There seems no doubt that China as a world power is rising. The questions examined here are:
- How “powerful” is China and how does it compare with Europe and the USA?
- What is the likely outcome of China’s greater economic growth vis-à-vis Europe and the USA?
- Should we in the West be worried?
To help me answer these questions I have relied here mostly on two lectures I recently attended, offered by The Swedish Institute of International Affairs (Utrikespolitiska Institutet, or UI).
To have a reference point for many of the comments to follow, here is a chart showing various economic measures for China and the USA, and other major world economies, including the EU (27 countries).
(Click on all charts and images for greater clarity).
The focus of Mr. de Jonquiéres’s presentation was on economics, finance, and trade.
Mr. Brzezinsinki addressed these areas: the history of hegemonic warfare; the shift of global power toward the East; general political awakening, beginning with the French Revolution; the role of the USA in maintaining a peaceful power balance in the world.
The two presentations were complementary and tended toward the same conclusions, at least with respect to the nature of the Chinese leadership, and the future role of China in world economics and politics.
“What Power Shift to China?”
Mr. de Jonquiéres sees as “highly questionable” the premises that underlie current assertions that “China is set irreversably on the path to global pre-eminence, if not outright domination; (that) it is only a matter of time… before China rules the world”.
China, indeed, has had three decades of double-digit growth in GDP, giving it “impressive economic scale”. It is the world’s second biggest economy, creditor nation, and importer (if one doesn’t lump all the EU countries together). It has the biggest current account surplus and foreign exchange reserves (see above chart), and is the world’s biggest consumer of commodoties, e.g., aluminum, iron ore and copper.
To put these facts in perspective, Mr. de Jonquiéres presented a historical review of the growth of the USA before it became a global superpower, showing that China has not yet achieved the growth curve of the historical USA, and that it is not likely to. Even now, China’s GDP per person is only 17% of the USA’s (see above chart).
What has happened, however, is a new (or newly revealed) self-perception in the Chinese leadership:
It is true that the West’s ability to inﬂuence China… is in decline. But that is as much because the ﬁnancial crisis of 2008 has sapped the West’s economic strength and moral authority as because of China’s rise. No longer is China prepared to be lectured by those who once treated it as a precocious pupil, when their own affairs are in disarray and when, in Europe’s case, they are looking to China to bail them out. China’s success in riding out the crisis and the West’s economic weakness have inspired in it greater outward self-conﬁdence, sometimes even hubris. Beijing has been emboldened to stand its ground more ﬁrmly in dealings with the rest of the world, in both bilateral and multilateral forums, from climate change talks to the G20, the International Monetary Fund and the World Trade Organisation. If China was ever amenable to bullying or coercion, it is noticeably less so today. It is also ready to use economic pressure to get its way with smaller or more vulnerable countries – for example by insisting that South Africa dis-invite the Dalai Lama from Archbishop Desmond Tutu’s birthday celebrations last year. (Source: What Power Shift to China?)
But Mr. de Jonquiéres points out that China’s use of economic means for political ends are rare and, where used, have often not succeeded. China was unable “to get southern Eurozone members to press Brussels to grant it Market Economy status in exchange for buying their debt…“
In sum, China’s use of its economic muscle is for the most part, and with the most successes, toward commercial aims, not political ones.
But what about the sheer weight and potential power of the imbalances between China and the USA in their current accounts (trade balances) and foreign exchange reserves? And the enormous amount in US Treasury securities that China holds?
Mr. de Jonquiéres does not see cause for alarm regarding China in these figures, except for showing the underlying weakness in recent and current financial policies and actions of the USA (and also in Europe).
… (T)he world economy’s impact on China has been at least as great, if not greater (than China’s impact on the world economy). Indeed, in a number of respects, China today needs the West more than the West needs China. The most important (thing) is to generate demand and thereby growth. China’s rise has beneﬁted raw materials exporters worldwide, but its relatively low level of domestic consumption limits its market for many goods and services of the kind made in the West. However, the West’s markets still matter a lot to China. The European Union is the biggest destination for its merchandise exports, accounting for roughly a ﬁfth of the total; yet China buys barely a tenth of extra-EU exports… Much as Western politicians may carp about China’s surpluses on bilateral trade, they are actually a symptom of Chinese economic dependence. (Source: What Power Shift to China?)
Major Foreign Holders
US Treasury Securities
(Click on the image)
Mr. de Jonquiéres recited the weaknesses, rather then strengths, that China’s trade surpluses and foreign exchange reserves represent. Chinese businesses and people are saving rather then spending, creating an excess of domestic savings over investment. These surpluses have been acquired to the detriment of Chinese living standards. A major reason for saving is the lack of a mature social security system, especially for retirement and medical care. (More on this in the concluding paragraphs of this article).
Evidence for these concerns is in the movement abroad, legally and illegally, of capital by wealthy Chinese people, as well as an increase in their emigration to Western countries.
Mr. de Jonquiéres has much to say about the Chinese Communist Party’s supreme power in all things and how this blocks innovation and balanced growth. The party, and therefore the country’s leadership, is trying to hang on to power at all costs, and the costs are mounting.
As a coda to this review of Mr. de Jonquiéres presentation, I paraphrase him from my notes: The Party (and therefore China) knows what it doesn’t want, but it isn’t clear about what it does want with respect to its economic policies.
I refer you to What Power Shift to China? for a full reading of Mr. de Jonquiéres’s remarks.
Britt-Marie Mattsson of Göteborgs Posten
and Zbigniew Brzezinski interact
after his presentation 11 June 2012
“Implications of the changing distribution of global power from West to East”
The headline is how UI described the subject of Mr. Brzezinski’s presentation. The following are from my notes.
