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Chicago Journal of International Law

Abstract

Reminiscent of America's drive west in search of valuable resources and economic growth, China is pursuing its own manifest destiny with an aggressive outward economic expansion program. The drive spans across many key sectors and touches on virtually every resource-rich country in the world. The drivers behind the program are few and rather simple: China is looking beyond its borders to sate its enormous domestic demands (focusing primarily on energy, minerals and agriculture) and to develop international markets (including distribution and after-market service channels) for its growing manufacturing sector. Spearheading the campaign are a number of increasingly world-class domestic companies. These companies have long held select advantages to their foreign competitors, including access to cheap labor and benefits bestowed by the state, that have allowed them to grow competitive internationally. And over the last few years, Chinese government policy has actively encouraged the global ambitions of China's corporations and banks. Chinese companies are dominating global exports and a number are starting to purchase significant stakes in foreign assets and reputable foreign companies. Yet despite the vast potential of Chinese companies to compete globally, there exists an equal number of systemic issues which have hampered Chinese growth. Companies are still held back by issues such as bureaucratic red tape and corruption, a lag in management and international experience and a growing distrust by foreign targets. Banks are hindered in their own growth and in fully assisting the global drive by problems such as non-performing loans and internal restructuring. The resolution of these issues will tell us not whether Chinese companies will take over the world, but when.

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