“The Chinese government attaches great importance to Asia Pacific regional co-operation,”
Hu Jintao, Chinese President
Since Mao Zedong's death in 1976, China's move towards a more market centric economy has yielded some spectacular economic effects. Deng Xiaoping launched the four modernisations and began the slow process of reforming not just the economy, but the political party into accepting the new 'Social Market' system. Despite China's rise into the global political landscape, there are still numerous challenges they have to attend to domestically, such as individuals rights and the overwhelming presence of the state that still exists. China's current President, Hu Jintao seems to have the right ideas on the path his nation needs to follow, continuing with integration into the global economy and not just economically but politically also.
It was during the 1980's and 1990's that China opened up the special economic zones, areas that were designated for foreign investment and private enterprise. A frenzy of capital ensued, seeking cheap abundant labour. Some of the largest investments during this time came from Hong Kong and Taiwan, as they had large numbers of expatriates who left during the Mao era. This investment, along with Western capital, began transforming the Chinese economy from a predominantly low subsistence level of agriculture to the manufacturing hub of the world, as global business leaders outsourced many of their operations.
On Sunday, China and Taiwan signed a new set of agreements to open up their financial services and further open trade and investment with one and another. It was only last year that both declared peace and began talks as there had been diplomatic complications between the two sides in recent decades. During the Communist revolution with the beginning of Mao's various witch hunts many of the old Nationalist party members fled to the island of Taiwan, and ever since there have been unfriendly relations between the two with the US protecting Taiwan from Chinese threats.
The recent diplomatic progress between the two brings more stability to the region and potentially increased trade. It also signals China continuing to form ties beyond the US. This has also been seen in recent years as Hu Jintao has expanded relations between Australia, Venezuela and Iran. China knows that in order to continue growing economically it requires a stable region, and strategic alliances with nations rich in the resources it lacks. China in recent years has also been moving into more high tech manufacturing such as computers and semiconductors, and this agreement can only help bring about the continuing knowledge transfer over the coming years. The extra stability will also bring about increased investment in the region from overseas investors, as political instability is always an investors nightmare. With recent Gold acquisitions almost doubling, which I mentioned back in September to watch out for, China is looking to become a world reserve currency contender. There can be no doubt about that. They are long way from this goal, which will at least take a decade or two, but as the villain in the recent Bond film states "The Dollar isn't what it used to be". Euros were his choice.
Various restrictions still exist but this is the nature of how China has been moving in recent years, that of gradual change. The senior members of the party saw what happened to Russia when it introduced Perestroika and are aware of the importance to not make the same mistake. Over time, if the ruling party continues on its current course, and Chinese citizens increasingly embrace these market reforms then it is only a matter of time before China supplants the US as the global superpower. However nothing in life is inevitable. As the population becomes better educated and gains further exposure to Western culture they will no doubt demand a more democratic political structure on which the people can influence decisions. In all probability this will be years away, but when it does come this will be the next critical transition period, just like Deng Xiaoping's market reforms 30 years ago. Again here, China can learn from Taiwan who over the past few decades moved from a dictatorship to a democracy. China has a lot more to do, but she is continuing to head in the right direction. The significance of events such as these should never be underestimated.
Hu Jintao, Chinese President
Since Mao Zedong's death in 1976, China's move towards a more market centric economy has yielded some spectacular economic effects. Deng Xiaoping launched the four modernisations and began the slow process of reforming not just the economy, but the political party into accepting the new 'Social Market' system. Despite China's rise into the global political landscape, there are still numerous challenges they have to attend to domestically, such as individuals rights and the overwhelming presence of the state that still exists. China's current President, Hu Jintao seems to have the right ideas on the path his nation needs to follow, continuing with integration into the global economy and not just economically but politically also.
It was during the 1980's and 1990's that China opened up the special economic zones, areas that were designated for foreign investment and private enterprise. A frenzy of capital ensued, seeking cheap abundant labour. Some of the largest investments during this time came from Hong Kong and Taiwan, as they had large numbers of expatriates who left during the Mao era. This investment, along with Western capital, began transforming the Chinese economy from a predominantly low subsistence level of agriculture to the manufacturing hub of the world, as global business leaders outsourced many of their operations.
On Sunday, China and Taiwan signed a new set of agreements to open up their financial services and further open trade and investment with one and another. It was only last year that both declared peace and began talks as there had been diplomatic complications between the two sides in recent decades. During the Communist revolution with the beginning of Mao's various witch hunts many of the old Nationalist party members fled to the island of Taiwan, and ever since there have been unfriendly relations between the two with the US protecting Taiwan from Chinese threats.
The recent diplomatic progress between the two brings more stability to the region and potentially increased trade. It also signals China continuing to form ties beyond the US. This has also been seen in recent years as Hu Jintao has expanded relations between Australia, Venezuela and Iran. China knows that in order to continue growing economically it requires a stable region, and strategic alliances with nations rich in the resources it lacks. China in recent years has also been moving into more high tech manufacturing such as computers and semiconductors, and this agreement can only help bring about the continuing knowledge transfer over the coming years. The extra stability will also bring about increased investment in the region from overseas investors, as political instability is always an investors nightmare. With recent Gold acquisitions almost doubling, which I mentioned back in September to watch out for, China is looking to become a world reserve currency contender. There can be no doubt about that. They are long way from this goal, which will at least take a decade or two, but as the villain in the recent Bond film states "The Dollar isn't what it used to be". Euros were his choice.
Various restrictions still exist but this is the nature of how China has been moving in recent years, that of gradual change. The senior members of the party saw what happened to Russia when it introduced Perestroika and are aware of the importance to not make the same mistake. Over time, if the ruling party continues on its current course, and Chinese citizens increasingly embrace these market reforms then it is only a matter of time before China supplants the US as the global superpower. However nothing in life is inevitable. As the population becomes better educated and gains further exposure to Western culture they will no doubt demand a more democratic political structure on which the people can influence decisions. In all probability this will be years away, but when it does come this will be the next critical transition period, just like Deng Xiaoping's market reforms 30 years ago. Again here, China can learn from Taiwan who over the past few decades moved from a dictatorship to a democracy. China has a lot more to do, but she is continuing to head in the right direction. The significance of events such as these should never be underestimated.
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