Sunday, November 23, 2014

Why China Won’t Rule

LONDON – Is China poised to become the world’s next superpower? This question is increasingly asked as China’s economic growth surges ahead at more than 8% a year, while the developed world remains mired in recession or near-recession. China is already the world’s second largest economy, and will be the largest in 2017. And its military spending is racing ahead of its GDP growth.

The question is reasonable enough if we don’t give it an American twist. To the American mind, there can be only one superpower, so China’s rise will automatically be at the expense of the United States. Indeed, for many in the US, China represents an existential challenge.

This is way over the top. In fact, the existence of a single superpower is highly abnormal, and was brought about only by the unexpected collapse of the Soviet Union in 1991. The normal situation is one of coexistence, sometimes peaceful sometimes warlike, between several great powers.

For example, Great Britain, whose place the US is often said to have taken, was never a “superpower” in the American sense. Despite its far-flung empire and naval supremacy, nineteenth-century Britain could never have won a war against France, Germany, or Russia without allies. Britain was, rather, a world power – one of many historical empires distinguished from lesser powers by the geographic scope of their influence and interests.  

The sensible question, then, is not whether China will replace the US, but whether it will start to acquire some of the attributes of a world power, particularly a sense of responsibility for global order.

Even posed in this more modest way, the question does not admit of a clear answer. The first problem is China’s economy, so dynamic on the surface, but so rickety underneath.

The analyst Chi Lo lucidly presents a picture of macro success alongside micro failure. The huge stimulus of RMB4 trillion ($586 billion) in November 2008, mostly poured into loss-making state-owned enterprises via directed bank lending, sustained China’s growth in the face of global recession. But the price was an increasingly serious misallocation of capital, resulting in growing portfolios of bad loans, while excessive Chinese household savings have inflated real-estate bubbles. Moreover, Chi argues that the crisis of 2008 shattered China’s export-led growth model, owing to prolonged impairment of demand in the advanced countries.

China now urgently needs to rebalance its economy by shifting from public investment and exports towards public and private consumption. In the short run, some of its savings need to be invested in real assets abroad, and not just parked in US Treasuries. But, in the longer term, Chinese households’ excessive propensity to save must be reduced by developing a social safety net and consumer credit instruments.

Moreover, to be a world economic power, China requires a currency in which foreigners want to invest. That means introducing full convertibility and creating a deep and liquid financial system, a stock market for raising capital, and a market rate of interest for loans. And, while China has talked of “internationalizing” the renminbi, it has done little so far. “Meanwhile,” writes Chi, “the dollar is still supported by the strong US political relations with most of the world’s largest foreign-reserve-holding countries.” Japan, South Korea, Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates all shelter under the US military umbrella.

The second problem is one of political values. China’s further “ascent” will depend on dismantling such classic communist policy icons as public-asset ownership, population control, and financial repression. The question remains how far these reforms will be allowed to go before they challenge the Communist Party’s political monopoly, guaranteed by the 1978 constitution.

Two important cultural values underpin China’s political system. The first is the hierarchical and familial character of Chinese political thought. Chinese philosophers acknowledge the value of spontaneity, but within a strictly ordered world in which people know their place. As the Analects of Confucius puts it: “Let the ruler be a ruler, the subject a subject, a father a father, and a son a son.”

There is also very little belief in the sanctity of human life: Buddhism holds that there is no difference between humans and animals and plants. A pledge to protect human rights was written into the Chinese constitution in 2004; but, as the recent case of the blind dissident Chen Guangcheng illustrates, this is mostly a dead letter. Similarly, private property ranks below collective property.
Then there is the Confucian doctrine of the “mandate of heaven,” by which political rule is legitimized. Today, the mandate of Marxism has taken its place, but neither has any room for a mandate of the people. Ambivalence about the source of legitimate government is not only a major obstacle to democratization, but is also a potential source of political instability.
These historical legacies limit the extent to which China will be able to share in global leadership, which requires some degree of compatibility between Chinese and Western values. The West claims that its values are universal, and the US and Europe will not cease pressing those values on China. It is hard to see this process going into reverse, with China starting to export its own values.

