Chung, Mascitelli Chpt 1

Dancing With the Dragon

Dancing With the Dragon

Doing Business With China

Mona Chung and Bruno Mascitelli

Dancing With the Dragon: Doing Business With China

Copyright © Business Expert Press, LLC, 2015.

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First published in 2015 byBusiness Expert Press, LLC222 East 46th Street, New York, NY 10017www.businessexpertpress.com

ISBN-13: 978-1-60649-970-2 (paperback)ISBN-13: 978-1-60649-971-9 (e-book)

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Abstract

China has passed through a tumultuous 20th century. This journey included moving from foreign domination to a Communist peasant rev-olution to the opening of its economy through “capitalist reforms” in the latter part of the 20th century. As we advance into the 21st century, China, to the surprise of many, appears in all the annals of economic advancement even reaching the milestone of the second largest economy in the world. Where it was once marginalised on the global stage, China today stands at the forefront of most economic international issues and developments. Much of the developed world is still getting used to this new milestone of China as a leader of the international community.

This book provides a fresh and possibly unorthodox examination of a number of contemporary business issues in relation to the current role China plays. Besides examining China’s global trade approach, the authors address China’s unique investment approach in three major stra-tegic destinations for China–Africa, Europe, and Australia. A special attention is given to the global financial crisis and its European version of this crisis. The authors also address some areas of “strategic mistrust” from global partners as exemplified in the handling of giant telecommunica-tions provider Huawei in the United States highlighting new perspectives in the China–U.S. relationship. The book provides a different perspective of China’s way about doing business with global partners offering new approaches to the way China, the dragon, dances in the centre stage with rotating dancing partners.

Keywords

Africa, Australia, China, corruption, cultural differences, EU, euro, euro-zone crisis, face, GFC, Greece, guanxi, Huawei, International Monetary Fund (IMF), investments, migration, OFDI, trade, United States

Contents

Chapter 1 China the Dragon ............................................................1Chapter 2 China—The Powerful Trading Nation ............................. 15Chapter 3 Outward Investment in Australia and Africa:

A Comparison ................................................................35Chapter 4 China and Eurozone Crisis .............................................53Chapter 5 The Role of Chinese Migration and Investment

in Europe .......................................................................71Chapter 6 The Exclusion of Huawei: Competition or “Strategic

Mistrust”? .......................................................................87Chapter 7 China and the Challenge of Corruption .......................103Chapter 8 Doing Business and Living with the Middle

Kingdom ......................................................................115

Notes��125References ��135Index ��149

CHAPTER 1

China the Dragon

Over the centuries, numerous statesmen and world leaders in their deal-ings with China have warned that China would be a major power at some point in the future and to be reckoned with. High expectations bordering on fear of the rise of China go back hundreds of years. When Marco Polo traveled through China at the end of the 13th century, he marveled about the new world he had encountered and of the fortunes that could be made there. Some hundreds of years later, Napoleon made similar reference to the sleeping dragon, which would arise one day from its sleep: Let her sleep, for when she wakes she will astonish the world.

As one observer reflecting on the sleeping dragon noted:

Nearly two centuries later, this dragon is not only awake, but roaring. Foreign companies in Asia, factories in Africa, and even villages in Italy and streets in France have been snapped up by perspicacious Chinese businessmen. Growth may have slowed in the midst of the world debt crisis, but China remains the world’s low-cost manufacturer and the US’s biggest creditor, with one Washington think tank recently making the prediction that the Yuan could overtake the dollar as the principal reserve currency within a decade.1

While the journey that China has undertaken is historic and breath-taking at the same time, it is somewhat beyond the scope of this book to give voice to the entire historic journey. The claims about Chinese supe-rior activity and presence are not fixed entities. The Chinese landscape is moving rapidly. Within the purview of this book, we can safely say that this moment referred to has arrived. There is an extraordinary level of interest in China’s development, activities, intentions, and aspirations,

2 DANCING WITH THE DRAGON

especially now that it is a player, and an important one, on the interna-tional stage. This curiosity and interest has led to the release of a plethora of books on China surging out of western publishing presses and book-shops. China is a hot topic, and publishing houses know that this topic has become of keen interest across all segments of society. These books address a multiplicity of themes relating to China’s new role in the globe, its trading approach, Chinese global investment, Chinese migration, and related themes. China as a subject has at the same time also witnessed important evaluations, grades of understanding (and misunderstandings), and even concern in some western seats of power. Much of this interest is due, in large part, to its sudden emergence, but also due to the suspicion about China, given its ideological origins and its contemporary profile. Two decades ago, few could have predicted this emerging entity being anything other than a middle power with a burgeoning population and having a strong rural and nonmarket economic system. Only a decade ago, anyone uttering that China would be the second largest economy in the world (in terms of Purchasing Power Parity) would have attracted ridicule. Trying to predict anything related to China is now contemplated and murmured with extreme care. There is little doubt that China’s rise has been spectacular not only in its nature but also in its timing.

