|Written by Pao-yu Ching|
|Tuesday, 23 October 2007 18:37|
The following sections provide background information for the discussion of these questions.
I. China's Capitalist Development and Its Rise to becoming the Regional Power
This background information will be useful for looking into future developments and for your discussions on the impact of China's FTAs on labor, local industry and natural resources in individual countries, as well as for finding the appropriate resistance strategies.
I. China's Capitalist Development and Its Rise to become the Regional Power
China's capitalist reform that began in 1979 fundamentally changed class relations in China. Domestically, the reformers dissolved the commune system in 1984, at the same time they proceeded to privatize the State owned enterprises and turn labor power into a commodity. By the early 1990s China's current regime basically completed its domestic reforms. Internationally, in the mid-1980s China began to reform its institutions and procedures regarding international trade and investment in order to prepare for its accession into the WTO. The reforms in this area include opening up its domestic market for foreign goods and services and granting favorable conditions for foreign investments. The goal has been to fully integrate China's economy into the international capitalist system.
China's economic influence was first felt in Southeast Asian during the aftermath of the 1997 crisis in Asia. China's firm decision not to devaluate its currency, the RMB, was a stabilizing force at the time when currencies of almost all Asian countries, with the exception of Japan of course, were going through several rounds of devaluation. Before the immediate crisis was over, China spent large sums of its foreign exchange reserves to defend both the RMB and the HK dollar.
China's rapid economic growth in the past decades, especially since 2000, has seemed very impressive; China has maintained a 10% growth in GDP and a 20% or more growth in exports in more than a decade. These accelerated rates of growth have been directly related to large foreign investments from the key imperialist countries: the United States, The EU, and Japan. These industrial powers saw that the capitalist reform in China was genuine and that the opening up of China's economy was more than satisfactory, prompting them to start shifting large sums of investment from South East Asia to China. The large outflow of foreign capital was in fact the immediate cause of the crisis faced by these countries. In 2001 China received 9% of the world's available foreign investment - five times the 1.7% received by the ten ASEAN countries. According to one estimate, foreign firms have invested $500 billion in China and accounted for 25% of China's total manufacturing output. (Harvard Asian Quarterly: Sizing Up China and India's Ascendance in the Global Age.)
Thus, China replaced the so-called new tigers: Malaysia, Singapore, Thailand, etc. and became the new manufacturing base for the multinationals. China's exports of low priced manufacturing products, which took off at the end of last century and have grown at increasingly faster rate, seem unstoppable.
China now has a trade surplus with all three major imperialist countries "" the United States, the European Union, and Japan. Since 2000, the United States has had its largest bilateral trade deficit with China ($201 billion in 2005, a 25% rise over 2004). In 2003, China replaced Mexico as the second largest source of imports for the United States. The United States is China's largest overseas market and on a cumulative basis is its second largest source of foreign direct investment. U.S. exports to China have also been growing rapidly. (CRS Report for (US) Congress: China's Trade with the United States and the World, updated January 4, 2007)
China's bilateral trade with EU also increased, quickly reaching 254 billion euros in 2006. China has displaced the United States to become the EU's largest trading partner. In the 1980s EU had trade surpluses with China, but by 2006, its trade deficit with China reached 128 billion Euros.
China's trade (including Hong Kong) with Japan reached $213 billion in 2004 accounting for 21% of Japan's total trade and replaced the United States as Japan's largest trading partner. (Washingtonpost.com, January 27, 2005, E01)
Since 1995, Sino-ASEAN trade has risen 15% per year then the rate of growth accelerated. The total Sino-ASEAN trade reached $161 billion in 2006 - tripled the amount of $54 billion in 2002 in merely four years. (Beijing Review, updated August 7, 2007) ASEAN's trade with China overtook its trade with the United States and its trade with the EU.
China has indeed risen as a regional power in terms of its GDP growth and its growth in trade with countries in Asia and outside of Asia. Trading with China has become increasingly important for its Asian neighbors. However, this statement needs some qualifications. We need to note that much of the trade China has with its neighbors is related to China's new position in the international division of labor, which is controlled by the powerful multinationals. Large quantities of trade between China and other Asian countries as well as its trade with the United States and EU reflect that reality.
