Footnotes: Research for TV 1/14/2011 China Special

For a recap of the TV Show click here

BACKGROUND ON CHINA’S ECONOMY

https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html

  • China’s economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy.
  • Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.
  • Annual inflows of foreign direct investment rose to nearly $108 billion in 2008. China has generally implemented reforms in a gradualist or piecemeal fashion. In recent years, China has re-invigorated its support for leading state-owned enterprises in sectors it considers important to “economic security,” explicitly looking to foster globally competitive national champions.
  • After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg was more than 20% by late 2008, but the exchange rate has remained virtually pegged since the onset of the global financial crisis.
  • The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2009 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income.
  • The Chinese government faces numerous economic development challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand through increased corporate transfers and a strengthened social safety net; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy’s rapid transformation.
  • Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work.
  • One demographic consequence of the “one child” policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment – notably air pollution, soil erosion, and the steady fall of the water table, especially in the north – is another long-term problem.
  • China continues to lose arable land because of erosion and economic development. In 2006, China announced that by 2010 it would decrease energy intensity 20% from 2005 levels. In 2009, China announced that by 2020 it would reduce carbon intensity 40% from 2005 levels. The Chinese government seeks to add energy production capacity from sources other than coal and oil, and is focusing on nuclear and other alternative energy development.
  • In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

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STATS ON CHINA’S ECONOMY

GDP (purchasing power parity):

  • $8.818 trillion (2009 est.)
  • country comparison to the world: 3
  • $8.083 trillion (2008 est.)
  • $7.415 trillion (2007 est.)
  • note: data are in 2009 US dollars

GDP (official exchange rate):

  • $4.985 trillion (2009 est.)

GDP – real growth rate:

  • 9.1% (2009 est.)
  • country comparison to the world: 4
  • 9% (2008 est.)
  • 13% (2007 est.)

GDP – per capita (PPP):

  • $6,700 (2009 est.)
  • country comparison to the world: 130
  • $6,100 (2008 est.)
  • $5,700 (2007 est.)
  • note: data are in 2009 US dollars

GDP – composition by sector:

  • agriculture: 10.3%
  • industry: 46.3%
  • services: 43.4% (2009 est.)

Labor force:

  • 813.5 million (2009 est.)
  • country comparison to the world: 1

Labor force – by occupation:

  • agriculture: 39.5%
  • industry: 27.2%
  • services: 33.2% (2008 est.)

Unemployment rate:

  • 4.3% (September 2009 est.)
  • country comparison to the world: 39
  • 4.2% (December 2008 est.)
  • note: official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas

Population below poverty line:

  • 2.8%
  • note: 21.5 million rural population live below the official “absolute poverty” line (approximately $90 per year); an additional 35.5 million rural population live above that level but below the official “low income” line (approximately $125 per year) (2007)

Household income or consumption by percentage share:

  • lowest 10%: 3.5%
  • highest 10%: 15%
  • note: data are for urban households only (2008)

Distribution of family income – Gini index:

  • 41.5 (2007)
  • country comparison to the world: 54
  • 40 (2001)

Investment (gross fixed):

  • 46.3% of GDP (2009 est.)
  • country comparison to the world: 1

Budget:

  • revenues: $1.002 trillion
  • expenditures: $1.111 trillion (2009 est.)

Public debt:

  • 16.9% of GDP (2009 est.)
  • country comparison to the world: 111
  • 15.6% of GDP (2008 est.)

Inflation rate (consumer prices):

  • -0.7% (2009 est.)
  • country comparison to the world: 14
  • 6% (2008 est.)

