By Cahal Milmo
Published: 01 January 2008
Here comes the world's newest superpower. The rest of the world is gloomily contemplating economic slowdown and even recession. Not in Beijing. China is set to make 2008 the year it asserts its status as a global colossus by flexing frightening economic muscle on international markets, enjoying unprecedented levels of domestic consumption and showcasing itself to a watching world with a glittering £20bn Olympic Games.
The world's most populous nation will mark the next 12 months with a coming-of-age party that will confirm its transformation in three decades from one of the poorest countries of the 20th century into the globe's third-largest economy, its hungriest (and most polluting) consumer and the engine room of economic growth.
Once regarded at best as a sporting also-ran, China is widely tipped to top the medals table in the Beijing Olympics in August, an event in which the country's leadership is investing huge importance and prestige.
It will be a celebration viewed with consternation by many, as China's authoritarian regime shows little sign of relaxing its grip on power and continues to expand its influence overseas from the oil fields and metal mines of Africa to the City of London. Appropriately, 2008 marks the Year of the Rat, an animal considered in Chinese folklore to be a harbinger and protector of material prosperity.
Britain will feel the full power of the new superpower's confidence. This month, for the first time, China's state-controlled banks will begin spending some of its $1.33trn (£670bn) in foreign currency reserves on London's financial markets. Beijing has ruled that Britain should become only the second destination after Hong Kong to be allowed to receive investors' money via so-called "sovereign funds" – the huge state-controlled surpluses built up by cash-rich economies from Qatar to South Korea. Throw in the biggest round of Chinese art exhibitions ever to tour these islands and the oriental bias to 2008 becomes even more pronounced.
The UK has made it clear that Beijing's investment, which could reach as much as £45bn, is welcome and it follows the recent acquisition by Chinese banks of stakes in such blue chip stocks as Barclays and the US private equity firm Blackstone, at a cost of $3bn. The talk in the finance houses is that the label "Made in China" will soon be replaced by one reading "Owned by China". Takeover speculation has provoked concern in some quarters at the wisdom of selling large assets to organs of a democratically unaccountable state where the financial sector remains underdeveloped.
China's trade surplus with the rest of the world will widen from £130bn in 2007 to £145bn this year as it tries to tame its burgeoning economy amid pressure from Washington and Brussels to narrow the trade gap and raise its currency's value.
Stephen Perry, chairman of the 48 Group Club, a Sino-British business network, said: "China has become an international player much more quickly than it would have wanted to do, in part to meet its need for natural resources. But I don't think China has any intention of taking on American power. The West is important to China in this stage of its development as it seeks inward investment. But that is beginning to be much less important and it is looking more to the development of a strong Asia, in which it is one of the strongest players because of its enormous consumer base."
But while some may question Beijing's political motives, there is no doubt that China has arrived as serious power-broker. Last year, it surpassed America as the greatest driver of global economic demand. It is also widely predicted to overtake Germany as the world's third largest economy this year.
While nearly all of its success since Premier Deng Xiaoping began China's economic transformation in 1978 has been driven by producing goods for the outside world, the country has a burgeoning urban middle-class whose insatiable appetite for consumer durables is hoped to put the economy on a more stable footing. One London-based luxury markets analyst said: "The Chinese are waking up to quality brands in a way that is quite exciting. There is a real sense that what the West once kept to itself is now available to them, or at least the urban few who can afford it."
The arrival of conspicuous consumption and entry of Shanghai's sovereign funds into foreign investment markets, with London soon expected to be followed by the US, is symptomatic of a China increasingly willing to assert itself as a political and cultural influence, according to experts.
From global warming to Darfur and North Korea, the views of Beijing and its willingness to act have become prerequisites to any solution to the world's most pressing problems.
The Chinese New Year on 7 February will herald the beginning of the largest-ever festival of China's culture in Britain with an accent on contemporary artists in fields from video art to neon signs. But others warn 2008 has as much potential to be a disaster as a triumph for Beijing's attempts to herald its own arrival on the world stage. The Chinese capital will host 31,000 journalists for the Olympics and any sign of protest or an attempt to quell dissent with violence would be catastrophic.
