Hofstra University, Department of Global Studies & Geography GEOG 113C – Geography of East and...

Hofstra University, Department of Global Studies & Geography

GEOG 113C – Geography of East and Southeast Asia

Professor: Dr. Jean-Paul Rodrigue

Topic 5 – China, the Awakening Giant

A – The Chinese WorldB – The Path to Chinese DevelopmentC – Selected Problems and Issues

© Dr. Jean-Paul Rodrigue

A. THE CHINESE WORLD

1. Unity and DiversityWhat characterizes Chinese geography and in which way it has been a factor of unity and diversity?

2. Chinese DemographyHow does China cope with its huge demography?

3. Communist ChinaHow communism has changed the Chinese society?


1. Unity and Diversity

■ A change in emphasis• Conventional perspective:

• China was presented mainly from a political and historical perspective.• Imperial history.• Communism (Maoism); a centrally planned economy.• Political movements that impacted the society (e.g. Great Leap Forward,

Cultural Revolution, Open Door Policy).• A rural society isolated from the outside world.• In today’s China, this perspective has almost become irrelevant.

• Emerging perspective:• Economic forces at play.• A China that has become the industrial motor of the global economy.• Unique social issues linked with industrialization and urbanization.• Growing player in regional geopolitics.



USA: 3.6 million square miles

China: 3.7 million square miles

65% mountainous

Gobi Desert



Arable land: 12%

Arable land: 25%


Main Rivers of China

Huang He (Yellow River)Can carry up to 40% sediment weight (highest in the world).Subject to flooding, especially in its delta.Changed course many times.

Chang Jiang (Yangtze)Longest river, China’s main street (6,300 km).

Pearl River delta systemMost productive and sustainable ecosystem in the world.Rice paddies and fish ponds.

Heilong Jiang (Amur)China's border with Russia



■ The Grand Canal• Achievement of Imperial

hydrological engineering.• First segments completed around

602 AD (Sui Dynasty).• At its peak during the Ming

dynasty (1368-1644 AD).• Totaled about 2,500 kilometers,

1,700 still in use today.• Grain distribution through the

empire, notably its capitals.

Hangzhou

Suzhou

Yangzhou

Chuzhou

Jizhou

KaifengLuoyang

Beijing

HuaiyinBian Canal(Song)

Tongji Canal (Sui)

Jizhou Canal(Yuan)

Yangzhou Canal(Song and Yuan)

Jiangnan Canal(Sui, Song and Yuan)

Yongji Canal(Sui and Yuan)

Tonghui Canal(Yuan)

Yongji Canal(Sui)

Jiao-Lai Canal(Yuan)

400 km

Old course ofthe Yellow River(Song)

Yellow Sea

East ChinaSea


Han

Tai

Tibetan

Turkic

MongolsTakla Makan

Gobi

Taiwan

Koreas

Highland China

The Chinese Realm

Miao-Yao

53% of the population speaks Mandarin.Han China: 92% of the populationMinorities dominantly live in mountainous or arid regions.


The South China Sea – A Contested Area of the Chinese Realm

Paracel Islands

Spartly Islands

Important shipping lanes.Oil and natural gas reserves.Fishing areas.High biodiversity (coral reefs)


1. Unity and Diversity: Main Agricultural Regions

Pasture and oasis

Wheat Dominant

Rice Dominant

Double-crop rice

China feeds approximately 25% of the world’s population with about 7% of the world’s arable land.

North: continental climate growing wheat, sorghum and corn.

South: subtropical climate growing rice.



■ Chinese Cuisine• Food and tastes are a cultural expression.• Reflects the complexity of the country.• Diversity of the climate, products and customs:

• Each cuisine has its own set of base elements (grains, meats, vegetables, oils and spices).

• Strive for harmony of sight, smell, taste and texture.• 8 regional / provincial cuisines:

• Shandong, Sichuan, Guangdong, Fujian, Jiangsu, Zhejiang, Hunan and Anhui.

• Two main local cuisines (Beijing and Shanghai).• Many minorities cuisines.

• Long history of famines and food shortages:• Anything edible will be used.• Parts of animals which are often discarded will be used (feet, head,

tendons, tripes).• The wok: a fuel efficient form of fast cooking.


1. Unity and Diversity: The Three Chinas

The InteriorAgricultural and demographic hearth.Poor and rural China.

Coastal ChinaForefront of modernization.Political and economic center.Rich, urbanized and open to the world.

Western ChinaSparsely populated.Region of minorities.Most mineral resources


1. Unity and Diversity: China’s Main Contrasts

• Inward-Looking History / Outward-Looking Future

• Hans / Minorities.

• Authoritarian Government / Opening of the Economy.

• Command economy versus market forces.

• Isolation versus openness.

• Rural Interior / Urbanizing Coast.