China has a choice: it can either accept Western values, or it can try to carve out an East Asian sphere to insulate itself from them. The latter course would provoke conflict not only with the US, but also with other Asian powers, particularly Japan and India. China’s best possible future thus probably lies in accepting Western norms while trying to flavor them with “Chinese characteristics.”

But neither choice is a scenario for China “replacing” the US. Nor, I think, is this what China wants. Its goal is respect, not dominance.

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    1. CommentedKeet Wong

      China won't rule because it doesn't seek to rule. It will act in its own strategic and economic interest. It will neither "rule" like a Colonial European power nor will it assume moral superiority and impose its values on the rest of the world like an American Superpower. These are completely Western constructs.

      Is China culturally different from the West? Yes. Are cultural differences a source of tension? Absolutely.

      All I'm hearing from the article and comments aren't reasons for why China won't rule, they are reasons for why you hope China doesn't rule.

    2. Commenteddan hitt

      I"m surprised that nobody has called Professor Skidelsky out on population control. As far as i know, the Chinese government is the only one on earth that has actually taken some responsible action towards population growth ---- and it has been quite successful, and is one of the reasons they are becoming so prosperous while we in the west sink further towards poverty.

      A second key to its success has been, of course, its tiny military. Despite bordering on 14 countries, some of them big, and some of them having been hostile in the past, it manages to get by on one-tenth the war budget of the US despite having 4 times as many people.

      Finally, it's not so clear that there's anything "rickety" about their economy. They seem to beat us (us being America, and more generally the west) at everything.

      My hope is that we can learn something from China, perhaps beginning with our imperial pretensions. Our founders urged us not to get involved in European problems (and presumably global ones), but we have foolishly ignored them, so we are drifting towards catastrophe.

      But i guess even if we are such dimwits that we cannot learn from China, at least human civilization does have a future, albeit a Chinese one.

    3. CommentedBakhtiyor Khujaev

      China will never become a world power in the meaning of empire that UK was and US is. There is no long lasting and effective financial/economic/industrial ideologies to share with the rest of the world. Moreover the most powerful influence China might practice simply lacks - no tools, no key people to act, no sound ideas. However, it might be sort of a try - unless China is learning how to live having a potential super world power.

      What do we do when this child graduates?

    4. CommentedYoshimichi Moriyama

      I basically agree that China won't rule East Asia, let alone the world. I think there are more reasons why it cannot be a number one country in Asia than why it can.

      There are weaknesses in China's politics, economy and society. As I don't want to write a long comment, I take up the renminbi in context with Chinese history and politics.

      The Chinese leaders won't loosen their tight political grip on the people, not simply because they are communists but first because political power is inseparably linked in China with aquisition of wealth. It is so in today's China and so was it in Chiang Kaishek' China, in Ching's China, in Ming's China...

      If we look at Chinese society and Western sociey, I'd like to liken society to a barrel. A barrel is made up of planks, loops and the bottom. The loops tie the planks together; without the loops, the planks do not hold together.
      In the West there is no need for loops. The planks and the bottom are all needed to make a barrel. Because the role of the loops is internalized by each plank.

      In China since the time of the first Chinese empire, Chin, Chinese society was ruled by authoritarian regimes. Chiang Kaishek's government was no exception. The Chinese communist party is no exception, either. The CCP is best understood as another Chinese dynasty.

      It needs authoritarian rule for itself. It needs authoritarianism for Chinese society, too; it is as if Chinese society knows no other way to be governed.
      Without one sort or another of authoritarianism China might go to pieces as had repeatedly happened. So there is at least some truth when the Chinese leaders say, "They cannot do away with the style of Chinese politics."

      They cannot afford people's free economic activities without risking social disintegration. Controlling money or the financial secter is decisively important for regulating economic activities as the source of the leaders money and as the means of holding down the people and the society at large.

    5. CommentedMatteo Sestito

      I agree that China won't be a "superpower" in the American sense. Indeed a stand-alone "superpower" never existed: even US during the last 20 years has not unilaterally ruled the world and before that US had to coexist with its opponents (firstly Soviet Union).

