B412 Week 7 Lecture - China and the rest of the World
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This seminar deals with key issues around China and the it's place in the rest of the World.
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B412 Week 7 Lecture - China and the rest of the World
- 1. School of Business International Business Regions: China Aspects of the region & the rest of the world Lecture Week 7
- 2. Pearson College London XXXX 2 School of Business International Business Regions: China Aspects of the region & the rest of the world Learning Outcomes Week 7 China’s re-emergence on the World Stage and the shift in the balance of power • The Zhongguo 中国 - Back to the Centre? • The nature of its rise: peaceful or predatory? • Asian neighbours: ‘friendly giant’ • Africa: win: win policy • The hunt for global resources • Policy of Non-Intervention & Soft power • China & the US – shift in world order?
- 3. Pearson College London XXXX 3 School of Business International Business Regions: China Aspects of the region & the rest of the world Awaking from the ‘wrong’ side of history “A nation that comprises 1/5th of the world’s population is already in the process of transforming the workings of the global economy and its structure of power. A country that regards itself, for both cultural and racial reasons, as the greatest civilization on earth will, as a great global power, clearly in time require and expect a major reordering of global relationships…for the next 20 years or so, as it continues its modernization, it will remain an essentially status-quo power” ‘When China Rules the World’, Martin Jacques
- 4. Pearson College London XXXX 4 School of Business International Business Regions: China Aspects of the region & the rest of the world A new beginning – China’s century? “The fact that China is so huge means that it exercises a gravitational pull on every other nation…Size will enable China to set the terms of its relationships with other countries… China’s mass will oblige the rest of the world largely to acquiesce in China’s way of doing things…It is possessed of a 5,000 year history and an extremely long memory…it is blessed with the virtue of patience, confident in the belief that history is on its side.” ‘When China Rules the World’, Martin Jacques
- 5. Pearson College London XXXX 5 School of Business International Business Regions: China Aspects of the region & the rest of the world Geographical Context • 14 land-connected neighbours of Asia / former Soviet Union • Eastern seaboard • Japan
- 6. Pearson College London XXXX 6 School of Business International Business Regions: China Aspects of the region & the rest of the world Impulse to ‘go out’ China is an ‘internal’ empire bounded by its own well- defined borders. It is a civilisation bent on consolidating and reinforcing its own territorial integrity and dedicated to raising the level of life within it. No religious impulse drives its outward thrust China has no intent to colonise or administer any overseas territory. - Barnaby Powell & Alex Mackinnon
- 7. Pearson College London XXXX 7 School of Business International Business Regions: China Aspects of the region & the rest of the world Most Favoured (Desti)Nation “In 2006 almost half the world’s leaders from 192 countries visited China” – Mark Leonard, ‘What China thinks’ • Investments or land deals • Access to markets • Gas or nuclear deals • Environmental collaboration • Peaceful Co-existence
- 8. Pearson College London XXXX 8 School of Business International Business Regions: China Aspects of the region & the rest of the world Prince William China visit, 01-03 March 2015 http://news.sky.com/story/1436769/prince-william-sells-brand-britain-to-china
- 9. Pearson College London XXXX 9 School of Business International Business Regions: China Aspects of the region & the rest of the world Five Principles of Peaceful Coexistence 1. Mutual respect for sovereignty and territorial integrity 2. Mutual non- aggression 3. Non-interference in each other's internal affairs 4. Equality and mutual benefit 5. Peaceful coexistence
- 10. Pearson College London XXXX 10 School of Business International Business Regions: China Aspects of the region & the rest of the world Energy and food ‘Smart power’ – the hunt for survival
- 11. Pearson College London XXXX 11 School of Business International Business Regions: China Aspects of the region & the rest of the world Near neighbours - Asia
- 12. Pearson College London XXXX 12 School of Business International Business Regions: China Aspects of the region & the rest of the world Taiwan • Own government since 1949 when KMT forced into exile at founding of People’s Republic of China • Chinese government sees it as integral part of China
- 13. Pearson College London XXXX 13 School of Business International Business Regions: China Aspects of the region & the rest of the world China’s 2nd continent – win:win politics Image Source: http://i.bnet.com/blogs/tumblr_lkzz79m3kl1 qiuwg7.png
- 14. Pearson College London XXXX 14 School of Business International Business Regions: China Aspects of the region & the rest of the world
- 15. Pearson College London XXXX 15 School of Business International Business Regions: China Aspects of the region & the rest of the world A new world order? US$ Rmb元 VALUE OF US imports from China 2009: US$296.4bn 2011: US$393.3bn 2014: US$466.6bn [vs $124bn of exports]
Notas del editor
- [Allow 3 minutes] Quick re-cap on last week. Last week we looked at China’s public and private enterprises, their evolution, growth and international expansion. Today we will look at what and why China is so attractive to the rest of the world, what it offers and what it needs. Despite being courted by countries from around the globe, the domestic picture is not all rosy. China is beset by an environmental crisis including water shortages, air pollution and desertification and a hunt for global resources to meet the insatiable demand of its economic growth and that of its people. China is the biggest emitter of CO2 in the world. Its military spending is massive and its near neighbours are fearful of its potential to be an aggressor. China does not behave like former colonial powers extracting what it can on its own terms but strikes deals that it calls “win:win” solutions for both parties, particularly in Africa. And what will China’s continued peaceful rise mean for America. We will take a look at all of these today.