• Wheat Growing North / Rice Growing South.

Geography Economy

SocietyPolitics


2. Chinese Demographics

■ Demographics...• More people than the combined population of Europe, the

Americas and Japan.• Any change has global ramifications.• The demography of China is a powerful trend (1.32 billion):

• About 14-17 million people are added each year in the 1980s.• Average of 13 million people per year in the 1990s.• 10 million people per year in the 2000s.• Expected to peak at about 1.45 billion by 2030.• Projection figures are revised downward (2000-2006: 100 million less in

2050).• 400 million Chinese live in towns and cities (30-35%).• 64% of the population lives in rural areas (950 millions).• 343 million females are in their reproductive age.


The Population of China, 0-2050

500 700 900 1100 1300 1500 1700 19000

200

400

600

800

1000

1200

1400

1600

The population exploded after 1949.Population control was secondary.Mao Zedong saw numbers as a workforce and a way to fight the Soviet Union and the United States.Calls for women to “breed for the motherland”.


Chinese Population, 1949-2008 (in millions) (projections to 2050)

1945 1955 1965 1975 1985 1995 2005 2015 2025 2035 204550000

60000

70000

80000

90000

100000

110000

120000

130000

140000

150000


Population Density of China and Most Populous Provinces

Excessive concentration: 50% of the population lives on 8.2% of the land.Bulk of the population along the coast.East China accounts for 90% of the population.56%, about 728 million, are living in mountainous areas.High density rural areas.



■ Current issues• Population growth undermines Chinese development (education,

health, energy, food, transportation).• About 10 million persons reach the job market each year.• Increasing ethnic diversity:

• The government had not enforced the One Child Policy among the country’s 55 recognized minority groups.

• They had increased their share of still predominantly Han population to 9.4% in 2005 from 6.7% in 1982.

• Missing female population.• Sustaining agriculture.• Coping with huge urban growth.• Nutrition transition: growth of “western diseases” (obesity,

diabetes).


Population Pyramid of China, 2005

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

70 20 30

4450

5465

5348

6063

524242

3022

1914

96

3844

4960

4946

5760

503940

2921

1815

109

FemaleMale

Millions


Population Pyramid of China, 2050

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

70 20 30

36373736

3741

4648

4441

4649

5642

3435

46

3435353435

394545

4137

4246

5543

3841

71

Female

Male

Millions



0

1000000

2000000

3000000

4000000

5000000

6000000

9000009500009750001050000

1500000

2200000

2600000

3200000

3800000

45000004800000

61000006300000

■ Education• Traditionally perceived as a path

to self improvement (Confucianism).

• College attendance: 20% in 2005 from 1.4% in 1978

• Produces 440,000 engineers per year (10 times more than the US).

• Low quality of many college degrees (rote learning).

• High unemployment among recent graduates (26% found employment in 2008).

• Tremendous incurred costs.



■ Surplus labor in rural areas• Development of the rural economy and the higher rate of birth.• Large numbers of surplus rural labor:

• Many rural provinces have an excess population they cannot sustain.• Difficult situation in the country side as China is running out of land.• Need to transfer from the agricultural to a non-agricultural sector.• Increased urbanization.

• About 20 million people per year migrated from the interior to the coastal areas.



1980

1990

1995

2000

2005

2010

2020

2050

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 to 14 15 to 64 65 and over

■ Aging of the population• China is in its peak active

population years, to last until about 2015.

• Then, a rapid shift is expected.• 65 years old or older:

• 87 million in 2000.• 112 million in 2010.• 340 million in 2050.

• Providing social security and services to a huge elderly population.

• High savings rate a positive factor.


3. Communist China: the Path to the PRC

Event ImplicationsGeography Large country; development of a canal system Large internal market; central

government; self sufficiencyPolitical and social system

Unified since 221 BC; Civil bureaucracy and meritocracy; Cultural superiority complex (sinocentrism)

National identity; Self-improvement; Unwilling to trade

Technological innovation

Leader up the to 15th century; Lagging behind until the late 20th century

Possibility of an industrial revolution; Economic opportunities missed

Foreign relationships Core civilization of the region; Never colonized; Forced to open port cities after 1842

Foreign nations as vassals; Hostile relationships with foreign powers

Key events 1433 – Ming Emperor ends international trade; 1839-1842 – First Opium War; 1910-1949 – Civil Wars; 1949 – PRC founded

Isolation of China; Forced to open markets; Adoption of Marxism.


3. Communist China

■ Chinese flag• Red: the color of revolution.• One large star: communist party.• Four stars: four classes : the workers, the peasants, the petty

bourgeois, and the “patriotic capitalists”. ■ Communism and China• The Marxist ideology is of western origin.• Leninism (Soviet Union after 1917):

• Compatible with the Chinese ideology.• Absolute central power.• Bureaucracy.• Social division of the society.• Economic and social control.


