...ELECTRONIC ASSIGNMENT COVERSHEET | | Student Number | 31963763 | Surname | Dendup | Given name | Tenzin | Email | Dendup.tenzin3@gmail.com | | | Unit Code | POL161 | Unit name | Asia Pacific in the Global System | Enrolment mode | Internal / external | Date | 13/05/2013 | Assignment number | 2 | Assignment name | Rise of China and Its Security Risk to Australia | Tutor | Kreisti Nillus | Student’s Declaration: * Except where indicated, the work I am submitting in this assignment is my own work and has not been submitted for assessment in another unit. * This submission complies with Murdoch University's academic integrity commitments. I am aware that information about plagiarism and associated penalties can be found at http://www.murdoch.edu.au/teach/plagiarism/. If I have any doubts or queries about this, I am further aware that I can contact my Unit Coordinator prior to submitting the assignment. * I acknowledge that the assessor of this assignment may, for the purpose of assessing this assignment: * reproduce this assignment and provide a copy to another academic staff member; and/or * submit a copy of this assignment to a plagiarism-checking service. This web-based service may retain a copy of this work for the sole purpose of subsequent plagiarism checking, but has a legal agreement with the University that it will not share or reproduce it in any form. * I have retained a copy of this assignment. * I will...
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...The rise of China and the impact it will have is the subject of much speculation. In his paper, “Will China’s Rise Lead to War?” Glaser (2011) looks at this issue. Glaser contends that the outcome of China-U.S. relations is not predetermined to be a repetition of the U.S.-Soviet Cold War or even a hegemonic war as per the standard realist’s view, nor does he agree with the liberal view that the current international order will accept China’s rise peacefully. Glaser’s thesis is that major confrontation can be avoided; he argues that the forces that could create a hegemonic conflict between the two powers are weak; that the greatest dangers will be created through “secondary disputes.” Glaser also contends that the US will have to make concessions alliances to China regarding U.S. to avoid a major clash and that the way the two nation’s leaders handle those issues will determine the eventual outcome. To the world China is an unknown actor upon the world stage, a communist regime that until 1980’s was for the greater part a closed country. Today as a growing world power, both economically and militarily China like any nation requires respect, security and economic growth and development for her people. In this endeavor China has created something of a security dilemma as no one really knows what role China will seek, what she will demand from those nations around her, nor the consequences of these desires. John Herz (1950) describes a security dilemma as being when a state...
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...John Mearsheimer takes a neo-realist viewpoint in his 2010 article on “Australians should fear the rise of China”. The validity of his arguments can be assessed, but, ultimately, a more satisfactory argument can be formulated in refuting his realist perspective; neo-liberal theories, drawn from liberal scholars such as Joseph Nye, uphold the counter argument that Australians should not fear the rise of China. China has already surpassed the United States as the world’s largest economy, and it will undoubtedly continue to grow and develop; estimates suggest that even if economic growth slows down, China is still likely to develop a high-income economy before 2030 (The World Bank 2013). As a result of its growing economic strength, China has...
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...Question 1 1. Evolution of RMB against USD, EUR and JPY. Figure 1 Figure 1 represents movement between the nominal and real exchange rates of Chinese renminbi (RMB) against US dollar (USD) between from January 2005 to December 2013. It shows that the nominal exchange rate of RMB/USD is higher than the real exchange rate throughout the period of observation indicating that the RMB is undervalued. This clarifies that the USD is buying more RMB in nominal terms than it should be in real terms. The increase in nominal exchange rate of RMB/USD is termed as a nominal depreciation of the currency after de-pegging whereas the real exchange rate of RMB/USD continues depreciating in the years of observation as shown in Appendix 2. It also shows that the RMB was depreciating against USD in every quarter after de-pegging. Table 1 compiles the average quarterly percentage of over-or-undervaluation of the RMB against USD, euro (EUR) and the Japanese yen (JPY) from January 2005 till December 2013. Before the de-pegging, the RMB was found to be overvalued by of 1.19% against the USD in January 2005 then it was discovered to be undervalued since March 2005 by 0.58%. The RMB continues being undervalued against the USD and reached its highest percentage at 28.49% in March 2013. By December 2013, the RMB was still undervalued by 28.35% against USD. Overall, the RMB was overvalued against the USD by 16.94% in the period of observation. Figure 2 Figure 2 demonstrates movement of the nominal...