Any news related to China’s growing economy travels fast and with it high expectations—so fast that predictions barely make it into the public realm before they are declared redundant. Moreover, the western media feast over the failed Chinese government predicted economic growth in 2014 of 7.5 percent when the growth only reached 7.4 percent. How-ever, this is a testimony of rushing to judgment. Even if this $10 trillion Chinese economy continues to grow at (only!) 7 percent each year, figures unimaginable in most of the developed as well as developing world, it is only a matter of time before it supersedes the U.S. economy. As recognized by one observer:

Over the past 30 years, the Chinese government has at times opened the door wide for foreign companies to participate in its domestic economic growth. At other times, it has kept the door firmly closed …. Government policy continues to be the critical shaping force ….2

CHINA THE DRAGON 3

No true words have been pronounced in terms of economic growth and in terms of the role of the Chinese government.

Chinese economic expansion is not always one that is understood, including those within the western elite and media. The different phases of China’s economic growth began with the expansion of trade taking the advantage of cheaper and accessible labor. Through its trade expan-sion and export sales, it accumulated large quantities of foreign currency. This allowed for greater opportunities and need for expanded outward investment. At the same time, it has not escaped the attention of Chinese as well as western sources of the need for focus on internal consumption and wealth, accessibility for all, especially those in rural and less favorable circumstances in inland China. Despite all the cracks in this still cen-tralized economy, China precisely through this centralized apparatus and decision-making instrument can quickly and easily change direction and engage in direct economic action. What is often seen as a source of dis-couragement, its centralism, can equally be a source of timely directives from the central party apparatus to confront and redirect resources and incentives to achieve intended objectives.

China’s Economic and Political System

Much has been written on China’s rise, though many aspects of this rise receive only partial and, at times, cautious treatment. Many issues are raised, though often left inconclusive and only progressed with great difficulty. One such factor is, of course, the nature of China’s economic system. Whether it is the evidently confronting scenario of Hong Kong (much lesser in Macau) or the use of market forms and expressions within mainland China in Shanghai or elsewhere, there are important and quite distinct aspects of the Chinese economy that require careful explanation. Bombastic predictions and declarations of China’s future direction are a plenty, but carefully analyzed assessments are unfortunately absent on the whole and, more importantly, carefully avoided by Chinese scholars themselves for obvious and possibly less obvious reasons and by Western scholars who only analyse from a Western and free market perspective.

China’s economic system is unique because it is fundamentally a centrally planned economic system but with features of capitalism more


typical of market economies.3 According to Article 6 of the Chinese Constitution:

The basis of the socialist economic system of the People’s Republic of China (PRC) is socialist public ownership of the means of pro-duction, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of “from each according to his ability, to each according to his work.”4

Article 7 states: “The state economy is the sector of the socialist econ-omy under ownership by the whole people; it is the leading force in the national economy. The state ensures the consolidation and growth of the state economy.”5

With the Chinese constitution guaranteeing that it is the state which will ensure the consolidation and growth of the state economy, all the specific measures integral to Chinese economic progress come under rel-atively strict controls. As such, what occurs is the control on imports and exports, for example, iron ore and coal from Australia, policies on real estate ownership and purchases, and less economically direct measures such as the single child policy. While some sources in the West have put this single child policy down as a denial of human rights, to the Chinese government, this emergency provision was a direct and immediate need to address the out of control population explosion and ensuring greater equality and accessibility to all. The need for this provision in China was to address the population imbalance in the coming decades, which raised other concerns including the issue of schools, aged population, and labor shortage. It was a necessary measure for its time, which is now being with-drawn and watered down, and the policy is changing to partial permission of second child.6

The rapid economic development is again a policy-driven exercise strategized by the ruling Communist Party. Deng Xiaoping (邓小平), after Mao Zedong’s (毛泽东) death, led his country through far-reaching market economic reforms. His slogan “Let some of the people get rich first” is a well-known driver for the economic reforms of the last three decades.7 The reforms allowed many Chinese to enrich themselves and

CHINA THE DRAGON 5

ultimately see some of this enrichment spread across the nation and its people. What is noticeable is that many of the rich Chinese who have ben-efited from the economic reforms find the Chinese leadership in accord with their activities. A sharing of Chinese culture and national values for the moment has all singing from the same page and all on the same side. It is unclear if this state of affairs will remain indefinitely. The benefit of the economic reform has also allowed the outreach of China for both individuals and the state through investments abroad.