History of Hegemonic Warfare
Hegemonic warfare in the world lasted 600 years, beginning with expeditions from Europe to North America, driven by curiosity and greed. Next, China and India were targeted by Europeans countries, generating competition, rivalry and conflict. In the last 200 years, the goal has been domination over Europe, the center the world. Napoleon, Hitler and Soviet Russia exemplify this drive.
Now the US is the sole superpower, but has become less hegemonic.
Global power is no longer centered in Europe—it has dispersed and is shared with the Far East.
In addition, and importantly, there is a general political awakening in the world, having started with the French Revolution. This awakening spread to to China (Sun Yat-sen) and Japan. World War II continued this awakening and, since then, the advent of radio, television and the Internet helped to create a contagious effect.
Political awareness does not necessarily lead to democratic outcomes, but it is populist in nature.
The mass media overestimated the democratic nature or intent of the “Arab Spring”. The middle eastern states now entering a period of ferment are more likely headed toward an Arab winter. The populist leaders are not driven by deeply embedded principles. (As an aside, Mr. Brzezinski said that in Libya “we should have won quickly”).
The Eurasian Continent
The Eurasian continent currently is the principle arena of political turmoil, it having moved from the Mediterranean (Balkans) to the Middle East, and from Southwest Asia to its north and east. Nationalistic aspirations are rising, especially in China, India and Pakistan.
Russia is still searching to define itself–it’s not sure of its place on the continent. The emergence of a new middle class is aspiring toward a democratic civil society. They are not politically intimidated by the current regime. The absence of fear indicates a new subjective reality in Russia. Putin’s nostalgia for an imperial Russia is irrelevant. The most of the former states of the USSR are enjoying their independence and don’t want to give it up.
The Mission of the USA
There is no historical precedent for China’s current progress. The mission of the USA should be to provide equilibrium in the balance of world powers. It should enhance and enlarge “the west”, by encouraging the inclusion of Russia and Turkey more formally, as in the EU. Geopolitically, Turkey is already part of the the West. Historically and currently there is the idea of a trans-Caucasian Europe (which would include Georgia, Armenia and Azerbaijan, as well as Turkey). Charles de Gaulle and others considered Europe to extend to the crest of the Ural Mountains.
Europe to the crests of the Urals and the Greater Caucasus Mountains. For this discussion add the countries south of the Caucasus: Georgia, Azerbaijan, Armenia and Turkey.
(Map source: wikipedia.org)
It should be remembered that the USA is a Pacific Ocean power. It needs to maintain an offshore balance like Great Britain in the 19th Century. e.g., with regard to territorial disputes over islands. The US should help to reconcile relations between Japan and China.
A strong United States is vital to global stability. China will not be in a position to assume the role the USA currently plays by 2025, or even later. Unless the USA maintains a stabilizing influence, there will be uncertainty and increased tensions between nations.
(End of notes from Mr. Brzezinski’s presentation)
Analysis and Comment
Given the remarks of these two speakers and a look at the data presented in the three charts, above, I come to these conclusions:
- China is rising, quickly for now, but has a long way to go to catch up to the USA.
- The current economic policies of European countries and the USA are weakening these nations.
- As of now, the world has no better place to put its excess capital than in the US Treasury securities; but this cannot last forever without a turnaround in the USA’s financial integrity.
- China appears not to have aggressive political ambitions but, rather, aggressive economic ambitions; its GDP per person puts it still within the “developing nation” category.
- China, unlike Russia, knows what it is and wants to preserve it and grow; world economic stability is more amenable to China in achieving its aims than world instability.
Important topics not covered by the speakers: Demographics and Environment
I invite you to look at this chart showing important current demographics of China (please click on it):
In 14 years, the cohort “0-14″ on the line above will have entered the line labeled “15-64″, thus increasing the imbalance between males and females in China. Such an imbalance can be the source of tensions not easily controlled by any political system. A young unmated male, who can have no hope for mating, is more likely to foment unforeseeable trouble than a male who can reasonably aspire to a wife and family. If there are many such males, together they can cause a lot of trouble.
Also, it is the daughters who care for aged parents in China, not the sons—and not the social services system. There is no social service system as seen in any given western state. As 235 million people enter 65+ cohort (assuming a like number in the current 0-14 cohort) over the next 14 years, who will take of these aged people? Current life expectancy at birth for males and females, combined, is around 75 years.
Here’s another thing to look at from the CIA World Factbook:
Environment, current issues: air pollution (greenhouse gases, sulfur dioxide particulates) from reliance on coal produces acid rain; water shortages, particularly in the north; water pollution from untreated wastes; deforestation; estimated loss of one-fifth of agricultural land since 1949 to soil erosion and economic development; desertification; trade in endangered species.
These two factors of growing demographic imbalance, and of rapidly degrading environment, may create such internal tensions that China and its people may well look elsewhere for relief. How about the relatively unpopulated lands to the north, like Mongolia and several contiguous territories of Russia?:
I am emboldened to suggest this implication only because I think I caught a whiff of it from Mr. Brzezinski.
Notes on speakers
Guy de Jonquiéres is a Senior Fellow at the European Centre for International Political Economy, Brussels. He recently published What Power Shift to China? UI provided Johan Lagerkvist, Senior Research fellow and an expert on China’s domestic policies, to interact with Mr. de Jonquiéres.
Zbigniew Brzezinski was National Security Advisor to President Jimmy Carter (1977-1981) and is Professor of American Foreign Policy at Johns Hopkins University’s School of Advanced International Studies. He referred to his book, Strategic Vision: America and the Crisis of Global Power (2012). Britt-Marie Mattsson, senior reporter at Göteborgs Posten, asked him some questions after his talk.
This useful graph was made available to me from The Atlantic magazine: