Roads to Prosperity
Will China Rule the World?
Dani Rodrik
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CAMBRIDGE – Thirty years ago, China had a tiny footprint on the global economy and little influence outside its borders, save for a few countries with which it had close political and military relationships. Today, the country is a remarkable economic power: the world’s manufacturing workshop, its foremost financier, a leading investor across the globe from Africa to Latin America, and, increasingly, a major source of research and development.
The Chinese government sits atop an astonishing level of foreign reserves – greater than $2 trillion. There is not a single business anywhere in the world that has not felt China’s impact, either as a low-cost supplier, or more threateningly, as a formidable competitor.
China is still a poor country. Although average incomes have risen very rapidly in recent decades, they still stand at between one-seventh and one-eighth the levels in the United States – lower than in Turkey or Colombia and not much higher than in El Salvador or Egypt. While coastal China and its major metropolises evince tremendous wealth, large swaths of Western China remain mired in poverty. Nevertheless, China’s economy is projected to surpass that of the US in size sometime in the next two decades.
Meanwhile, the US, the world’s sole economic hyper-power until recently, remains a diminished giant. It stands humbled by its foreign-policy blunders and a massive financial crisis. Its credibility after the disastrous invasion of Iraq is at an all-time low, notwithstanding the global sympathy for President Barack Obama, and its economic model is in tatters. The once-almighty dollar totters at the mercy of China and the oil-rich states.
All of which raises the question of whether China will eventually replace the US as the world’s hegemon, the global economy’s rule setter and enforcer. In a fascinating new book, revealingly titled When China Rules the World , the British scholar and journalist Martin Jacques is unequivocal: if you think China will be integrated smoothly into a liberal, capitalist, and democratic world system, Jacques argues, you are in for a big surprise. Not only is China the next economic superpower, but the world order that it will construct will look very different from what we have had under American leadership.
Americans and Europeans blithely assume that China will become more like them as its economy develops and its population gets richer. This is a mirage, Jacques says. The Chinese and their government are wedded to a different conception of society and polity: community-based rather than individualist, state-centric rather than liberal, authoritarian rather than democratic. China has 2,000 years of history as a distinct civilization from which to draw strength. It will not simply fold under Western values and institutions.
A world order centered on China will reflect Chinese values rather than Western ones, Jacques argues. Beijing will overshadow New York, the renminbi will replace the dollar, Mandarin will take over from English, and schoolchildren around the world will learn about Zheng He’s voyages of discovery along the Eastern coast of Africa rather than about Vasco de Gama or Christopher Columbus.
Gone will be the evangelism of markets and democracy. China is much less likely to interfere in the internal affairs of sovereign states. But, in return, it will demand that smaller, less powerful states explicitly recognize China’s primacy (just as in the tributary systems of old).
Before any of this comes to pass, however, China will have to continue its rapid economic growth and maintain its social cohesion and political unity. None of this is guaranteed. Beneath China’s powerful economic dynamo lie deep tensions, inequalities, and cleavages that could well derail a smooth progression to global hegemony. Throughout its long history, centrifugal forces have often pushed the country into disarray and disintegration.
China’s stability hinges critically on its government’s ability to deliver steady economic gains to the vast majority of the population. China is the only country in the world where anything less than 8% growth year after year is believed to be dangerous because it would unleash social unrest. Most of the rest of the world only dreams about growth at that rate, which speaks volumes about the underlying fragility of the Chinese system.
The authoritarian nature of the political regime is at the core of this fragility. It allows only repression when the government faces protests and opposition outside the established channels.
The trouble is that it will become increasingly difficult for China to maintain the kind of growth that it has experienced in recent years. China’s growth currently relies on an undervalued currency and a huge trade surplus. This is unsustainable, and sooner or later it will precipitate a major confrontation with the US (and Europe). There are no easy ways out of this dilemma. China will likely have to settle for lower growth.
