With this lesson, we will explore China, including the Chinese Communist Party and its role in society and business and the opportunities and challenges of doing business with and in China.
By the end of this lesson, you should be able to...
The table below provides an overview of the requirements for Lesson 10. For details, please see individual assignments.
Please refer to the Calendar for specific time frames and due dates.
REQUIREMENT | SUBMITTING YOUR WORK |
---|---|
Read Lesson 11 content and any additional assigned material | Not submitted. |
Weekly Activity 11 | Yes—Complete Activity located in the Modules Tab in Canvas. |
Case Study--participate in Case Study Q & A as described in weekly announcement | Check Announcements for all Case Study Due Dates. |
Welcome to China! Located in Eastern Asia, China is the world's fourth largest country in terms of geographic area (following Russia, Canada, and the United States). With nearly 20% of the world's people (about four times the population of the United States), China is the most populated country in the world. And Mount Everest, the world's tallest peak, is on the border China shares with Nepal.
Visit United States Central Intelligence Agency publication, The World Fact Book [2]
At this point, please complete Lesson 11 Reading: China, from Chapter 16 "China: History, Culture, and Political Economy" of Business and Its Environment by David P. Baron (Prentice Hall, 2010). A PDF can be found in the Lesson 11 Modules tab [3].
Some tips you will find helpful with these readings: "structured pluralism" here refers to a system where multiple stakeholders may be involved on an issue and have different preferences for its outcome. These preferences are expressed to political and social institutions, which act in ways that shape business opportunities. Sound familiar? Hope so! It is the nonmarket system described earlier in this course, with the added reminder that the nonmarket exists in a context of culture and history.
Also, very important, please remember that Baron uses the word "interests" to represent what we (more clearly, I believe) call "stakeholders." And, SOE means State-Owned Enterprise. CCP means Chinese Communist Party. PRC is the People's Republic of China, the official name of China. Read the following:
Reading Assignments are under the Modules Tab.
If you are interested, read this [4]recent, short article from Harvard Law that explains the continued role of guanxi in Chinese domestic and international business.
Every five years, China establishes a plan for economic development over the next five years that includes targets for growth and priorities for development. The first Five-Year Plan began in 1953, followed by new plans every five years, up to the 14th FYP, which was adopted in January 2022.
The Chinese economy is a mixed economy, as it combines important features of a market economy and a planned economy. To understand the role of economic planning in China, it is necessary to review its history briefly. During the period from 1953 when the first Five-Year Plan began to the end of the 1970s, China practiced central planning under the direction of the State Planning Commission (SPC). The main function of planning was to direct the production of major products by state-owned enterprises. The State Council had a large number of ministries, most of which were responsible for the production of the corresponding products. There were ministries for agriculture and fisheries, forestry, coal, petroleum, chemical products, metallurgy, consumer products, textile, machine building, electronics, nuclear energy, aircraft, ammunition, space, geology and mineral resources, water resources and electric power, railroads, transportation and communications, posts and telecommunications, urban and rural construction and environmental protection, finance, commerce, etc.
Beginning in 1978 the Chinese government changed the economic system gradually towards a market economy, allowing non-state enterprises to produce and compete with state enterprises. The Commission for Restructuring the Economic System was established in 1982 to direct economic reform. This Commission was under the chairmanship of the Prime Minister himself while the Planning Commission was chaired by a Vice Premier. In 1998, the SPC was renamed the State 2 Development Planning Commission (SDPC), which then merged with the Commission for Restructuring the Economic System and the State Economic and Trade Commission (SETC). In 2006, it was renamed the National Commission for Development and Reform (NCDR), with the term planning omitted, perhaps to convey to the world that China was no longer a centrally planned economy. The NCDR continues to prepare Five-Year Plans based on a draft from the Central Committee of the Communist Party. Each Plan has to be approved by the National People’s Congress.
(Economic Planning in China [6], Chow, Gregory C., Princeton University, CEPS Working Paper No. 219, June 2011)
From China Dialogue, read China’s Five Year Plan for energy: One eye on security today, one on a low-carbon future [7]. If you are interested in details of the what the newest plan means for energy and climate (not required) see "Q&A: What does China’s 14th ‘five year plan’ mean for climate change? [8]" from Carbon Brief.
There are some very practical reasons for China's new focus on cleaner energy, the health of its citizens among them. For example, in 2016 the World Health Organization determined [10] (you don't need to read this article) that 1,000,000 people died from dirty air in China in 2012.
Because it is the world's largest hydroelectric installation and the subject of significant controversy, China's Three Gorges Dam warrants specific mention in this lesson. Construction started in 1994. The 600-foot high dam across the Yangtze River was completed in 2006. The reservoir reached full height in 2010, after submerging 13 cities, 140 towns, and 1,350 villages, all in all displacing 1.3 million people. (BBC News, May 2011, China acknowledges Three Gorges dam 'problems' [15])
In 2011, China took the unusual step of admitting there were problems with the project. The New York Times reports, "China’s State Council [16], a coordinating body often likened to the United States president’s cabinet, said in a vague statement that the project suffered from a wide range of serious problems. 'Although the Three Gorges project provides huge comprehensive benefits, urgent problems must be resolved regarding the smooth relocation of residents, ecological protection, and geological disaster prevention,' the statement said." For full story, see New York Times, China Admits Problems with Three Gorges Dam [17], May 2011.