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...large-scale developments and improvements for those emerging economies. Emerging economies are growing at a high rate, which is giving them an economic importance as their share of the world total GDP is still growing (IMF, 2014). However, many factors are challenging the rapid growth of emerging markets. In fact, in some countries such as Turkey and Brazil, it’s proving difficult to achieve a sustainable growth due to political risks. In terms of opportunities, emerging markets are the most promising because they are very rich in human resources (China and India) and natural resources (oil in Middle east and energy in Russia). The financial crisis in 2008-2009 has given the emerging markets more confidence to take the lead on the international level. In my opinion, the opportunities for emerging economies are big because they are experiencing a lot of social and political developments and on the long-term nations like China, India, Russia and Brazil will be centers for economic growth and prosperity. In fact, in the last 50 years emerging economies such as China, India and Brazil grew more than 600% compared with 300% for developed economies (The Financial times, 2014). In their latest book, Emerging markets; Eswar Prasad and Ayhan Kose explain that over the last two decades emerging economies share of global GDP, foreign investment...
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...It is a state that has many disputes with neighboring countries, the same countries that have experienced Japanese domain during the Second World War and are not happy to be controlled by the other strong power of the area. Furthermore, China is not a country that can be appealing for the rest of the world. An authoritarian state, in which its citizens do not enjoy many individual liberties, is not something that attracts many people worldwide. It is appealing to those authoritarian states that are desperately trying to contain their population, because a stable economic growth can alleviate social tensions, but even China is going to have political problems relating to an increasing middle class and an increasing demand for civil...
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...early 80s, the new policy that opened China to the world had gained great impacts on this country’s economy. To have a further understanding about the China’s currency, we analyze the historical movements of the Yuan (CNY) towards its trading currency pair – the US Dollar (CNY/USD) in a 20-years period till now, argue the policies adopted and other factors that caused such movements of the Yuan in the past. In addition, how arbitragers buy and sell CNY using 2 point, 3 point and covered interest rate arbitrage to make profit in reality is also explained in this report. 2.0 Historical movements of the CNY/USD A flexible exchange rate is a system, which allows exchange rates to be affected by the supply and demand of its currency. It is unstable due to the low elasticity of import and export, which may cause depreciation in the currency, which leads higher levels of inflation. As China is a country with an undiversified export producing industry, it is unlikely that it would adopt this system as when the exchange rates rises, exporters would find it in their favor as they would be able to sell their goods cheaply aboard. However, importers are unhappy with the undervalued CNY as the price they would have to pay for goods would be more expensive and would seek to decrease the exchange rates. This would cause uncertainty with regards to investments and trade. However, Mr Guan, a senior official from China foreign exchange state that if China were to continue the peg with USD, when...
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...and Japan. The most current countries to join that list are India and China. However, whether they stay that way has yet to be seen. The Elephant and the Dragon written by Robyn Meredith takes a look at both countries’ rise to economic superpower status, and how it affects us now as well as the future. To achieve this Meredith begins with a recent history of each of the countries by examining the political and social factors related to the each of the countries’ rise. This is followed with a look into some of the economic similarities and differences between India and China as well as how the reforms both countries have in place affect U.S businesses and citizens. Through this process Meredith truly gives a truly complete experience with past, present and future analyzed. Unfortunately, there are certain areas of the book where issues with the material and Meredith’s interpretation arise. The first two chapters in The Elephant and the Dragon delve into the pasts of China and India, and the policies that made their growth possible. Meredith begins her look into China by looking at the effects of Mao’s rule. A major point that is brought up is Mao’s policy to collectivize farming. The policy to collectivize farming resulted in a 40% drop in agricultural production and therefore a decline in the standard of living. The first of the positive economic reforms began taking place in the late 1970s with the rise of Deng Xiaoping. With his new position as leader of the communist party...
