China-India Relations Hit a Bump

By S.P.SETH

Even as China is flexing its muscles with its neighbors in Asia-Pacific, it is also testing India’s resolve. This was recently demonstrated when Beijing cancelled an official-level meeting in New Delhi on their seemingly intractable border dispute.

China wanted India to cancel a religious gathering in New Delhi to be addressed by the Dalai Lama. When India declined, Beijing decided to cancel the official-level meeting.

China distrusts India’s hosting of the Dalai Lama and his government-in-exile (no longer led by the Dalai Lama), ever since he as was granted refuge in India after he and his entourage fled Tibet in 1959.

Since then, along with the unresolved border dispute between the two countries, the Dalai Lama has become the symbol of a continuing under-current of their prickly relationship.

When both the countries agreed in late-eighties to develop their relations, while simultaneously seeking a resolution of the border dispute through periodic talks, they hoped to overcome these differences through the gathering momentum of their relations in other areas.

It is true that they have made good progress in developing trade relationship but the border dispute and the shadow of the Dalai Lama has always been a limiting factor.

China is also not happy that India might have ambitions of becoming a competing Asian power, as well as becoming part of a containment ring around China as the United States’ strategic partner.

China’s India image is quite contradictory. At one level it has a low opinion of India as a nation. The People’s Daily noted, in a recent commentary, that, “India is expanding its military strength but it is still uncertain whether India will realize its dream of being a leading power, because India’s weak economy is severely unmatched with the image of a leading power.”

This is equally true of China, though its economy is much bigger than that of India. China’s economy has all sorts of distortions and imbalances. And its political system of one party rule is fanning social unrest.

China’s arrogance is a serious problem in its relations not only with India but also with its Asia-Pacific neighbors, as we have seen lately.

Expanding on its estimation of India, the People’s Daily added, “In addition, international communities and India’s surrounding countries are all suspecting and even being on guard against this kind of unbalanced development mode”--- whatever that means.

China apparently is alluding to India’s difficult relations with some of its neighbors, particularly Pakistan. And Beijing has been encouraging and aiding Pakistan to become a counter-point to India regionally.

But there are problems here. First, Pakistan is in all sorts of troubles internally and externally. Therefore, it is not a viable counter-point to India. Its deteriorating relations with the United States do give China space to make greater inroads into the country. However, its fractured society and polity makes any coherent policy approach difficult.

Besides, Pakistan’s Islamist character is at odds with China’s ongoing repression of Xinjiang’s Muslim population. It is important to remember that some of Xinjiang’s militants were trained in camps operating in Pakistan’s tribal areas.

As for India’s other neighbors, their relations with India might be prickly at times giving China some scope for creating trouble, but their relationship with India is quite normal, if not friendly.

In other words, China’s policy to hem in India regionally in its backyard is not succeeding, allowing it to develop relations with countries in South East Asia and East Asia.

India’s growing ties with Vietnam, including an accord for exploration of oil in Vietnam’s Spratly islands (also claimed by China), has raised Beijing’s ire. An Indian naval vessel was recently warned for entering South China Sea, though the warning was ignored.

India joined a number of regional countries raising the issue of China’s interference with passage of ships through South China Sea at the recent East Asia Summit.

China has serious problems with most of its neighbors in Asia-Pacific because of its maritime disputes, laying claim to South China Sea waters and islands, and with Japan in East China Sea.

Closer to India, China seems to have suffered a serious setback in its relations with Burma as its regime seeks to open up the country both internally and externally. The recent highly publicized visit of the US Secretary of State, Hillary Clinton, is a pointer to this.

Earlier, the Burmese government went ahead with cancelling a multi-billion dollars Chinese-financed dam to supply electricity to vast areas of China across the border.

India is likely to be a beneficiary as Burma seeks to balance its relations to reduce its economic and political dependence on China.