Central bank discount rate:

  • 2.79% (31 December 2009)
  • country comparison to the world: 129
  • 2.79% (31 December 2008)

Agriculture – products:

rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish

Industries:

mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites

Industrial production growth rate:

  • 9.9% (2009 est.)
  • country comparison to the world: 4

Electricity – production:

  • 3.451 trillion kWh (2008 est.)
  • country comparison to the world: 2

Electricity – consumption:

  • 3.438 trillion kWh (2008 est.)
  • country comparison to the world: 2

Electricity – exports:

  • 16.64 billion kWh (2008)

Electricity – imports:

  • 3.842 billion kWh (2008)

Oil – production:

  • 3.991 million bbl/day (2009 est.)
  • country comparison to the world: 5

Oil – consumption:

  • 8.2 million bbl/day (2009 est.)
  • country comparison to the world: 3

Oil – exports:

  • 388,000 bbl/day (2008 est.)
  • country comparison to the world: 32

Oil – imports:

  • 4.393 million bbl/day (2008)
  • country comparison to the world: 4

Current account balance:

  • $297.1 billion (2009 est.)
  • country comparison to the world: 1
  • $436.1 billion (2008 est.)

Exports:

  • $1.204 trillion (2009 est.)
  • country comparison to the world: 2
  • $1.435 trillion (2008 est.)

Exports – commodities:

electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment

Exports – partners:

US 20.03%, Hong Kong 12.03%, Japan 8.32%, South Korea 4.55%, Germany 4.27% (2009)

Imports:

  • $954.3 billion (2009 est.)
  • country comparison to the world: 4
  • $1.074 trillion (2008 est.)

Imports – commodities:

electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals

Imports – partners:

Japan 12.27%, Hong Kong 10.06%, South Korea 9.04%, US 7.66%, Taiwan 6.84%, Germany 5.54% (2009)

Reserves of foreign exchange and gold:

  • $2.426 trillion (31 December 2009 est.)
  • country comparison to the world: 1
  • $1.953 trillion (31 December 2008 est.)

Debt – external:

  • $349.3 billion (31 December 2009 est.)
  • country comparison to the world: 23
  • $378.2 billion (31 December 2008 est.)

Stock of direct foreign investment – at home:

$473.1 billion (31 December 2009 est.)

country comparison to the world: 11

$378.1 billion (31 December 2008 est.)

Stock of direct foreign investment – abroad:

  • $229.6 billion (31 December 2009 est.)
  • country comparison to the world: 15
  • $147.9 billion (31 December 2008 est.)

Exchange rates:

Renminbi yuan (RMB) per US dollar – 6.8249 (2009), 6.9385 (2008), 7.61 (2007), 7.97 (2006), 8.1943 (2005)

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SHARE OF GLOBAL MANUFACTURING OUTPUT

http://www.uschina.org/public/documents/2006/09/us-manufacturing

1995

U.S.: 22.3%

China: 4.2%

2005

U.S.: 22.4%

China: 8%

MORE ON U.S./CHINA MANUFACTURING

  • According to IHS Global Insight In 2009
  • Value of US manufacturing sector:  $1.71 trillion (#1)
  • Value of China manufacturing sector: $1.6 trillion (#2)
  • Value of Japan manufacturing sector: $795 billion (#3)
  • In 2009 the US created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession.
  • IHS estimates that China’s manufacturing output has grown 21 percent in nominal U.S. dollar terms from 2007 to 2009 whereas the U.S. manufacturing sector has declined by 8 percent over the same period due to the World Financial Crisis.
  • China relies much more heavily on the sector than the United States, with manufacturing in China accounting for 34 percent of GDP compared to a modest 13 percent in America.

http://www.eutimes.net/2010/06/china-to-overtake-us-as-worlds-biggest-manufacturer-in-2011/

