1. CHINA GONE GLOBAL Jack Garrity Executive Director Asia Society Washington May 10, 2011

2. “ All political power comes from the barrel of a gun.”

3. “ The economy is the basis for global power.”

4. Can the United States have Guns and Butter too?

5. US Still Out-Spends the Globe on Defense

6. However Military Spending Has Risen Across the Globe

7. China’s Booming Economy

8. Population Overview

9. China ‘ s GDP (1990-2010) 2010 GDP Growth Rate: 10.3

10. China‘s GDP Growth (1990-2010)

11. China‘s GDP Map 2010

12. Economic Powerhouse-GDP

13. China‘s GDP Compared to Other Countries (2000-2010)

14. Output and Outlook 1820-2001 India, China and US

15. Forecast of China’s and US GDP

16. China’s real per-capita GDP(1980-2000)

17. Rich- Poor Gap is Enlarging

18. China‘s GDP/per capita (2000-2010)

19. Gini Coefficients 1980-2006

20. China’s household saving

21. Hukou Household Registration

23. When will China become the largest economy

24. ECONOMIC CONCERNS AND CHALLENGES

25. Major Structural Problems: Stability /Sustainability of Chinese Economy

26. Unsustainable export level (Export over GDP ratio)

27. Unsustainable Low Domestic Consumption (Household consumption over GDP ratio US vs China)

28. Unsustainable Low Labor Income (Declining Labor income over GDP ratio

29. Unsustainable High Saving Rate. (China VS the rest of the world, 1978-2006)

30. Too much Enterprise and Government Savings

31. The Share of Household Saving in National Saving has declined substantially

32. Most government investment in China are Local Government Investments

33. Local government are in deficit. Poor regions have higher deficit

34. Is China’s real GDP growth sustainable ? Optimistic forecast versus official targets

35. How much progress can we expect from the 12th 5 Year Plan

36. The most challenging problems come from regional competition which has been essential for China’s growth

37. The institutional foundation of regional competition

38. Why regional competition is becoming a source of problems

39. Non-Market policies would not work

40. Market oriented policies may work

41. GROWTH DRIVEN BY INVESTMENT AND TRADE

42. CHINA’S FDI INFLOW

44. Railway Crossing| High-speed Network Lengths by Comparison

45. Map of High Speed Railway

46. Map of High Speed Railway (Planned)

48. Capital Growth

49. Foreign Direct Investment into China

51. China’s FDI inflow VS domestic investment Source: China National Bureau of Statistics $bn $3596bn $68bn $379bn $20bn

52. Government Debt is Scrambling

53. China’s Public Debt is More Than 80% of GDP

54. CDB’s Foreign and Domestic Lending, 2005-2009

55. Investment Contribution to GDP Growth

58. Intellectual property rights protection

59. TRADE

60. China’s Exports and Imports(2000-2010) China joins WTO in 2001

61. Garment trade with EU http://online.wsj.com/article/SB10001424052748704062604576105691622922576.html

62. Garment trade with US

63. China in the Global Economy, 2009 % share of the global total Sources: UNDP, NBS, UN Comtrade, SAFE, UNCTAD, IMF, World Bank, RHG; *China‘s share in global total as available from the IMF in November 2010, 101 countries

64. China’s Production Surplus Production surplus

65. World Trade 2010- Top 10 exporters Source: WTO data http://www.wto.org/english/news_e/pres11_e/pr628_e.htm

66. China and Developing states Projected to keep a favorable trade balance

67. China’s Rising Share of Global Trade $3,517 bn $15,518 bn $138 bn Surplus: $40 bn Surplus: $571 bn China: $3,122 bn

68. U.S.’s Share of Global Trade 1990 vs. 2010 20% 26% $3,517 bn $15,518 bn Deficit: $ -82 bn Deficit: $ -529 bn

69. China’s Global Trade by region 2000 VS 2010 $2,723.5 510.8 479.9 385.6 292.6 230.0 174.7 133.3 109.8 103.8 85.1 80.5 48.4 37.0 31.4 20.5 2010 —— 2000 —— China’s surplus 2243 16 4 11 13 6 7 10 15 9 3 6 4 6 3 5 times times times times times times times times times times times times times times times times $373.6 ($125.2) $143.0 $181.7 ($16.1) $210.7 ($22.7) ($25.3) ($6.3) ($25.3) $4.2 $34.6 $26.1 $7.4 $4.0 ($17.3)