3. Communist China

■ Maoism• Mao (1893-1976) had evolved a Chinese Communist alternative

that reflected China’s different demography.• Core goals:

• Economic self-reliance.• Power derived from numbers.• Labor-intensive rather than technologically advanced development.• Local community effort.

• Concept of “mass-line” leadership:• Integrated intellectuals with peasant guerrilla leaders as a fundamental

economic and social strategy.• Launched programs of industrialization and collectivism.


3. Communist China: Maoist Movements

Movement Nature ImpactThe “Hundred Flowers” (1956)

Intellectuals invited for constructive criticism.Some party leaders criticized for corruption and incompetence.

Followed by repression, with many intellectual labeled as “rightists”. No tolerance of dissent or criticism.

The “Great Leap Forward” (1957-59)

Supposed to industrialize the countryside. Over-inflated industrial and agricultural quotas.

Forgery and exaggerations of agricultural production figures. Resulted in the largest famine in human history. About 30 million died of starvation.

Sino-Soviet Break (1960)

Ideological differences. Removed Soviet aid and technical personnel. Increasing border clashes. No global “unified” communist bloc.

The “Great Proletarian Cultural Revolution” (1966-1976)

Ideological demagogy by Mao to maintain power. Millions of youths (the Red Guards) were mobilized.

Plunged the country in a turmoil.Factions fought to control the government. Party-state machinery was crippled and many Party veterans were purged.


3. Communist China

■ Development strategies• Based on the Soviet model.• Collectivization:

• Land was expropriated.• Farming was collectivized.• Industries were reorganized as state-owned communal enterprises.• Immobility of the population.

• Emphasis on “heavy industry” and as source of employment:• Redistribution of economic activities in the interior.• Fear of war and vulnerability of the coast.

• Dramatic social changes:• Education: formal state education (politically-oriented).• Religion: abolition but some level of tolerance.• Population growth: favorable policies.


3. Communist China

■ Reforming China (Deng Xiaoping, 1904-1997)• Initiated important agricultural and industrial reforms (1978).• Opened China to the outside world for trade and technology:

• Different from Mao’s view of self-determination.• Characterized by pragmatism:

• “It is not important if the cat is black or white, as long as it catches mice”.• Establishment of “socialist market economy” to help China’s development.

■ Decollectivization (1978-)• Many farms reverted to families.• Land leased.• Growth in Coastal zones:

• Major cities.• Special economic zones.• Most important migratory movement from the countryside to the cities in

history.


Administrative Divisions of China

22 Provinces7-100 million people.Similar to US states.

5 Autonomous RegionsRecognition of minorities.Buddhist Tibetans (Xizang).Muslim Uygurs (Xinjiang).Mongols (Inner Mongolia).

Taiwan“Rebellious Province”

4 MunicipalitiesBeijing, Tianjin, Shanghai and Chongqing; China’s most prominent cities.

2 Special Administrative RegionsHong Kong and Macao.“One country, two systems”.


B. CHINESE DEVELOPMENT

1. Rural DevelopmentWhat is the structure and challenges of Chinese agriculture?

2. UrbanizationWhat is the nature and extent of urbanization in China?

3. IndustrializationHow China was able to industrialize?

4. China and the Global EconomyHow China is becoming a leading element of the global economy?


Challenges for Chinese Agriculture

Challenge IssuesAgricultural productivity Consolidation of agricultural plots (economies of scale);

Better irrigation; Appropriate storage and transportAgricultural output Coping with population growth (10 million per year);

Coping with changes in the Chinese diet (more meat)Urbanization, industrialization and transport

Decreased agricultural land in the most productive areas; Development (land use changes) around cities.

Environmental degradation

Contamination of soils and water supply.

Dependency China is now a net importer of grain; By 2030, China would need to import the current global grain production; Finding reliable suppliers.


Production and Yield of Paddy Rice in China, 1961-2009

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

Yield (kg / hectare)

Production (tons)


Production and Yield of Wheat in China, 1961-2009

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

Yield (kg / hectare)

Production (tons)


Meat Production, United States and China 1961-2009 (in tons)

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

ChinaUnited States


1. Rural Development

■ Rural-Urban Migrations• Conventional situation:

• China fixed its population to its place of work and residence.• Food tickets were only valid at the place of residence.• Residence permit necessary to obtain food (permit not transferable).

• Emerging situation:• Possible to transfer the residence permit if a sum is paid.• Surplus labor in the countryside moved to cities in order to occupy lowe

wages jobs (construction, manufacturing and services).• Migrants around 100-120 millions (about 10% of the population).• 20% of agricultural workers take at least of month off per year to work

outside the farm.• About 250-300 million peasants may have left the countryside by 2010.