The bulk of China's exports are manufactured under foreign brand names, and over half of China's exports are produced by foreign-owned companies, so closer trade relations between China and other Asian countries often means intra-company trading of global multinationals. For example, China purchases heavily from its Asian trading partners - goods such as precision machinery, electronic components, and raw materials to be used for its manufacturing products exports. As a result China has large trade deficits with Taiwan, South Korea and others. According to Chinese official estimates, as much as 70% of its exports to the United States contain foreign components, particularly from Taiwan, South Korea, and Singapore. (CRS Report for (US) Congress: China's Trade with the United States and the World, updated January 4, 2007)
In other words, China's bilateral trade with other Asian countries may appear to be what is called South/South integration. A closer look, however, shows a large portion of the trade between China and other Asian countries has been the direct result of China's new role in the international division of labor assigned by global monopoly capital. The shifting of the manufacturing base from South East Asian countries to China was done by the multinationals as part of their global network restructuring. Therefore, the new and growing bilateral trade between China and these countries is very much part of the global economic network dominated by monopoly capital. Treating this kind of trade relationship as South/South integration as if it were independent of the larger global network is misleading.
II. Major Objectives of China's New and Increasing Numbers of Free Trade Agreements
Since China joined the WTO at the end of 2001, its economy has become more and more integrated into the world capitalist system. As said earlier multinational corporations based in the United States, the EU, and Japan have invested capital in China and used China as their manufacturing base, so that they can take advantage of China's cheap labor, lack of labor protection, low and preferential taxation for foreign investment, good communication and transportation infrastructure, lax environmental regulations and other concessions toward foreign capital stipulated in the WTO provisions. Authorities in China have worked closely with these industrial powers and used the rapid growth in exports to achieve high rates of GDP growth.
As China becomes the manufacturing center of the world, its energy and raw materials needs have expanded at a very fast pace. As late as 1992 China was still an oil exporting country. It became a net importer of oil in 1993 when the demand for oil went up sharply to accommodate the 20% and higher export growth. China's oil consumption increased 100% from 1990 to 2001 . By 2005 China's oil consumption surpassed Japan to become the second largest oil consumer in the world, second only to the United States. While China's oil consumption increased rapidly, its domestic oil production increased at a very slow pace. After oil production reached 140 million tons in 1995, the average oil production grew only1.9 % annually between 1995 and 2000. Therefore, China oil imports doubled in merely five years, between 1998 and 2003. (Time Asia, October 18, 2004) In 2005 China consumed 300 million tons of crude oil, 123 million tons of which were imported, amounting to about 40% of total consumption. According to some experts, at the current rate of consumption, China's proven oil reserves will be depleted in 14 years. The International Energy Agency (IEA) predicts that Chinese oil imports will double between now and the end of the decade, and by 2030 China's oil imports will equal that of the United States. (Power and Interest News Report, August 17, 2007)
The first objective of China's FTAs
Therefore, the most important objective of China's FTAs is to secure its long-range (the next few decades) energy supply - both crude oil and natural gas. In addition to securing its energy supply, China also has to locate sources of other natural resources, such as iron ore, cooper, other minerals, as well as lumber.
The urgent need for oil prompted China to begin a frantic search for oil all over the world. In order to secure its energy supply, China has to diversify its sources.
According to the Time Asia report, China has signed, or intends to sign, oil/gas deals with a number of countries in order to maintain a stable supply of oil and avoid buying all of its oil at higher prices on the open market. These countries include Indonesia, Uzbekistan and other energy rich states in Central Asia, as well as other geographically distant countries like Sudan, Ecuador and Columbia. Additionally China has invested in various countries in order to secure its oil supply. China already signed or is intending to sign FTA's with many resources rich countries including the ASEAN countries, Australia, New Zealand, and members of the Gulf Co-operation Council (GCC). In addition to trade, China also invested oil and resource rich countries. It invested more than $8 billion in Sudan, which now supplies over 7% of China's oil consumption. It has also invested $70 billion in Iran's oil and gas industry, which meets 11% of its energy needs. (Oil May Fuel Sino-US Conflicts, UN Security Council, Global Policy Forum, http://www.globalpolicy.org/natres/oil/2006/0629massoud.htm )
In July 2004, China and the Gulf Co-operation Council, (the GCC includes Kuwait, the United Arab Emirates, UAE, Saudi Arabia, Bahrain, Oman, and Qatar) met in Beijing and signed the framework of economic, trade, investment, and technological cooperation between them. Negotiations between China and the six on FTAs began in September 2004. The major incentive for China to form closer economic relations with these countries is to acquire oil and natural gas.
