World History Plan v02

World History Plan

10/31 – 4.3 “National Unification & the National State”

11/7 – 5.3 “The National State and Democracy”

11/14 – 7.1 “The Decline of the Qing Dynasty”

11/21 – Movie (2 days, China History Video)

11/28 – 7.2 “Revolution in China”

12/5 – 8.1 “The Road to World War One”

12/12 – undecided

12/19 – break

12/26 – break

1/3 – Dead Week (review 1^st semester)

1/9 – Finals Week

1/17 – 8.2 “The War”

1/23 – 8.3 “The Russian Revolution”

1/30 – 8.4 “End of the War”

2/6 – 9.2 “The Rise of Dictatorial Regimes

2/13 – 9.3 “Hitler and Nazi Germany”

2/21 – “Beautiful Life” & Discussion

2/27 – 11.1 “Paths to War”

3/5 – 11.2 “The Course of World War II”

3/12 – 11.3 “The New World Order and the Holocaust”

3/29 – 12.1 “Development of the Cold War”

3/26 – 13.1 “Decline of the Soviet Union”

4/2 – Movie: 13 Days (Cuban Missile Crisis)

4/9 – Easter Vacation

4/16 – 15.2 “Conflict in the Middle East”

4/23 – 15.3 “The Challenge of Terrorism”

4/30 – 16.1 “Communist China”

5/7 – Transforming Beijing (pg. 716-719)

5/14 – 16.2 “Independent States in South and Southeast Asia”

5/21 - Film?

5/29 – Dead Week – Presentations?

6/4 – Finals Week

China Bubble EC

Monday, Oct. 17, 2011

What If the China Bubble Bursts?

By Ken Miller

What's the most important economic question in the world today? One contender would certainly be whether the euro will collapse. Another might be whether the U.S. will plunge into a double-dip recession. But a third, and possibly the most important over the long term, is whether China can find its way out of the biggest housing bubble ever created.


It may seem strange to Westerners, who hear so much about the rise of Asia and growing Chinese competitiveness. But like U.S. Republicans who try to "starve the beast" by cutting government spending, the Chinese Communist Party has been attempting to put a damper on the debt-fueled real estate boom that is at the heart of the nation's economic miracle. This is part of a deliberate attempt that is meant to rejigger the Chinese economy into one that relies more on a domestic service sector and less on manufacturing and exports. If, however, the party's efforts result in a precipitous drop in real estate values, multinational corporations whose revenue and earnings growth are tied to China could be hard hit. And the U.S. could be thrown back into recession. (See pictures of China's 90 years of communism.)


The world has to care about Chinese growth, since it is an important driver of the global economy. China contributed 19% of the world's economic growth in 2010, and that's expected to increase to 24% this year. China's growing strength is essential to both the U.S. and European recoveries.


While Washington has sweated through its partisan debates on budget balancing and economists have bickered over solutions to our low-growth and high-unemployment problems, the Chinese boom of the past several decades has blasted ahead without a glitch. Much of that boom is wrapped up in real estate. In the first six months of this year, Chinese investment in real estate was up 32.9% compared with the same period in 2010, and China's economy is expected to grow more than 9% this year, about equal to its average during the post — Deng Xiaoping era of "communism with Chinese characteristics."


The popular narrative is that China's rise from nowhere in 1978 to its position today as the world's second largest economy has been fueled by cheap labor. While this is one factor, cheap capital and land have been as important. Most Chinese, who are huge savers, have little choice but to put their money in bank accounts that pay interest lower than the rate of inflation; these funds are then channeled into state-owned enterprises whose capital expenditures create the factories and buildings on which the Chinese miracle has been built. (See pictures of China's cutting-edge architecture.)