If China surmounts these hurdles and does eventually become the world’s predominant economic power, globalization will, indeed, take on Chinese characteristics. Democracy and human rights will then likely lose their luster as global norms. That is the bad news.
The good news is that a Chinese global order will display greater respect for national sovereignty and more tolerance for national diversity. There will be greater room for experimentation with different economic models.
Dani Rodrik, Professor of Political Economy at Harvard University’s John F. Kennedy School of Government, is the first recipient of the Social Science Research Council’s Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth.
Copyright: Project Syndicate, 2009.
www.project-syndicate.org
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Nico 02:35 13 Jan 10
China's rise to a global power is certainly the event of the twenty-first century; however, will China become hegemonic is another matter entirely, one has to remember the meaning of hegemony, defined by Gramsci as 'moral and intellectual leadership'. Firstly, I think it is a bit naive to believe that China will benevolently allow countries to 'experiment' with 'different economic models' that run counter to the economic interests of the Chinese economy. We have to remember the famous dictum from List and reiterated by Chang that successful capitalist states tend to 'kick away the ladder'; ergo, for China to become hegemonic it will have to theorize a economic theory that legitimizes an economic system that is perceived, and is to some extent, in the interests of both parties, i.e., neoclassical economics for the UK and the US. Secondly, I do not think China really has to look outside its borders to create a congenial global economy, it is so vast that internal differences in income and development will create, within China, a recreated mini-global economy and the problems associated with that will take up much of the CCP's time.
Read more of my thoughts at:
http://perspectivos.blogspot.com/
SS 07:30 13 Jan 10
The Chinese will be a considerably better international partner if we are polite to them. No, I am not kidding! Though this appers difficult for many Americans, especially those on the right, concerned as they are with their own masculity, it is essential to good diplomacy. And yes, it can include bowing as the case may be.
SS
sansonj 04:42 15 Jan 10
This is a very good article. However, there is only one model that has worked. The Free Market. Hence, China will fall. Look at China as a Kingdom with a King and Queen, and peasants with little grass huts around the kingdom. We all know that model has already faired. The King cannot take all o the wealth for him. China will not become a world power. It is not them moving the cheese, but we the greedy and stupid western people looking for cheap labor. China has a ton of problems. The western societies must keep their Nukes ready and advanced. China is not a historical warring nation/people, but they have a massive number of people, so we need to be able to prevent an attack by them. I do not fear them, but I respect what they can do. Now, the western countries should be wise and move the cheese of production to other third world counties, and make China make it on its own. Why do we not see made in Mexico? I go to Target and 9 out of 10 things are made in China. Why not 1 out of 10, and then have 9 other countries showing up in Target, etc. If we move the cheese China will stumble. The GOVT will not like stumbling, but the people will not care as most of the wealth is in the GOVT and not in the people.
sansonj 04:50 15 Jan 10
The Chinese will be a considerably better international partner if we are polite to them. No, I am not kidding! Though this appers difficult for many Americans, especially those on the right, concerned as they are with their own masculity, it is essential to good diplomacy. And yes, it can include bowing as the case may be.
SS
Where did this come from? We have morals, ethics, and laws. I know with our failed regulations on the Dem Rule over the last 10 years has lead us to this point. Yes, it was not Bush running our country- it was a majority Dem power in the Senate and Congress, and now a super majority ready to come crashing. Still I say this because you speak of the Right. We should have never given China so much Cheese. We did it out of stupidity. I am sure some thought it would cause them to become western. I do not want China to become anything, but what the people china want it to be. The people know if they really want change the country does not have enough people to kill them off, so they need to take over their country. This message needs to make it on the streets of China like you know the false claims in the USA with Obama. Yes, Mr leftist look at all of his promises, and then please tell me how many has he kept in 25% of his career as President? I would stretch to say his 50% mark, because after year two he will be focusing on the election in 2012. How many things did he hold true too and how many things did he say you know what I said those things to just get in office. Be real. I am critical of both sides.
