[MUSIC] So, let's now look at question four which is really the extension in which China's rise is changing the global economy. And, a few years ago people were talking about how China's enormous demand for energy had increased the price of gas and oil. And, its hunger for natural resources have greatly affected Africa, and then the price of those resources have come crashing down. We've seen China's labor price increase. And, therefore, the production lines have moved out of China and moved to less developed countries like Bangladesh, Cambodia, and even to India. We can see how China, as Richard had talked about before, whether China's strengthening or undermining International regimes, such as the intellectual property rights regime, or the free trade in the World Trade Organisation. We can also look at whether China is willing to abide by norms, in the international system, or whether it wants to change those norms because it wasn't there when they were created. China also where states can effect other states by adding tariffs, increasing tariffs, we hear this in the American election going on now that some candidates are talking about raising tariffs by 45%. And, we can also see how a country coming in, such as China, assertively coming into Australia has actually led the Australian government to introduce policies to try and restrict China's foreign direct investment into Australia. So, JP from a political economy perspective, how has China been changing the world? >> Now, first of all China being the most populated county in the world, becoming the second economy of the world is no small business. I mean, it's not small matter. It's a big, it's a sea change for the world economy and politics as well. I think the first impact has been to create a new bipolarity in the world I would argue, instead of multi-polarity. I think it has shortened the moment of the uni-polar world enjoyed by the United States at the end of the cold war. Now, what it has also created, it has created a momentum among emerging economies. Affecting what we call today the bricks, to some degree, India, Brazil, Russia, but also beyond the bricks a lot of developing economies have affected, China has directly affected Africa where China is with, China's trading >> You're doing a book on Africa, so. >> Yes, It's, I think it's a part of the world, which is developing very fast. Where a number of production lines have started to move away from Asia. And, where China is a big player. And with, so, it means, that, actually it's not only China which is developing. And, we're shaping the world economy, but also of the emerging economies. Including beyond the breaks of country like Nigeria, like in Asia, Indonesia, for instance, or Mexico. >> These are all related to doing trade with China. >> Trade and investments more and more. >> Yeah. Well, China's the number one trading partner of about a 140 countries in the world. Baohui, what do you think? How's China changing globally from a political economy perspective? >> I fully agree with Professor Kapistan's assessment. China, I would only correct him on one account, that is China is not a number two economy. According to the World Bank's calculation of GDP size based on PPP, purchasing power of front, China is the number one economy. So, no doubt, just by that fact alone, China has changed global picture. And, the most direct consequence of China's rise is, as a professor said, is that China has ended the uni-polar moment. We have already ushered in a new bipolar structure. The world today is very different from ten years ago. But more specifically. >> But, is it bipolar economically, does that necessarily mean it. >> But, other people would argue, you know, economic power today matters more than media power. Okay, that economic power is the daily currency of power, not media power. And so, on that account it is very significant China's rise. It is really reshaping the global order, in particular, China is reordering the global governance system. China's reinventing the global architecture. You know, so for example >> What does that mean? >> But other means for example China is inventing new global economic institutions, like the AIIB, the Asia Infrastructure Investment Bank. >> So these are political economy? >> Very important issues, yeah. And, China originating new original free trade ideas like the Pan Pacific Free Trade Area, which is direct competitor of the US TPP idea. >> Trans-Pacific Partnership. >> Exactly, TPP, yes. So, China's impact is profound extensive and we are feeling that impact every day. >> Okay, Richard, what do you have to jump, throw in here? Yes, I agree JP and Bauhui about China's increasing role on the world economy by the sheer size of Chinese economy. Number one, GDP or exporting or importing countries, and also, China is number one in terms of foreign reserve. And, as you said in your earlier remarks, China look for the man side, also sucking a lot of raw material, everything. But, I like to focus on one thing, which is look for the supply side. China used to be a labor intensive economy. And now, Chinese economy, after 40 years of development, becoming a capital affluent economy. Actually, China has a lot of money, fortunately. >> Right. >> For reserve. And then, China uses a capital capability to shaping the new world economic order. China set up new banks, like AIIB. >> Right. >> New Development Bank. Shanghai Corporation Organization Bank. China also set up a silk road fund. China, every year, provides foreign aid to developing countries, which- >> You mean Pakistan, it has invested 45 billion dollars in that stuff. >> Yes,you can count it in number. China provides Foreign aid about $5 billion every year. And then, which is probably more than the world bank to