Dr. Martin Jacques - How China will change almost everything

hello well I'm gonna have talk to you for 20 minutes about China just by way of quick background China's move very quickly so in 1980 China the Chinese economy believe it or not was one twentieth of the size of the American economy which is what 35 36 37 years ago and then of course it started to grow with extraordinary the speed and to the point where it reached more or less the size of the American economy by like quite quite recently but the real impact of China globally began to change a bit later it changed after the Western financial crisis in 2007 and 2008 and this had a profoundly different effect on the West on the one hand and China on the other the effect on China well China basically kept growing not quite as quickly as before which was 10% growing at about 7 or 8 percent a year or Sitton more like just under 7 at the moment on the other hand the situation of the West Was was much more serious the as you probably know the effect of the Western financial crisis on Europe and the United States led to more or less a lost decade living standards I mean this is an interesting chart here you'll see that this is the proportion of households who had either stagnant or falling real incomes in the period from 2012 to 14 and you'll see very high figures in Italy is not most all Italian population America 80% UK my country just under seventy percent and so on the weighted the average of all the advanced economies was something like sixty seven sixty seven percent altogether or take another example of what happened as a result of the crisis which is this survey about will my children be better off or worse off than me now basically the assumption in Western societies for many many decades is of course my children will be better off than I I will be now if you look at this bar chart here you'll have to put your heads over a bit but on the left hand side you've got China seventy four percent think the net figure is seventy four percent think that children be better off India is still very high seventy three percent there's the UAE 63% Indonesia sixty percent and so on and then you'll noticed so far no Western countries but if you move towards the middle as it were you'll see America on six percent so net next six percent of people thought that their kids would be better off but that means a very large minority felt they wouldn't be if you my country UK if exactly even 50 percent throw the bear off fifty Cent be worse off and then all the countries on the right hand side they're mainly Europe Netherlands Sweden Switzerland Australia Spain etc all Thornton and Japan all thought that their kids would be worse off now that is a real barometer I think of pessimism that there's a sort of collapse in in people's view of the prospects that their prospects in the coming period now in 2014 this survey conducted by the world comparison program of the World Bank you can see this is the growth this is the growth of GDP which basically is the size of the economy and the China's the red line and the United States is the blue line and you can see extraordinary the way in which in 2014 by a particular measure the Chinese economy overtook the size of the American economy so that was a great change and meanwhile look at the living standards GDP per capita is basically a measure of living standards and the Chinese see starting in 1980 took a while for living standards to really take off and then it they've they've continued to rise steeply now they're well over eight thousand dollars a head China is still a poor a relatively poor port we probably call it middle-income economy but still in the lower in terms of living standards in the la bande of middle-income status now until 2012-2013 other words five six years ago basically China's rise was economic it didn't believe in throwing its weight around it didn't have it didn't express any strong views about its position in the world its role in the world international institutions and so on the great Chinese dong-chil ping who started the economic reforms which led to this very rapid growth said look you know just concentrate on economic development concert I concentrate on reducing poverty they took 700 with China's taking 700 million people half the population out of extreme poverty in the last 30 years concentrate on economic growth those who and leave everything else and that's essentially Chinese government's pursued that strategy but with the election more or less well not quite accurate after the financial crisis the attitude of the China began to change they thought well the West the International economy's not performing well the financially the major institutions like the IMF haven't served as well and so on and so China began more to express its view about the state of American economy speculation and so on but the real change came in 2012 with the election of Xi Jinping as the new Chinese leader and it started with what he described he introduced the idea of a Chinese dream what is the Chinese dream and essentially his idea of the Chinese dream was of course you know everyone's you know what they dream about how you would like to live as opposed to how you your your parents have lived who your grandparents have lived think about what kind of future you would like what would you like Chinese to be like and last but not least what should China's place in the world be now this is a big question because you know China until the early mid 19th century was the largest economy in the world it was already in decline but in some respects it was still the most powerful country in the world but it went into huge a precipitous decline throughout the 19th century it was the opium wars which were fought fought by Britain against China forcing China to open its borders to the consumption of opium were a particularly kind of humiliating experience for the Chinese and by the end of the century China was occupied by many powers European powers like Britain France by also by Japan the United States and so on and by the end of the 19th century basically China was so weak that it was forced essentially to adopt the Europe the sort of into the Western norms of the international system because China isn't really in any conventional status and in any conventional sense it's not really a nation state it's a civilization state it's had to abandon all that it was forced to become like any other country in China it not still thought in itself in those terms ever really but certainly never in its in its history so that there was a particular meaning particular poignancy in China their Chinese dream dreaming of China having a different kind of place in the world from what it had really for well over a century so that and the Chinese dream was the beginnings of the Chinese beginning to express themselves in a different way to see the the place of China and the Chinese in a different way now a consequence of this was that the the the also China instead of being you know everything's being done sotto voce you know very quiet not criticizing others and so on China began to have expressed stronger views and instead of just being a sort of follower of