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The World Under PressureHow China and India Are Influencing the Global Economy and Environment$
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Carl Dahlman

Print publication date: 2011

Print ISBN-13: 9780804777131

Published to Stanford Scholarship Online: June 2013

DOI: 10.11126/stanford/9780804777131.001.0001

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Growing Economic and Geopolitical Impact

Growing Economic and Geopolitical Impact

(p.112) Chapter 5 Growing Economic and Geopolitical Impact
The World Under Pressure
Stanford University Press

Given the rapid economic growth of China and India, this chapter examines the impact of such growth on the world economy and geopolitics. It first assesses the positive and negative effects of the two countries' trade on other countries before turning to China's contribution to global imbalances. China has the world's largest trade surpluses, part of which it uses to buy U.S. Treasuries, resulting in a strong symbiotic relationship with the United States which has the largest trade deficits in the world. Two other economic impacts of the tremendous growth of China and India relate to foreign direct investment and unfair competition through intellectual piracy and restricted access to domestic markets. In particular, China is using access to its booming domestic market to demand greater technology transfer and give preferences to domestic firms at the expense of foreign firms. This booming market makes China an attractive destination for multinational corporations. Finally, China's growing military capability as a result of its rapid economic growth raises concerns about the changing balance of military power worldwide.

Keywords:   geopolitics, military power, trade, United States, foreign direct investment, unfair competition, technology transfer

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