- [Allow 1 minute] I would like to open with a couple of quotes from an excellent book called, When China Rules the World, by economist Martin Jacques (from page 431)
- [Allow 1 minute1] [QUOTE by Martin Jacques: ‘When China Rules the World – The Rise of the Middle Kingdom and the End of the Western World’ – page 432] I would concur with this thought pattern of Martin Jacques. The Chinese are very patient. Their self confidence is on the rise alongside China’s development and there is great pride in achievements to date. The idea that the 21st century belongs to China is not too far-fetched or bizarre; it is a definite possibility and we in the West have to get a handle on how we manage relations embrace the opportunities and plan our engagement with China over the coming years and decades.
- [Allow 5 minutes] It is good to remind ourselves of the geographical context of China. It is connected on its land borders with 14 sovereign states including Kazakhstan, North Korea, Russia, Pakistan, Afghanistan, Laos, Myanmar, Mongolia and Bhutan. It has an extensive sea border along its east coast, and its recent enemy, Japan, sits across the East China Sea. Over the course of China’s history it has had links with its neighbours through invasion, such as from the Mongols in the North. It has been at war with Japan and Korea to the East. It engaged with Russia, in solidarity for communist principles, in the early – mid 20th century – but relations soured in the 1960s. China has had deep trade links with the ancient Persian empire states including Kazakhstan and Uzbekistan along the well-trodden Silk Road It borders another major emerging BRIC country, on its southwest land border, namely India. Both boasting booming economies as well as massive population growth, India is concerned about China’s potential as an aggressive neighbour or a responsible global citizen. It has unveiled ambitious plans to create a new Silk Road starting in the ancient capital of Xian in Central China heading west into Central Asia, Iran, Iraq, Turkey, Germany and Italy. At the same time, a new vision for a Maritime Belt will go from eastern province of Fujian down to Guangzhou, Hainan Island, Malaysia, India, Kenya, Mediterranean, Athens and Venice.
- [Allow 5 minutes] According to the authors of China Goes Critical 2018, What China seeks now, after 20 years of meteoric growth, is to be recognised as a credible power, to defend the unity of the country and integrity of its borders and territories and to strengthen its power base. Why does China ‘go out?’ It is an internal empire already colossal in size and, as a nation with an exceptionally long history – considers itself more as a ‘civilisation state’ than a nation state as author Martin Jacques calls it. “The reason why the Chinese state enjoys a formidable legitimacy in the eyes of the Chinese has nothing to do with democracy but can be found in the relationship between the state and Chinese civilization. The state is seen as the embodiment, guardian and defender of Chinese civilization. Maintaining the unity, cohesion and integrity of Chinese civilization – of the civilization-state – is perceived as the highest political priority and is seen as the sacrosanct task of the Chinese state…. Over thousands of years, as a result of many processes, cultural, racial and ethnic, the differences between the many races that comprised the Han have been weakened to the point where they were no longer significant.” [Source: http://www.martinjacques.com/articles/civilization-state-versus-nation-state-2/] It does not have a religion to take overseas like the Christian Crusaders, the Jesuits, the Ottoman Turks and other Muslim Jihadists and, in modern times, the New World migrants with their ‘Protestant Work Ethic’. It has no intention to colonise or administer overseas territory. Its policy of non-intervention in the internal affairs of other countries is rigorously maintained. Thus, the charge of ‘neo-colonialism’ levelled against them simply does not stick. [Barnaby Powell & Alex Mackinnon – China ] There are various ways, however, that it promotes its power. The mission of its TV station, CCTV9 ,is to rival CNN. Xinhua, the China News Agency at the heart of the propaganda machine, has been professionalised and expanded in the hope that it will be taken as seriously as Reuters or AP. And its aim in the middle of the last decade was to increase the number of foreigners learning Chinese to 100m by 2010 and has opened universities up to foreigners. There is definitely a move to two-way exchange. China, in my view, despite having been carved up by the foreign powers in the 19th century, has had an insight into the way westerners and the Japanese think. The reverse cannot be said. Our understanding of China is still fairly opaque. It is difficult to be assimilated into China. The Chinese are very astute and flexible and will, guided still by the ancient philospher and strategist Sunzi said, avoid war at all costs. After all, being at war is a sign of failure. Its overarching aim, however, is to feed its economic growth and to feed its people. And it is in this context that China engages with so many governments and countries in order to buy up resources and food to cater for a voracious appetite of a growing and increasingly aspirational, urban middle class.