But the Chinese are pretty smart about money. They see the fortunes the elites have made by buying land at bargain prices and developing it. Ordinary individuals cannot get in on the ground floor to reap the obscene profits made by well-connected officials who facilitate purchases from historical occupants, but they are permitted to invest in real estate at later stages of development, and their wealth grows every year. Anyone who's spent more than a day or two in China knows that real estate is a popular preoccupation. Apartment flipping is all the rage; real estate prices have tripled in the past five years.


The question is whether the building bubble — not only in housing but in commercial property as well — is about to burst. Everywhere you go in China, you see new airports and high-speed train lines under construction; see-through apartment buildings whose empty units loom unilluminated in the night; beautiful underutilized roads, bridges and tunnels; and newly risen ghost towns waiting for occupants. One such town, Kangbashi, in Inner Mongolia, has everything a city needs, including investors who have bought apartments on spec. Yet it remains unoccupied, as reported last year in this magazine. Why does China keep building? Because building creates jobs and wealth for those who are associated with all that development.


Right after Mao came to power in 1949, China experimented briefly with driving growth through internal consumption, but this led to a flight of capital and dependence on foreign borrowing that scared the leadership. The party decided to focus on production and exports fueled by state capital expenditure. The factories that churned out made-in-China goods and the infrastructure that supported the factories encouraged the building boom that has culminated in a glut of high-rises all over the Middle Kingdom. (See pictures of Chinese actors impersonating Chairman Mao Zedong.)


The problem today is that this model, which has worked so well for over three decades, is showing signs of fatigue. Factories that make things the world wants were built long ago (and factories in many other parts of Asia can now churn out goods more cheaply than China). Returns on investment have been declining.
Despite undrinkable water and unbreathable air in many parts of the country, the party continues to enjoy widespread support; its p.r. machine emphasizes its efforts to redress China's humiliation at the hands of the West in the 19th and 20th centuries. Even intellectuals who gripe about personal-freedom and civil rights issues seem to do so through a filter of sincere patriotism. Unfortunately, the strains caused by hell-bent growth are starting to show up everywhere. Mass protests of party abuses — often the taking of land without just compensation — have been rising so steadily that the government did not publish the number of them last year. At government facilities in many regions of the country, there have been explosions set off by citizens so disaffected that they don't care about the consequences.


Beijing knows it's time to change strategy. The party's latest five-year plan shows that it wants to shift away from the old export-and-building-boom model to one that relies more on domestic demand for goods and services. But as it is finding out, this is easier said than done.


One problem the authorities have run into is their inability to stop cheap capital from flowing into state-owned enterprises. These businesses use the money they borrow to invest directly in real estate or lend to others who do so. The business elites owe their management positions to the party, and they continue to arrange access to cheap capital, which allows them to grow their profits while improving their standing in the hierarchy. If the party's attempt to rein in the easy money flowing to state-owned enterprises results in a dramatic decline in property values, the outcome could be an earthquake in the Chinese financial system that would be felt in the U.S. (See what Asia can really teach America.)


In the past, loans made by state banks to big government-related businesses created a significant amount of bad debt that had to be written off. In 1998 and 2004 — 05, a total of about $500 billion was classified as nonperforming loans (which state officials transferred into special investment vehicles in an attempt to create the appearance of containing the problem). But because the state, which owns the biggest banks — and thus the people's savings — ultimately pays the price of the write-off, households bear the cost of the cleanup.
There are rumors around the country that another big round of write-offs is imminent. If Beijing is serious about moving to a consumption model, imposing the cost of these bad loans on citizens again will be a serious impediment to that goal. Household income as a percentage of GDP has been declining in China for almost a decade, and it's hard to see what the people are going to use to buy stuff, even if wages rise, if they have to keep paying for bailouts and can't earn anything on their savings. It is one thing for the government to lower taxes on consumer goods, as it recently did, but unless it can reverse the decline in household income as a percentage of GDP, the people won't spend.


Another problem Beijing has in moving to a new growth model is local and provincial governments' addiction to revenue from land sales. According to the Ministry of Finance, land sales totaled $500 billion in 2010, more than double the amount of the previous year. Because provincial officials are promoted on the basis of their GDP-growth figures and because land sales are an important part of local revenue, it's difficult to curb the enthusiasm of local officials for project development.


