BARON LAUDERMILK - 24 September 2011

Since Chinese businesses and entrepreneurs have fostered a “go-global” attitude, a number of them are strenuously seeking access to Northern Europe in order to tap their offshore financial sectors, utilize their highly skilled and productive workforce, and to acquire their innovative technologies and groundbreaking ideas.

Invest Sweden, a Swedish government’s agency tasked with attracting offshore investments in Sweden, established a solid business relationship with the Chinese government and many Chinese business leaders.

Eddie Chen, the Invest Sweden’s vise-president, told China Daily in late September 2011 that, “Our China Office was founded in 2002, and Sweden is one of the earliest developed European countries that has set up an investment agency in China.”

In 2002, Invest Sweden and China’s National Development and Reform Commission (NDRC) signed a noticed that said both organizations are in agreement with each other, and the laws and regulations regarding the contract are transparent.

Since Invest Sweden and the NDRC signed the agreement in 2002, both organizations have been in routine contact with each other to discuss policies and two-way investments.

The establishment of the Invest Sweden agency in Shanghai has triggered waves of Chinese businesses to invest in Sweden. In only nine years, Invest Sweden has aided and consulted more than 250 Chinese businesses to invest and initiate companies in Sweden.

“About two-fifths of the investment projects are industrial, and the remainders are business-oriented; for instance, investing in real-estate and setting up operation centers,” said Mr. Chen.

Chinese businesses are aware that Sweden is a strategic location for centralized market operations in Northern Europe, and a prime choice for corporate and regional headquarters. In Sweden, business leaders and investors are not only granted access to Sweden’s economy, but they also have access to the world’s largest free-trade market--the European Union (EU). The EU consists of twenty-seven countries and more than 500 million potential customers.

The Swedish economy is renowned for its resilience in world recessions, its advanced manufacturing exporting logistics, its offshore financial service sectors, and its innovative technologies and worldwide networks. Chinese enterprises have recognized this and have made major strides in acquiring some of Sweden’s precious assets.

In early May, 2011, Hawtai Motor Group, a Chinese car manufacturer, attempted to invest over 200 million dollars in Sweden’s Saab Automobile. Hawtai was not investing in Saab to save the nearly bankrupt company, but because it wanted to have access to Saab’s technology and business connections.

Richard Zhang, vice president of Hawtai, said, “Saab brand will give Hawtai access to innovative technologies and an international network which would take decades to build.” Although the deal fell through in late May 2011, the discussions between the two companies still demonstrated the Chinese desire to heavily invest in the Swedish markets to gain access to innovative technologies and global connections.

The Sweden-China business relationships will strengthen over time. In the next twenty years, bilateral trade and investment will increase between China and Sweden. Bo Landin, chairman of Sweden-Trade Council Stockholm, said in an interview to Xinhua in 2010, “By 2020, the scope of trade and development between Sweden and China will be vastly widened.”

China’s interest in Sweden’s offshore financial sectors and productive workforce, compounded with the Swedish desire to tap into Chinese markets, will continue to strengthen the business relationships between the two nations.

BARON LAUDERMILK - 19 September 2011

China’s Premier Wen Jiabao said on September 14, 2011, at the World Economic Forum in Dalian, China, that the Chinese government remains able to purchase European debt, but advises the European governments to drastically cut deficits, liberalize markets, and implement a multitude of financial measures to alleviate the crisis and reestablish credibility and trust in the euro.

Mr. Wen’s advice to the European governments was necessary and even needed. For more than a year the European Union (EU) has experienced a grave debt crisis, which its leaders appear unwilling to solve. Mr. Wen’s concerns that the European markets revitalize suggest that even China, the world’s most rapidly developing economy and increasingly the leader in global economic growth, is unable to avoid the crisis that began in Greece in 2010.

The Euro Zone’s economic crisis is partly caused by Greece’s massive debt and rising deficits. Mr. Wen’s words of advice to the European governments on how to become economically stable are correct. According to many Western economists and The Economist, austerity and massive cuts are the key to solving the crisis. These radical measures would include privatizing companies, delaying retirement, liberalizing professions and services, and reducing the bloated bureaucracy.

Europe’s unwillingness to quickly resolve its problems is beginning to affect the Chinese economy. The European Union is China’s largest export market. The EU’s current economic crisis is negatively impacting China’s export trade, the reminbi (rmb), and Chinese ability to import goods. China’s exports to a few EU countries have dropped in the last few months. In March and April, imports from China into Spain fell drastically, and in May imports from China to Portugal fell by 11.6%.

