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The Dark Side of China's Economic Rise
Author(s) -
Wuttke Jörg
Publication year - 2017
Publication title -
global policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.602
H-Index - 33
eISSN - 1758-5899
pISSN - 1758-5880
DOI - 10.1111/1758-5899.12439
Subject(s) - china , subsidy , position (finance) , government (linguistics) , financial crisis , investment (military) , market economy , business , great rift , capital (architecture) , international trade , economics , world economy , economic policy , economy , finance , politics , political science , linguistics , philosophy , physics , astronomy , law , macroeconomics , history , archaeology
Since China acceded to the World Trade Organisation ( WTO ) in 2001, the country's importance to and impact on the global economy has expanded rapidly. This has been particularly notable since the global financial crisis in 2008. While this has created new opportunities and benefits for Europe, it has also brought with it important new challenges. One such challenge is the impact of industrial overcapacity in industries like steel that have resulted from the allocation of capital on non‐commercial terms. Going forward the China Manufacturing 2025 ( CM 2025) initiative that was announced in 2015 is another. The latter represents an attempt by the Chinese authorities to maintain a position as ‘masters’ of China's economy instead of allowing the market to drive innovation and industrial upgrading. Since CM 2025 also allocates capital on non‐commercial terms, including through subsidies and government‐backed investment funds, there is a risk that it will lead to overcapacity in advanced industries of importance to China's economy. This concern is further exacerbated by the fact that as Chinese investment rapidly expands in Europe, the authorities continue to deny European business reciprocity in the Chinese market.