Of course, nothing is ever a bubble until it bursts. Even an empty city is not a convincing warning to those who remember that it took Shanghai many years to grow into the now booming Pudong. Although some of these beautiful, ubiquitous new bridges, roads, tunnels and buildings may be underused today, maybe they will prove to be just the catalyst needed to keep the economy driving forward when demand catches up, as the optimists argue. (See pictures of China's high-speed rail.)


But if the bubble pops, it will have serious consequences in the U.S. America sold $92 billion in goods and services to China last year. If China succeeds in moving away from its model of cheap land and cheap capital and makes a smooth transition to an economy based more on domestic demand, hallelujah. But if Chinese land prices plummet, there will be less demand for raw materials and a steep decline in world commodity markets and global trade in general.


That could very easily lead to even higher unemployment in the West. The U.S. economy is already in the strange position of having cash-rich companies that are not spending or hiring. Imagine how much less inclined they will be to do so if they are frightened by a Chinese economic slowdown. And the U.S. government, already shedding jobs in the aftermath of the 2008 crisis, will be in no position to ride to the rescue.


Senior Chinese officials are secretly quite worried about a hard landing. Many observers say a sharp economic decline won't be permitted to happen before the change of leadership in 2012. But the Chinese stock market was not supposed to be allowed to crash in the run-up to the 2008 Beijing Olympics, and it did. The Chinese Communist Party is trying to engineer a delicate redefinition of how its economic model will work going forward. The last thing it needs right now is U.S. sanctions against Chinese imports. A more constructive approach, one that recognizes that the U.S. and China are in the same global economic boat together, would be for the U.S. to incentivize the export of technologies aimed at helping China grow its service sector. The U.S. needs an economically stable and growing China to buy not just its IOUs but also its goods and services.


Miller is managing partner of Keylink Capital International, a strategic financial adviser on international transactions

Extra Credit Questions

1. What are the major problems affecting China’s economy today?  (2 points)
2. If you were an investor, would you seek to invest in China’s housing market today?  Why or why not?  (1 point)
3. Why doesn’t Kangbashi, Inner Mongolia, have any citizens?  Would you live there if nobody else did?  (1 point)
4. How could a China slowdown affect the United States?  (2 points)
5. Which has been more important in fueling China’s growing economy: cheap labor or cheap land?  Explain (there is no right answer here, just back up your answer with quotes from the passage).  (2 points)
6. How is China’s environment?  Is air pollution and water pollution getting better or worse?  How does that affect political stability (i.e. the number of people protesting) (2 points)

Speaker Series at HSU

For those of you who are interested:
http://humboldt.edu/envcomm/speaker_series

Homework Etc.

Hi All, I hope you all had a great Homecoming Week and Weekend.  Just a reminder that the Section 2 review in Chapter 3 is due on Monday.  You need to complete #1, 2, 3, 5, and 6.

Also, I would recommend making flashcard (or other memory-sticking techniques) for the following terms for the exam (from section 1, 2, and 3)

Third Estate
bourgeoisie
Louis XVI
Tennis Court Oath
Declaration of the Rights of Man and the Citizen
Geogre Danton
Jean-Paul Marat
Maximilien Robespierre
National Convention
Girondins
Jacobins
Committee for Public Safety
The Great Terror
The Directory
Napoleon Bonaparte
Civil Code or Napoleonic Code
Waterloo
Duke of Wellington

I would also pay particular attention to the maps on pgs. 216 and 233.

Answers for Section 1
1.  Answers are in the glossary
2.  Louis XVI (pg. 213), Tennis Court Oath (p. 214), Declaration (p. 215), Olympe de Gouge (p. 215)
3.  See Chapter maps
4.  It was part of the old order that was being torn down.
5.  right to liberty, property, security; freedom from oppression; equal rights for all men; equal access to public office; equal, fair taxation.

