Influence and Impact of Asia Pacific on US Business - Essay Example

1) From your analysis of Reading 2, what are the opportunities and threats to the US involved with doing business in China In assessing whether to dobusiness in a particular country, the PEST (political, economic, social and technological) factors have to be analyzed. 2) What are the implications of this for Australia Influence and Impact of Asia Pacific on Business in US Political, Economic, Social and Technological Trends Asia Pacific, a region consisting of countries like China, India, Singapore, Australia, New Zealand and many more countries, has of late, been emerging as a formidable power in all walks of life; from strengthening their political and economic base, to spreading their cultural influence in the western world. Today, they are a force to be reckoned with: whether for their economical labor force or for the nuclear tests they are carrying out or the technological developments taking place in these countries. The western superpowers cannot afford to ignore these countries at any cost! A major factor that has influenced half the world's thinking, policies and decisions is the Sino-US bilateral relations. This area has been going through volatile changes as and when the political leaderships changed in both the countries. When George Bush came to power in 2001, there were rumors of a Cold War between the US and China. Serious tensions were sparked between the US and China on various issues. First, there was the issue of a collision of a Chinese fighter with an American spy plane and then it was the designation of Taiwan by the US and Japan as a "common strategic objective." China was certainly not happy with America's open opposition to lifting the EU's arms embargo on China. China was increasingly being viewed by the US as "a military competitor with a formidable resource base." The People's Republic of China (PRC) was perceived as "a military competitor with formidable resource base"5 by the US. Post the 9/11 attacks, however, there has been a subtle shift in the way the two countries view each other. China condemned the bombings in a mild tone but pledged its whole-hearted support to the US in fighting terrorism. China seemed to have taken a softer stand towards American policies and supported its war against terrorism. Beijing has supported counter- terrorism resolutions passed by the UN Security Council and the UN General Assembly. China has been cooperating in the US's efforts in combating the evil of terrorism, both in its own country and at a global level. The past four years have seen sweeping changes in the bilateral relations between the US and China. By providing useful 'information' on radical Islamic groups, it has resumed intelligence- sharing activities that had remained dormant since the end of the Cold War6. While China had not been actively involved in any military action against Afghanistan, it endorsed American intervention there, thus, reflecting a softening of its attitude towards the US. China has pledged to contribute US$150 million towards the reconstruction of Afghanistan. It is also supposed to have played an important role in encouraging close ally Pakistan to support American efforts in Afghanistan. Just as significant is China's lack of resistance to Washington's forcible invasion of Iraq and removal of Saddam Hussein. The present period of improved relations between the two countries is being referred to as the 'honeymoon' period. Political analysts feel that the honeymoon period in the US-Sino relations is expected to last longer as there is a deeper combination of economic, political and strategic considerations underlying it. perceptions and motivations. With the hosting of the Olympics in 2008, it is assumed that Beijing will assume its rightful place in the world's powers. Thus, it would be eager to avoid any confrontation with America that could jeopardize its preparations for the event. China's refusal to adjust its undervalued currency, which has been pegged to the US$ since 1994 and America's ballooning trade deficit with China which currently stands in excess of US$100 billion, has created tensions between the two countries on the economic front. Myriad challenges are being poised to the US economy by the growing figures of imports from China. The People's Republic of China is now America's third largest trading partner, its second largest source of imports, and second largest buyer of US treasury bonds. However, China's continued support is seen as a somewhat stabilizing factor in what remains of a fragile global economy 7. With the stupendous growth in trade and commerce, Chinese society has geared up to sweeping changes. According to James F. Hoge, Jr in "A Global Power Shift in the Making" From Foreign Affairs, July/August 2004 "China's economy is expected to be double the size of Germany's by 2010 and to overtake Japan's, currently the world's second largest, by 2020." In a speech at the opening of the national legislature's annual session,Chinese Premier Wen Jiabao has pledged greater support for education and health care over the next year and said the government would tackle sources of social unrest such as environmental problems, land seizures and privatization of state industries. Wen also pledged technology upgrading for the country's big but largely outdated armed forces. The comments came a day after the government announced a 17.8% increase in its defense budget - the biggest jump in more than a decade. Wen's budget priorities reflect Beijing's recent focus on shifting spending to education, health care and other social programs that have been neglected while the communist government concentrated on boosting investment and trade. Wen and other Chinese leaders have promised repeatedly to close a growing gap between China's rich and poor, which they worry threatens political stability and the ruling party's hold on power. "Education is the bedrock of China's development, and fairness in education is an important form of social fairness," he said. He said the government will step up spending on rural primary and middle schools by 21 per cent to $33.93 billion. Wen said a trial co-operative medical care system would cover 80 per cent of China, with the government more than doubling subsidies to it to $1.53 billion.The plan is aimed at ensuring that rural residents have access to "safe, effective, convenient and reasonably priced medical and health care services," Wen said.He promised almost $35.7 billion in increased spending on old age pensions, workers' compensation and other forms of social security. Long-term friendly relations between China and the US would certainly have a positive impact on Australia. This equation would help maintain cordial relations with the US while benefiting from China's growing influence in the Australian economy. It might even enable Australia to build an additional level of trust and confidence in its relations with China, leading to greater appreciation of China's foreign policy. The writer feels that it is particularly important for Australian policymakers to acknowledge the potential for a prolongation of the post 9/11 rapport and to actively encourage such an outcome as they contemplate alternative approaches to dealing with a rising China. China's growing industrialization will lead to an increase in the demand for raw materials, which will in turn be sourced from commodity producers, such as Australia. A Free Trade Agreement (FTA) is also in the works and it is anticipated that China will have assumed the mantle of Australia's largest trading partner by the end of the decade. Today, the relations between China and Australia are not limited to merely political or economic fronts, but encompass cooperation in all dimensions. China has already concluded an agreement to pursue low-level defense ties with Australia that will include training and personnel exchanges. To conclude, it might be pertinent to say that Australia needs to maintain a highly balanced and pragmatic approach in its dealings with each of these countries. It should be careful not to give an impression of choosing or even planning to chose between the two countries. The spills over effects of the 9/11bombings are in Australia's favour and it has to continue to maintain a delicate balance between the two countries. Not only would it allow Australia to retain the substantial benefits arising out of its close alliance with the US, while simultaneously enjoying the fruits of a deepening economic relationship with China. This balanced approach would be highly beneficial to Australia in both the "worst case" or the "best case" scenarios. If the so-called honeymoon were to last longer, Australia would anyway not be forced to make a choice between the "two great and powerful friends." References 1. Taylor, B, 2005,'US-China Relations After 11 September: a long engagement or marriage of convenience.' Australian Journal of International Affairs, vol. 59,no.2,pp.179-199. 2. James F. Hoge, Jr in "A Global Power Shift in the Making" From Foreign Affairs, July/August 2004 3. Dolby Jones, former director-general of the Confederation of British Industry (CBI), http://mangalorean.com/news.phpnewstype=local&newsid=40636 4. http://news.netscape.com/story/2007/03/05/china-premier-vows-to-support-education/comment/659989 5. Archibugi, D and Lammarino,S 1998.Innovations and globalization:evidence and implications 5. Quadrennial Defense Review 2001 6. Cossa,Ralph,2001.'A chance for New US-China Strategic Tie' ,Japan Times ,20 October. 7. For further reading, see Lardy 2003 Read More