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141. China's Looming Crisis—Inflation Returns

Author:
Albert Keidel
Publication Date:
09-2007
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
Surging food prices in China indicate a serious risk of inflationary overheating. Past steps to control inflation caused social protest and deadly unrest. China faces the same risk now. China could avoid severe inflation by learning from its past failures and quickly raising interest rates—but politics make this unlikely. “Cooling off” policies in the future will thus be harsher than necessary. Beyond short-term fixes, China should increase imports of fine grains, with long-term U.S. supply assurances, both to stabilize prices and to promote lucrative farm diversification. U.S. intelligence analysis of this overheating risk should refute the conventional wisdom that China's growth is export-led—it is clearly domestically driven. Policy makers need to realize that China's rapid economic rise is homegrown and sustainable. The United States should quietly remind China that harsh handling of inflation-related unrest could seriously damage U.S.-China relations—especially in a U.S. election year.
Topic:
Economics and Globalization
Political Geography:
United States, China, and Asia

142. Russian-Algerian cooperation and the 'gas OPEC': What's in the pipeline?

Author:
Hakim Darbouche
Publication Date:
03-2007
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
President Abdelaziz Bouteflika's statement to Spain's El País1 that the idea of a 'gas-OPEC' should not a priori be excluded, adds to a series of twists, among which was Vladimir Putin's confirmation on 1 February that the idea of a gas cartel was an 'interesting one' worth considering further. Hitherto, this gas saga featured Russia, Algeria, the EU, NATO and Iran. The story revolves around Russian-Algerian mingling on gas matters, spurring European and Transatlantic concerns over the prospects of a 'gas OPEC'. At a time of increasing European dependence on foreign energy supplies, these developments have been interpreted as being part of a wider effort, led by Russia, to use energy as a lever to undermine European diplomacy. These allegations have been dismissed by Algeria and Russia, whose leaders insist that their cooperation is intended to optimise their benefits and those of their customers alike. This paper examines the underpinnings of these developments by assessing the likelihood of their culmination in a gas cartel and offers an insight into the potential policy choices behind them.
Topic:
Economics and Energy Policy
Political Geography:
Russia, Europe, Eastern Europe, Asia, and Algeria

143. China and Economic Integration in East Asia: Implications for the United States

Author:
C. Fred Bergsten
Publication Date:
03-2007
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
East Asia is clearly, if gradually and unevenly, moving toward regional economic integration. Market forces are leading the process, as firms construct production chains across the area that exploit the comparative advantage of its individual countries. Governments are now moving to build on those forces, and consolidate them, through a series of formal agreements to intensify their economic relationships and start creating an East Asian Community.
Topic:
Development and Economics
Political Geography:
United States, China, Israel, East Asia, and Asia

144. Fiscal Policy for Poverty Reduction, Reconstruction, and Growth

Author:
Matthew Smith, Alan Roe, and Tony Addison
Publication Date:
06-2006
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
An effective state is able to mobilize revenue and spend it on infrastructure, services, and public goods that both enhance human capital and the well-being of communities (especially the poor), as well as stimulating investment and employment creation by the private sector. An effective state also manages public finance to ensure that macroeconomic balance is maintained—with policy neither too restrictive to discourage private investment and growth, nor too accommodative to create high inflation and crowd out private investment. Fiscal issues are therefore at the heart of the state's role in the development process and failure in this policy area—whether it is in taxation, public expenditures, or in managing the fiscal deficit and public debt—can quickly undermine growth and poverty reduction. Fiscal weakness can also be fatal to social peace when one or more ethnic, religious, or regional groups are taxed unfairly—or receives too little in the allocation of public spending.
Topic:
Debt, Development, Economics, and Poverty
Political Geography:
Africa and Asia

145. China and the Depreciating U.S. Dollar

Author:
Richard C. K. Burdekin
Publication Date:
01-2006
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
Over the past five years, U.S. exports to China have been dwarfed by imports from that country, with the resulting trade deficit igniting a bout of China bashing reminiscent of the Japan bashing of the 1980s. A major culprit in the trade imbalance, according to many U.S. analysts and policymakers, is China's currency: the renminbi, they say, is too cheap relative to the dollar. Some are calling for high tariffs on Chinese goods or for further exchange-rate adjustment that would revalue the renminbi significantly upward, making Chinese goods less competitive. But with just 10.4 percent of total U.S. trade attributed to China in the first half of 2005, it is unrealistic that any renminbi exchange-rate adjustment could rein in the burgeoning U.S. trade deficit. And if the adjustment were drastic the United States could be the big loser: driving China out of the market for U.S. treasuries would most likely have calamitous consequences, not only for the dollar but for U.S. credit markets and for the U.S. economy in general.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Asia, and North America