• Possibility of a reverse migration:• Sharp drop in exports by the end of 2008.• Unemployed workers returning to the countryside.


2. Urbanization

19701980

19902000

20102020

20300

10

20

30

40

50

60

70

80

90

100% Population Urban

Urban Rural

■ Urbanization concern• Historically underrepresented:

• Most of the labor in the countryside.• Urbanization accelerated only after

1978.• 32% urbanization level (2000), or

400 million urban residents.• 40 million new urban residents

between 2001-05 (official).• The reality is more likely to be 50-70

millions.• 50% urbanization level to be

reached by 2030.• Urbanization occurred at the

expense of highly productive agricultural areas.


Urban and Rural Population in China, 1961 - 2050

1961

1964

1967

1977

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

2047

2050

0

200

400

600

800

1000

1200

RuralUrban


2. Urbanization

BeijingThe political center.Imperial capital transformed into a national capital.

ShanghaiThe head of the dragon (Yangtse).The industrial center.The new financial center.Gateway to Central China.

GuangzhouOld commercial city.New industrial center (Pearl River Delta).Gateway to South China.


3. Industrialization

■ Urban industrial economy (1950-1980)• Creation of vast administrative units.• The work unit (Danwei):

• In industry, services and administration.• Controlling the population through geographical fixation.• Stability and material security provided.

• Workers class is the outcome of the communist government:• Regrouping of labor in industrial units.

• Employment was guaranteed for life:• Employees have a set of social benefits.• Health, retiring, housing, education, vacations, preferential prices on food.• Transmission of the job to a member of the family.• Promotions were done by the social position and respect of ideology.• Having a job in a State enterprise was to possess an “iron rice bowl”.


3. Industrialization

■ Open Door Policy and economic development (1980-)• Employment problems:

• Increasing since the 1960s because of demographics.• The State sector was not capable to absorb all the new workers.• Inefficiency of the State sector with diminishing returns (classic central

planning conundrum).• Collective and private enterprises:

• Growth occurring in the labor intensive light industrial sector.• The share of the industry outside the State control has gone from 20% of

industrial production in 1978 to 70% in 1993.• Private enterprises account for growing share of the industrial output.

• 1978-2001: 200 million Chinese have been lifted out of absolute poverty.


4. China and the Global Economy

■ Integration to the global economy• Economic growth is mainly driven by exports:

• China contributed to 25% of the world’s GDP growth (1995-2002).• With no welfare state, no labor unions and an enormous supply of both

labor and savings, “communist” China is a capitalist's paradise.• Lessons from the past:

• Each time China opened to the outside, a period of relative prosperity resulted.

• Each time China closed to the outside world (e.g. the Great Leap Forward and the Cultural Revolution) was a period of instability.

• The CCP is embracing this form of development:• Insuring improvements in the population’s welfare.• Insuring the growth of the economic power of China.• Insuring technological development.• Insuring their own survival / legitimacy.


Major Components to Price Reductions by the Chinese Manufacturing Sector, 2005

Wages

Export Industry Subsidies & Pref-erences

Industrial Network Clustering

Undervalued Currency

Counterfeiting & Piracy

FDI

Lax Health & Safety Regulations

Lax Environmental Regulations

0% 10% 20% 30% 40% 50%

39.4%

16.7%

16.0%

11.4%

8.6%

3.1%

2.4%

2.3%



■ Growing consumption of resources• Economic growth has increased China’s consumption of

resources:• “The Dragon is hungry”.• Second largest consumer of oil after the United States.• Energy supply problems with increasing blackouts.• Completion of a natural gas pipeline in 2004 (Tarim Basin to Shanghai).

• Driving up global commodity prices:• Increased global competition caused by China.• Fear that China may “export inflation”.

• China may hit a “resource wall” inhibiting future developments.


China’s Share of the World Commodity Consumption, c2009

CementIron Ore

CoalPigs

SteelLeadZinc

AluminiumCopper

EggsNickel

RiceSoybeans

PopulationWheat

ChickensGDP (PPP)

OilCattle

0 10 20 30 40 50 6053.2

47.746.9

46.445.4

44.641.3

40.638.9

37.236.3

28.124.6

19.416.6

15.613.6

10.39.5


China’s Endowment in Strategic Mineral Resources, 2007

Iron Ore

Platinum

Gold

Zinz

Bauxite

Nickel

Coal

Copper

0 20 40 60 80 100 120 140

52

100

1

25

58

67

0

65

37

0

7

15

34

33

145

35

Reserves Years

Import Dependency


Crude Oil Production and Consumption, China, 1980-2009 (in 1,000 of barrels per day)

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

ProductionConsumption


China’s Crude Oil Imports, 2004

45%

29%

14%

12%

Middle EastAfricaWestern HemisphereAsia-Pacific

Saudi Arabia

Oman

Angola

Iran

Russia

Sudan

Vietnam

Congo

Indonesia

Norway

Malaysia

Brazil

0 2 4 6 8 10 12 14 16

Percentage



■ Growth of international trade• Tremendous growth of China’s involvement in international trade

over the last 25 years.• Exploitation of comparative advantages.• Export oriented (neomercantilist) “strategy”:

• China is the world’s 3rd largest exporter (2005), 7.3% of the world’s trade.• Exports account for 40% of the GDP while this share was 5% in 1978.• However, 90% of exports are by foreign owned factories.