70. China ‘s Global Trade by Region 2010 In Billion

71. China ‘s Global Trade 2000 VS 2010 2000 2010 Trade Exports Imports China's surplus/deficit Trade Exports Imports China’s surplus/ deficit EU $71.9 $41.1 $30.8 $10.2 $479.9 $311.5 $168.4 $143.0 Russia and rest of Europe $12.3 $3.9 $8.5 ($4.6) $85.1 $44.6 $40.4 $4.2 US $74.5 $52.2 $22.4 $29.8 $385.6 $283.7 $102.0 $181.7 Canada $6.9 $3.2 $3.8 $0.6 $37.0 $22.2 $14.8 $7.4 Africa $9.6 $4.2 $5.4 ($1.3) $109.8 $51.7 $58.1 ($6.3) MENA $17.7 $7.1 $10.6 ($3.5) $174.7 $76.0 $98.7 ($22.7) Northeast Asia $118.5 $53.5 $65.0 ($11.5) $510.8 $192.8 $318.0 ($125.2) China HK, Macao $54.8 $45.2 $9.5 $35.7 $230.0 $220.3 $9.6 $210.7 ASEAN $39.5 $17.3 $22.2 ($4.8) $292.6 $138.2 $154.3 ($16.1) Oceana $12.6 $6.6 $6.0 $0.7 $103.8 $39.3 $64.6 ($25.3) South Asia $5.7 $3.8 $1.9 $1.9 $80.5 $57.6 $23.0 $34.6 Central Asia/ Caucuses $1.8 $0.8 $1.1 ($0.3) $31.4 $17.7 $13.7 $4.0 Central America/ Caribbean $4.1 $3.5 $0.6 $2.9 $48.4 $37.3 $11.2 $26.1 South America $8.4 $3.6 $4.8 ($1.2) $133.3 $54.0 $79.3 ($25.3) Other countries and area $0.0 $0.0 $0.0 $0.0 $20.5 $1.6 $18.9 ($17.3) Total $438.3 $245.8 $192.4 $53.4 $2,723.5 $1,548.6 $1,175.0 $373.6

72. China’s Share of World Trade (Shadow Chart) 1990-2010

73. China’s Share of World Total Exports

74. China’s Share of World Total Exports Clear

75. China’s Share of World Imports

76. Exports: Comparison among US, Germany, Japan and China

77. China's Top 10 Trade Partners in 2010 In billion USD

78. Top 10 China's Imports in 2010 In billion USD

79. Top 10 China's Exports 2010 In billion USD

80. China is the NO.1 trading partner of six G-20 nations

81. China is the NO. 2 trading partner of Canada, U.S, Indonesia, Mexico and Brazil

82. As new powers grow…China is becoming ever more important to their trade.

83. China’s Current Account and percentage of GDP

84. China’s current account surplus

85. Trade Remedy Measures on China’s Exports Value ($ billion)

86. The Disappearing Cost Advantage

87. Comparison of population in China, Indonesia and Brazil China is now Indonesia's biggest export market, having almost doubled its share in the past decade to about 12.5%.

89. Aging Society

90. RMB EXCHANGE RATE

91. China’s currency has risen against the dollar recently, but against a broad basket of currencies it is basically flat.

92. RMB against USD 2000-2010

93. REER USD CNY

94. CNY/ EUR/ JPY

95. CNY/USD/JPY/EUR

96. Big Mac index, CNY is the most under valued currency Source: McDonald’s; The Economist. At market exchange rate (2010 Oct 13th)

97. The Yuan has strengthened against the dollar and euro over the past several years, leading some economists to say it is approaching fair value

98. Does China Really Appreciate Their Currency

99. U.S. imports from China may shrink, they may be replaced by imports from other emerging markets

100. Yuan Internationalization

104. Volume of dollar-Yuan swaps traded increases

105. Top 10 underwriters for offshore Yuan-denominated bonds

106. FOREIGN RESERVES

107. China’s foreign reserve holdings topped $3 trillion in March, nearly three times the holdings of Japan $1.15 trillion is U.S. treasury

108. Foreign-exchange reserves keep rising

110. Internationalization of the Yuan

111. Using Yuan in Trade Settlement?

112. Criteria for being a dominant international reserve currency

113. The expectation of Yuan’s rise may lead to change of business strategy

114. INFLATION

115. Inflation may lead China to start revaluing its currency

116. China’s Consumer Prices

118. COMMODITIES A copper-products plant in Nantong, China: The metal bounced back from recent lows

119. Commodity Prices may increase and Hamper Growth

120. Metal prices go up

121. China’s refined copper imports drop

122. Copper reserves for selected countries

123. Steel Market

124. CHINA‘S DEMAND FOR ENERGY

125. China’s power picture

126. Typical urban household in China already has at least one air conditioners

127. Electricity consumption has soared in China

128. China is now the world Largest energy consumer

129. Power Output Source: China Electricity Council Unit: billion KWh

130. China and the US source their oil from different areas

131. Shanghai trucker strike as the price of oil surges.

132. In China, coal consumption has surged along with electricity consumption

133. World Gold Reserves in 2010

135. China has gone from the world’s largest coal exporter to the largest importer

136. China’s nuclear

137. LABOR FORCE ISSUES

138. Guangdong Migrant Workers

139. EDUCATION

140. Graduate Employment Many college graduates are more willing to work in places where the cost of living is lower as a result slightly smaller cities in China begun to grow at a faster rate. Source: Chinese college graduates employment annual report

141. World Class-Average math and science scores for 15-year-olds in 2009

142. Chinese Travel

144. Visitors from China spend more Parting with cash Visitors from China ranked among the top 11 in head count and they were No.7 in spending last year. International arrivals to the U.S. International visitor spending in the U.S. Rank In millions Rank In billions 20.0 13.4 3.9 3.4 1.7 1.3 1.2 1.1 0.9 0.8 $20.8 14.6 11.6 8.7 5.9 5.8 5.0 4.1 4.0 4.0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

145. CHINA’S INVESTMENT OVERSEAS

146. China’s overseas investment is surging

147. China’s ODI is stepping up

149. China ODI flow 2003-2009, total $177.2 billion USD