      However, it isn't so hard to imagine a situation in which China influence becomes so large that it exports its own values.
      I agree with your point that China is currently "accepting Western norms while trying to flavor them with Chinese characteristics". History repeats itself over time: a rising civilization takes some values from previous rulers and blends them with its own values. Europe did so with Islam a few centuries ago.

      So if China's growth (in both economic and military terms) will continue, why can't we imagine that the West will look with admiration the new Sinic world power and that it will start to take certain characteristics of China? West claims its principles are universal ones, but also others over the past centuries claimed that.

    6. CommentedPUNDALIK Kamath

      Um; These are the professor's own words."Buddhism holds that there is no difference between humans and animals and plants.." Really!

      I suggest the retired professor read few good books on Buddhism in his retirement days with lots of time, before he jots down his colomn written from his coffe table perch.

      No Buddhist myself, I would say Buddhism is much more complex and profound than that, Professor.!

    7. Commentedpeter fairley

      Buddhism? sees no difference between animals and humans & plants? Please consult some Buddhists on this.LOL. Even if that is true, I think better to blame Marxism and general anti-religious sentiment in Chinese rulers for their peculiarities... It seems economic success more than pure western values buys various political powers. China certainly has some weaknesses but relative to structural problems in EU and USA who is holding the best cards?... The simple Confucian understanding of the need to share enough with the people below to stay in power may work fine for China for many years. Could not many British authors have written a similar article about USA in the early 20th century?

    8. CommentedByung Gook Han

      I agree with most of his points other than his reference to Buddhism and Confucian as a limitation to Chinese value. When Buddha equated animals and plants to humans, he obviously meant to say that animals and plants deserves similar respect as a living creatures to those of humans.

      Regarding Confucius' teaching, let me quote a paragraph from Kim Dae Jung's article titled "the myth of Asia's antidemocratic value" appeared in Foreign Affairs in 1994, which quote Meng-tsu, another great Confucian after Confucius.

      "But almost two millennia before Locke, Chinese philosopher Meng-tzu preached similar ideas. According to his "Politics of Royal Ways," the king is the "Son of Heaven," and heaven bestowed on its son a mandate to provide good government, that is, to provide good for the people. If he did not govern righteously, the people had the right to rise up and overthrow his government in the name of heaven. Meng-tzu even justified regicide, saying that once a king loses the mandate of heaven he is no longer worthy of his subjects' loyalty. "

      Obviously, "mandate of heaven" is not legitimized regardless of the nature of regime. The great scholar of Keynes needs to better understand true Asian value before simply denouncing it.

    9. CommentedRob Ferrin

      This is a very unfortunate misunderstanding of Buddhism and the sanctity of life. Buddha clearly teaches a distinction between humans, animals, and plants. For starters, only humans can practice the dharma. Humans, being accorded six sense faculties, have far more karmic responsibility than any other life forms. Plants, having only one sense faculty are not human equivalents. Nor are animals. This does not mean all sentient life shouldn't be extended compassion and equanimity, but Buddhism has not held back Human Right's movements in China.

    10. CommentedFrank O'Callaghan

      The unique factors with China are scale and history. It is bigger and older than most conceivable competitors. this will determine much of it's relations with the world.

      The internal relation between population and rulers is also subject to these factors. Bigger groups tend to have relatively less value per individual.

    11. CommentedDennis Argall

      I tend to share views with Keshav and Andres.

      The 'choice' you posit is itself part of a 'western' wish for sustenance of western perspectives and power through paradigms probably of declining relevance. We have to open our minds to the evolution of international power in as yet unknown ways in the next several decades. Whether this contains threats or opportunities we do not add to security or exploit opportunities by sticking with old thinking.

      China, with long established foreign policy principles, does not know now how these principles will need adaptation, development and change as its power grows.