• United States:• Most important trading partner.• Account for 40% of China’s exports and 10% of its GDP.• American corporations benefiting tremendously from low costs.

• The European Union the second.• Japan the third.


Monthly Trade between China and the United States, Millions of USD (1985-2011)

Jan-

85

Jan-

86

Jan-

87

Jan-

88

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-30,000

-25,000

-20,000

-15,000

-10,000

-5,000

0

5,000

ExportsImportsBalance



■ Shifts in international trade• Decrease of raw materials:

• From 50% of exports in 1985 to 15% in 1995 to 2.5% in 2005.• Increase in manufactures:

• 97% of the value of exports.• Consumption goods (shoes, toys).• Textiles and clothes.• Low level electronics.• 12% of exports are bought by Walmart.

• Energy and raw materials imports:• 1/3 of its oil.• Second largest oil importer after the United States.



■ World dominance in manufacturing• Two processes:

• Addition of new manufacturing activities either the outcome of FDI or internal investments (modern facilities).

• The closing down of many manufacturing activities, mainly the outcome of Chinese competition and/or comparative advantages.

• Examples:• 50% of the world's TVs (80 million).• 60% of the world's cell phones.• 50% the world's shoes (and 95% of those sold in the United States).• 80% of the toys.• 90% of the sporting goods sold in the United States.• 100% of Levi's blue jeans are now made in China.• 70% of Wal-Mart products made in China.



■ Labor issues• China supplies a gigantic quantity of labor.• 200 million people in the countryside are without work.• Constant flow from the interior (poorer provinces).• Often woman to work in factories for about 3 years.• Come back to their villages/towns to marry or start businesses.• Flows of capital that is used for familial capital investments

(housing, agriculture).



■ Wages• Extremely low wages that are kept low because of rural to urban

migration and population growth.• Between $60 and $85 a month.• The rest of the developed world cannot compete.• Selling itself with diminishing returns.• Many factories offer “free” room and board.• Strong inflationary pressures having an impact on wages:

• Rising cost of living in manufacturing (coastal) regions.• Rising energy and food prices.• The same basket of goods can be as expensive in China than in the United

States.• Doubling of wages between 2005 and 2008.• Relocation of some manufacturing activities in Vietnam.


Hourly Cost of Wages and Benefits, 2004 ($US)

Germany

Japan

United States

Brazil

South Africa

China

0 10 20 30 40 50 60

$49.60

$40.96

$36.55

$5.87

$5.48

$1.96



■ Mechanisms for opening to the outside world• Rely on extraterritoriality and Foreign Direct Investments (FDI).• Gain capital and investment.• Using the Chinese diaspora:

• Chinese living abroad with substantial business experience.• About 75% of FDIs initially came from Hong Kong and Taiwan.• Facing high wages, high land values and scarcity of available space for

development.■ Geographical concentration• Guangdong, Fujian and Shanghai:

• Account for 50% of FDIs.• Coastal provinces account for 85%.

• 80% of FDIs are coming from Asia (Hong Kong, Taiwan).• 20 to 30% of the international trade concerns the Pearl River

Delta.



■ FDI Phases• 1st phase (1978-1995):

• Labor-intensive / low technology sectors.• Comparative advantages of China.• China received 4.1% of the world’s FDIs in 2000 (ranked 6th).• Often used to develop joint ventures / subcontracting.

• 2nd phase (1995-):• Shift towards added value goods is observed.• Basic to intermediate electronics (keyboards, mice, etc.).• An expertise in many sectors has been developed.• Integration in global commodity chains.• World’s largest manufacturer of consumer electronics.• About half of the world's DVD players are now made in China.• Emergence of a knowledge industry.


Value of Chinese Exports and Received FDI, 1983-2009 (Billions of $US)

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

200,000,000,000

400,000,000,000

600,000,000,000

800,000,000,000

1,000,000,000,000

1,200,000,000,000

1,400,000,000,000

1,600,000,000,000

0

20

40

60

80

100

120

Exports

FDI Inflows

Expo

rts

FDI


Extraterritoriality: China’s Special Economic Zones

Zones in which laws are different from China’s economic laws.The goal is to increase foreign investments.Subject to a different taxation regime; little or no taxes on exports



■ Purchase of foreign assets• Accumulation of gigantic foreign reserves ($US 1.3 trillion in

2007).• Recycling income from exports.• Initially involved mainly in T-bills and debt instruments.• Move to secure strategic resources:

• Oil, mines, lumber, food supply.• New Chinese presence in Latin America, Africa and Southeast Asia.