globalization and being relatively passive in its relationship with the United States China became much more proactive if you'd like a maker and a shaper of globalization which had never been you know it was a beneficiary in many ways of globalization but not a maker of American Americans used to criticize it you know you're a free rider or try to take advantage of public goods provided by us etcetera so but the most dramatic fait expression of the new Chinese approach was this now this is I don't know where you've heard of it but I'm a lot of you have which is the belt the great belt and Road initiative the belt and road project and this was I haven't got I don't think gonna work but there is a laser never mind it doesn't matter he loved it the the the idea was the transformation of the Eurasian landmass Eurasian landmass starts on the Pacific coast and goes all the way over till the furthest point I suppose is Portugal on the European mainland or maybe island off of the UK coast and this is home to about two-thirds of the world's population so it's extremely important but most of it or yeah most of it is very poor I mean obviously the European end isn't poor but the European end is small relatively small minority of the population but many countries in the landmass are relatively poor particularly those landlocked nations in Central Asia and so on which have not really ever been on the trade routes and so on so they experience relative isolation so China's idea was let's connect up connectivity let's connect up the the Eurasian landmass by wealth right by two main forms one is the maritime route but so that blue line you see the blue the blue wide line going down on the eastern coast of China and then going across to the tip of India and then going to the East African coast and so on and then you see it ends up going through the Suez Canal right past the Middle East and into Europe so that's one route and then there were six there are six other proposals of of connectivity across the last I mean this you can see that those are the sort of green lines if you like and the green and red lines and they go some of them go right across to Europe in a southern route and then a northern route which is mainly an energy route through Central Asia and so on and then these these smaller tributaries for example there's one from India leading into China and there's one that goes right the way down into Singapore Malaysia through Malaysia then Singapore and and there's another one moving right up north there's a red line which doesn't seem to go it doesn't really go very far westwards but that goes from China to Mongolia and Russia so this is a hugely ambitious project and the Chinese argument was well you know we transformed ourselves by large-scale investment state-led investment largely in infrastructure and we achieved these rapid economic growth this rapid economic growth and reduced our poverty enormously what if it worked for us why can't it worked for all these countries in across the Eurasian landmass so this project is probably you know which is probably talking 50 years a long time but it started the Chinese of the Chinese they're not the only funders but they're the main funder and they've already spent about 50 billion dollars and there's already about a thousand projects underway in different countries and a lot of the projects concentrate power supplies pipelines railways roads ports enterprise zones like York a leaf or the cleaver port here and then you've got a that you've got a developing enterprise zone around the economic zone we've been very successful in China and in other countries so the idea is to transform the Eurasian landmass which is home to some of the poorest countries in the world of course in addition to this the Chinese proposed the formation of a new Bank the Asian infrastructure Bank which was launched into fifth 2015/2016 and originally the idea was just an appeal for countries in East Asia in Southeast Asia and in and South Asia that's in Indian subcontinent and also in Central Asia and virtually all those countries not quite sold Japan didn't sign up and South Korea initially didn't sign up but then the UK suddenly out of the blue joined and then lots of countries so it's now nearly got a hundred members so this is the first big initiative I mean China had never done anything like this before it's China never taken an initiative to form a bank or any multinational institution but suddenly it made this proposal and it's been an enormous success and the bank is now in existence their headquarters are better in Beijing but the those who are running the Bank are extremely multinational and this for example there are three of the twelve directors come from the Middle East and so on so on and so forth so you began to get this the this you can see how China has become classically in this form the belton Road a really important mover on the global scene and this the future of globalization is this you know the Western globalization is actually being as you know in a lot of trouble with Trump with brexit and so on and I think the future of it is is this but the future of it is very different because of the first phase of globalization the Western one was really first and foremost for the developed world although the developing world like China and so on did well some parts did well some parts did badly and I think the future here is essentially the developing world for the next phase of globalization the other major development I suppose in China in this period with Xi Jinping has been a shift in the kind of way they think about the Chinese economy and what the Chinese economy is I mean you know you know how it started the great change in China started essentially by making really cheap goods for export markets and and of course the labor was very cheap China was very poor and there were many people in the interior provinces of China who who had very very very very badly paid rural jobs so there was a huge migration across China to the southern provinces where the industry initial industry was constructed and this the this was the engine of China's transformation so it was a it was in its what you do when you're just getting started economically when I mean at that point I think about 80% of the population live in the countryside now it's a minority live in the countryside it's the country's become you know those who've been to China if you go to some parts of China politically on the eastern seaboard and so on they are very very modern extremely money got a city like Shanghai and or Shenzhen and it makes lots of European cities look out of date so there's been this huge transformation now the problem was that you know as China became more successful then living standards began to increase wages we're going to increase so they price themselves out of the market for making these cheap goods toys textiles and what have you so they went off to other countries that were poorer Vietnam Indonesia Bangladesh and so on and meanwhile China began to value its production yeah that's the way that the value chain can work if you're successful and so what happened basically China was no longer where it was it