supply to African countries. So, China is a really changing the game now. >> But if you think about it, in terms of, you say in terms of per capita, PPP, Purchasing Power Parity. But, if you look at per capita income of China, China's no richer than Santa Domingo. China's an enormous, not a very rich country. >> Well that doesn't matter. >> So why is, well, so that's the question. >> It doesn't matter. >> Tell me why it doesn't matter. >> Nobody says Switzerland is a world power, a world and global influence, even though its per capita GDP is one of the highest in the world. In the international system, each constituent unit is not a person, its a unit as a sovereign state.. So, it's a sovereign states aggregate power that measures. >> >Not relative power? >> No, not relative power >> I thought you guys, realists talk about relative power. >> >No. No, relative power doesn't mean per person power. Relative power means the power gap you have over the next country. But, each is measured in aggregate terms. China's total GDP, if The World Bank assessment is correct, it is number one. That matters. It doesn't matter what is the per capita GDP. All that matters is the total GDP. >> I agree with that, the sheer size matters. And, the second thing is the willingness of Chinese government trying to play some roles in world economy. Although China is not really richer than other developing countries, but the government is willing to step in to provide funding for developing countries. It is biggest, the owner and founder to so-called South to South corporation, and that's really changed the global political economy map. I will bring a note of nuance to that. Because if you look at Africa, America, the European Union, the main aid providers altogether- >> Major investor. >> And the major investors in most African countries. So yes, China is a new player. Well, there are new players in Africa like India as well, Brazil. But, I mean, we have to put things into context. China is making an imprint everywhere in the world. But the same time this momentum of emerging economies has created, not only a bipolar world, and I would agree with that in many, in due strategic in term and in economic and political in terms. I think that created a much more multi-polar world where you see more emerging economies contributing to moving the center of economic activities away from the West to the rest the West is not only China. China keep a big place in what we call the West, but there's not only China is there. >> One thing though that strikes me, is this is sort of a positive, everybody's talking positively the growth of China. It creates this opportunity for all these countries. But yet, we saw last summer the collapse of the Chinese stock market. Has now China, when China catches a financial cold, if something happens in You know, the reactions are enormous. In the past, who cared what happened to Chenjung's stock market, right? Who cares? >> That just proves. >> Now you've- >> Well, it proves the entity. >> Right. >> That proves that's why China has become so important. >> But it's a negative impact now. >> And, also the interdependence of the Chinese economy and the world economy. The financial market, especially, is closely linked with the global financial market. Now I'd to follow up with one of the JP point about China's relation with developing companies. We all talk about at the state level. >> Hm. >> If you look below the state level, actually Chinese private business,and even individuals, they are much more active than we thought to entering, to expanding into other countries. >> Yeah. >> Look at Africa, there are more than 1 million Chinese. >> Two million. >> Either working as individual vendor or working for Chinese companies doing business there. This large amount of foot soldiers on the ground really matters. So, it make Chinese economic impact much greater. >> Then it also makes people worried. >> Well worried that too. Because there's a society relations. >> Right we can see that, you can see that as well particularly in the cases I mentioned of Australia. Where the Australian, 90 companies were trying to get into Australia and Australia passed a new law which made it much more difficult. >> Australia may be a unique case. I think the other unique case is the United States. >> And Canada also. >> Yeah. Anglo Saxon countries are peculiar. Chinese investments are seen as threat to the national security. But, every other country including in major European countries, Chinese investment are very much welcomed. >> Not in every sector. I mean, I think because China is a big country, is a great power, is a one party system, so we don't share the same political values. So, there were always be some kind of suspicion. >> I call it push back. Push back or suspicion among western countries in front of Chinese investment in some security or strategic sectors of the old economy. So, I think, what we see in Australia and Canada can be perceived in other parts of the world. >> It happened in Africa, some place in Africa. Last word? >> Yes, I think the market force is very important for China's expansion to the world. And, this is both good news and bad news for the countries receiving, or the host country for Chinese capitals. The good thing is everybody needs Chinese money, Chinese investment. But, the bad thing is look at the real estate market in those major world metropolitan cities. The Chinese investor, the private money drive up the price in all these places. Look at the number of Chinese tourists in those places. And then there are down sides. The criticism on some of the Chinese tourist behaviors in those places. >> Great, all right. Let's end that here. Thank you very much. We'll move on to the next question in a second.