The search for energy also brought closer trade relationships between China and African countries. According to a BBC news report, trade between China and African nations increased 39% during the first 10 months of 2005. (BBC News, January 2006) In November 2006, China organized a large scale African forum in Beijing and signed 16 trade and investment deals worth some $1.9 billion. (Reuters Foundation, Alert Net, November 30, 2006) According to a World Bank estimate in 2006 alone China spent more than $10 billion on infrastructural projects in Africa as part of its "capacity-for-resource exchange." (China Changes Rules of the Resource Game, February 13, 2007, Gold Anti Trust Action Committee, GATA, http://www.gata.org/node/4821)
In addition to investing in oil production China has also signaled its intentions to invest in exploration and development in places that have proven oil reserves. However, as will be explained in Section III, if China turns its intention into action, it is likely to get into territory disputes with other neighboring countries.
China also imports many other natural resources. For example, China is now the world's largest importer of copper, and it also imports large quantities of iron ore and lumber from Canada and Australia, and developing countries in Asia, Latin America, and Africa. China's FTA negotiations with Australia, now in its 10th round, and its FTA negotiations with New Zealand, now in its 12th round, also indicate China's interest in the natural resource in the two countries. An important objective for China to sign the Free Trade Agreements with the ten ASEAN countries in 2004 was to acquire their energy, minerals, lumber, and other natural resources.
The second objective
The second objective of China's FTAs is to expand manufacturing exports to other nations as it faces increasing protectionism from the United States. A related objective to trade is to expand China's investment in these countries. When China imports oil, natural gas, and other natural resources from various countries, in return it exports manufacturing products to these countries, thus expanding the volume of bilateral trades.
China's expansion into Southeast Asia started after the 1997 Asian crisis, and as a latecomer to the region, it has been busy signing investment and trade agreements with many of these countries. At the 2004 annual gathering of the Association of South East Asian Nations (ASEAN) in the Laotian capital, the ten ASEAN members signed a free trade agreement with China signifying a closer trade relationship. Both tariff and non-tariff trade barriers will be cut under this 10 + 1 = 11 (10 ASEAN countries plus China) free trade pact. It is the world's largest free-trade area covering 1.8 billion people and has provided even more opportunities for China to expand trade and investment ties with the ASEAN countries. In addition to the ASEAN-China Free Trade Agreement, China has also been negotiating bilateral trade and economic cooperation with individual Southeast Asian States. Trade between ASEAN and China increased reached $161 billion in 2006 - a twenty-fold increase from 1991. (Beijing Review Website updated August 7, 2007)
In addition to the objective of acquiring energy and natural resources from countries that China signed or is prepared to sign FTAs, China is also strongly motivated to expand its exports to these countries. Expanding manufacturing exports to its trade partners is actually a way to pay for its import of oil and other resources.
III. The Possible Global Impact of China's Ambitious FTAs
Should we treat FTAs with China differently from those other free trade agreements many countries have signed with the United States, EU, and Japan? As China expands trade and other economic relations with other countries, China portrays itself as a benevolent power, asserting that its economic dealings with other countries are based on mutual benefit. What China's current leaders do abroad is very much like what they do at home; they pretend that China is still a socialist country and that its policies are based on socialist principles. In the past China's foreign policy, as a socialist country, was based on the five principles of mutual benefit and mutual respect. China was able to champion these principles, because socialist economic development did not depend on outward expansion. During the socialist period China denounced its long history of imperial dominance over its neighbors.
China's actions today are like that of any expanding capitalist country in its search for natural resources, investment opportunities and for markets to sell its products. China's high demand for imported oil, natural gas and other natural resource has been directly related to the role China has played in the newly restructured international economic order dominated by monopoly capital. The tremendous volumes of manufacturing products it has exported in recent years require large quantities of raw materials and energy to produce them.