State-Owned Enterprises

The onset of the Asian Financial Crisis saw China looking quite critically at its numerous state-owned enterprises (SOEs), which were highly inef-ficient and a drain on valuable resources and finance. While there was much concern about fall-out from unemployment, China embarked on a restructuring process of its SOEs. The ultimate result was a reduction of SOEs from 120,000 in the mid-1990s to 31,750 in 2004.8 This included reductions during the period of World Trade Organization accession and economic turnaround for the Chinese economy.

Western economists and business pundits struggle to understand the phenomenon of China’s economic development mostly because it is framed along western economic framework and theories. In addition, the need to understand the Chinese economic system has to be through a better understanding of its constitution, the Chinese economy works on different concepts and drivers. Adding to the existing difficulty and con-fusion, China has acquired many characteristics of a free market economy. On the other hand, the government still owns most of the assets (and the means of production). Equally it is able to direct and allocate capital as the government sees fit either through its directives of SOEs or through its control on finance and banking. To understand these mechanisms is critical to a better understanding of the Chinese economic growth and direction.

Political Controversy and the Asian Century

Rarely does a day go by when China is not being asked to justify its actions in one quarter or another on a host of matters of an internal


and external nature. One of the stark aspects of its existence of course relate to the three China’s or better still the other two—Hong Kong and Taiwan. While China managed negotiations on the return of Hong Kong (and Macau) from the British and Portuguese in 1997 and 1999, respec-tively, the current “Democracy standoff” in Hong Kong again raises the question of “One country two systems” and how that can manifest itself in reality. For the past 17 years, Beijing has slowly sought to incorpo-rate Hong Kong into China but with the proviso that “… Hong Kong develops democracy in the future is a matter entirely within the sphere of Hong Kong’s autonomy, and the central government cannot intervene,” a Chinese senior official said in the People’s Daily in 1993.9

This tampering with China by outside forces has in part come to an end but not a tidy united end. The ending of the 100-year lease on Hong Kong by Britain, then an act of imperial control, produced an enclave of British and western influence in Hong Kong, which will require time and effort to overcome and resolve. Hong Kong and Macau are two prominent examples of Special Administrative Region and equally two examples of foreign interference into a sovereign nation albeit China. The worthiness of the current political system in Hong Kong whereby 35 representatives are directly elected and another 35 representatives in the Legislative Council are chosen by professional or special interest groups is outside the purview of this book, but after 17 years, it would be refreshing if there was more international understanding in supporting this integration process rather than the undermining old legacies of the cold war. Beijing would also wish to showcase Hong Kong to the other China—Taiwan—though it is clear that the two are inherently differ-ent scenarios. Put simply, the United States has stated on occasions that they will defend Taiwan from any encroachment from China. They have not made the same declaration about Hong Kong. Unfortunately, further elaboration of this issue goes outside the scope of this book, but the tensions that exist as they relate to China are important in any analysis of China.

On the back of the economic expansion of China came the Asian Financial Crisis of 1997. This crisis spelt the death knell to the growth and stability of numerous Asian economies as they were subjected to austerity-based International Monetary Fund directives, which provided

CHINA THE DRAGON 7

in exchange bailouts. This journey of economic recovery posed long-term structural difficulties to reasserting themselves. It was what one scholar termed as “the biggest collective corporate bail-out in history.”

The concept of an Asian century (亚洲世纪) emerged once the eco-nomic growth of China and India continued for decades with little inter-ruption. The Asian century is a term that is used to describe the belief that the 21st century will be dominated by Asian economies, culture, and politics. There have been discussions of whether the next century is a China century or an Asian century. The origins of the term Asian century remain poorly evidenced though the story goes that Deng Xiaoping (邓小平) may have made reference to this term in one of his pronounce-ments in 1978 around the time of the statements on opening the Chinese economy.10 It was also used by the U.S. Senate Committee on Foreign Relations in 1985.11 With time it has become a popular term in the media. The term Asian tigers was a narrower and an economic reference to rapidly growing Asian economies; however, it has not been populated in the limelight of China. But later the Asian century caught on and by 2001 became an often used term to embrace numerous rapidly growing economies in Asia.

Curiously, the Asian century includes the former powerhouse of Japan. Yet, the last decade has seen Japan in a shadow of its former economic self with growth rates barely rising above the zero point. The meaning desig-nated for many when referring to the Asian century is primarily China with other nations following such as India, Vietnam, Republic of Korea, and other South East Asian states. What does it mean to label this region as an Asian century?