  • China Could Overtake the United States as World’s Top Manufacturer by 2011
  • After gaining serious ground in 2009, a recent report says China may supersede the United States as the world’s preeminent manufacturer as early as next year, forcing the United States to relinquish a title its held for over a century.
  • Analysis undertaken by U.S.-based IHS Global Insight estimated the value of China’s manufacturing sector at US$1.6 trillion for 2009 in real U.S. dollar terms, almost US$1 trillion ahead of Japan in third place with US$795 billion and just US$110 billion behind the United States, whose sector ranked first in the study with a value of US$1.71 trillion.
  • Mark Killion, managing director at IHS Global Insight, believes it is more than likely that China will surpass the United States by 2011, but didn’t rule out a shift in the rankings this year, saying it would be a “close call.”
  • In the report, though, IHS stipulates that China’s manufacturing sector will trail the U.S. sector in “real inflation-adjusted” terms until””sometime around 2013-2014.” Either way, it seems as though America’s 110-year reign as the world’s leader in manufacturing is coming to an end.
  • IHS estimates that China’s manufacturing output has grown 21 percent in nominal U.S. dollar terms from 2007 to 2009 whereas the U.S. manufacturing sector has declined by 8 percent over the same period due to the World Financial Crisis.
  • This will no doubt come as a blow to the U.S. image, but it should be noted that the two countries don’t exactly place the same level of importance on manufacturing. China relies much more heavily on the sector than the United States, with manufacturing in China accounting for 34 percent of GDP compared to a modest 13 percent in America.
  • Also, the U.S. manufacturing base is both more efficient and more productive than its Chinese counterpart. While China has a “commanding lead” in low value-added areas like textiles, apparel, and appliances, the United States is far ahead in high-tech, high value-added areas like aircraft, consumer electronics, industrial machinery, media-related industries, and medical and scientific equipment.
  • “Even in high-tech electronics, where China is growing rapidly, if you have to choose between two, the U.S. sector is more appealing,” Krillion said.
  • Last year, the US created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession.

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THE U.S. ECONOMY BACKGROUND

https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

  • The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $46,000. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace.
  • US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals’ home markets than foreign firms face entering US markets.
  • US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II.
  • The onrush of technology largely explains the gradual development of a “two-tier labor market” in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits.
  • Since 1975, practically all the gains in household income have gone to the top 20% of households.
  • The war in March-April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military.
  • Soaring oil prices between 2005 and the first half of 2008 threatened inflation and unemployment, as higher gasoline prices ate into consumers’ budgets. Imported oil accounts for about two-thirds of US consumption. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.
  • The merchandise trade deficit reached a record $840 billion in 2008 before shrinking to $450 billion in 2009. The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid-2008.
  • GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression.
  • To help stabilize financial markets, the US Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008. The government used some of these funds to purchase equity in US banks and other industrial corporations.
  • In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years – two-thirds on additional spending and one-third on tax cuts – to create jobs and to help the economy recover. Approximately two-thirds of these funds will have been injected into the economy by the end of 2010.
  • In March 2010, President OBAMA signed a health insurance reform bill into law that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished.
  • In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a bill designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are “too big to fail,” and improving accountability and transparency in the financial system – in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight.

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U.S. STATISTICS

GDP (purchasing power parity):

  • $14.12 trillion (2009 est.)
  • country comparison to the world: 2
  • $14.5 trillion (2008 est.)
  • $14.5 trillion (2007 est.)
  • note: data are in 2009 US dollars

GDP (official exchange rate):

  • $14.12 trillion (2009 est.)

GDP – real growth rate:

  • -2.6% (2009 est.)
  • country comparison to the world: 160
  • 0% (2008 est.)
  • 1.9% (2007 est.)

GDP – per capita (PPP):

  • $46,000 (2009 est.)
  • country comparison to the world: 11
  • $47,600 (2008 est.)
  • $48,100 (2007 est.)
  • note: data are in 2009 US dollars

GDP – composition by sector:

  • agriculture: 1.2%
  • industry: 21.9%
  • services: 76.9% (2009 est.)

Labor force:

  • 154.2 million
  • country comparison to the world: 4
  • note: includes unemployed (2009)

Labor force – by occupation:

  • farming, forestry, and fishing: 0.7%
  • manufacturing, extraction, transportation, and crafts: 20.3%
  • managerial, professional, and technical: 37.3%
  • sales and office: 24.2%
  • other services: 17.6%
  • note: figures exclude the unemployed (2009)

Unemployment rate:

  • 9.3% (2009 est.)
  • country comparison to the world: 110
  • 5.8% (2008 est.)

Population below poverty line:

  • 12% (2004 est.)

Household income or consumption by percentage share:

  • lowest 10%: 2%
  • highest 10%: 30% (2007 est.)

Distribution of family income – Gini index:

  • 45 (2007)
  • country comparison to the world: 42
  • 40.8 (1997)

Investment (gross fixed):

  • 12.2% of GDP (2009 est.)
  • country comparison to the world: 145

Budget:

  • revenues: $2.104 trillion
  • expenditures: $3.52 trillion (2009 est.)