ASHEESH1963 08:24 19 Jan 10
I was planning for myself a similiar article a fortnight ago. I shall summarize my thoughts which can then be matched with this one for reaching some conclusion.
The evolutionary nature of countries and civilizations is no different from species. However it is not just survival of the fittest but also some extra evolutionary traits gained by the population over the years. Thus the Japanese ruled the electronic markets of the world, the Germans - machinery and the French - wine for years; not just a fluke. Somewhere the joie de vivre of the French matched with the Wine they produced, somewhere the urge for perfection of the Gremans compelled them to make the best machinery and small is beautiful theory of the Japanese briought the best semiconductor gadgets in the world. Of courrse the Americans gained by a mix traits of immigrant population which bought the best from around the world.
As it is known that the rise and fall of civilizations and countries is attached to thier economic growth and development China offers some good dose for thoughts. Will they ? is the paramount question raging in the most brilliant brains and strategic centers around the globe. The Chinese have reached this position because of their disciplined work force which is unmatched anywhere. No country can offer such a ideal work force for manufacturing industry and hence China has become the global manufacturer. However manufacturing is just one aspect of the the growing economic growth. The economic booom has to be followed by intellectual and other free thoughts which the country seriously lacks.
Therefore it is no one's guess that the future of China relies or rather is contrained by these factors. Does that answers the question raised by Doni Rodrik...i think so...mail me at asheesh.shah@gmail.com
aks..
Janey 06:24 22 Jan 10
A Chinese global order will not be pretty. The Chinese 'federalist' internal order is not pretty. 'Tolerance for national diversity'? Are we talking about the same China here??
The Chinese (eg: in China) believe that they are the natural rulers of humanity and that their culture and ethos is superior to any other - and to be fair, some elements are indeed superb. Make no mistake though, our British-American-Anglo notion of 'fair play' is a cultural construct; it is not shared by most other peoples - hence some of the intractable miscommunication in our Middle East adventures.... Other cultures have other (sometimes noble) values. Fair play is certainly not part of Chinese culture - which is all about hierarchy. New China will expect respect, obesiance and some form of tithing from its subjects and in the future will have the power to extract it.
As for an increased respect for 'national sovereingty': 'National sovereignty' looks good on paper but in many despotic regimes one has to probe who comprises 'the nation'. Often it is a small powerful enforcer group that makes exploitative decisions that we democratic peoples then confuse with the voice of the nation. Really, just what is the value of 'national sovereignty' without 'human rights'? At best it is a way to keep enough order so that the refugee problem doesn't land in our (Western) cities....Surely, we can aim a little higher than that...
The Chinese are in the midst of re-colonizing Africa, which is not surprising given the Chinese history of contempt toward Blacks. Mark my words: within 30 years there will be large colonies of ethnic Chinese in Africa, gradually repopulating AIDS-stricken areas and mining the continent for all its natural resources. I think the genocide in Darfur is the calling-card for China's future presence in Africa.
If you think this post is racist, talk to some African-Americans about their experiences with Chinese (émigré) landlords! Or talk to the American-Chinese grandchildren about their grandparents' views....Racism is not unique to Whites.
siburay 08:01 08 Feb 10
Chinese believe in their superiority, ergo, chinese rule will not be pretty. Americans also believe in their superiority (and believe that they are exempt from laws the mere mortals are subject to). But American rule is pretty. Ever heard the term - hypocrite!!