The drum beat of protectionism is already sounding in America and will only get louder in a presidential election year, putting pressure on both Republican and Democratic candidates to take a "strong" stance on China. In the meantime, Beijing will have to grapple with issues from rising inflation to Taiwan, which holds presidential elections in March, to its status as the world's biggest emitter of carbon dioxide and likely role as the largest consumer of primary energy resources.
Dr Kerry Brown, associate fellow of the Royal Institute of International Affairs, said: "There are good reasons to feel pretty uncomfortable about 2008 for China. The world will be rightly watching China in August for the Olympics. But it will only take one truncheon blow to turn it away from a story about sport to one about repression."
The world's most populous nation will mark the next 12 months with a coming-of-age party that will confirm its transformation in three decades from one of the poorest countries of the 20th century into the globe's third-largest economy, its hungriest (and most polluting) consumer and the engine room of economic growth.
Once regarded at best as a sporting also-ran, China is widely tipped to top the medals table in the Beijing Olympics in August, an event in which the country's leadership is investing huge importance and prestige.
It will be a celebration viewed with consternation by many, as China's authoritarian regime shows little sign of relaxing its grip on power and continues to expand its influence overseas from the oil fields and metal mines of Africa to the City of London. Appropriately, 2008 marks the Year of the Rat, an animal considered in Chinese folklore to be a harbinger and protector of material prosperity.
Britain will feel the full power of the new superpower's confidence. This month, for the first time, China's state-controlled banks will begin spending some of its $1.33trn (£670bn) in foreign currency reserves on London's financial markets. Beijing has ruled that Britain should become only the second destination after Hong Kong to be allowed to receive investors' money via so-called "sovereign funds" – the huge state-controlled surpluses built up by cash-rich economies from Qatar to South Korea. Throw in the biggest round of Chinese art exhibitions ever to tour these islands and the oriental bias to 2008 becomes even more pronounced.
The UK has made it clear that Beijing's investment, which could reach as much as £45bn, is welcome and it follows the recent acquisition by Chinese banks of stakes in such blue chip stocks as Barclays and the US private equity firm Blackstone, at a cost of $3bn. The talk in the finance houses is that the label "Made in China" will soon be replaced by one reading "Owned by China". Takeover speculation has provoked concern in some quarters at the wisdom of selling large assets to organs of a democratically unaccountable state where the financial sector remains underdeveloped.
China's trade surplus with the rest of the world will widen from £130bn in 2007 to £145bn this year as it tries to tame its burgeoning economy amid pressure from Washington and Brussels to narrow the trade gap and raise its currency's value.
Stephen Perry, chairman of the 48 Group Club, a Sino-British business network, said: "China has become an international player much more quickly than it would have wanted to do, in part to meet its need for natural resources. But I don't think China has any intention of taking on American power. The West is important to China in this stage of its development as it seeks inward investment. But that is beginning to be much less important and it is looking more to the development of a strong Asia, in which it is one of the strongest players because of its enormous consumer base."
But while some may question Beijing's political motives, there is no doubt that China has arrived as serious power-broker. Last year, it surpassed America as the greatest driver of global economic demand. It is also widely predicted to overtake Germany as the world's third largest economy this year.
While nearly all of its success since Premier Deng Xiaoping began China's economic transformation in 1978 has been driven by producing goods for the outside world, the country has a burgeoning urban middle-class whose insatiable appetite for consumer durables is hoped to put the economy on a more stable footing. One London-based luxury markets analyst said: "The Chinese are waking up to quality brands in a way that is quite exciting. There is a real sense that what the West once kept to itself is now available to them, or at least the urban few who can afford it."
The arrival of conspicuous consumption and entry of Shanghai's sovereign funds into foreign investment markets, with London soon expected to be followed by the US, is symptomatic of a China increasingly willing to assert itself as a political and cultural influence, according to experts.
From global warming to Darfur and North Korea, the views of Beijing and its willingness to act have become prerequisites to any solution to the world's most pressing problems.
The Chinese New Year on 7 February will herald the beginning of the largest-ever festival of China's culture in Britain with an accent on contemporary artists in fields from video art to neon signs. But others warn 2008 has as much potential to be a disaster as a triumph for Beijing's attempts to herald its own arrival on the world stage. The Chinese capital will host 31,000 journalists for the Olympics and any sign of protest or an attempt to quell dissent with violence would be catastrophic.