The EU’s economic crisis is affecting Chinese business not only with the severely economically devastated EU nations, but also with wealthier and more stable EU countries. Imports by Denmark, France, and the Netherlands have dropped sharply. Even more importantly is that imports by Germany, the Euro Zone’s main economic engine, have also severely decreased.

Nor is the rmb safe from Europe’s economic problems. China’s state administration of foreign exchange pointed out that the rmb’s incremental appreciation will be affected by the European debt crisis. The weaker euro is forcing the Chinese rmb to strengthen, which is reducing Chinese profits in almost all industries.

Young people on Weibo, China’s version of Twitter, which has over 70 million members, have expressed their resentment towards Mr.Wen’s willingness to help bail out the Euro Zone. One user posted “The Chinese government should use their reserves to build schools and healthcare in China, let the Europeans take care of themselves.”

The question becomes, should China be purchasing European debt knowing that Greece and other European nations could be insolvent. Mr. Barry J. Naughton, a professor of Chinese economy who teaches at the University of California, said that the Chinese are purposely being vague about their intentions until they can find more lucrative opportunities in Europe.

“The real question is whether it should buy more now for political reasons (or because it thinks it will end up a good deal). It seems to me that the best policy from China’s standpoint is to express vague willingness and support but not really do anything major until there are further opportunities or proposals from the Europeans”, said Professor Naughton in an email to World News Report.

Li Daokui, a member of the monetary policy committee of China’s central bank, said at the World Economic Forum in Dalian, China, on September 14, 2011,“I don’t think any country can be saved by China in today’s world. Countries can only save themselves by pushing through reforms.”

But Mr. Wen did not just offer the Europeans a golden nugget. During his speech in Dalian, Mr. Wen made an unprecedented move for China. He offered to help the Europeans under the condition that they renounce the last obstacle against cheap Chinese products.

Mr. Wen encouraged the EU to change China’s current classification from a “nonmarket economy” to a “market economy.”

This means that the European Union will not be able to impose tariffs on Chinese goods. By keeping China classified as a nonmarket economy, The EU can compare Chinese products’ prices with other low-cost countries. In other words, if China’s products prices appear too low, which could be caused by a variety of reasons, the EU can impose tariffs.

Regardless of whether or not the European Union decides to reclassify China’s market status, the fact is that Europe’s current situation desperately needs international loans. One of the best contenders for this deal right now is China because to the access to resources and willingness to offer assistance.

China giving Europe a helping hand will not only help stabilize Europe’s economic crisis, but it will also give China more influence in the region and the world. Carol H. Shiue, a professor of economics at the University of Colorado at Boulder agrees.

“Even though there is a risk of default, by buying up European debt and becoming Europe's creditor, China can trade some of its considerable foreign earnings for political influence in Europe. Imagine China imposing financial conditions on Europe--that certainly expands China's global importance to an entirely new level” said Professor Shiue.

BARON LAUDERMILK - 13 September 2011

Three years after Mao Zedong’s death in 1976, the Chinese government implemented a widely controversial policy to halt its rapid population growth, the one-child policy. This policy limits the number of children the majority of Chinese (specifically Hans) families can  have. The Chinese government has claimed the law has prevented 400 million births, about equal to of the combined populations of the United States and Canada. Beijing has stated that despite the international and internal criticism that the law has endured, the reduction in the nation’s population growth has brought many socioeconomic benefits to its people.

The communist leaders have suggested that the lower fertility rate, which has fallen drastically since the 1980s, has contributed to an increased savings rate for the average Chinese household. Their logic is that since millions of urban households only have one child, they will utilize fewer resources, and in turn save more money and  time, and invest their extra resources in education, health care, and business. The government gas made the bold claim that the one-child policy is directly connected to China’s unrivaled economic growth. According to the government, the reduction in the demand for  resources, and the lower unemployment rate, have made maintaining a steady labor force more practical and manageable.

The one-child policy has directly and dramatically contributed to the reduction of China’s fertility rate. We can see this in the government’s many initiatives. Since the introduction  of the one-child policy, thousands of abortion clinics have emerged in almost every major city. Access to birth control and other protections has become  more prevalent. Because many of these measures have affected only city dwellers, the Chinese government created mobile abortion clinics to travel around the countryside to promote abortions and sterilizations.

The Chinese government has also used the media to encourage urban dwellers and rural peoples to only have one child. In the 1980s and early 90s, posters could be seen with slogans such as, “China Needs Family Planning, and “Have Fewer Children Live Better Lives”. The government even gave rewards to people who supported and encouraged others to have one child. Parents who had one child would get a “one-child glory certificate,” which entitled them to certain economic benefits. The law also offers extended maternity leave, which includes other benefits for couples that delay childbirth.