      Having been in Beijing in the beginning of the reform period, I am very conscious of the way the best Chinese leaders constantly search for new ways of thinking about issues and resolving them - much more than 'the west' does, where freedom to think in new ways is so limited in government, academia and elsewhere. This Chinese freedom seems not understood, not brought into the equation by western political, academic and media observers.

      Looking back on the evolution of China in the past 35 years, it is important to see that there have been no overall models for them in the former USSR, the USA, India or elsewhere, though there have been myriad borrowings at relatively micro levels. My observation is that the west, in those 35 years, has begun a downward spiral in the quality of its governance, its management of economies, its ways of dealing with externals other than by violence... Why would China aspire to them?

      That's why China has to figure it out in its own way. Much advice, gratuitously tendered, even when greeted with smiles, tells Chinese leaders more about the advisors than about running China. Running very large countries is very difficult, it's not just a linear scale. The revolution in China in the past 35 years is without question the fastest and most profound in human history. And it's far from finished, it has both a 'forward' momentum and internal contradictions to work themselves out or be levered about.

      We do not serve ourselves well in the 'west', intellectually or politically, to try to pin the fish scales of western notions of the nation state or its international behaviour onto the imagined skin of this emerging phenomenon. To do so is simply to put scales over our own eyes.

    12. CommentedProcyon Mukherjee

      In this uncertain world many Pundits have been proven wrong, and specially with China, it is almost impossible to predict anything. The case in point is the book, 'Competitive Advantage of Nations', published in 1994, by Michael Porter, who completely missed to mention the word 'China', in the entire 800 pages, where chapters were devoted to the more competitive nations at that point of time.

      More than competitiveness, what has come out in the article is the might of values and what values really would count in the future. I think China would tend to be still more inward focussed stemming from the need to spur domestic demand in the wake of the current crisis. There is no other pressing need at the moment; the world would be better of if this happens.

      Procyon Mukherjee

    13. CommentedKeshav Prasad Bhattarai

      I think China does have no ambition to rule the World .Its goal is prosperity for its people and the respect for its national identity- that was ignored and humiliated for long. Also I think that it has no aim to replace USA and put it in that position, what it wants is the assured security of its continued journey to prosperity and a sizable army and military capability to protect its economic interest.
      Similarly, China has both territorial and maritime disputes with almost all country in East and South East Asia including with India - another great Asian power.
      Moreover, rising economies like Indonesia, India and Vietnam along with established economic power like Australia, Japan, South Korea and Taiwan all are making strong demand with U.S. to remain in their region and play crucial strategic role to meet the challenge posed by China both ideologically and strategically.
      I never think American power emanates from its military and money, but from the values of freedom and democracy that American people love and have made it their identity. What the great might of its education, technological innovation followed by research and development and the sense of responsibility to protect freedom of people to freedom of navigation from one corner of the World to the other, cannot be replaced by any other country so soon.
      American values, American goods, American education and look at Microsoft, Apple, Google, face book, twitter, Gmail, Hotmail, Yahoo to Gillette and Coke or Pepsi - all American, so when will China be able to compete with all these and prepared to replace America? With its size, level of innovation, and a single country in the World – that stands equal to all its people than any other country in the World is the greatest reserve of power of America and so has become a dream destination of all the young and meritious people around the World.
      Besides, American fight against Malaria, AIDS, and food aids to millions and lifting more than 4 billion people from poverty across the World along with its rise, has given America a new and unique power – that is far stronger than its military has offered to it.
      So to win American power in all these respects in foreseeable future is next to impossible.
      But it does not mean that America is a perfect society, it is not and cannot be a perfect society. All the major problems the World faces today from terrorism to environmental degradation and existing poverty to large extent are “Made in America or Made by America” in this that country and this may pose a greater challenge to America than China.

    14. CommentedAndrés Arellano Báez

      The western values are unreal. There is no real democracy in our societies (there are governments who protects the interests of the powerfull) and there is no real capitalism or free market (there are socialism for the richest and the banks). Those are concepts with no real apllication in our lives, here in the west. So, why China needs to change and insert these unreal values in his nation?
      In the west, we are no living in democracies. We are living in oligarchies.