- [Allow 7 minutes] It would seem that China is, once again, the Middle Kingdom, the Zhongguo. China is very popular these days. It dominates in news headlines, is popular in documentaries and is the talk of economists and business. When it comes to why and how other nations of the world flock to China there are many reasons. China is actively courted for Chinese investments and is the most sought-after source of capital infusions. It has become the main trading partner of many of the most influential economies in both the developed and developing world Under the terms of the World Trade Organisation, countries who are members have to sign up to the Most Favoured Nation (MFN) principle, namely that, all people are treated equally so that countries cannot normally discriminate between their trading partners. With China providing funding to shore up failing economies, deals that assist the poorest countries in the world to develop much-needed infrastructure and access to a developing consumer market and China is a hot and favoured destination for world leaders across the globe to sign deals. https://www.google.co.uk/search?q=world+with+china+as+superpower&rlz=1C1SKPL_enGB398&espv=2&biw=1366&bih=600&source=lnms&tbm=isch&sa=X&ei=6HiDVPDJIcq7UbTqgeAP&ved=0CAYQ_AUoAQ#facrc=_&imgdii=_&imgrc=4-_WKWIXlhXAxM%253A%3B1bDrnatZDNSYoM%3Bhttp%253A%252F%252Fluxurysociety.com%252Fattachments%252Farticle_images%252F4394_epcp_0906_05_z_china_map_graphic_medium.jpeg%253F1405955061%3Bhttp%253A%252F%252Fluxurysociety.com%252Farticles%252F2011%252F11%252Fthe-worlds-next-e-commerce-superpower%3B450%3B338 Quote: Mark Leonard, What China Thinks p131 http://www.theguardian.com/world/2013/dec/06/china-cash-seeking-world-leaders-uk-human-rights Europe and the US seek foreign direct investment deals, access to an emerging consumer market and manufacturing deals. Russia gains billions of dollars in exchange for a gas pipeline that will help to fuel China’s huge demand to fuel its growth Countries across the continent of Africa gain aid and infrastructure in return for land and natural resources Similarly South America and Australia gains investment and trade in return for natural resources However, world leaders have learned the hard way that China’s golden purse is open on its own terms and when talk is left out on human rights and democracy. The British economy was hit and Prime Minister, David Cameron, was put into the proverbial deep-freeze for almost two years, when he met with the exiled spiritual leader of Tibet, the Dalai Lama in May 2012. China responded by saying that the UK had "seriously interfered with China's internal affairs" and "hurt" Chinese feelings. When the British Prime Minister subsequently visited Beijing in December 2013 he signed multiple business deals and China and the UK talked of a bright road ahead. What he neglected to do is arguably more significant. He did not criticise China for its recent unilateral declaration of administrative control over a swath of airspace in the east China sea, bringing territorial disputes with Japan to a boil. He did not mention China's human rights record, its environmental degradation, nor the Dalai Lama.