What is worrying China, among other things, is that India is seeking to develop its relations with Asia-Pacific countries. Whenever New Delhi seeks to tread on, what China regards as, its patch, Beijing turns up the heat on the border by reigniting its dormant border claims to more territory on the Indian side of the border.

For instance, Beijing is now laying claim to Arunchal Pradesh calling it “south Tibet.”

They have never forgotten India for letting in the Dalai Lama and his entourage when they were escaping to seek refuge in 1959 from Chinese occupation of Tibet.

Even though India acknowledges China’s sovereignty over Tibet, it is not good enough for Beijing because the Dalai Lama continues to function in his spiritual role as the head of the Tibetan Buddhism. Beijing regarded the recent religious gathering in New Delhi a provocation, making it the occasion to cancel the official-level border talks, thus raising the temperature between the two countries.

Despite this, both China and India are unlikely to let their tense relations get out of control. Despite China’s distrust of India’s strategic relationship with the United States, it is not keen to push New Delhi into any formal military alliance between the two countries.

India is unlikely to forgo its strategic independence through any kind of a military pact. And Beijing is not keen to push it into such a situation.

Therefore, India-China relations, for the foreseeable future, will continue to remain in a state of controlled management, with both sides remaining distrustful of each other.

North Korea: The Death of a Dictator
By S P SETH

The television images of mass grief in North Korea over the death of its dictator, Kim Jong-il, says a lot about the country. While a fair bit of it is a command performance required by the regime, it is not difficult to imagine that many North Koreans might be genuinely sad over the passing of their Great Leader, as he was called. While North Korea is a basket case economically, with many of its people dying of starvation, its population has only known Kim dynasty as the country’s rulers ever since the Peninsula was divided in the aftermath of the WW11. The death of Kim Jong-il, who succeeded his father Kim Il-sung in 1994, does create a vacuum of sorts in a country so structured around the personality cult of its leader. Kim Jong-il’s anointed heir, Kim Jong-un, his third son, is an unknown quantity, having been groomed by his ailing father for only a little over a year before he died. He is very young at about 28 years of age and with little political experience, Kim Jong-un era might be a little rocky, though his lineage is an advantage for him in a country where virtually all authority has percolated down from the ruling Kim dynasty from the beginning.
For a small country with a population of about 24 million, Kim Jong-il’s death has created a lot of flutter in the major capitals of the world. Indeed, both the US and China are equally worried about the political transition in Pyongyang, and their foreign ministers have been in touch to ensure that the political transition there happens peacefully to ensure regional stability. While the US and China might agree broadly about this, they remain distrustful of how a crisis in North Korea might pan out. For China the Korean peninsula is its strategic space, and it regards the United States as an outside power. On the other hand, for the United States, South Korea is its military and strategic ally. Indeed, the two halves of Korea are technically still at war with each other-- the war having ended in an armistice without a peace treaty.
A bit of history to the Korean problem might be in order here. When North Korea attacked South Korea in 1950, the peninsula was not only plunged into a brutal war but also became a theatre of Cold War between the United States and the Soviet Union. Additionally, there was a new China under the leadership of the Communist Party. It felt threatened when the US forces in South Korea started pushing closer toward its border with North Korea. This brought China into the war on behalf of its North Korean neighbor and ally. China’s forces finally pushed the US troops back and the war ended in 1953 with a truce along the 38th parallel dividing North and South Korea. The two countries are now separated by a demilitarized zone, more or less eyeballing each other with the not infrequent fear of a military confrontation. Indeed, the sinking of a South Korean naval ship last year, believed to be by a North Korean torpedo, and the shelling of one of its islands, created the fear of a military flare up. The Korean peninsula remains a flash point with the likelihood of the US and China drawn into it by virtue of their alliance relationship--- China with North Korea, and the United States with South Korea.