Public debt:

  • 53.5% of GDP (2009 est.)
  • country comparison to the world: 41
  • 37.7% of GDP (2008 est.)
  • note: data cover only what the United States Treasury denotes as “Debt Held by the Public,” which includes all debt instruments issued by the Treasury that are owned by non-US Government entities; the data include Treasury debt held by foreign entities; the data exclude debt issued by individual US states, as well as intra-governmental debt; intra-governmental debt consists of Treasury borrowings from surpluses in the trusts for Federal Social Security, Federal Employees, Hospital Insurance (Medicare and Medicaid), Disability and Unemployment, and several other smaller trusts; if data for intra-government debt were added, “Gross Debt” would increase by about 30% of GDP

Inflation rate (consumer prices):

  • -0.3% (2009 est.)
  • country comparison to the world: 22
  • 3.8% (2008 est.)

Central bank discount rate:

  • 0.5% (31 December 2009)
  • country comparison to the world: 136
  • 0.86% (31 December 2008)

Commercial bank prime lending rate:

  • 3.25% (31 December 2009 est.)
  • country comparison to the world: 149
  • 5.09% (31 December 2008 est.)

Agriculture – products:

wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; fish; forest products

Industries:

leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining

Industrial production growth rate:

  • -5.5% (2009 est.)
  • country comparison to the world: 117

Electricity – production:

  • 4.11 trillion kWh (2008 est.)
  • country comparison to the world: 1

Electricity – consumption:

  • 3.873 trillion kWh (2008 est.)
  • country comparison to the world: 1

Electricity – exports:

  • 24.08 billion kWh (2008 est.)

Electricity – imports:

  • 57.02 billion kWh (2008 est.)

Oil – production:

  • 9.056 million bbl/day (2009 est.)
  • country comparison to the world: 3

Oil – consumption:

  • 18.69 million bbl/day (2009 est.)
  • country comparison to the world: 1

Oil – exports:

  • 1.704 million bbl/day (2008 est.)
  • country comparison to the world: 13

Oil – imports:

  • 11.31 million bbl/day (2008 est.)
  • country comparison to the world: 1

Oil – proved reserves:

  • 19.12 billion bbl (1 January 2010 est.)
  • country comparison to the world: 14

Current account balance:

  • -$378.4 billion (2009 est.)
  • country comparison to the world: 190
  • -$668.9 billion (2008 est.)

Exports:

  • $1.069 trillion (2009 est.)
  • country comparison to the world: 4
  • $1.305 trillion (2008 est.)

Exports – commodities:

agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0%

Exports – partners:

Canada 19.37%, Mexico 12.21%, China 6.58%, Japan 4.84%, UK 4.33%, Germany 4.1% (2009)

Imports:

  • $1.575 trillion (2009 est.)
  • country comparison to the world: 2
  • $2.14 trillion (2008 est.)

Imports – commodities:

agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys)

Imports – partners:

China 19.3%, Canada 14.24%, Mexico 11.12%, Japan 6.14%, Germany 4.53% (2009)

Reserves of foreign exchange and gold:

  • $130.8 billion (31 December 2009 est.)
  • country comparison to the world: 17
  • $77.65 billion (31 December 2008 est.)

Debt – external:

  • $13.45 trillion (30 June 2009)
  • country comparison to the world: 1
  • $13.75 trillion (31 December 2008)
  • note: approximately 4/5ths of US external debt is denominated in US dollars; foreign lenders have been willing to hold US dollar denominated debt instruments because they view the dollar as the world’s reserve currency

Additional China and U.S Manufacturing Comparisons

China taking over on innovation

= China is set to become the world’s most important centre for innovation by 2020, overtaking both the United States and Japan, according to a public opinion survey to be published on Monday.

China is already the world’s second-largest economy, after establishing itself as the global workshop for manufacturing. Now it wants to move up the value chain by leading in invention as well.

Today, the United States ranks as the world’s most innovative country, with 30 percent of people surveyed taking that view, followed by Japan on 25 percent and China on 14 percent.