China's quest for oil and other natural resources inevitably has come into competition with the United States and Japan, and also with South Korea and India, whose economies are also dependent on oil imports. Even though China has tried to diversify the source of its oil supply, it is still heavily dependent on the imports from the Gulf region. Currently 48% of China oil imports come from the Persian Gulf region, already higher than the 25% of US oil imports that come from that region. (Kelly Sims Gallagher, Foreign Technology in China's Automobile Industry: Implications for Energy, Economic Development, and Environment, China Environment Series, Issue 6, 3-4)
Although China has tried to assure other big powers that it is a peaceful nation and has no intention to provoke conflicts with them, the United States has been alarmed by the fact that China is entering into treaties with the US dominated oil-producing countries in the Gulf region. It will be difficult for the US, as a free trade advocate, to openly oppose China signing FTA's with countries in the Gulf region. However, the United States wants to make sure that China will not affect US interests in the region. Therefore, according to some experts China must be extremely cautious not become involved in political and military affairs in the Gulf and Middle East region.
Exercising that extreme caution will be difficult, because oil-producing countries in the Gulf region that have extended their trade relationships with China to supply China oil want something in return. In addition to China's economic and military aid and access to Chinese markets, these countries expect Beijing's support at the UN where China has veto power in the Security Council. The Middle Eastern energy producers are looking to China as an alternative to the US Hegemony in the region.
Since 2003 just after the US invaded Iraq Gulf countries have begun to open their relatively closed and monopolized oil prospecting and exploitation market for fear that they may be totally controlled by the United States. Russian, French, and Chinese companies have all since obtained oil and gas exploitation contracts.
As mentioned earlier China will be increasingly relying on oil from the Gulf region, and 80% of that oil will have to transit the Malacca Straits, one of the busiest shipping lanes in the world, located between Malaysia, Singapore and Indonesia. The US navy controls the sea lines of communication (SLOC) over the Malacca Straits and the Southeast Asian sea lanes. The growing tension between China and United does not seem to be avoidable. The question is whether there will be a direct confrontation between the most powerful imperialist country and China.
China's urgent energy needs have also prompted China to consider off shore oil exploitation. Currently China does not have the technology required for off shore exploitation and is dependent on other imperialist powers for such technology. When China is ready to start such exploration, it may get into territorial disputes with other neighboring countries. In one recent case the China National Offshore Oil Corporation formed a partnership with the Philippine National Oil Company, for oil exploration near the Spratly Islands in the South China Sea. The sovereignty of Spratly Islands, however, has long been disputed by Vietnam, China, the Philippines, and Malaysia.
Another example is when China was exploring natural gas fields near the Japan-China medium line in the East China Sea, Japan asked China to suspend the exploration, claiming that China could access marine resources from the Japanese side. (ZNet, Yomiuri Shimbun, China Gorging and Japan-China Resource and Energy Conflicts, July 1, 2005) Author Yomiuri Shimbun not only sees the conflicts between China and Japan in East China Sea, he also sees the potential conflicts among oil importing countries in their conquest for oil in Kazakhstan and other oil rich countries bordering the Caspian sea.
China's quest for energy and other natural resources has intensified its competition with other imperialist countries in energy and resources all over the world - in Asia, Latin America, Middle East, as well as in Africa.
IV. The Impact of China's Capitalist Reform and it Development Strategy on workers, peasants and Environment and People's resistance
Linking China's economy to the world capitalist system has been a major and well -integrated part of China's capitalist reform. During the fifteen years of negotiations before joining the WTO, the reformers took major steps to open up China's economy by lowering the tariff significantly, eliminating import quotas, and granting favorable treatment for foreign investment. Before WTO members voted on its ascension, China entered into separate bilateral negotiations and agreements with 37 WTO members upon their requests. After these agreements were signed and China's domestic procedures were completed, the WTO members voted for its ascension at the end of 2001.
