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The Emergence of China in the Global Economy

The Emergence of China in the Global Economy

This video was recorded at MIT World Series: Back to the Classroom 2004. Napoleon admonished the world to beware an awakened China. 200 years later, Lester Thurow traces the astonishing rise of this economic giant. In contrast to Russia, says Thurow, China solved the problem of moving from communism to capitalism in less than two decades. Starting in 1978, Chinese leaders ended communes and gave hectares of land to industrious peasants. Leaders also tested private enterprise in a succession of cities. By the mid 1990s, "the time had come to play the international game," says Thurow. China sought technology and foreign investment. But "how do you sell a country"? According to Thurow, China decided, "We're the cheapest place to make everything." Foreign firms flooded in, selling equipment to China, or making products there and selling them back to the developed world. But now there are problems: China has no regulations for maintaining intellectual property rights, so Chinese companies pirate Western technology and products with impunity, and undersell the foreign firms that have invested in them. Also, Thurow believes tales of China's phenomenal growth are often just that – fictions sold by bureaucrats to rate a promotion. "China is a great success but it's not growing at 9 to 10% a year." Finally, divisions between prosperous cities and stagnant rural areas threaten long-term stability in the People's Republic.

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