Chapter Three Review

The French Revolution and Napoleon – Chapter 3 Review

Section 1: The French Revolution Begins

Big Question: Why have people in the past struggled for their rights?

Main Ideas

§       The Third Estate, the vast majority of the people, were heavily taxed and discontented.

§       Meeting as a separate assembly made the Third Estate votes count as much as those of the clergy and nobles.

§       The National Assembly set up a limited monarchy in the Constitution of 1791

Chapter Objectives

§       Describe the social inequalities that contributed to the French Revolution

§       Describe the economic problems that contributed to the French Revolution.

§       Understand why certain groups opposed the new order.

HW: pg. 218 (1, 2, 3, 4, 5) – due 10/5 (Wed)

Section 2: Radical Revolution and Reaction

Big Question: What is the difference between asserting a claim to human rights and simply trying to gain more power? 

Main Ideas

§       Some European countries threatened to invade France to keep the king in power.

§       The Committee of Public Safety executed thousands who opposed the government.

§       The revolutionary army defended France against invasion.

§       The Directory set up in 1795 was not able to solve the government’s economic problems.

Chapter Objectives

§        Identify the reasons why a European coalition fought together against France.

§       Explain why the Reign of Terror occurred.

§       Explain how Napoleon Bonaparte was able to seize power during a coup d’état.

HW: pg. 225 (1, 2, 3, 5, 6) – due 10/10 (Mon)

Section 3: The Age of Napoleon

Big Question: What are the ways that governments violate the rights of their citizens? 

Main Ideas

§       Napoleon overthrew the Directory and eventually held total power.

§       Napoleon established a single law code that recognized the equality of all citizens.

§       Napoleon established an empire covering much of Europe.

§       Nationalism spread by France led to opposition to French rule in other countries.

§       After major losses in Russia and Austria, Napoleon met defeat at Waterloo and was exiled.

Chapter Objectives

§       Describe Napoleon’s rise to power and his victories.

§       Explain why Napoleon was ultimately defeated.

§       Explain how the spread of nationalism led to French defeats

HW: pg. 235 (1, 2, 3, 4, 5) – due 10/13 (Thurs)

Chapter Review pg. 238 (16, 17, 18, 19, 20, 21, 23, 25, 33, 34, 35, 36) – due 10/18 (Tues – Test Day) (extra credit is #28, 29)

Mesquita on the Daily Show

Here is the link.  Check it out:
http://www.thedailyshow.com/watch/mon-september-28-2009/bruce-bueno-de-mesquita

Instructions for Academic Writing

Analyze           Break the subject (an object, event, or concept) down into parts, and describe the various parts. 

Compare        Show how two things are similar as well as different; include details or examples

Contrast         Show how two things are different; including details or examples

Critique          Point out both the good and bad points of something

Define            Give an accurate meaning of a term with enough detail to show that you really understand it

Describe        Write about the subject so the reader can easily visualize it; tell how it looks or happened, including how, who, where, and why

Diagram          Make a drawing of something, and label its parts

Discuss          Give a complete and detailed answer, including important characteristics and main points

Evaluate         Give your opinion of the value of the subject; discuss its good and bad points, strengths and weaknesses

Explain           Give the meaning of something; give facts and details that make the idea easy to understand. 

Illustrate         Make the point or idea clear by giving examples

Interpret         Tell about the importance of the subject.  Explain the results or the effects of something. 

Justify             Give good reasons that support a specific decision, action, or event. 

Outline           Make an organized listing of the important points of a subject

Persuade       Give good reasons in order to get someone to either do or believe something; try to appeal to both the reader’s feelings and mind

Prove             Show that something is true by giving facts or logical reasons

Relate             Show how things are alike or connected. 

State               Give the main points in brief, clear form

Summarize     Briefly cover the main points; use a paragraph form

Trace              Tell about an event of process in chronological order