- Prince William only this week has been in China to meet President Xi Jinping in Beijing and to open the Great Festival of Creativity in Shanghai to showcase the innovation that GB has to offer. This is the first visit in 3 decades for a royal to China; Duke of Edinburgh made a gaff 30 years ago when he referred to the Chinese as ‘slit-eyed yellow bellies’ and told a British student not to stay in China too long for fear of getting slitty eyes. Prince Charles referred to the Chinese is waxworks. Prince William is on the charm offensive, therefore, to promote royalty – like the Chinese leadership – whose power is not resultant on elections. A palace statement says that “William recognises that China is a global player and will be for his lifetime.” Business and cultural ties between the UK and China are strong. Britain is already China's most popular European destination for outbound investment, worth £7.7bn in 2014. According to the China Britain Business Council, British investment in China has reached £11bn The Chinese government has predicted that its outbound investment globally will grow from £64bn in 2014 to £324bn within five years. Cultural exchanges and high-profile visits like Prince William's are designed to ensure as much of that investment as possible comes to the UK. And that is why other countries court Beijing, too, to get a piece of the pie.
- [Allow 7 minutes] China’s Five Principles of Peaceful Co-existence were drawn up in 1954 but still serve a purpose and define China’s outbound policy: http://afe.easia.columbia.edu/special/china_1950_forpol_principles.htm mutual respect for sovereignty and territorial integrity mutual non-aggression non-interference in each other's internal affairs equality and mutual benefit and peaceful coexistence. They offer an alternative to the American conception of a new kind of world order — one in which international regimes and institutions, often reflecting U.S. interests and values, limit the rights of sovereign states to develop and sell weapons of mass destruction, repress opposition and violate human rights, pursue mercantilist economic policies that interfere with free trade, and damage the environment. China's alternative design for the world stresses the equal, uninfringeable sovereignty of all states large and small, Western and non-Western, rich and poor, democratic and authoritarian, each to run its own system as it sees fit, whether its methods suit Western standards or not. Another Chinese term for such a system is "multipolarity." The Five Principles explain why America should not be able to impose its values on weaker nations. Thus the core idea behind the Five Principles as interpreted by China today is sovereignty – that one state has no right to interfere in the internal affairs of another state The consultant for this unit is Andrew J. Nathan, professor of Chinese politics at Columbia University. The unit draws from Andrew J. Nathan and Robert S. Ross, The Great Wall and the Empty Fortress
- [Allow 8 minutes] But it is not all about other countries courting China. China has enormous needs too and is on a breathtaking global shopping spree for commodities, those things that create the energy for daily living including energy, water, arable land, minerals for telephony and machinery. Astonishing statistics are given in Dambisa Moyo’s excellent book, ‘Winner Take All.’ She cites a McKinsey Global Institute forecast that China will add 400m people to its urban population by 2024 (accounting for 64% of total population so new urban residents between 2008-2018 will increase to 160 million in China (100m in India and 20m in Brazil). By 2010 China had 40 cities with population of over a million (page 25) and by 2020 China plans another 225 fully functioning new cities with 1 million inhabitants, each coupled with fast new mass transport to connect vertically and horizontally across the country. China needs resource to fuel all this growth. FDI needed to fuel this consumption and search for global resources. 2005-2011 engaged in >350 FDI projects vaued at >US$400bn (mostly in natural resources) Soft power is a concept developed by Joseph Nye, Assistant Secretary of Defense for International Security Affairs in the Clinton Administration, to describe the ability to attract and cooperate rather than use coercion, force or money as a means of persuasion. If using those means then this is termed as ‘hard power’. Nye stresses the combination of soft and hard power which he calls ‘Smart Power’ and that using this in today’s dynamic international relations will be highly effective. Looking back at former President Hu Jintao’s visit to the US and linking it with multidimensional rise of China’s influence on the international stage, one can discover the subtle similarity between Chinese and American foreign policies. All wars are fought around resources. The growth and development of the BRIC countries are already causing a real challenge in our times. International Energy Outlook forecasts India & China consumption up 21 % by 2035. But at what cost? Lung cancer cases up 465%, birth defects, pollution and health scares, re-routing of rivers and environmental degradation. Global food prices are accelerating at a great pace and the hunt for energy to fuel growing economies is causing concern amongst western developed nations.