At the time of the Asian Financial Crisis (1997 to 1998), the concept of Asian century was a faraway and almost an unimaginable concept. The economic submission that many Asian economies would need to endure to reach any level of recovery was forecast to be at least five years. China in the early 1990s had just undertaken control of an escalating inflationary economy and had implemented capital controls and fiscal austerity, which, according to one significant observer, largely spared China from the worst of the Asian Financial Crisis.12

Ever since China’s burgeoning economic power emerged in the early years of the new millennium, the global narrative has shifted to the


economic importance of Asia and China. In this context, the other grow-ing obsession is the western rhetoric with reference to the Asian century. This has all the characteristics of a throwaway line which has been dealt a cruel blow on more than one occasion in the past. These grandiose cate-gories and labels have been used in the past and, to global historians, are no less clear than they are realistic. Stewart13 depicted accurately the ritual of the self-styling labeling but noted:

There is a problem with the very concept of an Asian Century. Asia is not a civilization—it is a diverse region. Previous eras of far-reaching influence were characterized by the influence of a dominating culture such as the American Century, the British Empire, the Ottoman Empire, the Tang Dynasty, the Roman Empire, and Classical Greece.14

This healthy skepticism toward throwaway lines has been learnt from the casual variants of German century, American century, or even Jewish century, which in their own way were used as slogans but with little substance. Despite references to regional centuries, much of these slogans have been more rhetorical than meaningful. The British century in the 1900s, the Germany century just before the First World War, and the American century after 1945, reaching finally to the Asian century in the 1980s and 1990s, all carry great expectations of meaning and description.

Curiously, it is a term which China itself uses very little and does not fully acknowledge or embrace. Rarely it is to be seen that China will identify itself with the term Asian century. As one scholar noted: “… overall Chinese attitude has been characterized by ambivalence, caution and skepticism about this notion [Asian century] and its ‘Chinese cen-tury’ variant.” China’s skepticism toward embracing this term might seem to be well placed given this historic context. The Asian century and much of its attention is directed toward the powerful presence and growth of China, though, in lesser ways, India, Korea, and ironically Japan are part of this club. It is a reference to a regional prominence in global history, but it lacks the historical narrative to be primarily a slogan, which is as catchy as it can be inaccurate.

CHINA THE DRAGON 9

The rapid economic growth has seen China moving fast into a lead-ing international position on the economic level. In 2014 China has the second largest GDP in real terms just after America. The discussion about when China will overtake the United States to become the largest economy in the world has been going on for quite some time. The 2008 Global Financial Crisis (GFC) certainly helped China to speed up the waiting period.15 More importantly, the discussion about China’s growing GDP no doubt makes the United States uncomfortable having enjoyed the position of world dominant economic power for almost a century. This is not just a simple question of which country has greater levels of wealth. The more strategic question to ask is how will China behave if and when it becomes the largest economy in the world? Will its economic power translate into economic global control? Will China simply replace the United States as world economic superpower and will there be aggres-sive overtones? These are questions many are contemplating now creating greater uncertainty and even longer term concern.

Rivalry of a New Type: China and the United States

Kissinger16 in his historic treatment of China makes the valid assertion that the rivalry between the United States and China could have sim-ilarities to the Anglo-German rivalry of the late 19th and early 20th century. Kissinger refers to a British Foreign Office analyst Eyre Crowe who predicted in 1907 that Germany’s rise may have been the cause of the First World War. Kissinger’s digressing into European history is, of course, related to whether a similar approach is currently being under-taken within the China–U.S. relationship and, as such, using the Crowe analogy “Is crisis caused by Chinese capabilities or Chinese conduct?” This is an interesting and valid interpretation of history and one that has roots in events that have occurred. Is it inevitable that both sides will argue to the contrary? Will this strategic mistrust creep into a concern about “history repeating itself ” but with new players and new scenarios?

What the last decade demonstrates, and the future appears to be tell-ing us will continue, is that the capability versus conduct theorem is ever present in much of what China does and the response which emanates from the United States and the wider international community. Strategic


mistrust, as some scholars refer to, in the context of the U.S.–China relationship is, of recent times, a much touted description of this mistrust between these two powers both becoming commonplace and of shared responsibility. Defined by Lieberthal and Jisi17 as being “mutual distrust of long-term intentions,” the description captures and seeks to portion blame on both sides for this tense state of affairs and for the poor bilateral relations. As one scholar eloquently put it:

China’s rise to date appears to be much less about the ‘inevitable conflict of rising power’ theory popular in some circles than about creeping power transition. Chinese thinkers, themselves, have recognized that the international community is concerned over the potential implications of China’s rise, and have taken pains to ensure that China’s rise is perceived as nonthreatening.18

This form of mistrust will appear throughout this book, covering a range of themes and unfortunately dominating the agenda of discussion in relation to China. One must expect that it will not quickly disappear.

Why Another Book on China

At this moment in world history and the China narrative, no further books on China should need justification. There is so much to say and so much to learn as though we are behind with what should be known. This book seeks to be slightly different from others. This book is a bio-scope on the Chinese strategic direction through case studies, sectoral interests, and Chinese global engagement. This is not a book on China’s superiority in any special field, though occasionally we digress. It is a series of essays on scenarios where China is engaging with the world in relation to migration, investment trade, or its integration. By examining the attempts to trade, invest, or even migrate scenarios of distrust, uncer-tainty, and sometimes even hostility have emerged.