Oh yes, US believes in fair play. My my my. US is the only country that ever used Nuclear weapon on civilians, without any good reason. Yet, it believes that other countries do not have right to possess nuclear arms. What a comic relief!!
usersuz 11:54 10 Feb 10
I would add two thoughts: (1) What will happen when China's plans for development run smack up against its looming environmental crisis (water)? (2) What do you call 30 million young Chinese men without wives? I call that a standing army, and an expendable one, too.
miga74 12:55 17 Jan 11
There is no doubt that China is gearing up towards super powerdom. China is making manufacturing everything thing from teddy bears & junk toys for Christmas to sophisticated machinery. The chinese companies have clearly defined objectives and work on following lines
1) Priority-1 -> gain for China i.e country comes first (western multinational would not be able to interpret this since their objective is shareholders come 1st then the CEO and then the rest )
2) Priority-2 -> Gain for the organization (Internal share holding pattern and balance sheets of most of the Chinese companies are not exposed nor publicly available so no one knows the real valuation)
3) Priority-3 -> Personal gains if any ( if country dominates the world the company benefits and hence the employee gains)
The one comment which I find hard to agree is that China would respect the sovereignity of other countries across the world. Under the guise of friendship China backstabbed and militarily attacked India in 1962. Even after four decades China does not respect the Macmohan line which is supposed to the line of control and stakes claims on Indian territory of Ladakh, Arunachal Pradesh.
Large sections of Indian territory were gifted by Pakistan to China and China continues to hold sections of Paskistan occupied Kashmir. Infact only last week the Chinese Army made an incursion into Ladakh and stopped work on a road project.
Tibet which was an autonomous region has been gobbled up by China and the tibetians are refugees in their own country with settling the ethinic Chinese HAN population from other parts of China into Tibet.
The Chinese have built railways & military bases in Tibet to attack India. China is supporting terror states such as Pakistan, North Korea and flexing its muscles against Japan, India, South Korea, Cambodia.
The chinese policy of "string of pearls" to strangulate India's influence in the Indian Ocean is well known fact.
The world is romantically visualising China as a shaolin monk but there is actually a dragon which is lurking beneath the garb ready to breath fire and annihilate the naive believers.
Mind my words the world would realize the real nature of Chinese after loosing their core capabilities of manufacturing & industry to the chinese under the garb of low cost manufacturing and there would be no point of return. Just remember .....Chengiz Kahn did not stop world domination out of choice but due to physical ailments......So also China would only stop when its repressed population gives rise to a new revolution .....
Pmcdonald 06:02 01 Nov 11
Remember that the US only began to advocate a free market economically liberal world order when it took over from Britain. Presumably because being the biggest economy and having the biggest companies and deepest capital pools puts you at an advantage in a system of free movement of capital and trade. Exactly as Britain had concluded before. And likely the same as China will conclude in future.
What exactly is Jaques reasoning for China reverting to its pre-modern modus operandi? Just because that's what it did before...or does he have some other compelling insight?
hsgross 04:38 12 Jan 10
An interesting conclusion. But will it come to pass? The big supposition here is that China will not have an economic crash (which Rodrik rightly states will lead to great internal turmoil, but he should also have noted that continued economic growth is the only staning pillar supporting the PRCs legitimacy to rule) and will not become embroiled in a major military crisis (there is a high possiblity for military crisis, not only given the historical conflicts with Japan and Germany, but also and especially given the PRC's stance on Taiwan and the status of various other ongoing border disputes).
In a recent article for the NYT, Chanos is quite bearish on China's economy (http://finance.yahoo.com/banking-budgeting/article/108534/contrarian-investor-sees-economic-crash-in-china;_ylt=Aq7.0P9.KR94jTY4uh.OgN.7YWsA;_ylu=X3oDMTE1bjRsb25wBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawNjb250cmFyaWFuaW4-?sec=topStories&pos=7&asset=&ccode=)
In a recent article for Project Syndicate, Mark DeWeaver points to economic overcapacity in a similar vein as Chanos, though with different conclusions (http://www.project-syndicate.org/commentary/deweaver2).
My general sense is that China will not replace the West because its model does not provide the individual with the same degree of hope and opportunity as the Western liberal model.
Ian Buruma's article from last week for Project Syndicate, "A Dissident in China" is a great follow-up read to Rodrik's column: (http://www.project-syndicate.org/commentary/buruma33).