Fast-forward 10 years, however, and 27 percent of people think China will be top dog, followed by India with 17 percent, the United States 14 percent and Japan 12 percent, according to the survey of 6,000 people in six countries done by drugmaker AstraZeneca.

The shift is not because the United States is doing less science and technology, but because countries like China and India are doing more — a fact reflected in a spike-up in successful Asian research efforts in recent years.

A study last month from Thomson Reuters showed China was now the second-largest producer of scientific papers, after the United States, and research and development (R&D) spending by Asian nations as a group in 2008 was $387 billion, compared with $384 billion in the United States and $280 billion in Europe

[Source: Reuters China to lead world in innovation by 2020 - survey 5 December 2010]

China on high-tech

= But in his speech, Dr. Chu seemed to have longer-term goals in mind. He compared the recent rise in research and development and high-technology manufacturing in China to the Soviet launching of the Sputnik satellite in October 1957. In 1998, he said, the American share of worldwide high-tech exports was nearly 25 percent and China’s was less than 10 percent; by 2008, he said, China’s share was 20 percent and the American share was less than 15 percent.

[Source: NYT Blogs In the Energy Race, Echoes of Sputnik; Green 29 November 2010]

Manufacturing GDP comparison

March 2009

= While manufacturing equals about 14 percent of gross domestic product in the United States, it totals 18 percent worldwide, and accounts for 33 percent of G.D.P. in China, according to the World Bank.

[Source: NY Times Rapid Declines in Manufacturing Spread Global Anxiety 20 March 2009]

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*CHINA IS NOW THE BIGGEST EXPORT MARKET FOR:

-BRAZIL (ACCOUNTING FOR 12.5% OF BRAZILIAN EXPORTS IN 2009)

-SOUTH AFRICA (10.3%)

-JAPAN (18.9%)

-AUSTRALIA (21.8%)

(Source: The Economist) http://www.economist.com/blogs/dailychart/2010/10/dependence_china

AFRICA

*CHINA SAYS ITS TRADE WITH AFRICA SURGED BY 43 PERCENT DURING THE FIRST 11 MONTHS OF THIS YEAR.

·        China’s investment in Africa has largely targeted oil, gas and mining but is expanding to manufacturing, real estate, infrastructure and other sectors.

·        China has long offered low-interest loans to African nations, usually on the condition that governments spend the money on Chinese-made goods or on projects built by Chinese companies (http://www.nytimes.com/2009/11/09/world/asia/09china.html?scp=51&sq=china+africa&st=nyt)

·        China says its trade with Africa surged by 43 percent during the first 11 months of this year. Gov’t report says China-Africa trade was $114.8 billion from January to November. (DEC 23, 2010 http://www.nytimes.com/aponline/2010/12/23/business/AP-AS-China-Africa-Relations.html?scp=1&sq=china+africa&st=nyt)

·        NOV 2009 Prime Minister Wen Jiabao pledged to grant African countries $10 billion in low-interest development loans over the next three years.

·        Wikileaks revealed that the US is closely monitoring China’s expanding role in Africa. A cable from February quotes a senior US official in Nigeria’s main city, Lagos Johnnie Carson, US Assistant Secretary for African Affairs describing China as “a very aggressive and pernicious economic competitor with no morals”. “China is not in Africa for altruistic reasons,” he says. “China is in Africa primarily for China.”

He adds: “A secondary reason for China’s presence is to secure votes in the United Nations from African countries.”

·         Nigeria, China Sign $23 Billion Oil Refinery Deal. Nigeria has signed a $23 billion agreement with China to construct three gasoline refineries and a fuel complex in the oil-rich, but gas-starved African nation. <http://www.voanews.com/english/news/africa/Nigeria-China-Sign-23-Billion-Oil-Refinery-Deal-93844304.html>

JAPAN

*JAPAN’S EXPORTS TO CHINA TOPPED THOSE TO THE UNITED STATES LAST YEAR, ACCOUNTING FOR NEARLY 20 PERCENT OF ALL ITS EXPORTS.

·        In 2008, China-Japan trade grew to $266.4 billion, a rise of 12.5 percent on 2007, making China Japan’s top two-way trade partner. China was also the biggest destination for Japanese exports in 2009.