China’s ability to be an economic force is also interpreted in cer-tain quarters as an event of fear and concern. In some scenarios, China’s aggressive trade has created many negative aspects such as the closure of thousands of factories previously producing basic goods such as clothing,

CHINA THE DRAGON 11

textiles, footwear, and furniture. In the countries affected by China’s place in the market, there is open hostility toward China as an economic entity. In industrial districts in parts of Europe, such as Italy, the impact of Chinese products has changed the industrial landscape in ways that were unimaginable only two decades before. Being such a new country in terms of its engagement with the world, many behavioral features of its activity are closely scrutinized. Many books on China have agendas, a view to push which might not be open and neutral. Only a few books are actually authored by Chinese and even fewer by Chinese living in the PRC. This might indicate an ongoing propensity to be one sided and not considerate of the Chinese view.

This book seeks to combine the western standpoint with a depth and understanding of the internal Chinese system. Equally, it is an unashamed empathetic view toward how China sees the world. We hope this approach will become more widespread and this is why this book is different and we feel will be useful. For long periods of time, the Chinese view has been seen with suspicion and has been following the old edict of “what is said is not what is meant.” It is human nature to be suspicious and insecure of other nationalities that we are not familiar with. This ultimately results in stereotyping which in China’s case has been cast far and wide, pro-ducing fantastic conspiratorial theories rather than moderated interna-tional strategies. It is not expected to change in the short term. While the authors of this book are sympathetic with the approach taken, this is not quite like the book Chinese Whisper: Why Everything You’ve Heard about China is Wrong.19 What it shares is seeing matters a little more through the eyes of the Chinese. We are confident that this approach offers a different perspective and a more subjective understanding to those who are inter-ested in China. We feel that this approach will be useful for those who want to deal with the Chinese, engage in professional relationships, and do business, and, especially, in gaining a more contemporary view and images of events and developments in this middle power.

What Is in the Book?

This book addresses lesser developed areas of Chinese prowess and more importantly different aspects of China’s engagement with the


commercial world, whether it be based at home or abroad. Some of China’s engagement with the world has had less desirable outcomes and has demonstrated conflicting interests with those of other multinational companies or even nation states. This book seeks to address the multitude of cross-impacting developments that make China’s global engagement a reality and a vibrant one. This book examines contemporary case study scenarios and activities involving China at the global and strategic level. It covers events related to its positioning in trade and investment in a macrovision as well as the growing migration resulting from its outward investment. This book also addresses China’s relationship with Europe and the European Union and China’s attempt to intervene during the Eurozone crisis and after. A chapter addresses the multinational tele-communication giant excluded from western markets like the United States and Australia and the causal factors that may have been behind these exclusions. This book also examines Chinese outward investment and the Chinese diaspora, which has played a key role since its explosive expansion in 2004. As Shambaugh20 points out, this expansion, while it has been sudden, also started from a low base. The promotion of the going out policy for investment has been in the making over decades, and only in the last decade has the actual outward investment reached significant heights. Numerous western economies, not forgetting Africa, have been the recipient of this outward capital growth. Different chapters of this book address the uncertainty and suspicion aroused as a result of China’s rise economically. The final segment of this book seeks to address the frequently asked question on how to build real and lasting relation-ships with China and at the same time work with and do business with the Chinese.

Conclusion

The story of the 20th century for China saw it as a progress of the nation through numerous phases of social and institutional development and at times almost in discontinuity. The early 20th century oppressed China and subjected it to international humiliation and occupation through the Communist Party led peasant revolution in 1949 with national cohe-sion and structure. The last and most challenging phase is, of course, the

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economic reforms of the late 1970s, which are extensively addressed in this book. We are confident that the reader will appreciate the approach undertaken with this book of bringing to the public arena a different per-spective expected from a western viewpoint in relation to China’s engage-ment with the world. China’s engagement on many fronts has resulted in a distorted and partisan debate and discussion.

The global alliances of the G6, then the G7, and later the G8, all seemed blind to the developments occurring in China and embarrass-ingly China was never considered in these summits. It took the GFC of 2008 and China’s willingness to assist some bailout countries in the Eurozone crisis for a realization of the significance of China and its influential economy.

It can be deduced that this nation previously contained and hardly considered a modern nation has now emerged to seat itself at the table of the powerful and its due respect accorded at this table. In some seats of institutional membership, China continues to be ignored. It means inter-national dialog and development still has some way to go before China is seen as a trusted member of the international community. This may come through eventually, but there are no guarantees.

