Articles

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=The “New Deal”: Politics and Policies of the Hu Administration=
 * 1) [|Cheng Li]
 * 2) Department of Government, Hamilton College, 198 College Hill Road, Clinton, NY 13323, USA, cli@hamilton.edu

Abstract
//The recently held Sixteenth Congress of the Chinese Communist Party and the Tenth National People’s Congress signified a shift in power to the so-called “fourth generation” of Chinese leaders. With the declining trend of “strong-man politics,” Chinese politicians have been increasingly concerned about coalition-building, political compromise, and factional negotiation. The norm in Chinese elite politics has transformed from the zero-sum games of the past to an emerging pattern of power-sharing among competing factions, regions, and social groups. Prominent leaders are willing to cooperate—not because they are motivated by democratic ideals, but because they recognize their own limitations and thus the need to cut a “new deal” between factions. The new leadership also signifies new policies. President Hu Jintao and Premier Wen Jiabao have outlined a new vision and a “New Deal” (xinzheng) for China’s future. The “New Deal” is an economic and socio-political program that incorporates three interrelated aspects: first, more balanced regional economic development to reduce regional disparity, increase employment, and stimulate the domestic market; second, increased concern for social justice, fairness, and the need to create a social safety net; and third, greater political transparency and institutionalization.// = = =[|Why Hu Jintao's Trip to Chicago Is a Big Deal]=

[|William Spence]
Chairman Pro Tem, Chicago China Economic Development Center Posted: January 20, 2011 01:36 PM

Chinese President Hu Jintao is coming to Chicago this week. As Mayor Daley said, the visit is "a very, very, very, very, big deal."

Here's why. China's 1.4 billion people are participating in the greatest economic surge in the history of mankind. Their per capita annual income has risen from $795 in 1990 to $6,778 last year, an 800% increase in just 20 years. That rise means that more people have been lifted out of poverty than at any other time in history. This staggering growth is due to China's booming economy which has been transformed from a predominantly agricultural society to a major manufacturing juggernaut. In the past 20 years, more than 300 million Chinese--the equivalent of the entire population of the United States--have moved from farms to cities and another 400 million are expected to make the shift in the next 15 years. China's rapid growth mirrors what happened to the U.S. economy over several decades more than 100 years ago when it too moved from an agricultural to manufacturing economy. But in China it's happening much faster and affects the lives of more people. Why is this good for the U.S.?

First, this migration to prosperity means that millions of new city dwellers in China are buying American designed stoves and refrigerators, General Motors cars (Buick is the most popular brand in China) and condominiums and office towers designed by Chicago's great architectural firms with Kohler or American Standard bathroom fixtures.

Further, to keep their economy moving ahead and avoid civil unrest, China needs to create 20 million new jobs a year. Most of the jobs they currently have produce things that are being exported and sold to U.S. consumers at low Wal-Mart prices which keeps our inflation under control. But China's leaders know that as their middle class grows, they will demand iPhones and flat screen TV's just like American consumers.

China's evolving economy is good for both the U.S. and China because the shift to domestic consumption will give U.S. businesses 1.4 billion new consumers, travelers and investors. As China's middle-class blossoms, consumers will soon want the latest technology in their offices, homes and hospitals, including iPads, GPS navigators, and MRI scanners. Naturally, these new consumers will be a boon to American tourism, traveling on Boeing-made airplanes to Chicago, New York and San Francisco to see the sites and visit relatives. Indeed, the developing Chinese middle-class will create an extraordinary market for new U.S. ideas and products. But to maintain our edge, the U.S. must follow companies like Apple, Garmen and Chicago's own Groupon which, with creative new ideas, will keep the U.S. in the game. With the old manufacturing base in decline, new technologies and creative ideas are the key to our future. In a global world America needs creative, well-educated people with the vision of Steve Jobs, Bill Gates and now our own Andrew Mason of Groupon in order to survive. Since we no longer have cheap labor, education and a renewed emphasis on research and development which produces technological innovation are the keys to our continued competitive advantage. It's a global race we are running every day and new jobs and new industries are the prizes. Think for example, of the jobs and industries which will be spawned in the country which finds the replacement to the internal combustion engine or develops reliable voice recognition software.

So let's not wring our hands and weep at our lost jobs and blame China. The world has changed dramatically in the last 20 years and many Americans have been asleep or resting on their past laurels. Instead of looking at the greatness of our past, let's take advantage of China's rise and prosper along with them. Some smart Chicago companies like Abbott, Grainger and ITW are doing just that as our two economies become increasingly linked together.

Here is but one example of how even our manufacturing economies are linked. It's a quiet and relatively unknown story of how some Chinese companies are actually creating and preserving U.S. jobs in the Chicago region and are prospering here. China-based Wanxiang, which has offices in Elgin, has purchased 28 American companies since 1994 and employs more than 3,500 U.S. workers. Wanxiang's recent construction of a solar panel manufacturing plant near Rockford will create even more U.S. jobs and give a boost to Rockford's troubled economy. Like many Japanese companies in the 1980's, China is coming here with jobs and new ideas and should be welcomed.

So we should keep in mind that for now at least, both the Chinese and the U.S. badly need each other. They need our customers to buy their goods to keep their factories running and we need their continued funding of our debt to support our current deficit. As some have said, it is a balance based on "mutually assured economic destruction." If our economy declines and we don't buy, they can't run their factories.

So when President Hu Jintao comes to Chicago with his 400 person business delegation, it is a "big deal" as the Mayor put it. Four hundred Chinese business leaders will be meeting with hundreds of Chicago businessmen and women and they will be signing contracts, discussing deals that can bring hundreds of millions of dollars into Chicago's economy. These business deals will create jobs for lawyers, accountants, investment bankers, insurance companies, architects and engineers as well as hundreds, if not thousands of employees at Aon, Abbott, Baxter, Boeing, Grainger, ITW, Kraft, Motorola, United, UL, Wrigley and hundreds of other Chicago companies currently doing business in China. Chicago is blessed with one of the strongest and most diverse economies in the world, and we should welcome the leader from the fastest rising economic power the world has ever seen. Hopefully he will see that Chicago is "China friendly" -- and the best place in the U.S. for China to do business.