The drum beat of protectionism is already sounding in America and will only get louder in a presidential election year, putting pressure on both Republican and Democratic candidates to take a "strong" stance on China. In the meantime, Beijing will have to grapple with issues from rising inflation to Taiwan, which holds presidential elections in March, to its status as the world's biggest emitter of carbon dioxide and likely role as the largest consumer of primary energy resources.
Dr Kerry Brown, associate fellow of the Royal Institute of International Affairs, said: "There are good reasons to feel pretty uncomfortable about 2008 for China. The world will be rightly watching China in August for the Olympics. But it will only take one truncheon blow to turn it away from a story about sport to one about repression."
By Ciar Byrne, Arts & Media Correspondent
Published: 01 January 2008
Skyscrapers reach into the air above Shanghai, a symbol of emergent economic might. In Beijing, the "birds nest" stadium is woven into the urban landscape, serving notice of a sporting revolution. Yet China's astonishing domination of the world stage this year will have a third dimension, and it will be played out in Britain.
Chinese culture steps out of the shadows in 2008, reminding the world of its rich legacy of music, dance and visual arts. However, those expecting throwbacks to the Ming dynasty or totalitarian art will be disappointed. For the UK is about to be flooded by a new wave of creativity unlike anything it has seen before.
The Chinese New Year begins on 7 February, the start of the year of the rat. It will also mark the beginning of China Now, the UK's largest festival of Chinese culture, which will continue up to and after Olympics in August, with more than 800 events nationwide. As part of the festival, the organisers are staging China Art Now, a trail of work by new and established artists which will span the UK.
One of the artists featured is Cao Fei, who works in the virtual online world Second Life, where she has created RMB City, a fictional place named after the Chinese People's Currency (the renminbi or RMB), and a hybrid of communism, socialism and capitalism.
Highlighting a very different aspect of China, a sculpture trail will include works by Sui Jianguo, who has created two giant, bronze-cast Mao suits, which will be exhibited in public gardens across Britain. The head of the sculpture department at the Central Academy of Fine Arts in Beijing, Jianguo first realised the disappearing cultural significance of the Mao suit when he visited the birthplace of the Chinese revolutionary leader Sun Yat-sen in Guangdong province in the summer of 1996.
China Art Now is also expected to feature a huge brontosaurus installation, inspired by Damien Hirst's animals in formaldehyde, by Xu Zhen, known as the maverick of the Chinese art world, to be situated outside London's Hayward Gallery.
And He An, a young artist who explores the contemporary environment of China, is creating four neon signs, which will be displayed on iconic buildings around Britain.
The sound artists Zhong Minjie, Yan Jun and Wang Changcun are creating installations at the Southbank Centre ballroom, bringing sounds from the streets, shops, bars and workplaces of modern China to London. At a number of locations, headphone trails will guide listeners through a Chinese soundscape in their local area. When, for example, they pass a school playground, they will hear sounds from a schoolyard in China.
Sadler's Wells, meanwhile, is staging a season of Chinese dance in May and June 2008. The dancer and choreographer Sidi Larbi Cherkaoui has teamed up with the artist Antony Gormley to create a piece inspired by the martial arts of the Buddhist monks from the Shaolin Temple.
Alistair Spalding, the chief executive and artistic director of Sadler's Wells, said: "The more I've worked with the Chinese, the more I realise how different we are as people. They've had this huge event in terms of the Cultural Revolution – a huge weight over the creative process. They're just really coming out of that.
"In some areas of the arts, particularly the visual arts, they've really raced ahead; they've become quite avant-garde. Because it was so repressed, it's come out in quite an extreme way. China is going to be an absolute force."
China has a very strong classical dance tradition and the impresario Victor Hochhauser is bringing the National Ballet of China to Covent Garden for a week of performances including a new production of Swan Lake by Natalia Makarova and Raise The Red Lantern, based on the controversial 1991 film of the same name.
Hochhauser's China Season will also feature Acrobatic Swan Lake, a radical makeover of the ballet by the Guandong Acrobatic Company, which combines classical ballet with pole balancing, rope walking, and jumping through fire hoops.