It is clear that China as a nation feels little burdened by its histori-cal journey, much of which in more modern times was that of subjuga-tion and occupation. As Kissinger21 noted, China considered itself as a returning power, not a rising power, and has been temporarily damaged by outside forces. In current times, China is able to guarantee with greater ability its integrity and independence and its return to the table of the great nations. Whether the West is able to embrace this restored China remains to be seen.

Index

Africa, 1, 12, 36–38, 44–45, 51, 77–78, 119

China’s investment in, 48–50Aggressive trade, negative aspects of

China’s, 10–11Agricultural Bank of China, 62American century, 8Anglo-German rivalry, 9Anticorruption, 108–109, 113–114Anti-Corruption Plan (2013 to

2017), 108Anti-inflationary approach of German

Bundesbank, 55ANZ Bank, Australia, 65–66ASEAN, 123

-China FTA, 31Asia and China, trade relationship

between, 32Asian century, concept of, 5–9, 27Asian financial crisis (1997), 5–7, 15,

19, 27, 32. See also Global financial crisis (GFC)

Asian pivot, 34, 87, 96, 120Asian tigers, 7ASIO. See Australian Security

Intelligence Organisation (ASIO)

Australia (Australian), 4, 12, 27, 33, 35–36, 38, 41, 47–51, 58–59, 69–70, 74–76, 81, 84, 87–89, 93, 101, 104, 110–111, 113, 121

China’s investment in, 42–46and China, trade relationship

between, 24–25Eurozone crisis and, 64–67

Australian Security Intelligence Organisation (ASIO), 93

Bandung Conference (1955), 37, 48Bank of China, 62Bao, 57

Bao Steel, 111Battellino, Rick, 65Beijing, 6, 26, 123Beijing model, 38Berlin Wall fall, 81Berlusconi, Silvio, 56BHP (Billiton), 111BNP Paribas, France, 66Bond markets, 54Bond repayments, 53Bo Xilai, 108Brain drain, 77, 79–80Brazil, 22, 28–30, 39, 75Brazil, Russia, India, China, and

South Africa (BRICS), 22, 27–32

BRICS. See Brazil, Russia, India, China, and South Africa (BRICS)

British Empire, 8British Telecom (BT), 99Burgeoning economic power, 7–8Business culture, 117–118

Capability vs conduct theorem, 9Capitalism, 3, 39Capital Steel, 111CBBC. See China–Brazil Business

Council (CBBC)Chang-Kai Shek nationalists, 100China–ASEAN FTA, 33China Australia Free Trade

Agreement, 33China–Brazil Business Council

(CBBC), 29–30China–Chile FTA, 33China Construction Bank

Corporation, 62China Development Bank (CDB), 29China Iron and Steel Association,

110–111China–New Zealand FTA, 33

150 INDEx

China–Pakistan FTA, 33China–Peru FTA, 33China–Singapore FTA, 33Chinese Communist Party, 4, 12, 26,

94, 98, 104, 108, 110, 117, 124

Chinese Constitution, 4Chinese Free Trade Agreements

(FTAs), 24, 31–33, 43Chinese imperialism, 51Chinese Red Army, 89Cisco, 88–90, 92–94, 97Classical Greece, 8Cold War, 6, 22, 34, 48, 88, 123Communist Party, 4, 12, 110, 124Companhia Vale Do Rio Doce

(CVRD), 111Congress Report (2014), United

States, 21Constitution of China

Article 7 of, 4Corruption, 17, 98, 103–104,

107–111, 113, 116–118Criminal Law of the PRC, 108Cultural knowledge, increasing

demand of Chinese, 79Cultural Revolution, 17–18, 26, 38CVRD. See Companhia Vale Do Rio

Doce (CVRD)Cyprus (Cypriot) financial crisis, 59,

68–69, 83

Deng Xiaoping, 4, 7, 17–19, 26, 37, 89, 91, 123–124

Diaspora, Chinese, 12, 19, 35, 41, 76“Doing business with China,” 103,

105–106, 113Dutch East Indies Company, 39

ECB. See European Central Bank (ECB)

Eclectic theories, 39Economic and Monetary Union

(EMU), 54Economic expansion, 3Economic force, 10Economic growth in 2014 of China, 2Economic system of China, 3–5

