Thousands of Chinese travellers rush to buy their train tickets at the railway station in Beijing

Economics

Zal China daadwerkelijk de Amerikaanse hegemonie overnemen?

Apr 2, 2018 Kenneth Rogoff

CAMBRIDGE – Terwijl China en de Verenigde Staten zich in hun meest recente handels-schermutselingen storten beschouwen de meeste economen het als een gegeven dat China op de lange termijn mondiale economische superioriteit zal behalen, wat er nu ook gebeurt. Is het tenslotte met vier maal zoveel mensen als de VS en een vastbesloten inhaalprogramma na eeuwen van technologische stagnatie niet onvermijdelijk dat China het stokje der economische hegemonie voor eens en altijd zal overnemen?

Ik ben hier nog niet zo zeker van. Veel economen, waaronder veel van dezelfde experts die de grote beroepsbevolking van China als een doorslaggevend voordeel zien, maken zich tegelijkertijd zorgen dat robots en kunstmatige intelligentie uiteindelijk de meeste banen zullen laten verdwijnen, wat de meeste mensen hun tijd zal doen verdrijven met recreatieve activiteiten.

Wat zal het worden? Wie zal het de komende honderd jaar gaan overnemen, Chinese arbeiders of robots? Wanneer robots en AI de komende honderd jaar de dominante aandrijvers van de productie zullen worden zal een te grote bevolking – en vooral een die gecontroleerd moet worden door beperkingen op internet en toegang tot informatie – om te onderhouden wellicht juist voor China een grotere hindernis betekenen. En de snelle vergrijzing van de Chinese bevolking vergroot deze uitdaging alleen nog maar.

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Kenneth Rogoff

Writing for PS since 2002
245 Commentaries

Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. He is co-author of This Time is Different: Eight Centuries of Financial Folly (Princeton University Press, 2011) and author of The Curse of Cash (Princeton University Press, 2016).

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0 Comments on this paragraph, 19 Comments on this article

RE Mant May 29, 2018

Yes, of course they will, because they're nowhere as daft as we are
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S Kaleberg May 10, 2018

I think China's big problem is that more advanced technology destroys jobs in the basic productive sectors: agriculture, mining and manufacturing. The problem is finding an excuse that allows people outside of those sectors to raise their standard of living and developing an internal market. Rising standards of living and growing internal markets lead to political problems. Look at Europe in the 19th century. Look at North Korea more recently. If you clamp down too hard, living standards fall and the internal market shrinks. If you don't clamp down hard enough, new people will start demanding a piece of the action.
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Hahn-June Yeon May 8, 2018

German economist Friedrich List argued that the rapid-catch up of technology and state-sponsored industry is necessary in order for a nation to truly compete other nations on an equal level. In other words, free trade is only mutually-beneficial when the two countries have similar economic level. In fact, Germany applied this idea to its industry to catch-up against Britain whose economy, due to success in (first) industrial revolution, was rapidly expanding.

Although it might be true that Chinese industries have achieved such rapid growth largely by 'adoption of Western technology', that process seems necessary for China to be fully competent to compete against other companies. It is said that "Imitation is the mother of creation". It is too early to judge whether China can succeed or not in becoming the global economic hegemony of the 21st century.
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Richard S. Stone May 7, 2018

This article is asking a question, and providing a tentative answer. It is not strident or accusatory. On that basis alone it deserves some respect. However, putting that aside, the concern and proposal is altogether legitimate, roughly similar to the usual problem of countries and their armies being well prepared to fight the last war.

Surely cheap labor is, or was, a large or maybe huge factor in recent Chinese growth, even if other Asian or African countries are now more engaged in that low wage work. The first problem for the US is that such a transfer of work clearly, to some extent, led to a loss of manufacturing jobs in the USA and a transfer of wealth to China, although one can, and should, argue that both sides benefitted from that transfer of work and production and importation of cheaper goods. The second issue, which I consider more damaging, is that the transfer of production has actually led to a loss of critical expertise in manufacturing in the USA.

But surely the future is that production will come back to the USA if or when AI and robots are sufficient to get the work done in the USA, with minimal involvement of "factory workers." The current argument is that most "lost" factory jobs in the USA (and West) are the result of improved automation, not low wage competitors. If that is true, then China will at some point be left without its largest, richest customer. I am being very conditional here, because I am sure that trade with China will not entirely cease, but even a slowdown puts a lot of pressure on China. Or worse still for China, it switches to an automation and AI model resulting in even less work and worse income disparity within China.

We can see that China is using a Singapore model politically, but the unfortunate part is that Chinese leadership is not legitimate, in terms of being elected and in terms of representing the people. A good deal of Chinese public policy is nothing more than "Party" leadership self-defense and perpetuation of the party. This cannot work out well.
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wolfgang price Apr 9, 2018

American hegemony is a consequence of the society it fostered. Wars and the "national interest" have blind-sighted the real basis for any hegemony. Economic hegemony has become geopolitical. The China syndrome has the political establishment in a dither. Domestic policy takes the hindmost. Technology ceases to relate to quality of life, it is a means for geopolitical status. In a former time it was the USSR. Another encounter for economic hegemony for geopolitical status. The US economy increasingly serves external interests in the name of "national security".
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george sos Apr 9, 2018

Realizing that having to feed billions of people living in poverty due to lack of employment and resources (land and water mainly) must be a nightmare for chinese government officials and rich investors alike.
The western capitalism has evolved from the struggles that lead to workers rights and higher salaries during the era of the fat cows (namely 1980-2009) a time that there were still certain principles the human community was hesitant to violate ,and the notions of peace ,love inclusiveness and antifacism were in full force.
Since then ,west allowed the "silent" majority (which was silent for a reason (and it wasnt because someone was stopping them other than common sense and the intolerance of humans for racism and hate ,stupidity and ignorance ),to speak out and dominate the public domain filling it with all the stuopidity they were hiding for years .
Today China is at the same doorstep,people there grew tolerant to opression and the non existence of human rights for all(for the rich of course there are rights,they can do whatever they want)
Chinese people will not explode as the westerners might do under similar circumstances.They are trained to be obedient and "respect" authority.Eventually there will be some movements there also and there will be a class war with disastrous consequences,but this is not a Chinese privilege. The west will follow the same path ,all you need to look at is the way the few greedy organised their assault on earth's resources and any form of social protection wherever there was some.
Yes markets will flourish,Chinese investors will keep buying africa ,and eventually we will all die horrible deaths due to the stupidity and greed of the few,the few we didnt have the providence to eliminate before they destroy us all...
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edgyinchina Apr 8, 2018

Good points made.... I would only hope that the continued use of the '1.3 billion' number as the population of China be abandoned. That number was the result of a census count in 2000... It's now 2018, and to say that the population has not grown is beyond ridiculous. I lived in China for 11 years and watched the population of even small towns (approx. 1 million) grow in size exponentially since 2000... STOP using the 1.3... it's probably much closer to 1.5 or 1.6 million in 2018....
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d clark Apr 8, 2018

“[America] must devise a way to retain dynamic technological growth while preventing excessive concentration of wealth and power.” What does Kenneth Rogoff mean by “…preventing excessive concentration of wealth and power.”
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Leo Kipps Apr 8, 2018

The author must be living in the 1990s... That's the problem today: so many so-called 'experts' have zero understanding of the state of the world. Rubbish.
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Paul Daley Apr 4, 2018

No mention of saving and investment rates. Rogoff evidently foresees a small role for capital formation in our robotic future.
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David Donald Apr 4, 2018

This piece is rather confused. More polemic than analysis. Labor is no longer China's key comparative advantage. Much low skill work has already been moved to South East Asia. The demographics in China (aging, few children) also appear to fit well with an automation trend. Size in China is not primarily an advantage for labor and the export market, as Rogoff argues, but rather to eventually create an internal economy with scale - something the US has benefited from and the primary goal of the EU 'internal market' project. A major problem remains economic and social inequality between western and eastern China.
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Ariel Tejera Apr 2, 2018

