[MUSIC] So let's talk about international political economy and national power. Now international political economy focuses on how political forces, such as states or governments, raid these international regimes and global institutions like the World Trade Organization. How they affect Economic interactions and conversely, how economic institutions, particularly markets, can influence domestic and global political structures, states' power and the kind of political outcomes we see in the international system. Now in the case of China, we have witnessed an amazing event in terms of international political economy. The rise to economic prominence of a massive state in the blink of an eye, in terms of history. And this has had enormous influence on natural resources, aluminum, nickel, iron, copper, oil, and gas, and on the growth rates of countries around the globe. Now here you can see, I don't even need to go into much detail. You can just see the growth rates, the amazing growth rates, really starting from the earlier part of the millennium, just continuing to go up in all of these sectors. It's just quite remarkable. And here as well, we can see this is the volume of China's exports and imports by countries. And I can focus on a few of the key points here. One is you can see the amazing growth, in terms of Chinese exports to the United States. Right? Within five years, it's gone up something like 25%. That's an amazing, amazing growth and that really helps China's economy. Here with the case of India, you can see, so here's Chinese exports, and these are Chinese imports. So how much is China importing from India versus how much Much as China exporting to India. And you can see here a huge imbalance, what we call a trade imbalance. And it has continued. China is just not importing very much from India but the exports to India have increased significantly. And these kinds of things, these kinds of imbalances, can really create political tensions. And I always think of Australia as a country that had benefited enormously from China's growth. And really from 2005 onward, up until just recently. And you can see this here. You can go back yourselves, too. You can see this in terms of Australia's, so Chinese imports, that means Australia's exports. You can see this big jump in Australian exports, and that's been driving Australian economy for a long time. Now when we talk about international political economy, we need to think in terms of two competing visions of this global economy. One called liberalism and the other one called mercantilism. Now liberalism asserts that all states can benefit from having all countries, all economies could benefit from having an open global market economy. And that each country produces what it does most efficiently and then trades those goods on the global market. Under mercantilismm we really now focus on the state. The state becomes the key actor that manipulates, regulates, but manipulates the market so that they can grow faster and across more economic sectors. Airplanes, manufacturing all kinds of pharmaceuticals, and that they'd use this to augment their national power. Now the East Asian model of development, particularly the countries of Japan and Korea, followed this kind of mercantilist strategy, and it suggested to China that mercantilism can succeed. And therefore China, in fact, began to follow that kind of mercantilist strategy. Now, having become so economically powerful, China can use its economic power as leverage against most states in the world. And that was the point that I was showing you about that big table on trade. That if a state like Australia is deeply dependent upon exports to China, then China has much more influence on that state. Although China's influence is primarily economic and it is limited by the military influence and the soft, what we call soft power, which I'll define later on, this sort of soft power of the US. Still China feels that despite it's rapid growth, its political influence in global economic institutions. Making the rules in organizations like the IMF (International Monetary Fund), the World Bank, The World Trade Organization, Asia Development Bank, that China, its influence has been limited by the US and its allies. So president C, one of his new strategies is to try and escape American containment in these organizations by starting it's own institutions such as the Asian Infustructure Investment Bank, what's now called the AIIB. And through new policies such as what's called One Belt, One Road. Sometimes we call it the Maritime or the Overland Silk Road. The old silk road. And that by this strategy, China will be able to use its trade influence, its ability to attract foreign direct investment. Its own overseas direct investment to enhance its influence, particularly in the neighborhood. And we'll see this in the next two weeks, that the Chinese state, the party state, is actively engaging in global economic activity, particularly to get energy, resources and human talent. So here again I share with you another table. So here we have FDI, Foreign Direct Investment, coming into China from these countries or regions. And ODI refers to China's outbound, outbound, outward foreign direct investment into others countries. And here you can see, if you can compare to 2010. Here, 44 billion. And now by 2014, we're talking about 85 billion. So almost a doubling of the amount of money, the ODI, the amount of money that China is investing overseas. And you can see that that's true also. That's in Asia. And here you can see it's true also in Europe. It's also true in North America, 2.6 versus 9.2. Within North America, China is investing a lot of that money in the US. Now, under realism, national power is a relative concept because, states always balance against external threats or other states who maybe more powerful. So it's all how their own power is relative to others. So the CNP or Comprehensive National Power should be framed in terms a state's relative status. Now CNP can be made up of a combination of military, economic power, national will, how well the state hangs together, leadership, unity, global status. Sometimes we talk about soft power, trade dependency, population, science and technology, education. The ability of the government or the regime to mobilize society, legitimacy, I mean all this stuff, trust, all this stuff goes together. But by measuring comprehensive national power over time, we can also evaluate the pace of change, which can have a big impact on how states perceive each other and how much they feel threatened. And because we're talking about the rise of China now, we need to pay attention to the changes. And for a long time there was a very mixed view about China's relative rank in terms of CNP. But as the following table shows, China is now ranked number two. So, here we can see China in terms of it's comprehensive ranking. This is from Global Firepower Ranking. It puts China as number two. The US is still as number one in comprehensive power. Russia is somewhere between three and six, Japan and then India. And you can see this, in terms of military strength, China is number three. Russia's number 2, the US remains number 1. And so you can look at these kinds of indicators that really say that China is rising, getting to be more powerful. But it's still not the most powerful state. Now, China is also much weaker in what we call soft power. Which is really the ability to co-opt other states to accept your position on foreign affairs, through persuasion, rather than through coercion or by giving the money. And the currency of soft power is culture, political values, foreign policies. And so Xi's major effort is to socialize the region to accept China's view of China's core interests and not challenge those interests. But that's a real difficulty for China. And a good example of that is that a widely recognized survey by Pew finds in 2014 that only 16% of Vietnamese have a positive view, of China and 74% see it as the greatest threat. So it's unlikely that China can have this kind of cultural soft power. Even though it's put Confucius institutes around the world. But some of these institutes have generated suspicion and are seen as fronts for Chinese propaganda. As we will see in a future module on China's search for human talent, China's also having trouble attracting the very best scientists of Chinese ethnicity who have gone abroad to study. Trying to get them to come back full time to work in universities and laboratories because of the problematic research culture that exists in China.
