The end of China’s peaceful rise.docVIP

The end of China?s peaceful rise China?s relations with its many neighbors have undergone significant change over the past two years. A decade of warming relations with most of them, encapsulated in the phrase“China?s peaceful rise,” have become more complicated for reasons which have more to do with regional and global circumstances than any specific changes in Beijing?s policies. The “peaceful rise” period dates from the 1997-99 Asian financial crisis when China was seen to be a helpful by not devaluing its currency – though it had devalued two years previously. This helped crisis countries recover on the basis of rapid export-led growth, since huge currency devaluations made their exports relatively cheap. China also benefited in the wake of the crisis from Asian resentment at attempts by the IMF and other western agencies to impose economic reforms. The next phase of China?s “peaceful rise” was characterized by the rapid growth of trade both in anticipation of and then subsequent to its entry into the World Trade Organization in 2001. Some Southeast Asian countries worried that the massive inflow of foreign invest- ment into China, much of it for export processing, damaged their own prospects for attracting such investment which had driven their rapid growth in the two decades before the crisis. But with their own trade with the West continuing to grow and their current account surpluses swelling, China?s rise was seen more as an opportunity than a threat. China?s demand for raw materials began to rise, and the country started to play a much bigger role in East Asian manufacturing systems that increasingly underpinned world trade. Further strengthening ties was that China?s opening was an attraction for ethnic Chinese who orchestrate much of Southeast Asian business. For Japan and South Korea, China provided not just a new low-cost location for offshore manufacturing for export but an increasingly important market for capital goods and high-end consum