146. Strategic Partnership or Strategic Competition

Author:
Bonnie Glaser and James Nolt
Publication Date:
12-2006
Content Type:
Policy Brief
Institution:
Foreign Policy In Focus
Abstract:
As part of our China Focus, we asked two leading scholars to reflect on the tensions and possibilities in U.S.-China relations. Bonnie Glaser is a senior associate at the Center for Strategic and International Studies. James Nolt is a senior fellow at the World Policy Institute. We asked them first about the potential for a strategic security partnership between the United States and China, then about their economic relationship.
Topic:
Security, Economics, and International Cooperation
Political Geography:
United States, China, and Asia

147. Economic Survey of the Russian Federation, 2006

Publication Date:
11-2006
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The Russian economy has been enjoying a period of robust growth, thanks largely to steadily rising terms of trade. The challenge confronting policy-makers is to facilitate Russia's transition into a period of self-sustaining, investment- and innovation-led growth. This will require a sound macroeconomic policy framework to manage the economy's adjustment to sustained high oil prices and a range of structural reforms aimed at creating better framework conditions for business.
Topic:
Development, Economics, and Markets
Political Geography:
Russia, Europe, and Asia

148. Untangling China's Quest for Oil through State-backed Financial Deals

Author:
Erica Downs and Peter C. Evans
Publication Date:
05-2006
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The efforts of China's national oil companies to secure upstream oil assets abroad have attracted attention from U.S. officials and policymakers. Congress has taken notice, as indicated by the request of the Chairman of the U.S. House of Representatives Resources Committee Richard W. Pombo—triggered by the bid made by China National Offshore Oil Corporation Ltd. for Unocal in 2005—for a study by the Department of Energy of the economic and national security implications of China's energy demand. The report, released in February 2006, concludes that the foreign investments of China's national oil companies do not pose an economic challenge to the U.S. However, one issue the report mentions only in passing that merits further attention is how the Chinese government's financial support for some of these investments can undermine an open and competitive world oil market.
Topic:
Security, Economics, and Energy Policy
Political Geography:
United States, China, and Asia

149. China's Social Unrest: The Story Behind the Stories

Author:
Albert Kiedel
Publication Date:
09-2006
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
China is confronting widespread violent and even deadly social unrest, raising Communist Party alarms about national security. Some observers speculate that unrest could undermine China's national leadership, as it did in the Ukraine and the Philippines. Some U.S. policy makers might welcome unrest in China as a path to democracy and “freedom.” But rather than an opportunity to transform China's political order, China's social unrest should be understood as the unavoidable side effects—worsened by local corruption—of successful market reforms and expanded economic and social choice. Managing this unrest humanely requires accelerated reform of legal and social institutions with special attention to corruption. More violence would generate more suffering, potentially destabilizing East Asia and harming U.S. interests. The United States should encourage China to strengthen its social reconciliation capabilities, without making electoral political reform a prerequisite for intensifying engagement across the board.
Topic:
Civil Society, Development, and Economics
Political Geography:
United States, China, Ukraine, East Asia, and Asia

150. China: Toward a Consumption-Driven Growth Path

Author:
Nicholas R. Lardy
Publication Date:
10-2006
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In December 2004 China's top political leadership agreed to fundamentally alter the country's growth strategy. In place of investment and export-led development, they endorsed transitioning to a growth path that relied more on expanding domestic consumption. Since 2004, China's top leadership, most notably Premier Wen Jiaobao in his speech to the National People's Congress in the spring of 2006, has reiterated the goal of strengthening domestic consumption as a major source of economic growth. This policy brief examines the reasons underlying the leadership decision, the implications of this transition for the United States and the global economy, and the steps that have been taken to embark on the new growth path.
Topic:
International Relations, Development, and Economics
Political Geography:
United States, China, and Asia

151. Negotiating the Korea-United States Free Trade Agreement

Author:
Jeffrey J. Schott, Scott C. Bradford, and Thomas Moll
Publication Date:
06-2006
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Five years ago the Institute published Free Trade between Korea and the United States? by Inbom Choi and Jeffrey J. Schott, which analyzed the potential benefits and costs of pursuing a bilateral free trade agreement (FTA). At the time, neither government had vetted the idea in bilateral consultations, though some business groups in each country—and some members of the US Congress—had voiced support for deepening US-Korea economic ties through an FTA.
Topic:
Economics, International Organization, and Political Economy
Political Geography:
United States, Asia, and Korea

152. The Doha Round after Hong Kong

Author:
Gary Clyde Hufbauer and Jeffrey J. Schott
Publication Date:
02-2006
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Trade ministers from member countries of the World Trade Organization (WTO) convened in Hong Kong in December 2005 to jump-start the flagging Doha Round of multilateral trade negotiations. The Hong Kong ministerial was not a complete bust. But ministers accomplished only the minimum necessary to keep the Doha Round moving forward—toward an undetermined and probably distant conclusion.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Asia

153. What Could Go Wrong?

Author:
Harry Harding
Publication Date:
01-2006
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
China has done remarkably well in its development over the last twenty-five years. It has achieved and sustained high rates of economic growth, lifting millions out of poverty. It has achieved a significant place in the international economy. It is widely regarded as a major power, not only in Asia but also increasingly on a global stage. Looking ahead, however, things could go wrong – possibly quite seriously wrong – for China, and if China experiences serious problems, its size and its expanded role in the world mean that there could be serious consequences for the broader international community as well.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
China and Asia