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...Reference…………………………………………………………………………………………………….11 Executive summary This report is about a business plan that intends to attract investment from angel investor. From the beginning of the report, a rough description of business will be provided that include how much amount of currency should be borrowed and how the company will run this business. In the second part of report, a lot of details about the product will be stated and also the target market and customers, the competitions, the location will be provided. In the third part, how the financial services should be choose and what skilled of staff should be hired will be supported. Furthermore, the mainly yearly budget and cash flow statement. In the last part of the report, the risk that will possible rise in the business will be analyzed 1. Introduction According to the scale of the business and all the cost be analyzed, there is totally $100,000 need to be...
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...trying to resolve. That’s why understanding goals and barriers of this Far East country is especially difficult, not only for us, but for the most of businessmen around the world. First part of our research will be focused exactly to these issues. So, let’s get to the point. Globally, what does China want and what problems is it facing? We will start with the presumed assumption that China wants to beat USA and become worlds leading economy. But first, we must emphasize that Chinese government never actually said these words. The biggest reason for that is the fact that China obviously doesn’t want to accept responsibilities which they will automatically undertake from USA if they become world’s leading economy. These responsibilities include the role of world policeman and the role of being the trigger for major changes in the world. There is also the fact that some other countries will automatically try to follow China’s economic politics, so they will be in a risk to lose their comparative advantage. We can backup this with government statements: “We don’t want that other countries follow our example and our politics in any way”. (CCTV Dialogue) When you look at China’s rise one thing couldn’t be neglected. The...
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...In advising ABC Motor Company on the subject of opening manufacturing facilities in Asia, Karim Global Consulting Firm would like to present the risk factors of two companies in the automotive industry which already operate in two different Asian countries. In order to present two very different regions for consideration, we have selected to review General Motors operations in China and Ford operations in India. We will examine risk factors that should be taken into consideration before entering the global market, such as political and economic risks. There is considerable concern regarding the economic stability in India, as the country’s stock market, the Sensex, fell by twenty-five percent last year, which put the country in last place among all major world economies. Additionally, the country’s currency, the rupee, fell sixteen percent, which was the worst in all of Asia. These decreases are in large part due to worries regarding the country’s current account deficit as oil imports trump the country’s level of exports. With the rupee falling, inflation has been high in India. However, inflation in food prices fell drastically in December, raising hopes that general inflation rates will follow in the long run (Daniel, 2012). Although India is the third largest economy in Asia, growth has fallen to its lowest rate in two years, 6.9 percent, by the middle of last year. (Daniel, 2012). However, though this information looks grim, India is not in any immediate danger...
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...Abstract With the rise of China, following the enhanced economic and trade relationship between China and Asian economies, and China’s increasing importance in the world economy, China’s national currency, the renminbi (RMB) will be getting global from Asia. As regional internationalization of RMB is doubleedged, in order to eliminate the financial risks brought by this process, maximize the benefits, it is necessary for China to consider the trade off between costs and benefits of RMB internationalization. RMB internationalization is a dynamic process, in accordance with the different level of the process, the phased strategy should be implemented, and the corresponding policies should be pursued too. Key word: RMB internationalization Cost and benefit Roadmap Introduction If you travel in the Asian region, you will notice that the Chinese renminbi is appearing more often in shops and restaurants, driven by the rapid growth in mainland tourist volumes. Will Chinese Renminbi be the next world currency? Since 2000, RMB internationalization has attracted great attention from the policymakers and the academics both at home and abroad. There is sizable RMB circulation in China’s neighboring countries and economies, even RMB can be fully convertible in some developed countries, some of neighboring countries and economies treated RMB as a reserve currency. This is a new economic phenomenon for both China and the world...