The one-child policy has also affected China’s reduction in its fertility rate by using coercion and punishments to discourage couples from having multiple children. Couples can be fined thousands of dollars for having supernumerary children without obtaining a permit. The typical fine is sometimes five times that of an average Chinese family’s salary. If fines are not paid, homes and land may be confiscated.

The Chinese government has also violated women’s bodies by using coercive tactics to keep the fertility rate low. There are many reports claimed that forced abortions and sterilizations are common throughout rural and urban China. There are even reports of babies being aborted in their third trimester, and even immediately after birth. In the mid 2000s  claims were made of authorities randomly raiding rural areas looking for unregistered children and forcing woman to have abortions if they already had a child. Reports of pregnant woman being thrown jail and told to have abortions are also prevalent.

Many scholars and human rights activists have argued that the one-child policy has not correlated as directly China’s lower fertility rate as the Chinese government claims it has. They have a point. Rapid economic growth, the rise of the population’s education, and women’s access to education and employment would inevitably have reduced the fertility rate. We can see this by looking at other nations, including developed Asian nations, which have lower fertility rates. But it is difficult to argue that the one-child policy has not reduced the fertility in China. The fact that the Chinese government has for so many years used a wide range of tactics to prevent and discourage couples from having more than one child has definitely had an effect on the fertility rate.

I suggest that the Chinese government’s  persistence in preventing couples from having a second child has caused a sense of fear, internal pressure, and even anxiety that is now ubiquitous throughout Chinese society. The social pressures and coercive tactics used by the Chinese government has used on its citizens to prevent families from having multiple children, are causing profound problems throughout rural China, and even amongst the lower and middle classes in Chinese cities.

This pressure the Chinese government constantly places on the people, compounded with the are major penalties for having multiple children, has caused unprecedented social problems.

                                                Too Many Men and Not Enough Women

According to the most recent census data, there are 120 men for every 100 women in China.  In other words, there are too many men and not enough women. At no time in history has there been such a dramatic shortage of women in a society. The closest humanity has come to China’s present situation was is after World War I in Germany, Russia, Britain and France.

Some people have  argued that because of a certain part of Chinese culture that prizes the birth of boys over girls, couples historically have taken steps to ensure that their first child is a boy. This may have had a small effect on the disproportionate gender ratio, but to make the gender gap so wide is unlikely. It is my opinion, along with those with many others, that the one-child policy is possibly the main contributor to China’s gender imbalance. The repercussions in China’s society are deep.

China’s gender imbalance has made it very difficult for men to find wives. Some men in China have become so desperate to find a wife, that they have resorted to human trafficking. Chen Shiqu, head of the Chinese government agency that is attempting to reduce human trafficking, has said that the great demand for women in China is “fueling the culprits.” Many of these women are coming from Yunnan, Guangdong, and even from countries outside China, including Vietnam, Burma and Laos. The one-child policy is partially contributing to the female human trafficking in southern China and neighboring nations.

The more fortunate bachelor’s are resorting to newspaper ads and other legal but odd methods to attract wives. Some of these advertisements have highlighted that their home has a “good bathroom.” Even some Chinese men who have careers, a home, and a car, are having difficulty finding  wives. Sometimes their mothers go to parks while their sons are at work to help them find a wife. Less fortunate men have resorted to purchasing female prostitutes (there is a rise in prostitution in all major cities in China), by deceiving women by offering phony job offers.

The lack of women in China has also caused a major rise in crime. An associate professor of economics at Columbia University, Lena Edlund, has found that “a one percent increase in the ratio of males to females equates to an increase in violent and property crime of as much as six percent, suggesting that male sex ratios may account for 28 to 38 percent of the rise in crime.”

                                                Time to Rethink the One-Child Policy

The one-child policy was an attempt to reduce China’s fertility rate the people behind it had good intentions. They saw that China’s rapidly growing population was rapidly growing, and it did appear that hundreds of millions of people would consume China’s resources, and possibly cause social, economic and political instabilities. But now China’s population is more or less under control. For the most part, China’s population is growing at a steady rate, and the one-child policy has prevented 400 million births. But some of the methods employed to prevent these births were morally reprehensible. Chinese society will have a difficult time dealing with the extreme gender imbalance, and its many repercussions in the next few decades. It is time that China rethink, revise or abolish its one-child policy.