Unit 2 China Rising How China Runs the World Economy

1.“If you want one year of prosperity, grow grain.If you want ten years of prosperity, grow trees.If you want 100 years of prosperity, grow people.” This old Chinese proverb crudely sums up how the entry of China's massive labor force into the global economy may prove to be the most profound change for 50, and perhaps even for 100, years.

2.China, along with the other emerging giants, India, Brazil, and the Soviet Union, has effectively doubled the global labor force, hugely boosting the world's potential output and hence its future prosperity.China's growth rate is not exceptional compared with previous or current emerging economies in Asia, but China is having a more dramatic effect on the world economy because of two factors: Not only does it have a huge, cheap workforce, but its economy is also unusually open to trade.As a result, China's development is not just a powerful driver of global growth; its impact on other economies is also far more pervasive.

3.Beijing's new influence was clear from the shockwaves in global currency, bond, and commodity markets last week after it announced that the yuan will no longer be pegged to the dollar.Until a couple of years ago nobody cared much that the Chinese yuan was pegged to the dollar.Recently, though, this link has become one of the hottest issues in international politics, widely blamed in America for its huge trade deficit.

4.Last week's 2.1 percent revaluation of the yuan is trivial and unlikely to dent America's trade deficit.More important is the breaking of the yuan's formal link to the dollar and the shift to a so-called “managed float” against a basket of currencies.In theory, this allows considerable scope for a further rise in the yuan against the dollar, though it is unclear by how much the Chinese authorities will allow the yuan to climb.

5.Even if last week's adjustment was timid, it could mark an important turning point.It is certainly a step in the right direction for China itself, as greater currency flexibility will give it more room to use monetary policy to steer the economy.More interesting are the implications for the world economy.This might be the beginning of the end of what has been dubbed a revived Bretton Woods system of fixed exchange rates between China (and other Asian economies) and America.

6.Under this arrangement, China has provided cheap finance to America's consumers and its government by buying treasury bonds.If the switch to a currency basket causes China to reduce its new purchases of dollar assets, then American bond yields could rise.America's China bashers, who demand a further revaluation of 25 percent or more, should therefore be careful.Such a large-scale revaluation would surely push bond yields higher and badly hurt America's economy.Indeed, if the yuan's adjustment has any real impact on America's trade deficit, it will not be through the revaluation itself, but because higher bond yields squeeze domestic demand.

7.America's trade deficit is due mainly to excessive spending and inadequate saving, not to unfair Chinese competition.If China has contributed to America's deficit it is not through its undervalued exchange rate, but by holding down bond yields and so fuelling excessive household borrowing and spending.From this point of view, global monetary policy is now made in Beijing, not Washington.

8.The popular focus on the yuan, America's trade deficit and jobs as China's main impact on the rest of the world misses the point.China's growing influence stretches much deeper than its exports of cheap goods: It is revolutionizing the relative prices of labor, capital, goods, and assets in a way that has never happened so quickly before.A recognition of China's profound and widespread impact on the world economy explains various current economic puzzles.

9.Take, for instance, the oil price.Since the beginning of last year, oil prices have doubled, yet in contrast to previous oil shocks, inflation rates remain low and global growth robust.The answer to this riddle is China.To the extent that oil prices are driven up by strong Chinese demand rather than, as in the past, an interruption of supply, they are less likely to hurt global growth.And the impact of higher oil prices on inflation has been offset by falling prices of all sorts of goods from cameras and computers to microwaves and bicycles—thanks to China.In addition, competition from China and the threat that firms in developed countries might shift offshore also helps to keep a lid on wages and hence inflation.

10.Another oddity is that, while the prices of most goods are falling, house prices are soaring in many countries.Again, enter China.Cheaper goods from China have made it easier for central banks to achieve their inflation goals without needing to push real interest rates sharply higher.This has encouraged a borrowing binge.The resulting excess liquidity has flowed into the prices of assets, such as homes, rather than into traditional inflation.And, last but not least, there is the conundrum which has puzzled Alan Greenspan, head of America's central bank: Why are American bond yields so low despite robust growth and hefty government borrowing? Part of the answer lies, once again, with China, which has bought large quantities of treasury bonds to hold down its currency.