• Purchase of foreign technology and brand names:• Lenovo acquired IBM personal computing division (2004).• Little known Chinese manufacturers seeking an international recognition.


Acquisitions by Chinese Oil and Gas Companies, 2008-2009

Year Company Acquisition Value ($ billion)

2008 Sinopec 60% of AED Oil Ltd, Australia 0.56

2008 CNOOC 100% of Awilco Offshore 2.5

2008 Sinopec 100% of Tanganyika Oil, Syria 1.8

2009 Sinochem 100% of Emerald Energy, Syria and Columbia

0.88

2009 CNOOC, Sinopec 20% of Angola’s Bloc 32 from Marathon Oil 1.3

2009 Sinopec 100% of Addax Petroleum, Calgary 7.2

2009 CNPC, PetroChina

96% of Singapore Petroleum 2.0

2009 CNPC, KazMunaiGaz

50% of MangistauMunaiGaz, Kazakhstan 3.3

2009 CNPC, PetroChina

60% of Athabasca Oil Sands, Mackay River, Dover Projects, Canada

1.9



■ Trade and tourism• Very difficult for a Chinese to go outside China until recently.• Closed under communism (1949-1978):

• Only 210,000 Chinese people were allowed to go abroad.• About 7,000 a year. • Mainly diplomatic personnel.

• Open door (1979-1985):• 50,000 per year in the 1979-1985 period.• Students and trade personnel.

• Economic reforms (1986-2001):• 18.1 million people were approved to go outside China.• Average of 1.13 million annually.• Mainly for educational and business purposes.



• A maturing industry (2001-):• Emerging middle class allowed to travel with a visa.• In 2001, four million Chinese went overseas for tourism.• 20 million in 2003.• 26 million in 2004.• 31 million in 2005.• 57 million in 2010.• Proximity effect.• 30-50% go to Hong Kong or Macao.• Travel mostly organized as tightly scheduled group tours, Europe being the

most popular foreign destination.



■ Over optimistic views on China?• Analogies with Japan during the 1980s.• “Resources wall” (energy and food shortages).• National inequalities (civil unrest).• Over dependence on foreign markets for exports:

• Triggers protectionist forces.• Low profit margins (less than 5%).

• Large misallocations of capital (export based / real estate).• Large debt by state enterprises:

• Non-performing loans.• Fiscal irresponsibility.• Little profits in spite are massive investments.

• The Yuan is a fiat currency like many others:• Money printing (inflation) by the government is rampant.

• De-industrialization of some manufacturing clusters.


C. SELECTED PROBLEMS AND ISSUES

1. Family PlanningWhat was the One Child Policy and how it impacted the Chinese society?

2. ModernizationWhat are the challenges of modernization in China?


1. Family Planning

■ Early 1970s• Known as the “later-longer-fewer program”.• Authorized age of marriage 25 for men and 23 for women.• Wait later to begin their families, allow for longer spacing in

between children, and have fewer children overall. • Began to reduce fertility levels.• Not fast enough to really slow down population growth due to the

demographic momentum that had already developed.■ End of 1970s• Government began to promote the two-child family throughout the

country.• Slogan “One is best, at most two, never a third”.• Contributed to fertility decline but, again, not rapidly enough.


1. Family Planning

■ One Child Policy• Launched in 1981 when the population reached 1 billion:

• Initial goal: Stabilize China’s population at 1.2 billion.• Revised goal: Keep China’s population under 1.4 billion until 2010.• Population expected to stabilize around 1.6 billion by 2050.

• Under the responsibility of the State Family Planning Commission (SFPC):• Population control perceived from a strategic point of view.• Employers and neighborhood committees had to enforce guidelines.

• Great variations in performance between the country’s urban and rural areas.

• Possible to enforce in China (totalitarian).• Would have been impossible in most other places.


Regulation of the One Child Policy

Authorization for marriage

25 years for male and 23 years for

female.Students and

apprentices not allowed to marry.

Monitoring menstrual cycles

Monitored by the work unit.

Contraceptive use mandatory

IUD used for women with already one

child.Incentives for

sterilization after the birth of the first child.Couples with two or more children had to

have one partner sterilized (women 80% of the time).

All pregnancies must be authorized

Unauthorized pregnancies had to

be aborted.7th, 8th or 9th month abortions are legal.


1. Family Planning

■ Urban areas• Small sized apartments.• Improving one’s status and level of consumption.• Easier control from the government.