154. China Succeeding Beyond Expectations

Author:
Albert Kiedel
Publication Date:
01-2006
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
What are the implications if China sustains nine-percent growth through 2010? This is the basic question posed by conference organizers. The relevant time frame is what matters most. If China merely maintains nine-percent growth until the year 2010, the implications are not great. Too much is left unknown about what comes after 2010. Even with nine-percent growth over the next five years, China in 2010 will still be at a relatively low level of performance, both overall and in per-capita terms. But if sustaining nine-percent growth to 2010 means that China has launched on-going reforms that will continue to engineer institutional changes needed for a market economy's successful commercial and political management, then the resulting successful development trajectory in the rest of the century will generate profound and, from today's perspective, unexpected consequences.
Topic:
International Relations, Development, and Economics
Political Geography:
China and Asia

155. Comments on China as a Regional Player

Author:
Edward J. Lincoln
Publication Date:
01-2006
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
China ought to be able to produce a relatively high economic growth rate over at least the next decade. There are a number of problems confronting the economy, but one of the great lessons of the past half-century of world economic growth is how much growth can result even when economies have considerable institutional flaws. Economists usually speak about the need to get the “fundamentals” right to produce economic growth, but we should also keep in mind that nations need not get have a perfect set of institutions and rules to generate growth.
Topic:
Economics, International Trade and Finance, and Regional Cooperation
Political Geography:
China and Asia

156. Taiwan In Search of a Strategic Consensus

Author:
Banning Garrett, Franklin Kramer, and Jonathan M. Adams
Publication Date:
03-2006
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
At the beginning of 2006, Taiwan is confronted with difficult choices that it currently seems unprepared to face. Cross-Strait tensions have diminished in the last year and Taiwan's economy has grown at an annualized rate of about 3.6 percent, which is respectable if not robust by East Asian standards. Taiwan, however, also faces an East Asian future which likely includes an increasingly important role for its relations with the Mainland as China becomes an ever more important economic and political factor regionally and globally.
Topic:
Foreign Policy, Economics, and International Trade and Finance
Political Geography:
China, Taiwan, East Asia, and Asia

157. Banking Crises in East Asia: The Price Tag of Liberalization?

Author:
Ilan Noy
Publication Date:
11-2005
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
The banking crises that swept through East Asia in 1997– 1998 set off dramatic recessions in the affected countries and imposed heavy costs on the domestic taxpayers. Fear of further crises prompted searches causes and early warning signs. It soon became apparent that liberalization the domestic financial sectors of the countries in crises contributed to genesis of these crises, but policymakers, regulators, and economists disagree about the reason for this. Initial scrutiny fell on unregulated international capital flows, but a comprehensive study suggests that liberalization can to financial instability either because of insufficient regulation of the financial sector or because of erosion of previously granted monopolies of existing banks. These possibilities suggest varying policy implications for the current state domestic financial systems in East Asia, including the challenges inherent opening up ChinaÂ's banking system to foreign competition as mandated in China–World Trade Organization accession agreement.
Topic:
Economics and International Trade and Finance
Political Geography:
Israel and Asia

158. The United States as an Asian Power: Realism or Conceit?

Author:
M. Taylor Fravel and Richard J. Samuels
Publication Date:
04-2005
Content Type:
Policy Brief
Institution:
MIT Center for International Studies
Abstract:
The long history of U.S. foreign policy is punctuated by axiomatic truths that have bordered on conceit—e.g., the virtues of isolation, America's manifest destiny, and our benign, democratizing presence in world affairs. Strategists have lurched from truth to truth across the centuries, often without sufficient reflection and learning. Today the United States is operating with an axiomatic idea about its place in and of Asia. U.S. foreign policymakers—and U.S. foreign policy wonks—intone the mantra: “The United States is an Asian power.”
Topic:
Foreign Policy, Economics, and Politics
Political Geography:
United States, America, and Asia

159. Agricultural Policy Reform in China

Publication Date:
11-2005
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
China is the world's sixth largest economy and its most populous country, home to 1.3 billion people or 21% of the Earth's total population. But it faces a major challenge in providing its people with food – China has only 10% of the world's arable land and only one quarter of the average world water resources per person.
Topic:
Agriculture, Civil Society, and Economics
Political Geography:
China and Asia

160. China's Governance in Transition

Publication Date:
09-2005
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
China's economic reforms over the past two decades have brought remarkable growth, the development of a vibrant private sector and significant reform of the state-owned sector. Private businesses now represent some 57% of GDP, and productivity in the state-owned sector has improved significantly. However, a number of problems threaten to undermine prospects for sustainable growth. These notably include social tensions, partly due to increasing inequality within society and massive migration to the cities, but also linked to corruption, insufficient public services and rising unemployment as millions of workers have been laid off in the reform of the state-owned sector, while agriculture still displays huge structural under-employment.
Topic:
Development, Economics, and Government
Political Geography:
China and Asia