11.Over the coming years, developed countries' inflation and interest rates, wages, profits, oil, and even house prices could increasingly be “made in China.” How should the world's policymakers respond to China's growing economic clout? Trying to halt China's growth through protectionist measures, as many American congressmen would like to do, would be a disaster, for it would close off a powerful source of future global prosperity.

12.A better way to deal with China's growing power would be to give the country a bigger stake in global economic stability.China should be a full member of international economic policy forums, such as the G7 and the OECD.Western policymakers would be wise to remember another Chinese proverb: “What you cannot avoid, welcome.”

From The Economist

Jul.28, 2005

Words & Expressions

·global currency 全球货币，国际货币

system of money that is used globally

·bond 债券，联系

security, relationship

·commodity market 商品市场

market in which goods would be exchanged

·be pegged to dollar 与美元挂钩

be attached or fastened to dollar

·trade deficit 贸易赤字，贸易逆差

the amount by which the cost of a country's imports exceeds the value of its exports

·managed float 由政府操纵的汇率浮动，管理浮动

the current international financial environment in which exchange rate fluctuate from day to day, but central banks attempt to influence their countries' exchange rates by buying and selling currencies

·revived Bretton Woods system 复兴的布雷顿森林体系

the system established the rules for commercial and financial relations among the United States, Canada, Western Europe, Australia, and Japan in the mid-20th century

·borrowing binge 借贷狂潮

unrestrained bout of borrowing

·Alan Greenspan 艾伦·格林斯潘

US economist, and the former chairman of the National Commission on Social Security

·economic clout 经济影响力

economic influence or power

Questions

1.What does the proverb “If you want one year of prosperity, grow grain.If you want ten years of prosperity, grow trees.If you want 100 years of prosperity, grow people” mean?

2.How does China impose dramatic effects on the global economy?

3.What does the effect of revaluation of Chinese currency have on the American economy?

4.Why does a recognition of China's profound and widespread impact on the world economy explain various current economic puzzles?

5.How can you interpret the Chinese proverb “What you cannot avoid, welcome”?

Buzzwords of China Rising

News Style

News Values （1）

Every day a large number of events are occurring in the world, however, only a small portion of happenings have been made into headlines of media.So what counts as news? To the perception of editors, it is the news values that matter in this case.News values are qualities that are taken into consideration by journalists to determine the “newsworthiness” of an event.They are the most important ideological factors in governing the journalistic practice, specifically giving guidelines to journalists in making decision for selecting news events.News values are cognitive criteria supplying guidance to journalists in practice.The premier study of news value was conducted by Galtung and Ruge in 1965, who proposed ten items of characteristics, namely relevance, timeliness, simplification, predictability, unexpectedness, continuity, composition, elite peoples, elite nation, and negativity.

Based on the initiative studies of Galtung and Ruge, many news writers and news researchers create new items of news values.Yet whatever terms they address, the core of news values tend to be identical, particularly for recent years.Table 2.1 shows the core values in recent studies.

The table shows the major news values different scholars maintain.Although the criteria and the number of news values are arguable, the common ground of newsworthiness is shared among scholars.It can be identified from Table 2.1 that eight categories of the core news values can be generalized: timeliness, currency, proximity, conflict, impact, prominence, novelty, and human interest, which are commonly shared among most news scholars.Occasionally, the criteria to judge a news event will overlap, for mostly one news event possesses more than one news worthiness.In addition to the standards discussed above, there are other qualities that can be used to determine the newsworthiness,including negativity,sex, usefulness, emotion, suspense, secrecy, progress, and other criteria.

News Resource

Associated Press (AP) is an American news agency.News has covered a long journey from the earliest forms of news sheet to the current online news services.According to Wiki, the earliest news form can be traced back to Acta Diurna,a kind of bulletins used for government announcement in Roman Empire around 59 BC.Many web portals such as Yahoo! and MSN rely on AP as their first source of news.

Website: www.ap.org

The Cable News Network (CNN) is an American basic cable and satellite television news channel owned by the Turner Broadcasting System division of Time Warner. It was founded as a 24-hour cable news channel and is now regarded as “a 24-hour global multiplatform network.” CNN/US and CNN International provide news services to one-third household audience in America, and other viewers in over 212 countries.

Website: www.cnn.com