Transcript: China Chat
Xue: Certainly I concede there are many social challenges to China's development. The government is trying to maneuver a way that it can keep the stability while at the same time being able to bring the change. We shouldn't forget that China is undergoing this tremendous change, both the economic structure from a planned economy to a market economy, but also I think the society is changing from a rural society to urban one. The scenario, changing from the one-party system to a multi-party system. I don't see that in the coming years. But within the political system, there will be more mechanisms for broader discussion in the public policy process. For example, some of the so-called public hearing system has been introduced in some policy-making processes and also the local people have representatives are becoming more vocal in expressing their concerns and interests. In coastal areas I think you can see those change so much faster. Inland and in the northern part, it's much slower.
Utley: There's a question or concern that appears on the cover of U.S. News. The title itself is "The China Challenge" not the "China Threat," but there are people and we're looking now at China from outside China, whether it might be Australia, or the United States or . . . particularly in Europe these days. Is China . . . should China be seen as a threat to jobs, to a way of life, to the middle-class in the industrialized nations. I'm open to any ideas. Who wants to start off? Bill Fischer.
Fischer: My sense is that it's both a challenge and a threat. China has entered the world market, has become a fully functioning member in the global community. In many ways, is a very good citizen in a variety of ways that it wasn't 30 years ago, 40 years ago. And part of the price that we pay for that benefit is that they also want to participate in the global economy and that means they want their people to have jobs that are exporting products to other markets, they want to move up the value chain in industries that they're a part of. I think we would all agree in principle that's a good thing. But where it becomes a challenge and a threat is to those businesses and individuals who, in fact, are going to lose through competition their jobs or their share of the market as China enters the market. It's kind of hard to believe that there isn't going to be some dislocation and as it inevitably the people who are dislocated by it see it more as a threat.
Utley: Michael, on the energy front, is China more than challenge, is it a threat in terms of what it's going to mean for prices of raw materials, particularly energy prices? That's something it cannot escape?
Komesaroff: There's no doubt that China's purchases of all raw material but energy in particular has driven prices up in the last 12 months, and in many cases to record highs. In past that was the result of supply, and this is more on the mineral side than the energy side, the supplies being unprepared for the spurt of growth. And not bringing capacity on now, and you'll find, for example, in the iron ore industry, everyone's struggling to expand capacity and you can't get an engineer or construction project manager for love nor money because they're all working on expansion projects as part of the Chinese market. That's one side of the question you asked before–the Chinese are flooding the market but they're also demanding a lot of goods in return which is creating capital investments in other countries.
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