Will China eclipse US?

S P SETH

When China sneezes, Australia catches cold, metaphorically speaking. Australia’s prosperity over the last ten years is significantly underpinned by continuing high economic growth in China. If China’s growth rate is even fractionally low, Australia’s stock market, particularly its resources sector, loses badly. Australia’s good economic fortune depends on high demand from China of its mining and mineral resources at high prices. Australia might be a special case of a direct link between its prosperity and China’s growth rate but, in varying degrees, China is now a growth engine for global economy, especially at present times when much of the western world is either growing at a snail’s pace or actually in the negative growth territory.

Which brings us to China’s rise into a future superpower; that future, according to some analysts, is getting closer and closer.  One of the most confident predictions in this regard is made by Arvind Subramanian in an article he wrote in the US journal, Foreign Affairs, entitled “The Inevitable Superpower”, now expanded into a book called, Eclipse: Living in the Shadow of China’s Economic Dominance. Subramanian wrote in his Foreign Affairs article, “ The upshot of my analysis is that by 2030, relative US decline will have yielded not a multipolar world but a near-unipolar one dominated by China.” He added, “China will [then] account for close to 20 per cent of the global GDP (measured half in dollars and half in terms of real purchasing power) compared with just under 15 per cent of the United States.”

He goes on, “At that point, China’s per capita GDP will be about $33,000, or about half of US GDP. In other words, China will not be dirt poor, as is commonly believed. Moreover, it will generate 15 percent of word trade--- twice as much as will the United States.” Therefore, “by 2030, China will be dominant whether one thinks GDP is more important than trade or the other way around; it will be ahead on both counts.”

 Subramanian doesn’t think that the US can reverse this trend because it has multiple economic problems. In his words, “… the country has a fiscal problem, a growth problem, and, perhaps most intractable of all, a middle class problem… High public and private debt and long-term unemployment will depress long-tem growth.”

And what is this middle class problem? It is that, “The middle class is feeling beleaguered: It doesn’t want to have to move down the skill ladder, but its upward prospects are increasingly limited by competition from China and India.”

China’s economic dominance over time will enable it to translate this into achieving its political objectives, the same way as the US did since WW11. Being a country deeply in debt to China, the US might find it increasingly difficult over time to stand up to China in its regional territorial and maritime disputes, thus enabling Beijing to prevail in the region. Subramanian has made a strong case that China, most likely, would eclipse the US as a superpower over the next few decades. He admits, though, that it might still “mess up”.

The problem with Subramanian’s thesis is that its linear argument is too neat without making any allowance for different variables. Generally speaking, economic forecasts are qualified to indicate that a certain outcome is likely if other factors remain equal. For instance, very few economists foresaw the global financial crisis that is still hobbling US economy and creating severe problems for the European Union. The global economic curve was supposed to be going upward all the time. Such was the magic of the new economy, so they said.  

In China’s case, it has severe unresolved social, economic and political problems, not to speak of intractable maritime disputes with a number of its neighbours tied in with the US in bilateral alliances. China’s Leninist polity, with Communist Party enjoying monopoly power, and a partial capitalist economy, is complicating things all the time. There is lack of transparency, large scale corruption, widening economic disparities between regions and among people, and the absence of any kind of higher idealism that Mao promoted and that many people in China, including in the CPC, are keen to bring about. With all these issues around, it is a brave man that would make such a confident prediction as in Subramanian’s thesis. He might turn out to be right but a guarded forecast might be in order.

An entirely opposite conclusion is reached by Edward N. Luttwak in his book, “The Rise of China vs. The Logic of Strategy”. He finds fault with China’s strategy of messing up its relations with its regional neighbours with its maritime claims, thus damaging China’s superpower prospects. Reviewing his book in the New York Review of Books, Ian Johnson writes that, “If accurate, Luttwak’s theory means Americans don’t have to worry too much. China will essentially self-destruct, at least diplomatically. And the list of problems facing China make it seem that this could well be happening right now.”

Yet another view is that as China goes along, it will change and adapt to manage its rise. Odd Arne Westad broadly expostulates this view in his book:  Restless Empire: China and the World since 1750.

China carries heavy weight of its history on its back. It is reflected at two levels. The first is an intense pride in its hoary history and civilization as the Middle Kingdom, with its territorial and maritime claims in the region based on ancient maps going back several centuries of dynastic rule. Beijing refuses to accept that the intervening colonial conquests and the rise of nation states might militate against such claims and that these might have to be revisited through negotiations.

The second is a great sense of humiliation and consequent anger from nearly 200 years of being subjected to Western and Japanese intervention and invasion. It is now determined to restore China’s rightful historical place in the world. China believes that this phase (of colonial humiliation) was just an aberration in its otherwise glorious history and that the new China must rectify this situation.

Both aspects of its history, its glory and a period of humiliation it suffered, seem to be reinforcing each other to push China into a new historical phase of reclaiming its past and recreating a new future. And with its power growing economically, politically and militarily China has the confidence that it can do it again and become the new Middle Kingdom to eclipse the United States as the world’s only superpower.

Note: This article was first published in Daily Times. 

Contact: sushilpseth@yahoo.com.au