- [Allow 10 minutes] As early as 1994 China went on the charm offensive and set up the ASEAN-China Free Trade Area. It was keen to ensure that it was not seen as a bully. The ASEAN–China Free Trade Area is the largest free trade area in terms of population and third largest in terms of nominal GDP. [Source: Walker, Andrew (1 January 2010). "China and Asean free trade deal begins". BBC News. Retrieved 1 January2010.] It has the third largest trade volume after the EU and the North American Free Trade Area. In 2005 the first East Asia Summit took place, initially involving 16 nations in East Asia (p104). (Mark Leonard, ‘What China Thinks’ p102). Since 2011 the forum has included Russia and the US. The aims of ASEAN include accelerating economic growth and social progress among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully. Established in 2001 along political, military and economic lines The Shanghai Five, comprised Kazakstan, Krygystan, Russia, Tajikistan and China. What is interesting is its name that bears the city of Shanghai. The concept was to demilitarise mutual borders and to expand cooperation. When Uzbekistan joined the group the name changed to the Shanghai Cooperation Organisation. Both Russia and China committed to traditional notions of sovereignty and authoritarian rule but it grants China negotiated access to oil and gas from Central Asia. This is a pact between countries that could rival NATO. China has increased its own military spending by more than 10 per cent a year for the past 20 years. Its military budget is now the second largest in the world and more than twice that of Japan’s. China’s relations with Japan have been difficult since the Rape of Nanking and the Japanese War in the late 1930s. Japan sees evidence of what it terms “provocation” by China in relation to the disputed Senkaku or Diaoyu Islands. When a Chinese destroyer directed its fire-control radar at a Japanese destroyer in 2013, which in normal naval practice might be regarded as an act of war, the Japanese vessel made an evasive manoeuvre rather than risk further endangering the situation. Chinese ships repeatedly intrude into Japanese territorial waters surrounding the Senkaku or Diaoyu Islands, which have been peacefully under Japan’s sovereignty for 120 years. [Source: http://www.telegraph.co.uk/news/worldnews/asia/japan/10552351/China-risks-becoming-Asias-Voldemort.html] At the heart of the dispute are eight uninhabited islands and rocks in the East China Sea. They have a total area of about 7 sq km and lie north-east of Taiwan, east of the Chinese mainland and south-west of Japan's southern-most prefecture, Okinawa. The islands are controlled by Japan. They matter because they are close to important shipping lanes, offer rich fishing grounds and lie near potential oil and gas reserves. They are also in a strategically significant position, amid rising competition between the US and China for military primacy in the Asia-Pacific region. [SOURCE: http://www.bbc.co.uk/news/world-asia-pacific-11341139] The US and Japan forged a security alliance in the wake of World War II and formalised it in 1960. Under the deal, the US is given military bases in Japan in return for its promise to defend Japan in the event of an attack. This means if conflict were to erupt between China and Japan, Japan would expect US military back-up. US President Barack Obama has confirmed that the security pact applies to the islands - but has also warned that escalation of the current row would harm all sides. What next?The Senkaku/Diaoyu issue highlights the more robust attitude China has been taking to its territorial claims in both the East China Sea and the South China Sea. It poses worrying questions about regional security as China's military modernises amid the US "pivot" to Asia. In both China and Japan, meanwhile, the dispute ignites nationalist passions on both sides, putting pressure on politicians to appear tough and ultimately making any possible resolution even harder to find. Xi Jinping and Japan’s PM Shinzo Abe meeting in Beijing in November 2014 was an historic opening of talks on political, diplomatic and security.
- [Allow 2 minutes] South East Asian Tiger Democracy China claims territorial ownership – denied by Taiwan Only in 2008 were direct flights allowed between the two states. China and Taiwan have been ruled by separate governments since 1949. China considers the island as part of its territory. China offers Taiwan a ‘one country two systems’ solution (like Hong Kong) and threatens Taiwan with military action if it presses for formal independence and international recognition.