The Liverpool Biennial, meanwhile, is working with the artist Ai Weiwei, who designed the Beijing Olympic stadium, on a proposal for an ambitious installation, which would consist of a giant spider's web, made of illuminated crystalline strands stretching across the city's Albert Dock.
There will also be a design spectacular, China Design Now, at the Victoria and Albert Museum. Zhang Hongxing, the co-curator of the exhibition summed up what 2008 will mean for his country. "Despite China's economic importance, its contemporary culture remains mysterious and remote in the West." Bringing it to the UK would, he added, present the world with " a more balanced and layered picture of contemporary China".
Chinese culture steps out of the shadows in 2008, reminding the world of its rich legacy of music, dance and visual arts. However, those expecting throwbacks to the Ming dynasty or totalitarian art will be disappointed. For the UK is about to be flooded by a new wave of creativity unlike anything it has seen before.
The Chinese New Year begins on 7 February, the start of the year of the rat. It will also mark the beginning of China Now, the UK's largest festival of Chinese culture, which will continue up to and after Olympics in August, with more than 800 events nationwide. As part of the festival, the organisers are staging China Art Now, a trail of work by new and established artists which will span the UK.
One of the artists featured is Cao Fei, who works in the virtual online world Second Life, where she has created RMB City, a fictional place named after the Chinese People's Currency (the renminbi or RMB), and a hybrid of communism, socialism and capitalism.
Highlighting a very different aspect of China, a sculpture trail will include works by Sui Jianguo, who has created two giant, bronze-cast Mao suits, which will be exhibited in public gardens across Britain. The head of the sculpture department at the Central Academy of Fine Arts in Beijing, Jianguo first realised the disappearing cultural significance of the Mao suit when he visited the birthplace of the Chinese revolutionary leader Sun Yat-sen in Guangdong province in the summer of 1996.
China Art Now is also expected to feature a huge brontosaurus installation, inspired by Damien Hirst's animals in formaldehyde, by Xu Zhen, known as the maverick of the Chinese art world, to be situated outside London's Hayward Gallery.
And He An, a young artist who explores the contemporary environment of China, is creating four neon signs, which will be displayed on iconic buildings around Britain.
The sound artists Zhong Minjie, Yan Jun and Wang Changcun are creating installations at the Southbank Centre ballroom, bringing sounds from the streets, shops, bars and workplaces of modern China to London. At a number of locations, headphone trails will guide listeners through a Chinese soundscape in their local area. When, for example, they pass a school playground, they will hear sounds from a schoolyard in China.
Sadler's Wells, meanwhile, is staging a season of Chinese dance in May and June 2008. The dancer and choreographer Sidi Larbi Cherkaoui has teamed up with the artist Antony Gormley to create a piece inspired by the martial arts of the Buddhist monks from the Shaolin Temple.
Alistair Spalding, the chief executive and artistic director of Sadler's Wells, said: "The more I've worked with the Chinese, the more I realise how different we are as people. They've had this huge event in terms of the Cultural Revolution – a huge weight over the creative process. They're just really coming out of that.
"In some areas of the arts, particularly the visual arts, they've really raced ahead; they've become quite avant-garde. Because it was so repressed, it's come out in quite an extreme way. China is going to be an absolute force."
China has a very strong classical dance tradition and the impresario Victor Hochhauser is bringing the National Ballet of China to Covent Garden for a week of performances including a new production of Swan Lake by Natalia Makarova and Raise The Red Lantern, based on the controversial 1991 film of the same name.
Hochhauser's China Season will also feature Acrobatic Swan Lake, a radical makeover of the ballet by the Guandong Acrobatic Company, which combines classical ballet with pole balancing, rope walking, and jumping through fire hoops.
The Liverpool Biennial, meanwhile, is working with the artist Ai Weiwei, who designed the Beijing Olympic stadium, on a proposal for an ambitious installation, which would consist of a giant spider's web, made of illuminated crystalline strands stretching across the city's Albert Dock.