couldn't have that kind of economy it couldn't just be based on cheap production cheap labor for low-skilled not much sophisticated a capital equipment for export markets it needed to change and so join the Xi Jinping pair the other big shift has been what type of a car me and to basically try and move towards a much more sophisticated economy making high-value products with a well well-trained labor force and with very good capital equipment and not least for domestic consumption in other words although China's the biggest exporter in the world not to be so dependent on exports and so we China moved into a new phase now and and it has to do that if it doesn't it will get stuck if it doesn't make that shift it'll get stuck now what is very interesting about China now is it is people used to say to me well yeah China's gonna get stuck isn't it I mean the Chinese aren't inventive they're good at imitating they're good at copying but they're not good at create you know creativity and song well actually what is extraordinary about China is how quickly that transition is taking place China's become very innovative in a very short space of time I'm you know I go really I'm working on new books I've been in China for a third of the last two years and just between this year and last year I mean I'll just tell you anecdotally that there's a surprise I had was when I was I was in Shanghai they sought this last autumn and but and I am a year ago when I was in Beijing that general university this these these bikes started appearing you know and I thought I like quite interesting bikes I wonder where you can buy those from and then they started to spread a year later when I go to Shanghai they're absolutely everywhere across all the cities you know and this is bike sharing this is I mean China is the home the bicycles but with the right arrival of the car bikes went into decline but now bikes of the whole idea of cycling has become very fashionable again amongst all generations but of course especially amongst amongst younger people so so and you just stick you know everything's done I haven't got my phone with me but you know basically that the other side to China's transformation like this is mobile technology in that does it have you any of you heard of WeChat yeah how many of you use WeChat oh great ok good well I mean if you want to I mean basically when I went to Shanghai this autumn I couldn't believe it you know I was about the only person who was using cash they weren't using credit cards I don't use debit cards they use the QR code on their WeChat phone and they pay everything and the banking system is also which is some people think is much better modernized than the UK one so basically there's a few foreigners like myself who know sort of you know we have yet been entered this world so we're still outside it but you go and cure but it doesn't matter what generation of course the young people take too easy but older people lots of or everyone was using their phones to pay you just put it up to the sensor when you paid for you good good luck and you can do it for lots of things you can order your taxi that way you can pay all your bills that way you can you can fix just cinema ticket that way and so on I mean it's so suddenly you know China is making all any western city I've been to anywhere it states or in Europe and so on in certain respects already seem quite old-fashioned you know so and this has all happened within so I think the question well what's the Chinese what's going to happen to the Chinese economy I don't think there's any doubt it is not going to get stuck in the middle income trap it is going to make very rapid economic progress and and it has a very modern outlook I mean China's defer I think I think it's true to say China is the first country in the world to say to their all their car manufacturers China is the biggest car market in the world now it's about a third bigger third bigger than the American economy and that they've been structured all car manufacturers that from 2019 that is next year that 10% of their production must be electric vehicle that's not bad for a country that hasn't had the car very long and and so okay so that's a that's explaining how quickly China has changed and China's place in the world by let me just see which is the no no I did have that one never mind they were that's the membership in Asia and then they were the rest of the other countries joined and I mean they're another example while talking about the economy you know until five to ten years ago the only country in the world that had major technology companies of the new type web internet-based and so on was the United States Silicon Valley Facebook Google Microsoft and so on no other country Europe has completely failed to generate companies of this kind but in China over the last five to ten years especially the last five years suddenly the Chinese have you know they got Baidu which is the equivalent of Google as a search engine they've got Alibaba you probably heard of Alibaba which is much bigger than Amazon they've got ten ten cent which amongst other things is responsible for WeChat they've got Huawei which is we're missing something Huawei which is a manufacturer of very good phones and telecom equipment and so on so China is performing in the most you know the most modern tech sectors with with growing effect and in some areas as I say not all areas most areas I think it'd still be high in the United States but insofar as mobile technologies concern in some areas of mobile technology they're now ahead of Silicon Valley which is unit which is remarkable really and I mean I put I put this slide up was because these are these are the top Chinese brands in the top the top charts Chinese bands in the top 100 and it's just that if I'd shown you this five years ago it would have been mobile companies all your companies and so on and now the top ones at $0.10 China Mobile Alabama Baidu poha way it's just it speaks to the rapid change in the nature of the Chinese economy now what are the how to look how to think of the future well this is a projection of the size of various economy the biggest economies in the world by 2030 and just just remember I said at the beginning okay in 1980 the Chinese economy was one twentieth 5% of the size the American economy you know how things can change with such incredible speed the projection is that the Chinese economy will be thirty four percent of the global economy you know there's one third of the global economy by the way Chinese economy was one third of the global economy in 1820 so we're back back to the past really and then in India the second at nineteen percent and America is only fifteen percent and the American economy would be was not on this projection less than half the size of the Chinese economy and the EU 30 percent so if you put you in the u.s. together twenty eight percent it's a lot smaller than the the Chinese economy

Channel: Ideas Abu Dhabi

Views: 102,255

Keywords: Martin Jacques, Abu Dhabi Ideas Weekend, China, Belt & Road Initiative, When China Rules the World, NYUAD

Id: jJpJkYLQE1k

Length: 28min 32sec (1712 seconds)

Published: Wed Oct 24 2018