Silk Road 2004 Understanding China in a Globalizing World

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Silk Road 2004Understanding China in a
Globalizing World
OutsourceWorld Conference 10/7/2004

• Joseph T. Hsu, CEO
• The Symbio Group
• www.symbio-group.com

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China De-Mystified

• Social Myths
• Political Myths
• Economic Myths

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Social Myth 1

• A phoenix rising China is a new emerging
  superpower

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Social Myth 1 A phoenix rising China is a
new emerging superpower

• The Real Story
• Historically has been a superpower nation
• Long civilization
• The Great Divergence Western Europe and China

China is a much richer country than any part of
Europe
-Adam Smith, The Wealth of Nations ,
1776
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China has historically been a superpower nation
in the world
Chinas GDP AS OF THE WORLD , 2000 years
- Deutsche Bank Based on US of 1990
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China has a robust recorded history
Details of life in the second millennium B.C.,
conversations of the sixth century B.C., and
letters of the first century A.D. and the like
have been preserved, and thousands and thousands
of local gazetteers about local conditions have
been published by prefectures and counties for
centuries. - Wing-tsit Chan, Professor of
Chinese Philosophy and Culture Emeritus,
Dartmouth College,1995
Written language Oracle used 2015 century BC.
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But in the 16th century, China and the West took
two very different courses
While the West experienced
China went the other way and shut its door to
the outside world

• Industrial Revolution
• Religious reform
• Renaissance
• Emergence of the US

• Starting in 1434, Ming empire halted the great
  maritime expansion
• Qing Emperor made craftsman and merchant the
  lowest professions for Chinese citizens
• Qing Emperor told King George III that China had
  no use for your countrys manufactures

The ancient Chinese ship sailed off the course
of the worlds mainstream wealth - Hu Yung,
Chinese Academy of Social Sciences, 2003
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Social Myth 2

• Everyone looks alike China has a homogeneous
  culture

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Social Myth 2 Everyone looks alike Chinas
culture is homogeneous

• The Real Story
• Multiple ethnicities, religions and philosophies
• The Chinese Union

As early as three thousand years ago, Hebraic and
Iranian religious ideas and practices traveled
eastwards on the Silk Road, to be followed
centuries later by the great missionary tradition
of Buddhism, Christianity, Manichaeism, and
Islam. And no religion emerged unchanged at the
end of the journey. -Richard C.
Foltz, Religions of the Silk Road, 1999
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China has officially 56 nationalities
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Social Myth 3

• China is
• One Country, Two Systems

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There are vast differences between regions in
China

• 6 provinces in the coastal zone account for
• 80 of exports
• 89 of export incomes
• ¼ of total population (about 338 million)

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China De-Mystified

• Social Myths
• Political Myths
• Economic Myths

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Political Myth 1

• The East is Red China is a rigid communist
  state

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Political Myth 1 The East is Red China is a
rigid communist state

• The Real Story
• Socialist Market Economy with Chinese
  characteristics
• Reforms Black or white, a cat that can catch
  the mouse is a good cat Deng Xiaoping

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China is not a traditional communist country

• Communism is a Western concept
• China is heavily influenced by Confucian values
• Chinas system is a unique blend of Eastern and
  Western values

Confucian chief virtues are Courtesy Tolerance G
ood faith Diligence Moderation Kindness Bravery F
ilial piety
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Chinas reforms are taking hold on many fronts

• Economic reforms
• Private enterprises
• Property rights
• Social reforms
• Constitutional human rights
• Political reforms
• Government by law
• Introduction of limited elections

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Reforms will take time
It is comparatively easy for 1.3 billion people
to send one person into space but very
difficult for us to shift 50 of the poor rural
population into cities - Professor Hu Angang,
School of Public Policy and Management, Tsinghua
University.
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Political Myth 2

• The Dragon is ready to strike China is a
  threat to the world

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Political Myth 2 The Dragon is ready to
strike China is a threat to the world

• The Real Story
• Protection of sovereignty through the Tribute
  system
• Victim of the imperialistic Land Grab in the
  last 2 centuries.

Unfortunately, China is more feared than
emulated because it has the size to be everyones
major competitor in the third world. -Lester
Thurow, Fortune favors the bold, what we must do
to build a new and lasting global prosperity,
HarperBusiness 2003
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Protection of Sovereignty through the Tribute
system
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Peaceful Rising VS China Threat
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China De-Mystified

• Social Myths
• Political Myths
• Economic Myths

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Economic Myth 1

• Chinas economic growth is a modern miracle

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Economic Myth 1 Chinas economy is a modern
miracle

• The Real Story
• Following same pattern as other Asian countries
• Although a large economy, not going to be a
  rich country

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Even if China becomes a large economy, it
wontbe a rich country
Global Repositioning Estimate of worlds largest
economies in 2050 Trillions
of Dollars

• Even if Chinas GDP increased 600 in the last 23
  years, Chinas 2002 GDP is only 1/4 of Japans,
  which has gone through 10 lost years.
• In 2000, GDP/per capita was 848, compared with
  US 29,240, Japans 32,350.

-Goldman Sachs Co. BusinessWeek 10/27/2003
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Economic Myth 2

• China is a third-world country

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Economic Myth 2 China is a third-world country

• The Real Story
• Fastest advancing infrastructure
• Great leap forward Generational leaps in
  technology and infrastructure

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Chinas use of technology is growing at a
phenomenal rate
Unit1000 Users
-IT Time Weekly, Beijing China 10/20/2003 and
BusinessWeek 3/15/2004
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Economic Myth 3

• Bull in a china shop China is responsible for
  the Wests economic woes

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Economic Myth 3 Bull in a china shop China
is responsible for the Wests economic woes

• The Real Story
• Unlike other Asian economies, China imports a
  great deal
• China actively involves foreign participation
• Chinas sweet-and-sour effects on the world
• China is losing manufacturing jobs as well

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China is not like other Asian countries
We think import will outpace export this
year.., Our forecast is that Chinas trade
surplus is going to diminish this year.
-Robert Subbaraman,
Lehman Brothers, Asian Wall Street Journal
3/10/2004
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China actively involves foreign participation
Abundant inflows of capital are a catalyst for
management know-how and technology innovations

• Foreign Direct Investment (FDI) has totaled over
  50 billion every year for the previous 3 years
• Over 100 RD centers in China owned by large tech
  multinationals
• Over 100 billion invested in RD centers until
  end of 2002
• Expected to double by 2005

- Wall Street Journal, Dow Jones Newswires, World
Bank
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Closing Remarks
Something to Think About In 1799, China was 44
of the worlds GDP In 1900, China was 7 of the
worlds GDP Last year, China is only 3.5 of the
worlds GDP
For further information Email
joseph_at_symbio-group.com