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...Part 2 Introduction China’s export growth and penetration have been remarkable. While China was basically a closed economy 30 years ago, it is now the leading exporter to Japan, the second leading exporter to Europe, and the third leading exporter to the US. This surge in exports has been accompanied by growing trade imbalances between China and the rest of the world. China’s global current account surplus equaled 9% of Chinese GDP in 2006 and 11% of GDP in 2007 (Thorbecke & Smith, 2010). These surpluses are primarily with the US and Europe. Due to these factors, the exchange rate policy of China has attracted a great deal of attention in academic, industrial and political arenas. With the emerging China economy as the largest reserve country and the largest “world factory”, the Chinese renminbi (RMB) exchange rate has been the centre of ongoing debate over the source of global current account imbalance, especially with the United States (Sato, Shimizu, Shrestha & Zhang, 2012). Since the direct peg to the dollar was ended in 2005, the RMB has continued its appreciation about 6% per year and enhanced flexibility over the past 7 years. However, appreciation pressure on the RMB remains intense and it is still debatable whether and to what extent the current level of the RMB exchange rate is overvalued or undervalued. Issues Political Influences One of the main reasons for the appreciation pressure on the RMB is the US’ claim that the Chinese government has made the...
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...The Risks of Doing Business in China Despite recent measures to curb corruption, foreign investors doing business in China must remain vigilant. Tuesday, June 04, 2013 , By Jim Barratt and Jimmy Ko China's economy is the second-largest in the world and continues to grow at an astonishing rate. Just recently, in fact, the Asian Development Bank forecasted that China's economy will grow by 8.2% this year. However, while economic growth brings business opportunities to all investors, continued widespread corruption in China has affected its government's legitimacy in maintaining prosperity in the region and can bring a multitude of risks to financial services companies that are doing business there. With China's recent transition to new leadership complete, it has been interesting to observe the ruling party's heightened focus on tackling corruption. Under China's new president, Xi Jinping, it has conducted a visible anti-corruption drive and imposed austerity measures in an effort to curb the display of wealth by government officials and generate goodwill among the Chinese population. While critics say that the recent measures target only the most conspicuous displays of wealth by government officials, the anti-corruption drive has already netted dozens of officials. Moreover, some perceive that the recent election of Wang Qishan as the new head of China's anti-graft body, the Central Commission for Discipline Inspection (CCDI), signals that the financial sector could...
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... 1. Renminbi Deposit Since 2004, the Chinese government has reinforced the Hong Kong as an offshore renminbi business centre. Hong Kong is the largest renminbi liquidity pool outside Mainland China, and the gradual rise of the amount of renminbi deposit supports other renminbi businesses in Hong Kong. Between September in 2010 and September in 2010, the total amount of renminbi deposit has risen more than 300% from RMB149 billion to RMB622 billion. The rapid increase could be accounted for the poor performance of the equity market, leading to the search for another alternative investment for investors’ savings. When equity market is not doing well, RMB deposits and debt instruments could be no doubt the alternatives. Secondly, the expectation of the appreciation of renminbi has led to a rise of expected return on renminbi deposit, which increases the value of the renminbi, and it attracted more investors to deposit their money in reminbi. Comparing to the low Hong Kong dollar-deposit interest rate, which is around 0.1% because of following U.S. interest rate, Hong Kong dollar deposit became less attractive. Third, the cross border RMB trade settlement and the signing of the Supplementary Memorandum of Cooperation between the Hong Kong Monetary Authority and the People’s Bank of China on RMB business showed the determination of the support on Hong Kong’s renminbi offshore market. Owing to the exchange rate, interest rate, and the support from the Chinese...
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