·        China produces 97% of the world’s rare earths – 17 elements vital to technological products as diverse as wind turbines, car batteries and sophisticated radar systems http://www.ft.com/cms/s/0/ae49b354-dba7-11df-a1df-00144feabdc0.html#axzz19GRf3GyR

BRAZIL

*CHINA HAS MOVED PAST THE U.S. TO BECOME BRAZIL’S LARGEST TRADING PARTNER

·        In Brazil, South America’s biggest economy. China has surpassed the United States as that country’s biggest trade partner, but that’s not all. China is gobbling up hard assets like copper from Chile, iron ore from Brazil and zinc from Peru. It is also shipping buses to Cuba, cars to Peru and clothes to Mexico.  All of this has catapulted trade between China and Latin America from $10 billion at the turn of the millennium to $140 billion last year.  And unlike the U.S., which asks for more improved transparency and human rights from trading partners, China isn’t so ideologically hamstrung.  China has also been sure not to establish a military presence in the region. And thanks to its trillion dollar surpluses, China has also become a major lender to Latin America, spending tens of billions in the region.

·        In the first half of this year, China’s investment in Brazil topped $20 billion, more than 10 times all of China’s previous investment in the country. That puts China on track to be Brazil’s No. 1 investor for 2010.

·        Chinese firms have bought stakes in Brazil’s electrical grid; they are building steel mills, car plants and a telecommunications infrastructure in that country.

·        The China Development Bank has given Petrobras, Brazil’s main oil producer, $10 billion as a down payment on future business.

·        China is targeting South America because there are few barriers to investment and because the region’s rapid economic growth–and rising energy consumption–is hard to ignore. http://online.wsj.com/article/BT-CO-20101221-711252.html

·        Last year, China announced a $10 billion oil-for-credit deal with Brazil, in part to help explore massive offshore finds that could turn Brazil into a major global oil player.

·        China’s upstream oil and gas deals in Latin America this year have totaled more than $15 billion and industry executives expect more to come, the Financial Times reports.

AUSTRALIA

**CHINA HAS OVERTAKEN THE UNITED STATES AS AUSTRALIA’S LARGEST EXPORT PARTNER FOR GOODS AND SERVICES.

“A decade or so ago, we spent a lot of time puzzling over why quarterly movements in Australian GDP were so highly correlated with quarterly movements in US GDP. We don’t puzzle over this anymore – not because we solved the puzzle, but because the correlation has fallen. At the same time, the correlation between quarterly movements in Australian and Chinese GDP has steadily increased. Clearly what happens in the Australian economy is now more dependent upon what happens in China than has been the case at any time in our past.” - Reserve Bank of Australia (RBA) Assistant governor Philip Lowe (in speech at NatStats 2010 conference in Sydney. Sept 2010)

·        China has overtaken the United States as Australia’s largest export partner for goods and services. Australia’s department of foreign affairs and trade says the country’s total trade with China is growing by 8.8 per cent, with just over 90 billion dollars to the end of this financial year. Japan is now Australia’s second largest two way trade partner, followed by the United States. http://news.smh.com.au/breaking-news-national/trade-on-its-way-back-from-crisis-20101222-1952r.html

·        “Over the last decade, the share of Australia’s two-way trade in goods and services with China (has) increased rapidly, from just 5.1 per cent in 1999-00 to 17.6 per cent in 2009-10,” (Australia’s Trade Dept)

·        Australia & China sign deals worth over $8.8 billion, largely in Mining (2010) http://www.reuters.com/article/idUSTRE65K09920100621

·        Currently, Australia is the biggest exporter of iron ore, alumina, coal and liquefied natural gas to China, and China is Australia’s biggest trading partner and biggest exporting market as well as the biggest importer.

PAKISTAN

*CHINA HAS COMMITTED TO INVEST ABOUT US $20 BILLION IN PAKISTAN WITHIN THE NEXT THREE YEARS.