In the process of joining the WTO, China took major steps to liberalize its economy in order to play its role in the new international division of labor of the world capitalist system - primarily to become a manufacturing center for the giant multinationals. Even though China was a new comer in the global economy, the opening up of its economy was rather bold. Even a mainstream economist in the United States, Nicholas R. Lardy of the Brookings Institution, admitted, "By the time China entered the WTO it was already perhaps the most open of all developing countries." (Lardy, vii)
China opened its arms to welcome foreign capital, foreign multinationals from automobile, electronics, textile/clothing, shoes and all other kinds of light manufacturing and large retailing, all came running. They came with both the aim of occupying China's domestic market and relocating their production sites to China in order to utilize China's cheap labor and to take advantage of China's low taxes and lax environmental regulations. China has since become the manufacturing center of the world producing extraordinary quantities of consumer goods, such as shoes, toys, clothing, small electronic goods, computers, other household products, as well as industrial products such as parts and components for the world market.
While the high rates of export growth have attracted more foreign investment and stimulated strong growth in China's GDP, China and its people are paying a high price for this kind of development strategy. What has been the impact of the more than one decade of high rates of export growth, especially during the seven years since 2000, on China and its people, and especially on Chinese peasants and workers?
Serious Economic Imbalances between China and the Imperialist Countries
One serious and negative impact is that this kind of development has generated serious imbalances between China's domestic economy and the rest of the world. As said earlier China runs trade surpluses with all major capitalist countries and most of all with the United States. In 2006 China's current account surplus (mostly from trade) was $249.9 billion and equaled 9.5% of it GDP (as compared to 8.1% in the first half of 2005). Then for the first four months of 2007 the current account surplus increased to $63.3 billion, a jump of 88% from the same period in 2006. (FT.com, May 11, 2007) By the end of March, 2007 China accumulated $1.202 trillion in foreign exchange reserves mostly from its trade surpluses in past years. (Chinadotcom, April 12, 2007 and Business Week, May 17, 2007)
The majority of China's foreign exchange reserves are in foreign currencies (most of it in US dollars), foreign stocks, bonds, and securities (mostly US government bonds and Treasury Bills), and other foreign assets, all of which is debt owed by foreign countries. Therefore, most of China's trade surpluses from these past years were exchanged into foreign IOU's and now sit as foreign exchange reserves in the Central Bank.
By the end of the third quarter of 2005, China became a net capital exporter. The 9.5% of GDP surplus in 2006 means in that year, 9.5% of what China produced was not consumed domestically, nor was it invested in China, or spent by its government. The capital, which equals to 9.5% of GDP, was simply exported (in net, after deducting imports) with nothing in return but more promissory notes to be paid supposedly sometime in the future. This is a serious imbalance between China and the rest of the world, especially the United States. China is still a poor country that needs capital for its own development and for the immediate needs of its people, such as clean water, basic health care, and basic education. But it is exporting capital, most of which goes to the United States, the richest country in the world, at an accelerating rate. Even though other economies, such as South Korea, Taiwan, or even Japan, have also exported capital, China's capital exports, both in the absolute quantity and relative to GDP, is astonishing.
Serious Impact of China's Capitalist Reform and Development Strategy on Workers and Peasants
Although China was able to achieve high rates of GDP growth, the development of the past nearly thirty years has thrown tens of millions of workers out of the factories. The overwhelming majority of the laid off workers and those who were forced into early retirement can not find comparable jobs that allow them to have a decent standard of living with health care and other benefits. The more fortunate ones rely on meager pensions, while many others take temporary and seasonal jobs and are paid about half of the already low wage of regular workers. A large number of workers, estimated to be about 40% of the urban work force, are either unemployed or are trying to make a living in the informal sector.
