Fdi In China

China and its Growth

China’s growth has just not affected their neighbors but also has effect many aspects of their economy and the quality of life of their residents. China’s affect on their neighbors has risen because of the amount of resources that it has required because of the growth of the economy. The account for about a fifth of the world’s population but they use half of the world’s pork, half of the cement, a third of it’s steel and over a fourth of it’s aluminum. They have increased it imports on soy bean and crude oil by 35 times since 1999. The International Energy Agency expects China’s import on oil to triple by 2030. China has used over 80 percent of the world’s consumption of copper since 2000 (Economist.com). In its effort to maintain its resources, China has begun pouring money into undeveloped countries so that it can secure access to their physical resources. Some of the counties include war-torn Congo and Sudan. The Congolese government announced that Chinese state-owned firms are going to build and improve railways, roads and mines around the country at the cost of $12 billion, in exchange for the rights to mine the copper ore to the same amount. In Sudan, China has begun to invest into their oilfields and purchasing their outputs. These investments have allowed Sudan to shrug of Western threats and sanctions. These activities have had some backlash from other government and non-government groups. The most recent in the news was when Steven Spielberg resigned as an adviser to the Beijing Olympics in protest at China’s failure to act against the violence in Darfur. A large amount of criticism came from China’s official media (www.economist.com).

Another issue that has risen from China’s growth is the amount of pollution. Pollution is the cause of ever more protests and demonstrations. There were some 60,000 in 2006 alone, by the authorities' own count. Some are led not by peasants but by well-organized groups from Shanghai and Xiamen (www.economist.com). And the potential for even more disruptive environmental crises is great, because there is not enough water in the Yellow River basin, which covers a huge swathe of northern China, to supply both farmers and factories. Acid rain from coal-fired power plants is reducing agricultural yields, raising the amount of rural unrest. As it is, the authorities are struggling to ensure that the air will be fit for athletes to breathe at the Olympics in Beijing this summer. All the while, the number of noxious steel mills, cement kilns and power plants relentlessly increases. Global warming, which is fed by their fumes, will make all these problems even worse. The government is aware of these problems, and is trying to address them. It has increased fines for pollution, reduced subsidies on fuels and scrapped tax breaks for heavy industry. It is also promoting cleaner sources of power, such as windmills and natural gas. Yet despite frantic efforts to clean up Beijing in time for the Olympics in August, athletes still doubt the air will be fit to breathe. The world's fastest marathon runner, for one, has threatened to drop out of that race because of pollution. All the government's green schemes are being undermined by an artificial abundance of cheap capital, and by bureaucrats' enthusiasm for channeling it to large industries. Chinese banks, with the government's blessing, pay negative real interest on deposits and so can lend to state-owned firms very cheaply. Many of those firms also benefit from free land and pay negligible dividends to the state, leaving lots of money to invest in more dirty factories. Chinese depositors and taxpayers are paying for the industries that are slowly destroying the country around them. China is bound to consume enormous amounts of raw materials as it develops. But given how polluted the country already is, and how much unrest that pollution is causing, it should curb its hunger for resources. A less wasteful development strategy would be a healthier one.

One agreement from joining the WTO,