Economist (The), 59, 98Economy (Chinese)

changing characteristics of, 104–105

and greedy operators, 116Euro currency, importance to world

trade, 63Europe (European Union), 9, 11–12,

36, 39, 48, 53–86, 88, 95, 116, 119–122

and China, trade relationship between, 22–24

European Central Bank (ECB), 54–55

European economic difficulties, response of China to, 61–63

European government bond, 57Eurozone debt crisis, 12–13, 23,

53–67, 69–70, 82, 121–122

Financial markets of China, 63–64. See also Eurozone debt crisis

Financial Times (The), 30, 94–95First World War, 8–9Food, 18, 25, 45

imports, 27Foreign companies, 1–2, 30, 108,

110, 112Foreign debt investment, 63Foreign Direct Investment (FDI), 23,

32, 35, 37–42, 44–47, 49–51, 74–76

Foreign Investment Review Board (FIRB–Australia), 42–43, 50

Four little tigers, 32France, 1, 39, 57–59, 64, 76, 79, 81,

83, 85–86Free market economy, 20, 105Free trade agreements (FTAs), 21, 24,

31–33

G6 (Great six nations), 13G7 (Great seven nations), 13G8 (Great eight nations), 13, 27G20 (Great twenty nations), 27, 54,

68, 124Garde, Le, 58GATT, 22

INDEx 151

GCC. See Gulf Cooperation Council (GCC)

GCHQ. See Government Communications Headquarters (GCHQ)

German bunds, 57German century, 8Germany, 8–9, 16, 32, 54, 58, 64, 76,

78–79, 81, 85–86GFC. See Global financial crisis

(GFC)Glass Wall Effect, 118Global community, China as a

member of, 116Global Competitiveness Report (2013

to 2014), 109Global economic output, BRICS

share of, 29Global engagement, China’s, 12Global financial crisis (GFC), 9, 13,

20, 25, 45, 53–54, 56, 59–60, 64, 70, 75, 82, 116, 121

Global power, China rise as, 90–92Global relations of China, 120–124Global standing of China, 118–119Go-go growth, 119Going global (go abroad) policy 2009,

40–41, 76, 83Golden visas of Spain and Portugal,

83Government Communications

Headquarters (GCHQ), 99Greece, 8, 53–54, 57, 61, 64, 83, 122Guan Xi-related gift giving practice,

108Gulf Cooperation Council (GCC), 33

Hayden, Michael, 92Henry, Kissinger, 9, 13, 21, 90Hong Kong, 3, 6, 19, 32–33, 35, 67,

71, 75Horizontal foreign investment, 39Huawei, 101

exclusion from projects, 93–100origins of, 89–90threat to national security, 87–89,

92–93

U.S. government standoff over, 87–88

Hu Jintao, 49Human capital theory, 77Human trafficking, 81

Illegal route of emigration, 80–81. See also Migration, Chinese

IMF. See International Monetary Fund (IMF)

India, 7–8, 22, 28–29, 33, 63, 67, 77, 90

Indonesia, 28, 32, 39Industrial Commercial Bank of

China, 62Industrial revolution, 115International Monetary Fund (IMF),

6, 22–23, 28, 30, 54, 58, 62, 68, 119, 124

World Economic Outlook 2014, 15

Investment migration, 72, 74–77. See also Migration, Chinese

Investment-motivation-based theories, 73

Inward foreign direct investment (FDI), 35, 37

Ireland, 53, 58Italy, 1, 11, 53, 56–58, 64, 79, 83,

85–86, 122

Japan, 7–8, 19, 27, 32–33, 39–40, 42–44, 67, 79, 97, 101, 105, 120, 122

Jewish century, 8JP Morgan Chase and Co., United

States, 62

Korea (South), 7–8, 29, 32–33, 48Korean War, 48

Labor export by China, 78Le Garde Christine, 58Lehman brothers, 59Li Keqiang (Premier), 28Liu Mingfu, 21

152 INDEx

Liu Tienan, 108Liu Zhijun, 108

Maastricht (accord/agreement) of 1991, 54–55

Macau, 3, 6, 33Made in China, 91Made in Italy, 86Mainland and Hong Kong Closer

Economic and Partnership Arrangement, 33

Mainland and Macau Closer Economic and Partnership Arrangement, 33

Mao Zedong, 4, 17–19, 21, 26, 37–38, 48, 91, 100, 108

Marco Polo, 1Market economies, 4Marxism, 18Mianzi, concept of, 106–107Middle East, 78Middle Kingdom, 115–124Migration, Chinese, 71. See also

“Open door” policyto Africa, 49after Second World War, 71categories of, 74–81to European countries, 71–73impact on investment due to,

84–86reasons for increasing, 81–83and trade, 119–120

Mining sector in Australia, 45Ministry of Commerce (MOFCOM),

Chinese, 22, 75–76Ministry of Finance, China, 64Monopoly theory of advantage, 39Motorola, 97Multinational enterprises (MNEs),

36, 40–43, 47, 75–76, 80–81, 83, 94, 103

Mysterious community, 84

Napoleon, 1Nasser Gamal, 48National Administration for

Protection of State Secrets, 112

National Broadband Network (NBN), 88, 93, 99

National Emergency Communications Network project, U.S., 98

National Security Agency (NSA), 88, 92

Neoliberalism policies in West and China, 73

Netherlands (The), 81, 83New York Times (The), 88New Zealand, 24, 33, 43Nixon Richard, 21NSA. See National Security Agency