■ Rural areas• Families want more children to work the family plots and sustain

parents when they get old.• Want sons who will continue the family line and provide ritual

sacrifices to their ancestors after they die. • Daughters are leaving their family once they marry.• Girls are accounting for only 20 to 30% of a new demographic

class in some areas.


Percentage of Women Having More Than One Child, 1998

National

Beijing

Shanghai

Jiangsu

Fujian

Guangdong

Sichuan

Tibet

Xinjiang

0 5 10 15 20 25 30

5.1

0.19

0

2.16

3.68

12.32

4.19

26.58

21.55 ■ Fertility reduction• Prevented about 400 million

births since 1980.• When the program began (1970),

Crude Birth Rate was 34 and TFR was around 6.

• Been brought down to 10 (CBR) and 1.7 (TFR).

• About 40% of Chinese women have been sterilized.

• About 5% of women have more than one child.


Percentage of Chinese Women with No Born Sonsby 60th Birthday

1989-1990 1991-1995 1996-2000 2001-2005 2006-2010 2011-2015 2016-2020 20250

5

10

15

20

25

30

35


1. Family Planning

■ Fluctuations of fertility• Fertility has declined substantially before the OCP.• Reached a low in 1984.• Increased from the mid 1980s to the early 1990s:

• Relaxation in enforcement in rural areas.• In 1986, 2 children per couple were allowed in rural areas.• In 1995, the restriction was lifted for urban areas.• Reductions in the authority of local officials responsible for implementing

the program.• Sizeable age cohort entering their reproductive years:

• Baby boom of the early 1960s (about 40% of the increase was due to this).• A decline in the age of marriage explained the other 60%.• Nearly 75% of this increase was offset by declines in the age-specific

fertility rates.


Chinese Fertility Rate, 1949-2005

1949195

1195

3195

5195

7195

9196

1196

3196

5196

7196

9197

1197

3197

5197

7197

9198

1198

3198

5198

7198

9199

1199

3199

5199

7199

9200

1200

3200

50

1

2

3

4

5

6

7

8

TFR


1. Family Planning

■ Imbalanced sex ratio• Male children are more valued.• 120 boys for 100 girls (national average).• Abandon or abortion of females:

• 11 million abortions a year; 1 out of 2 live births.• “Missing female population” as girls are not declared.• 2000: About 900,000 girls were missing (0 to 4 years group).• Only 1% of females are unmarried by the age of 30.

■ Psychological consequences• Currently around 70 million single child.• 4-2-1 syndrome (4 grand parents – 2 parents – 1 child):

• “Little emperors” or “little empresses”.• Self-centrism.• Pressure to succeed.


Males minus Females per Age Cohort, China, 2000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

-3,000,000 -2,000,000 -1,000,000 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000


1. Family Planning

■ Government’s response• Well aware of the situation, but limited range of options.• Laws giving girls and women equal rights with males.• Propaganda and consciousness-raising slogans about the equal

value and contributions of females and males.• Laws outlawing infanticide, prenatal sex identification, and sex-

selective abortion.• Policies in most provinces allowing rural couples to have two

children, or a second child if the first is a girl.


1. Family Planning

■ The Population and Family Planning Law• One-child policy was “a policy for one generation”. • Relaxed in the mid 1980s:

• 2 children permitted in rural areas.• A new family planning law started in 2002.• Same goal than the One-child policy, but offer more flexibility:

• One child, but permission may be granted for a second under specific circumstances.

• Late marriage and childbearing. • More flexibility for provinces, autonomous regions and minorities.• People in reproductive age have to use contraception.• Provisions for sex-determination and sex-specific abortions.

• Government keeping a close eye on demographics to see if population control is required:• Considering abandoning the one child policy (2008).


2. Modernization

■ The appeal of modernization• For the last 500 years, China developed an inferiority complex:

• Decline of China’s status as a global power.• Humiliation by foreign powers (e.g. Opium Wars, Japanese invasions).• Collapse of the imperial government (1912).

• Strong pressure to portray China as a modernizing nation.• Large investments in grandiose projects:

• Largest dam; Three Gorges Dam (2005).• Largest shopping mall; The South China Mall.• Highest railway (Tibet).• First maglev train in Shanghai (2003).• First Chinese in space (2003); spacewalk (2008).• New international airports (Beijing, Shanghai, Guangzhou).• 2008 Olympics.


2. Modernization

■ Development of the telecom market• Easier and cheaper to switch to the latest technology.• World’s largest mobile phone market:

• 376 million cell phone subscribers (2005).• 25.7 mobile phones for every 100 Chinese.• 4-5 million cell phones sold each month.• 70% of Beijing resident have a cell phone; 60% for Shanghai (2002).• 42% of the Guangdong province population; 30 million.

• World’s largest online user:• 20% of the population uses the internet.• 268 million users (2008).• The “Great Firewall of China”.