- [Allow 10 minutes] China has become the champion for the world’s poorest countries. China’s involvement in Africa has been so significant and its approach so different to the former colonial powers. Ithas offered support to the Sudan, Iran, North Korea, Uzbek, Angola – all places where the west takes the moral high ground. Beijing has removed tariffs on trade for 45 underdeveloped countries and increased its overseas development assistance by almost US$4bn) (p96) China has surfaced the roads from Cape Town – Cairo, the Trans African Highway - a colossal feat, spanning 9,000 miles or the equivalent distance of travelling 3x between New York and California. China has leant its support to combating the Ebola crisis and, in October 2014, promised US$82million in crisis support for the fight against Ebola including the establishment of Emergency Training Units in Liberia alone. [SOURCE: Liberia: http://www.focac.org/eng/zxxx/t1204653.htm We Are Here to Build and Maintain Treatment/Training Centers- Chinese Ambassador Declares As China Invests U.S.$82 Million in Ebola Fight, October 2014] Africa’s SEZ’s: transplant of own growth model with series of industrial hubs, tax incentives, road, rail and shipping lanes to the rest of the world. Zambia = metals hub (copper, cobalt, diamonds and uranium). Mauritius was established as a ‘trading hub’ to give 40 chinese businesses preferential access to 20 member state Common Market of East and South Africa. Shipping hub too. (p119) US$5bn investment fund for Africa, debt cancellation for 32 countries, scholarships, schools, hospitals etc. Changing the rules of economic development as IMF’s shrinking loans means that China’s loans are favourable. China favours use of public money to drive innovation, protect public property and gradual reforms of SEZ (p121) ‘influence not intervention’ (p128) 2-way trade between China and Africa up (according to Dambisa Moyo, Ecomist, page 77) 2000 US$10billion 2006 US$55bn 2009 US$90bn 2009 US$162bn (see http://www.africaresearchinstitute.org/files/briefing-notes/docs/Between-extremes-China-and-Africa-P2E56236DQ.pdf) [IMAGE SOURCE: Sino African Trade exports http://i.bnet.com/blogs/tumblr_lkzz79m3kl1qiuwg7.png] CHINA-AFRICA – Xinhua News Agency 2006 http://www.china.org.cn/english/features/focac/183721.htm China's African Policy January 2006 Foreword “The first few years of the new century witness a continuation of complex and profound changes in the international situation and further advance of globalization. Peace and development remain the main themes of our times. Safeguarding peace, promoting development and enhancing cooperation, which is the common desire of all peoples, represents the irresistible historical trend. On the other hand, destabilizing factors and uncertainties in the international situation are on the rise. Security issues of various kinds are interwoven. Peace remains evasive and development more pressing. China, the largest developing country in the world, follows the path of peaceful development and pursues an independent foreign policy of peace. China stands ready to develop friendly relations and cooperation with all countries on the basis of the Five Principles of Peaceful Coexistence so as to contribute to peace, stability and common prosperity around the world.” China goes to Sudan, SA, Nigeria, Zambia, Algeria, Niger, Egypt, Mauritus, Ethiopia, Angola and DRC. Most for mining sector (40.74%) business services (21.58%) finance (16.4%) transport and telecoms (21.58%) and wholesale and retail trade (6.57%) [Source: Dambisa Moyo page 79] According to Howard French in his book on China: Africa’s second continent [quoted in http://www.economist.com/news/books-and-arts/21613162-mass-immigration-chinese-people-africa-almost-entirely-driven-money] The trade and investment figures are hard to verify, too. According to one source used by Mr French, “China’s Export-Import Bank extended $62.7 billion in loans to African countries between 2001-2010, or $12.5 billion more than the World Bank.” Other figures go even higher. What is clear, at any rate, is that Chinese people and money have flooded into Africa in the past decade, chiefly to buy raw materials to fuel China’s roaring economy Despite this involvement on economic basis, China often abstains in G8 voting so as not to contradict the rhetoric of non-interference in the affairs of other nation states.
- SOURCE: both charts from http://www.africaresearchinstitute.org/files/briefing-notes/docs/Between-extremes-China-and-Africa-P2E56236DQ.pdf
- [Allow 3 minutes] China is challenging US hegemony in trade and in the established world order. In terms of economic might, the balance of power is very much in China’s favour In 2011 value of US imports of goods from China was US$393.3bn up from $296.4bn in 2009 then US$466.6bn in 2014 [Dambisa Moyo, Winner Take All, page 77 and United States Foreign Trade Census https://www.census.gov/foreign-trade/balance/c5700.html] The US is stretched militarily – so has removed forces from Afghanistan and, along with other major European powers, has been reticent about involvement in Syria’s civil war. President Barack Obama’s political clout at home is weak. The economy is in deficit. US acts as the world policeman but has many enemies, particularly along cultural and ideological lines leading to acts of terrorism and fear of attack at home. China fears attack domestically from its own people if it fails to deliver on the promise to improve people’s lives. It does not see great threat from overseas. It is so large and its influence is now so widespread. China has made many friends and established pipelines for access to resources fundamental to fuelling its continued growth. How it balances that peacefully into the future including the ability to set pricing on commodities is of paramount significance for the rest of the world.