Obama, Barack, 34, 57, 87, 94, 98OECD. See Organisation for

Economic Co-operation and Development (OECD)

Oligopoly theory of advantage, 39One country two systems, 6, 116–117O’Neil, Jim, 28“Open door” policy, 15–16, 18, 37,

71–72, 79Opium War (1839 to 1842), 16–17,

39, 71Organisation for Economic Co-

operation and Development (OECD), 58, 69–70, 77

Ottoman Empire, 8Outward foreign direct investment

(OFDI), 37–38, 40–42, 44–50, 73–77, 81

Peng’s three-pillar view of strategy, 73People’s Daily (The), 6People’s Liberation Army (PLA), 89,

92, 94People’s Republic of China (PRC), 4,

11, 48Per capita income increase of China,

27PIIGS. See Portugal, Ireland, Italy,

Greece and Spain (PIIGS) Political controversy, 5–9Political system of China, 3–5Portfolio investment, 40Portugal, 53, 81, 83

INDEx 153

Portugal, Ireland, Italy, Greece and Spain (PIIGS), 53–55, 59, 67

Preferred approach, 50Private Chinese investors, 46Product life cycle model, 39Professionals migration, 72, 77–80,

Chinese, MigrationPurchasing Managers Index (PMI),

HSBC, 63Purchasing power parity, 2, 15

Qianlong, 16Qualified Domestic Institutional

Investor Scheme, 40, 76

Regional Comprehensive Economic Partnership (RCEP), 31

Ren Zhengfei, 88–89Reserve Bank (Australia), 65–66Resources imports into China, 45Rio Tinto, 48, 104, 109–113Rivalry between China and United

States, 9–10Roman Empire, 8Russia, 22, 28–29, 38, 75, 79–81, 83,

90, 105

Selling products, 109Shanghai Free Trade Zone, 26Shenzhen South Sea Oil Corporation

(SSSOC), 89Silicon Valley, 77Singapore, 32–33, 35, 67, 75, 123Skilled labors, increasing demand of

Chinese, 79Snowden, Edward, 88Socialist public ownership system, 4SOEs. See State owned enterprises

(SOEs)South Sea dispute between China and

Vietnam, 123Sovereign debt (Greek), 64. See also

Eurozone debt crisisSpain, 53, 57–58, 61, 71, 79–80, 83,

85, 122Special Administrative Region, 6Special Trade Agreements (STAs), 33

Sprint, 97Stability Growth Pact, 55Stable banking system, 65State Administration of Foreign

Exchange, China, 75State owned enterprises (SOEs), 5,

20, 30, 38, 40–41, 46–49, 73–77, 82, 86, 104, 117. See also Asian financial crisis (1997)

Stern Hu, 104, 110, 113–114Strategic mistrust, 9–10, 87, 93–100.

See also HuaweiStructuralist neo-Marxist macrolevel

approach, 77–78Structuration approach, 77Students migration, 72, 77–80, 84.

See also Migration, Chinese

Taiwan, 6, 19, 32, 35, 96Tang Dynasty, 8Thailand, 32Third world, 41, 48TPP. See Trans-Pacific Partnership

(TPP)Trade agreements of China, 32–33Trade history of China, 16–17Trans-Pacific Partnership (TPP), 21,

27–32, 96Treaty of Nanjing (1942), 17Two system nature, 113

UNCTAD, 40United Kingdom (UK), 46, 49, 64,

67–68, 71, 76, 78–80, 84, 99, 108, 117

United Nations (UN), 38, 40, 119United States (US), 6, 9–10, 12, 15,

31, 33–34, 36, 38, 42–44, 46, 57–58, 60–67, 75, 80, 82–84, 87–92, 94–98, 100–101, 119–123

and China, trade relationship, 19–23

economy, 2US Congress, 20–21, 88–89, 92, 98U.S. Senate Committee on Foreign

Relations, 7

154 INDEx

USSR (former), 38, 48, 120US Treasury (Bonds, Securities), 20,

43, 63–64, 68–69, 76, 91, 115

Vietnam, 7, 32, 122–123

Wall Street Journal (The), 58Wen Jiabao, 99White House, 20World Bank, 22, 28–30, 62, 119, 124World merchandise exports volume

(1990-2013), 61

World Trade Organization (WTO), 5, 15–16, 21–22, 25–27, 30, 32–33, 35, 91, 100, 119

WTO entry (Chinese), 19, 27

Xi Jinpin, 109Xi Jinping, 108Xuetong Yan, 119

Yuan (renminbi), 1, 20, 24, 121

Zhengfei, Ren, 88Zhou En Lai, 48ZTE, 87–88, 92, 97–99

Documents

Chung, Mascitelli Chpt 1