In February of 2014, the US Energy Information Administration reported, "The world's largest hydropower project, the Three Gorges Dam along the Yangtze River, was completed in July 2012 and includes 32 generators with a total maximum capacity of 22.5 GW. The dam's annual average power generation is anticipated to be 84.7 TWh. The Chinese government plans to increase hydro capacity to 325 GW by the end of 2015. However, China has faced some delays on projects resulting from environmental concerns and complications of population displacement" (EIA China Analysis).
However, it appears that the Chinese government is becoming more hesitant to ignore environmental sustainability issues at the expense of hydroelectric infrastructure. In April of 2015 news has slowly leaked out that the government has canceled plans to add hydroelectric dams to the upper reaches of the Yangtze River, as evidenced by the scrapping of the plan to build a large dam in the city of Chongqing. (New York Times, China Blocks Yangtze Dam Project, Activists Say [18]). It is difficult to say for sure, but according to reports from environmentalists in China, the project in Chongqing was canceled due to environmental concerns, including habitat destruction of endangered fish species. This may be an indicator that the government has grown concerned about the environmental impact of their energy infrastructure.
One intention of this course has been to expose you to information resources that may serve you well in future courses and your professional work. Earlier in this lesson, we introduced the United States Central Intelligence Agency publication, The World Fact Book. In this section, we use the international resources from the U.S. Energy Information Administration.
Read the Country Analysis [19] for China from the U.S. Energy Information Administration. (Make sure you are reading the version dated August 2022.)
Read (or scan closely) the following sections (more if you have time, it's very interesting).
Overview
Petroleum - Trade.
Natural Gas - Entire Section
Coal - Entire Section
Electricity - Entire Section
China was a key player in the COP21 (the "21st Conference of Parties") negotiations in December 2015 which resulted in the Paris Climate Agreement (sometimes called the "Paris Accord"). Both China and the U.S. [20] signed (on Earth Day 2016) and ratified the Paris Climate Agreement. Combined, they emit nearly 40% of the world's carbon emissions. In a role reversal, it is now the Chinese government that is urging the United States [21] to uphold its commitment, as President Donald Trump has withdrawn the U.S. from the agreement (though notably, cities, states, and businesses in the U.S. have stepped up and filled the emissions reductions gap [22] admirably). This is another chapter in the history of China's varying role in global climate agreements.
China is well known as the major global supplier of solar panels. This article from the IEA [23] demonstrates the extent of China's dominance in the global solar supply chain. Not only is China the major solar panel supplier globally, but the solar industry contributes quite a bit to China's overall global trade balance. The U.S. government has recently imposed tariffs [24] on Chinese solar panels and components, in order to support domestic manufacturers. The solar trade war is not going away - the recent Bipartisan Infrastructure Law passed by the U.S. Congress designates "domestic content requirements [25]" for solar panels to be eligible for subsidies and incentives.
Please read "Changing Climate: What The Paris Accord Means For China [26]" from Law360 to get some context for their role in this, and previous agreements.
Before reading the article, here are some terms that might be helpful to know:
Conference of Parties (COP): From the United Nations [27]: "The COP is the supreme decision-making body of the (UNFCCC). All States that are Parties to the Convention are represented at the COP, at which they review the implementation of the Convention and any other legal instruments that the COP adopts and makes decisions necessary to promote the effective implementation of the (UNFCCC)..." The COP has a meeting each year. The Paris Climate Agreement was made at the 21st COP, aka COP21.
UNFCCC: United Nations Framework Convention on Climate Change. This is the UN treaty that was signed in 1992 establishing the Conference of Parties (COP) system, thus establishing the organizational foundation for international climate agreements.
Non Annex I Party: This is how the Kyoto Protocol referred to "developing" countries that were not bound to emissions targets in the Protocol. Annex I parties, on the other hand, were required to reduce emissions. (There are other differences between the two, but this is the primary one.) China is a non Annex I country.
Clean Development Mechanism (CDM): CDMs are international development mechanisms created by the UN to allow Annex I countries to offset their carbon emissions by funding clean energy projects (e.g., wind farms, reforestation, etc.) in non Annex I countries. These have the dual benefit (in theory, anyway) of providing financial and technological assistance for establishing a more sustainable and lower emission energy infrastructure in low-income countries.
In addition, for a perspective on the dynamic interplay between China, the EU, and the U.S. with regards to the solar industry, tariffs, and subsidies (Oh my!) read "China's solar subsidy cuts erode the impact of Trum tariffs [28]" from Nichola Groom of Reuters and "Commission scraps tariffs on Chinese solar panels [29]" by Jorge Valero of Euractiv.