CHINA HAS DECIDED TO PROP UP PAKISTAN’S ECONOMIC AND MILITARY STRENGTH TO MAKE ISLAMABAD LESS DEPENDENT ON THE US. http://www.eurasiareview.com/analysis/the-usa-af-pak-and-china-24122010/

·        China is Pakistan’s closest friend in the region, giving Islamabad military aid and technical assistance, including nuclear technology…The country serves as China’s gateway to the Muslim world, and is a close and cheap source of natural resources to fuel its growing economy.

·        Approximately 10,000 Chinese workers are engaged in 120 projects in Pakistan, which includes heavy engineering, power generation, mining, and telecommunications. http://www.thenewamerican.com/index.php?option=com_content&view=article&id=5624:pakistan-shows-signs-of-turning-away-from-the-united-states&catid=16:asia&Itemid=33

·        Pakistan calls China its “all-weather” friend — an ally that offers consistent, no-strings-attached support during turbulent times.

·        A senior Pakistani official told CBS News “China is beginning to launch an important new phase to help Pakistan transform itself economically,” said the official, who spoke anonymously because he was not authorized to talk to journalists. “Unlike our western friends such as the U.S., China remains a true friend of Pakistan,” he added. http://www.cbsnews.com/8301-503543_162-20026117-503543.html

VENEZUELA

·        In April, China agreed to lend Venezuela $20 billion. President Hugo Chavez said the funds would be used to build power plants, highways and other projects, and would be repaid with Venezuelan crude oil.

·        “The linchpin of the loans appears to be China’s thirst for oil” “While the United States remains the top buyer of Venezuela’s oil, China is emerging as a new market.” http://www.nytimes.com/2010/04/19/world/americas/19venez.html

ARGENTINA

*CHINA IS NOW ARGENTINA’S SECOND LARGEST TRADING PARTNER AFTER BRAZIL. STATISTICS FROM THE U.S. CENSUS BUREAU SHOW THAT AMERICA WAS ARGENTINA’S SECOND-LARGEST TRADE PARTNER IN 2006.

·        China to Invest in Argentine Railways JULY 13, 2010. WSJ. <http://online.wsj.com/article/SB10001424052748704518904575364523811330964.html>
Argentina said it secured an agreement with China for the Asian giant to invest $10 billion in the South American country’s railways, Beijing’s latest move to extend its influence in Latin America through multibillion-dollar energy and infrastructure deals. Argentina’s transport secretary, said the pact calls for China to invest in 10 separate rail projects in Argentina over the next two to five years, including construction of rail lines and equipment. Argentina has been shut out of international credit markets for years following its sovereign default in late 2001. Mrs. Kirchner said China is offering a kind of low-rate financing “that doesn’t exist anywhere in the world.”

·        China’s Sinopec buys Occidental’s Argentina assets for $2.5 bln (Dec 2010)

CAMBODIA-

*HILLARY CLINTON JUST URGED CAMBODIA NOT TO BE TOO DEPENDENT ON CHINA.

·        US Secretary of State Hillary Clinton called on Cambodia not to rely to heavily on any other single country when talking with Cambodian students on Nov. 1. China has expressed anger over Clinton’s remarks, perceiving an attempt to divide China and Cambodia. “You look for balance. You don’t want to get too dependent on any one country,” Clinton said to young Cambodians when asked about China’s increasing influence in Southeast Asia. (11-2-2010)

·        China is Cambodia’s strongest ally, giving aid worth more than US$200 million a year. This year, China offered US$1.2 billion aid to Cambodia when the United States canceled a military truck donation in April.

·        China, Cambodia pledge to further enhance ties http://news.xinhuanet.com/english2010/china/2010-12/15/c_13650551.htmBEIJING, Dec. 15 (Xinhua) — Chinese and Cambodian leaders on Wednesday pledged to further enhance bilateral ties, two days after the two countries agreed to establish a comprehensive strategic partnership of cooperation…. President Hu Jintao added that China will expand bilateral cooperation in areas such as trade, investment, finance, infrastructure construction, agriculture and energy, increase bilateral trade, enhance cultural, technological and youth exchanges, and maintain the two countries’ coordination on regional and international affairs.

INDIA

*CHINA IS INDIA’S LARGEST TRADING PARTNER.

·        India and China have agreed a new $100bn (£66bn) bilateral trade target by 2015, up from $60bn in 2010.

