ABSTRACT
This chapter focuses on how the China model plays out in China's relations with the rest of the world. A rising China constitutes a shock to the international system, creating winners and losers. For the developed countries, China's rise is putting pressure on the manufacturing sector. But some countries, including the United States, had been losing manufacturing before China's rise, and China is part of a global production network now. China's rise impacts the developing countries mainly in three ways. First, China's rapid economic growth constitutes an exogenous shock to the existing world market. Its booming manufacturing economy pushes up the prices of energy and natural resources. Second, China's rise offers an alternative example of progress and growth to the Western models. Third, China provides direct assistance in foreign aid, loans, training and investment in the developing world. The China model is now a major concern for even the Western business community because of the strengthening of China's state capitalism.