Please review Canvas calendar for all due dates related to your Nonmarket Analysis Case Study.
Complete "Weekly Activity 11," located in the "Weekly Activities" folder under the Modules tab. The activity may include a variety of question types, such as multiple choice, multiple select, ordering, matching, true/false, and "essay" (in some cases these require independent research and may be quantitative). Be sure to read each question carefully.
Unless specifically instructed otherwise, the answers to all questions come from the material presented in the course lesson. Do NOT go "googling around" to find an answer. To complete the Activity successfully, you will need to read the lesson, and all assigned readings, fully and carefully.
Each week a few questions may involve research beyond the material presented in the course lesson. This "research" requirement will be made clear in the question instructions. Be sure to allow yourself time for this! You will be graded on the correctness and quality of your answers. Make your answers as orderly and clear as possible. Help me understand what you are thinking and include data where relevant. Remember, numbers should ALWAYS be accompanied by units of measure (not "300" but "300 kW"). You must provide ALL calculations/equations to receive full credit - try to "talk me through" how you did the analysis.
This Activity is to be done individually and is to represent YOUR OWN WORK. (See Academic Integrity and Research Ethics [30] for a full description of the College's policy related to Academic Integrity and penalties for violation.)
The Activity is not timed, but does close at 11:59 pm EST on the due date as shown on the Calendar.
If you have questions about the assignment, please post them to the "Questions about EME 444?" Discussion Forum. I am happy to provide clarification and guidance to help you understand the material and questions (really!). Of course, it is best to ask early.
In this lesson, you learned...
You have reached the end of Lesson 11! Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there.
Links
[1] http://www.nationsonline.org/oneworld/asia_map.htm
[2] https://www.cia.gov/the-world-factbook/
[3] https://psu.instructure.com/courses/2191688/files/137068642?module_item_id=35906401
[4] https://www.pon.harvard.edu/daily/international-negotiation-daily/negotiation-in-china-the-importance-of-guanxi/
[5] https://www.cia.gov/the-world-factbook/countries/china/flag
[6] https://gceps.princeton.edu/wp-content/uploads/2017/01/219chow.pdf
[7] https://chinadialogue.net/en/climate/chinas-five-year-plan-for-energy-one-eye-on-security-today-one-on-a-low-carbon-future/
[8] https://www.carbonbrief.org/qa-what-does-chinas-14th-five-year-plan-mean-for-climate-change
[9] https://www.theguardian.com/environment/2020/sep/22/china-pledges-to-reach-carbon-neutrality-before-2060
[10] https://www.theguardian.com/environment/2016/sep/27/more-than-million-died-due-air-pollution-china-one-year
[11] http://www.abc.net.au/news/2017-01-08/chinese-air-pollution-crisis-caused-by-ongoing-coal-use/8168702
[12] https://www.weforum.org/agenda/2020/07/pollution-co2-economy-china/
[13] http://www.npr.org/sections/parallels/2017/03/02/518173670/for-some-in-chinas-middle-class-pollution-is-spurring-action
[14] http://earthobservatory.nasa.gov/IOTD/view.php?id=6574
[15] http://www.bbc.co.uk/news/world-asia-pacific-13451528
[16] https://english.www.gov.cn/
[17] http://www.nytimes.com/2011/05/20/world/asia/20gorges.html
[18] http://www.nytimes.com/2015/04/11/world/asia/environmental-order-in-china-to-prevent-building-of-contested-dam.html?_r=0
[19] https://www.eia.gov/international/content/analysis/countries_long/China/china.pdf
[20] https://www.pri.org/stories/2016-09-25/us-and-china-have-now-officially-ratified-paris-climate-agreement
[21] http://www.reuters.com/article/us-usa-trump-energy-china-idUSKBN1700RU
[22] https://www.brookings.edu/blog/planetpolicy/2018/06/01/trump-tried-to-kill-the-paris-agreement-but-the-effect-has-been-the-opposite/
[23] https://www.iea.org/reports/solar-pv-global-supply-chains/executive-summary
[24] https://www.npr.org/2023/08/18/1194303196/solar-panel-imports-china
[25] https://www.utilitydive.com/news/irs-guidance-renewable-energy-made-in-us/650228/
[26] https://www.e-education.psu.edu/eme444/sites/www.e-education.psu.edu.eme444/files/2016-03-21-Law360-Changing-Climate-What-The-Paris-Accord-Means-For-China.pdf
[27] http://unfccc.int/bodies/body/6383.php
[28] https://www.reuters.com/article/us-usa-solar/chinas-solar-subsidy-cuts-erode-the-impact-of-trump-tariffs-idUSKCN1LF18K
[29] https://www.euractiv.com/section/economy-jobs/news/commission-scraps-tariffs-on-chinese-solar-panels/
[30] https://www.ems.psu.edu/undergraduate/academic-integrity/academic-integrity-undergraduates