·        The two countries signed some 50 deals in power, telecommunications, steel, wind energy, food and marine products worth $16bn at the end of a business conference attended by Mr Wen in the capital, Delhi, on Wednesday evening. This overtakes the $10bn of agreements signed between Indian and American businesspeople during the recent visit of US President Barack Obama. http://www.bbc.co.uk/news/world-south-asia-12006092

AMERICA

*THE CHINESE HOLD MORE THAN A QUARTER OF ALL US TREASURY SECURITIES. CHINA CURRENTLY HOLDS APPX $868.4 BIL IN US TREASURYS (AS OF AUG. 2010)

**CHINA IS ON COURSE TO OVERTAKE THE U.S. AS THE WORLD’S LARGEST ECONOMY AROUND 2020, PRICEWATERHOUSECOOPERS SAID IN A JANUARY REPORT

U.S. AND CHINA DEBT AS % OF GDP:

U.S.              CHINA

2000:            54.8              16.4
2009:            83.2              18.9
2010 est:       92.6%           20.0

(IMF, “Fiscal Monitor,” May 14, 2010; http://www.imf.org/external/pubs/ft/fm/2010/fm1001.pdf)

U.S AND CHINA GDP REAL GROWTH RATE:

US: -2.6% (2009 est.)

China: 9.1% (2009 est.)

(source: CIA 2010 World Factbook; https://www.cia.gov/library/publications/the-world-factbook/fields/2001.html?countryName=China&countryCode=ch®ionCode=eas&#ch )

COMPARISON OF U.S. & CHINA EXPORTS, 2009:

US exports: $1.056 trillion
China exports: $1.201 trillion

(United Nations, “International Merchandise Trade Statistics”; http://comtrade.un.org/pb/CountryPagesNew.aspx?y=2009)

COMPARISON OF U.S. & CHINA IMPORTS, 2009:

US imports: $1.563 trillion (2009 est.)
China imports: $954.3 billion (2009 est.)
(CIA 2010 World Factbook)

·        If real GDP in China and America continued to grow at the same annual average pace as over the past ten years (10.5% and 1.7% respectively) and nothing else changed, China’s GDP would overtake America’s in 2022 (good chart) http://www.economist.com/node/17733177?story_id=17733177

·        China is even playing a key role in the reorganization of the American auto industry China is now the world’s biggest car market overtaking America. (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aE.x_r_l9NZE)

·        The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products — from compact fluorescent light bulbs to electric cars to giant wind turbines. – according to u.s. energy dept Dec 2010. United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies http://www.nytimes.com/2010/12/15/business/global/15rare.html?partner=rss&emc=rss
EUROPE

CHINA IS THE EU’S SECOND-LARGEST TRADING PARTNER BEHIND THE UNITED STATES. BUT COULD THAT CHANGE SOON? TWO-WAY TRADE BETWEEN CHINA AND THE EU FOR THE FIRST 11 MONTHS THIS YEAR REACHED $433.9 BILLION, AN INCREASE OF 33 PERCENT FROM THE PREVIOUS YEAR.

·        China has supported highly indebted European countries, offering in October to buy Greece’s debt. Last week, Portugal said that China had pledged increased support for its efforts to climb out of a financial crisis, reportedly promising to buy $4 billion in Portuguese government debt.

·        China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7 trillion overseas investment fund.

·        (AP) — The European Union said Tuesday that China has pledged to guarantee the supply of rare earths — minerals essential to high-tech industry — to Europe as the two sides wrapped up high-level economic talks. (Dec 21, 2010)

SAUDI ARABIA

Saudi Arabia – the world’s second-largest crude oil producer – used to rely on the US as its single-largest customer for petroleum liquids up to 2008, averaging 1.53 million barrels per day. In 2009, this figure fell to 989,000 while Saudi oil exports to China surged to above 1 million barrels a day. With overall net crude imports of around 5.4 million barrels a day and a projected uptick of 900,000 more barrels a day in the next two years, China is set to keep the US displaced for good as Saudi Arabia’s number one destination. http://www.atimes.com/atimes/China_Business/LG24Cb01.html