• Half of the rural residents have a television.


Chinese Internet Market, 2000-2008

2000 2001 2002 2003 2004 2005 2006 2007 20080

50

100

150

200

250

300

0

5

10

15

20

25

Internet users (Millions)Internet penetration (%)


2. Modernization

■ Industrial development problems• Pulling millions of Chinese out of poverty:

• More than 200 million peasants live on less than $1 a day.• Justifies any policy and project.• Guangdong; the Manchester of the 21st century.

• Inequality is becoming a standard:• Wages remain $50 to $70 per month.• With inflation, standards of living are going down.

• Industrial overcapacity:• Over investment.• Over supply of consumption goods, driving prices down.• Limited profits.

• Quality issues:• Several companies are starting to move away from China.

• Rising transportation costs.


2. Modernization

■ The “business environment”• The rule of law is not well applied.• Local abuses and racketing:

• Local government seizing and selling land to special interests.• Joint ventures must contribute to local development.• Different price systems.

• New Property Law (2007):• Protection of private property.• Remove the power by many government entities, particularly local, to seize

property with impunity.• Good Guanxi enables to bend most of the rules.


2. Modernization

■ The parasite economy• 73 million members of the CCP working for the government or

managing State enterprises (2007).• Duplication of functions in every sector of the civil service at the

national, provincial and township level.• 90% of civil servants are redundant.• Institutionalized racketing of economic activities by all levels of

government.• China ranks low on the international transparency index.


2. Modernization

■ Environmental degradation• Limited attention placed for the protection of the environment.• Development is a priority over the environment.• Serious degradation of environmental conditions.• Air pollution:

• China is the second largest CO2 emitter in the world.• 2/3 of the Energy supplied by coal.• 16 of the world’s 20 worst polluted cities.• 2/3 of Chinese cities have pollution level well above national criteria.• 75% of the urban population suffering from health problems.

• Water pollution:• 20% of rivers in China are severely polluted.• 80% cannot sustain commercial fishing.

• Energy efficiency issues.


2. Modernization

■ Counterfeiting and intellectual property• One of the greatest “industrial subsidy” ever seen.• Failure to protect intellectual property rights.• Indirect involvement with hackers to steal information abroad.• Technological expropriation:

• Copy a well known product without paying any royalties or R&D costs.• Illegal copies:

• More than 90% of the movies, music and software. • Legal CD has a 1.2% market share.• About 40% of pharmaceutical products.

• Two levels:• International: software and brand names (e.g. Polo, Nike).• National: books and music.


2. Modernization

• Role of government:• Weak (non-existent / arbitrary) legal environment.• Counterfeiting controlled by authorities and protected by judiciary

instances.• High levels of profits prevent any governmental intervention, except when

counterfeiting involves Chinese brands.• Pirate DVD market mostly controlled by the military.

• Consequences:• May impact on future economic growth.• Firms reluctant to invest in China outside simple labor intensive processes.• Other options (Southeast Asia, India) are available.


2. Modernization

■ Speculation• Short term perspectives of investments.• Real estate, not production, is the favored sector:

• “Development zones” are often created for this sole purpose.• Over supply of office space in many cities.• Vacancy rate of more than 25%; large non-performing assets.• People cannot afford to buy most of the housing, so real estate becomes a

speculation based solely on appreciation (not rent seeking).• Large shopping malls projects for a customer base that does not exist.

• Stock markets:• Market still in its infancy and low level of education of shareholders.• The notion of “investment” is not well understood (perceived as a “sure-

winning” lottery.• The stock market has been declining due to low profits, until 2006.• Bubble of 2006-2007; and then a crash (70% drop in 2008).


Shanghai Composite Index, 2000-2011 (Monthly)

Jan-0

0Ju

n-00

Nov-00Apr-

01

Sep-01

Feb-02

Jul-0

2

Dec-02

May-03

Oct-03

Mar-04

Aug-04Ja

n-05Ju

n-05

Nov-05Apr-

06

Sep-06

Feb-07

Jul-0

7

Dec-07

May-08

Oct-08

Mar-09

Aug-09Ja

n-10Ju

n-10

Nov-10

0

1000

2000

3000

4000

5000

6000


2. Modernization

■ Consumption• Symbol of modernity and of achievement:

• Mass consumption and mass media has created needs while the employment market offered limited opportunities to many.

• Access to new sources of information providing a globalized culture.• Mass media is new to China and there is no tradition of consumer

behavior.• Development of Western consuming behavior:

• Fashion and beauty products.• Weddings.• Christmas (the consumption segment of it).• New housing complexes and home decoration.

• Emergence of a middle class:• About 150-200 million as of 2010.• A tool of social change, but also instability.

Hofstra University, Department of Global Studies & Geography GEOG 113C – Geography of East and...

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