Not too long ago, say two years ago, we could hear the pundit chorus warning us of the impending fall of the Chinese State. With a myriad or reasons. And also foretelling on the fortitude of Western Democratic institutions. Rolling back to this day, unexpectedly, now we live in Trumpian, Brexit times and everything is different. China is the most important trade partner of all of the Asian economic powers. And China's government has 5 year plans that get actually tried, if not fully met, and is swimming on a sea of money from its own savings. And America has Trump. Make your calculations.
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Joseph Zorzin Apr 2, 2018

If we only compare America vs. China in economic terms- we might have something to worry about. China's economy will be larger and equally sophisticated but that shouldn't be anything to worry about- especially if America goes back to building strong alliances. It's the sum of the economies of Western civilization that should be compared to the Chinese economy and I suggest the former will always be greater. China will also always have to worry about its neighbors- more than America does. It's not likely to be a threat to its region. And if it wants to be dominant in the South China Sea, so what? It's right next to them and its not unreasonable for China to desire such a development. Keeping its population content will keep it from starting trouble and its economic development could help the world economy. China likes stability more than stirring up trouble.
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Godfree Roberts Apr 2, 2018

Thought provoking, but limited by some outdated notions of what China and its economy are up to. Three statements deserve closer scrutiny:

1. 'perhaps having too large a population to care for – especially one that needs to be controlled through limits on Internet and information access – will turn out to be more of a hindrance for China'? The Chinese censor publishes his regulations and follows them pretty transparently and 85% of citizens approve of his work. In contrast to the US (where censorship is pervasive but unacknowledged) China's censor blocks disinformation–harmful nonsense designed to create mischief in foreign countries–and overt spying by Color Revolution organizations like Facebook, Google and Twitter. Nothing of value is blocked.

2. 'As the rising importance of robotics and AI blunts China’s manufacturing edge, the ability to lead in technology will become more important. Here, the current trend toward higher concentration of power and control in the central government, as opposed to the private sector, could hamstring China'. China already leads the the world in the hard sciences, https://tinyurl.com/ydeqeqnb, and in 22 of 26 critical technologies not because of the power and control of the central government but because the central government is staffed by honest people whose IQ averages 150.

3. 'The possibility that China might never supplant the US as the world’s economic hegemon is the flip side of the technology and inequality problem'. Um, China's economy passed ours in 2010 and, by 2020 will be 50% bigger and growing three times faster. Who are we kidding here?
- John Maxwell Apr 9, 2018
  
  Nothing of value is blocked. Who are you trying to kid? Key political information required for efficient trading, both domestic and international, is routinely blocked.
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Michael Public Apr 2, 2018

Well, maybe, or maybe not. Think back to the Eastern Front where Russia beat back a technologically superior Germany through both sheer numbers and practical (yet inferior) engineering. China has the ecosystem in place to build their robot workforce (or doomsday army), while that of the USA is busy making opiates in their kitchen or cleaning swimming pools while working for Taskrabbit.

At another level, ideology behind the article is somewhat repulsive, immediately framing the rise of AI a new opportunity to 'be the world power'. There is another possibility, admittedly remote, that we could for a change just decide to use this technology for the good, rather than like last time where where built way too many warheads and way too few power plants.
- Paul Friesen Apr 2, 2018
  
  I sure hope that we can get rid of the "battle for hegemony " stuff at some point. When self-replicating artificial intelligence robots can do anything a human can do, and produce anything humans want, what will hegemony even mean? "My robots can self-replicate faster than your robots?"
  
  With such technology, there will be no justification for inequality, including inequality between countries. Of course, that does not mean that inequality will not exist, just that it will be unambiguously bad. Can we dare to hope that we will be smart enough as a species to understand this and structure our economy accordingly?
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Krzysztof Worytkiewicz Apr 2, 2018

Classical "strawman argument"
- Michael Public Apr 2, 2018
  
  A strawman argument is where you mischaracterize someone's position. The mentioned paragraph does not characterise anyone's position. Maybe you meant to say it smells like bullshevik, in which case I am inclined to agree since China is doing quite well in all those areas.
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