Currently there are 320 millions peasants who still rely on farming as their main source of income. These peasants have had a very hard time making ends meet. The prices of agricultural inputs continue to rise, while the prices of agricultural products have stagnated. The agricultural infrastructure, including the irrigation system built during the socialist period has fallen apart. Since the end of the 1990s, many peasants have lost or abandoned their land and many more also suffered the effects of natural disasters, which also have become more frequent in recent years. A large and growing number of peasants have migrated to cities to work. Currently the estimated number of migrant workers is about 150 million. According to Bai Jing-fu, the vice-chair of a Research Center in the State Council, the problem of unemployment grows worse in the countryside, and as more peasants lose their land (40 million peasants lost their land in 2004 alone), the number of migrant workers can be expected to increase another 106-108 million between 2001 and 2010. (Ba Jing-fu, The Main Contradictions of Our Country's Economic Growth during the 11th Five- Year Plan. http://theory.people.com) Younger males leave home usually to find construction work in cities, leaving women to do the heavy farm work at home and also care for the young and the aged. Young women from the countryside are employed in domestic and foreign factories of the new exporting industries in the coastal areas. Many work under deplorable conditions and earn low wages without benefits. They also often suffer many abuses from their employers. The migrant workers send whatever they can from their meager wages home, so their families can survive.
With the exception of some large and well-established enterprises, workers do not have any health insurance. The cooperative medicine established during the socialist period for people in the countryside collapsed with the commune system in 1984. The majority of China's working population has lost their protection from illness. The absence of any preventive medicine has meant that infectious diseases, such as tuberculosis and schistosomiasis, which had been under controlled in the 1950s, have returned in full force. In addition, new infectious diseases, such as HIV/AIDS and SARS have caused suffering for tens of million people, not only from the effects of the disease, but also from government's denials and cover-ups, and the low priority government places on public health. China's countryside has also borne the heaviest burden of environmental pollution. (See below.)
The Serious Drain on China's Natural Resources and Destruction of Its Environment
China is not only using up its own domestic oil supply as said in earlier section, it is also exhausting its other resources including water. The Yellow River is the second largest river in China, which had provided water for Chinese people and its agriculture in central China for thousands of years. Today heavy water consumption upstream has exhausted the Yellow River's water supply and caused water shortages for the 170 million people in this region. Since this region is also an important grain production area, water shortage has already begun to affect grain production and the effects will worsen in the future. Even though there were instances before the 1990s when the Yellow River ran dry before reaching the sea, the problem has become increasingly worse since 1990. In 1997, the Yellow River ran dry for a record breaking 226 days. (Yi Hui-ming, The Warming of Yellow River, Yellow River Utilization Publisher, 1999, 1, 12)
Not only are water supplies from rivers, especially in Central and Northwest China, dwindling, China is also losing ground water rapidly from overuse. The ground water level of many cities is approaching dangerously low levels. For example, Beijing's ground water table, according to the Ministry of Water Resources, has been dropping 1.5 to 2 meters a year. The Ministry said that the lower water table will not only further aggravate water shortage, it will also lower the quality of water and increase the risk of earthquakes and landslides. ("China's Water Shortage to Hit Danger Limit in 2030," People's Daily Online: http://english.peopledaily.com.cn/) The heavy loss of groundwater has also speeded up desertification in the northwest. According to the director of Gansu's Desert Control Research Institute, Ji Yongfu, overuse of groundwater and overgrazing has caused the desert to advance at a rate of about 2,000 square kilometers a year. (Bloomberg.com, February 22, 2006) In the late 1990s, 300 of China's 617 cities faced water shortages, (Ibid.) and the situation has only continued to deteriorate.
China is facing a water shortage crisis in the not too distance future. Projections made earlier show residential demand for water will increase from 31 billion tons in 1995 to 134 billion tons by 2030, and industrial water demand will increase from 52 billion tons to 269 billion tons during the same period. (Worldwatch Institute, News release, April 22, 1998.) There is simply not enough water in China to go around. The expanding industrial and residential water consumption means water supply for agriculture will have to be further squeezed. Moreover, distribution of water is very uneven; water shortages in some regions like the Northwestern provinces are most acute and are only going to get much worse in the future.
Beginning in the 1980s environmental pollution has become a serious problem, and the environment has only deteriorated at faster pace since the mid-1990s. Water pollution has brought tremendous loss to agricultural production and has caused serious illnesses for people who live around it - mostly peasants in rural areas. The government-run People's Daily reported in 2005 that in Liukuaizhuang, a village of 6,000 people near the city of Tianjin, water pollution drove the cancer rate to 25 times that of the national average in 2004. In addition, the chemical plant accident that has caused the contamination of the Song-hua River caught attention in international news and did tremendous damage to peasants in the affected areas. Another horrific incident in 2005 polluted the Yangtze River, China's longest river, after a zinc smelter spilled cadmium into the water, a toxic metal that can cause neurological disorders and cancer.
