finance, 2010, “The Nightmare of a Chinese economic collapse,” lexis It has been calculated that to keep China’s society stable – ie to manage the transition from a rural to an urban society without devastating unemployment - the minimum growth rate is 7.2 percent. Anything less than that and unemployment will rise and the massive shift in population from the country to the cities becomes unsustainable. This is when real discontent with communist party rule becomes vocal and hard to ignore. It doesn’t end there. That will at best bring a global recession. The crucial point is that communist authoritarian states have at least had some success in keeping a lid on ethnic tensions – so far. But when multi-ethnic communist countries fall apart from economic stress and the implosion of central power, history suggests that they don’t become successful democracies overnight. Far from it. There’s a very real chance that China might go the way of Yugoloslavia or the Soviet Union – chaos, civil unrest and internecine war. In the very worst case scenario, a Chinese government might seek to maintain national cohesion by going to war with Taiwan – whom America is pledged to defend. Goes global and nuclear Lee Hunkovic, Prof. at the American Military University, 2009, “The Chinese-Taiwanese Conflict,” http://www.lamp-method.org/eCommons/Hunkovic.pdf) A war between China, Taiwan and the United States has the potential to escalate into a nuclear conflict and a third world war, therefore, many countries other than the primary actors could be affected by such a conflict, including Japan, both Koreas, Russia, Australia, India and Great Britain, if they were drawn into the war, as well as all other countries in the world that participate in the global economy, in which the United States and China are the two most dominant members. If China were able to successfully annex Taiwan, the possibility exists that they could then plan to attack Japan and begin a policy of aggressive expansionism in East and Southeast Asia, as well as the Pacific and even into India, which could in turn create an international standoff and deployment of military forces to contain the threat. In any case, if China and the United States engage in a full-scale conflict, there are few countries in the world that will not be economically and/or militarily affected by it. However, China, Taiwan and United States are the primary actors in this scenario, whose actions will determine its eventual outcome, therefore, other countries will not be considered in this study. a2: economy resilient Economic collapse of China is possible Edmund Conway, economics editor of The Telegraph, writer, The Telegraph, 2009, lexis China has grown to its current size, as do most "young" economies, by exporting cheap goods to richer countries. In its case, this has resulted in the biggest trade surplus in history. The proceeds of that surplus have to go somewhere but, rather than buying General Electric, the country's leaders have splurged it in the currency markets, doing whatever they can to keep their currency, the renminbi, down. Such a policy made sense when China had an economy that was relatively underdeveloped, and was trying to shield nascent exporters from volatility; but now, by keeping assets artificially cheap, it serves to exacerbate the bubble that is building up as a result of those low US interest rates. And while this approach worked when consumers here and in America would spend on Chinese exports, that is no longer assured. As if this weren't dangerous enough, the authorities have also taken to trying to pump up the economy further by channeling cheap credit to companies. There could hardly be a more reliable recipe for an asset bubble, and too many economists assume that the omn ipotent Chinese leaders know better. In reality, this bubble is being allowed to grow by a Communist party, which is well aware that, if economic growth drops below a certain level, their positions could become less secure; the authorities are also less in control than they would like to be. ***AT COOP PERM*** COOPERATION WILL NOT HAPPEN China won’t cooperate – doesn’t need the US Jeff Foust is an aerospace analyst, journalist and publisher. He is the editor and publisher of The Space Review and has written for Astronomy Now and The New Atlantis, Space Politics is a space policy blog, offering news and commentary about key issues affecting civil, commercial, and military space efforts. Dec 16th 2010, (http://www.spacepolitics.com/2010/12/16/why-cant-the-us-and-china-cooperate-in-space/) There has been a renewed effort by the US government to reach out to China and find ways to cooperate in space, including a brief mention of cooperation in space exploration last year when Presidents Obama and Hu met, as well asNASA administrator Bolden’s visit to China in October. Yet, those discussions have yet to result in any concrete steps for joint projects or other cooperative ventures between the two countries, apparently to the surprise and disappointment of some within the administration. One expert believes that it’s because China doesn’t need to cooperate with the US as much as American officials think it does. At a space security forum Wednesday organized by the Union of Concerned Scientists (UCS) in Washington, Gregory Kulacki, senior analyst and China project manager for UCS, said China’s current space efforts were motivated by a single event: President Reagan’s 1983 SDI speech. That speech, he said, was a “Sputnik moment” for China, in particular scientists who convinced the leadership that this demonstrated the importance of space. “The United States was going to make another Kennedy-sized investment in this whole area of technology and China just could not be left behind,” he said. If China didn’t invest in space, “in the way the scientists put it in their letter to Deng Xiaoping, [it] ‘would make us a second-rate power again.’” China’s space capabilities, therefore, are tied closely to their national prestige and status, he said. The growth of Chinese space capabilities during time, Kulacki said, means that cooperation with the US is simply not a high priority now. “As far as the technical community, there’s no real incentives. They don’t need anything” from the US, he said. He added that Chinese space professionals aren’t interested in cooperation with the US because it’s “nothing but problems”, interfering with their current efforts. Any push for cooperation would have to come from the political side, but space is not a high priority there, he noted. Cooperation on space won’t happen – it’s diplo smokescreen Keith Richburg, Washington Post staff writer, January 22 2011, (http://www.washingtonpost.com/wp-dyn/content/article/2011/01/21/AR2011012104480.html) But as China ramps up its space initiatives, the diplomatic talk of cooperation has so far found little traction. The Chinese leadership has shown scant interest in opening up the most sensitive details of its program, much of which is controlled by the People's Liberation Army (PLA).At the same time, Chinese scientists and space officials say that Washington's wariness of China's intentions in space, as well as U.S. bans on some high-technology exports, makes cooperation problematic. For now, the U.S.-China relationship in space appears to mirror the one on Earth - a still-dominant but fading superpower facing a new and ambitious rival, with suspicion on both sides."What you have are two major powers, both of whom use space for military, civilian and commercial purposes," said Dean Cheng, a researcher with the Washington-based Heritage Foundation and an expert on the Chinese military and space program. NASA's human spaceflight program has been in flux in recent years, fueling particular concern among some U.S. observers about the challenge posed by China's initiatives in that area. There is "a lot of very wary, careful, mutual watching," Cheng said. Song Xiaojun, a military expert and commentator on China's CCTV, said that substantial cooperation in the space field is impossible without mutual trust. Achieving that, he said, "depends on whether the U.S. can put away its pride and treat China as a partner to cooperate on equal terms. But I don't see that happening in the near future, since the U.S. is experiencing menopause while China is going through puberty."
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