There will also be a design spectacular, China Design Now, at the Victoria and Albert Museum. Zhang Hongxing, the co-curator of the exhibition summed up what 2008 will mean for his country. "Despite China's economic importance, its contemporary culture remains mysterious and remote in the West." Bringing it to the UK would, he added, present the world with " a more balanced and layered picture of contemporary China".
Published: 01 January 2008
In 2008, China will contribute more to world economic growth than the United States. Were it not for China, in other words, the world would be staring at a recession right now. Untroubled by the credit crunch, China is still set to grow in the next year by something like 10 per cent. At that rate its economy will double again in seven years time, and it will be well on the way to becoming the world's second-largest economy, outstripping Germany and Japan. It may take just a decade to catch up with the US.
But for next year at any rate we should be thankful that China will probably save us from a slump. Even China's vast trade surplus with America – they are now each other's largest trading partners – may begin to correct itself thanks to the dramatic devaluation of the dollar and a more modest revaluation of the renminbi. That will help resolve one of the great "global imbalances" in economics and ease geopolitical tensions too, if it muffles populist US calls for more protection.
Meanwhile, we can still expect the various Chinese sovereign wealth funds, with trillions of dollars at their disposal, to carry on taking strategic stakes in major Western companies such as the one in Barclays that was acquired last year.
But are the Chinese using an undervalued currency to deliberately build up enormous trade surpluses that are then used to buy Western know-how and technology? Will we see more intellectual property and factory equipment crated up and sent east, as happened with MG Rover? Expect a controversy about the role and motives of such massive Chinese investments to become a renewed source of controversy – especially within the EU.
However, there are signs that the trajectory of China's rise may not be quite as astronomic as we have come to expect; 2008 could be year when China faces its most serious financial crisis since Deng Xiao Ping initiated the market reform process 30 years ago. Western China remains largely agrarian and poor in stark contrast to the modern industrialised east. Beijing's rhetoric about balance, harmony and restoration of Confucius into official thinking has done little to resolve the question of such unequal growth. The rural poor are especially hard-hit by inflation in the price of basic foodstuffs. Just as Chinese growth has bid up the world price of oil so it has with food.
Inflation generally is accelerating as the economy shows signs of overheating. Are the Chinese authorities and banks ready to deal with such a problem? Most perilously, what happens if the bubble that is the Chinese stock market goes pop? The Shanghai market rose a further 161 per cent in 2007, and too many Chinese cleaners and cabbies have poured their life savings into what is basically a gamble. The rest of us can only hope their luck holds.
But for next year at any rate we should be thankful that China will probably save us from a slump. Even China's vast trade surplus with America – they are now each other's largest trading partners – may begin to correct itself thanks to the dramatic devaluation of the dollar and a more modest revaluation of the renminbi. That will help resolve one of the great "global imbalances" in economics and ease geopolitical tensions too, if it muffles populist US calls for more protection.
Meanwhile, we can still expect the various Chinese sovereign wealth funds, with trillions of dollars at their disposal, to carry on taking strategic stakes in major Western companies such as the one in Barclays that was acquired last year.
But are the Chinese using an undervalued currency to deliberately build up enormous trade surpluses that are then used to buy Western know-how and technology? Will we see more intellectual property and factory equipment crated up and sent east, as happened with MG Rover? Expect a controversy about the role and motives of such massive Chinese investments to become a renewed source of controversy – especially within the EU.
However, there are signs that the trajectory of China's rise may not be quite as astronomic as we have come to expect; 2008 could be year when China faces its most serious financial crisis since Deng Xiao Ping initiated the market reform process 30 years ago. Western China remains largely agrarian and poor in stark contrast to the modern industrialised east. Beijing's rhetoric about balance, harmony and restoration of Confucius into official thinking has done little to resolve the question of such unequal growth. The rural poor are especially hard-hit by inflation in the price of basic foodstuffs. Just as Chinese growth has bid up the world price of oil so it has with food.
Inflation generally is accelerating as the economy shows signs of overheating. Are the Chinese authorities and banks ready to deal with such a problem? Most perilously, what happens if the bubble that is the Chinese stock market goes pop? The Shanghai market rose a further 161 per cent in 2007, and too many Chinese cleaners and cabbies have poured their life savings into what is basically a gamble. The rest of us can only hope their luck holds.
The writer is the Independent's Economics Editor
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