While these large-scale accidents sent shock waves around the nation and the world, the impact of smaller scale but constant dumping of industrial wastes into rivers and ground and the excessive use of chemical fertilizer, pesticides and herbicides in agriculture are even more devastating. According to the Water Ministry, most of China's rivers are seriously polluted and contaminated by toxins. According to a report published by the Water Resources Ministry - The China's Water Resources 2000 - of all the water in China's rivers, only 28.9% is of better quality (ranked class I and II), and 29.8% is a lesser quality (ranked class III). 16.1% of water in rivers is dangerous for human to touch (Class IV) and the rest, or 25.2% of all water in rivers is too polluted to use for any purpose (Class V).
The State Environmental Protection Administration estimated that some 200 Chinese cities are estimated to fall short of World Health Organization standards for the airborne particulates that have been the cause of many respiratory diseases. According to Worldwatch, of the 20 cities with the most polluted air worldwide,16 are in China. Sandstorms are a major cause of respiratory disease. In the spring of 2006 Beijing and other northern cities in China were hit by one of the worst sand storms from the Mongolian desert in recorded history. Since the fast advance of desertification, above a rate of about 2,000 square kilometers a year, sand storms have become increasingly worse, affecting cities in Korea, Japan and even Taiwan. Since China has large coal reserves, it relies heavily on coal for its energy consumption, however, burning coal has also filled many Chinese cities' air with sulfur dioxide, which has resulted some of the world's worst acid rain.
The over-consumption of the natural resources and the deterioration of China's natural environment are the direct results of China's mindless strategy of high export and GDP growth. This strategy has depleted China's natural resources and is causing its environmental crisis, making China's future long-term sustainable development very difficult. If it continues along this path, the damage done may not be reversible.
China's capitalist reform and its development strategy in the past two decades have imposed great pain and suffering on Chinese workers and peasants. Such development has caused serious distortion in the utilization of China's natural resources and has rapidly deteriorated China's environment. The serious imbalances between the Chinese economy and the economies of major imperialist powers mean China has exported capital year after year to these countries, and such capital export has deprived China and its people from using their savings for their own genuine development. The kind of development that will raise the well being of Chinese people, preserve its resources and protect its environment. After two decades of "development" more and more people in China now understand that capitalist reform both domestically and internationally has only benefited a small powerful minority and robbed the majority of resources they need to sustain and flourish. Chinese people have also realized that if the current "development" continues, the future of China and its people are doomed. Therefore, for the Chinese people the issue is not the individual FTAs that China has signed with other countries, but rather China's new role in the global capitalist system and the dire consequences of this role on China and its people.
Chinese people have organized to protest factory lay-offs, plant closings, land grabbing by the government and developers, the building of toxic plants near their homes, water and ground pollution, and the injustice government actions on these and many other issues. These protests involve more than 100,000 people each year but are still limited to local areas. However, the government has not been able to suppress these protests and continued resistance and we can only expect them to grown and spread.
 These enterprises encompassed those in the production and the distribution spheres.
 The more liquid portfolio investment left first and then the direct investment.
 See concept paper for the explanation of South/South integration.
 See Bai's report (point 5).
 Currently China's oil import is about one third of that of the United States.
 GCC is a loosely organized group. China would need to have bilateral talks with each individual Gulf countries to achieve any significant progress in the Sino-GCC trade relations.
 The IEA predicts that by 2015, 70% of China's oil imports will come from the Middle East.
 China also offered African countries an aid package of $3 billion in preferential loans and $2 billion in credits and over the next three years
 80% of China's exports are consumer goods and the other 20% is industrial products.
 If surplus in the capital account was to be added, then China's foreign exchange reserves is estimated to be even higher and the total reserves are likely to continue to accelerate and possibly reaching a staggering $2 trillion by the end of 2008.
 Nationally, 900,000 people have been infected by the disease and an estimated 30 million are no at risk. (New York Times, February 23, 2005)
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