Things might get even more than usually dangerous in the new situation created by the death of its dictator, Kim Jong-il, and the succession of his inexperienced son, Kim Jong-un. With North Korea’s economy in dire straits, and its political transition worrisome, there are fears that the country might collapse from within. If this were to happen, it would pose serious challenges for regional stability. For instance, China might be faced with the prospect of a large influx of refugees from across a crumbling North Korea. The same will be true of South Korea. For South Korea, the bigger challenge/danger will be to prepare for a possible unification of the Korean peninsula in the event of a North Korean collapse.
Even with South Korea’s relatively strong economy, the economic cost of integrating North Korea will be prohibitive. Germany’s example is instructive, but the West German economy was much larger and it wasn’t facing a precarious strategic situation: not knowing how China will react to such sweeping developments on the Korean Peninsula. With South Korea allied to the US, any unification process under South Korean terms and patronage will make the unified country a military ally of the United States. The prospect of having US troops on its border is unlikely to be acceptable to China. China, therefore, will seek to perpetuate the new political order in Pyongyang under the nominal or effective leadership of the younger Kim. The problem, though, is that even China doesn’t really know the internal workings of the hermit kingdom, as North Korea is called. Therefore, there are more questions thrown up by Kim Jong-il’s death than there are plausible answers.
What is known, though, is that North Korea is an economic basket case, hugely dependent on aid and trade with China. Despite this, Beijing’s political leverage over North Korea seems rather limited. Short of ditching its ally, thus giving the United States a foothold on its border, Beijing cannot afford to wash its hands off the hermit kingdom. This is why it is seeking to enlist the US cooperation in bringing about a peaceful political transition in North Korea to perpetuate the Kim dynasty.
The US interest in North Korea is centered on ridding it of its nuclear capability. China doesn’t favor a nuclear North Korea, but it is against joining the US and its allies for sanctioning North Korea, and worse. It doesn’t want to be a party to upsetting the status quo on the Korean peninsula lest it works against its strategic interest, as earlier discussed. If the political transition in North Korea goes peacefully avoiding an internal collapse, it is likely that the suspended talks for North Korea’s denuclearization might be revived, with Beijing as its venue.
China has played the host in these on-off talks in the last few years, but without much success. This is so because Pyongyang wants to use its nuclear leverage to get the maximum mileage from these talks through a phased process of linking abandonment of its nuclear program with concrete diplomatic, aid and trade concessions from its negotiating partners. On the other hand, the US and its allies would require North Korea to abandon its nuclear program first under a rigorous process of international verification. Only after that Pyongyang will become entitled to diplomatic recognition as well as trade and aid provision. This remains the sticking point, with seemingly no way out.
In any case, the immediate concern for the region and its principal stakeholders, like the US, China, Japan, Russia, South Korea and North Korea, is the unpredictable nature of how the political transition in North Korea might pan out. Because: any internal implosion has the potential of plunging the region into a turbulent crisis that might involve the US and China on opposing sides. Hopefully, it will not come to that as the world can hardly afford another area of instability and confrontation.

US-China in Asia-Pacific

By S P SETH

The US President Barack Obama’s just concluded Asia-Pacific trip is a strong signal that the United States will re-energize its engagement with the region. It is important to remember that the US has been the dominant economic and military presence in the region since after WW11. With the collapse of the Soviet Union in 1991, the US sway was even more complete. China had started as an emerging economy in the eighties under Deng Xiaoping’s leadership after the disasters of the Cultural Revolution. And it depended on the US and its Western allies for entry into their markets and into global trade forums like the World Trade Organization.

However, early in the present century, the US invaded Afghanistan and Iraq as part of its global war on terror, where it is still stuck, especially in Afghanistan. With the US distracted and increasingly mired in these two wars, China was able to raise its regional profile backed by impressive economic growth, and a steady rise of its military power. There was a growing feeling in the Asia-Pacific region that the United States might not stick around for long, with China eventually replacing it as the dominant power. The global financial crisis in 2008 and 2009, which the United States and Europe are still struggling with, tended to further increase this pessimism about the United States.

It is against this backdrop of China’s rise, and its impact on the region, that President Obama forcefully declared during a daylong visit to Australia that the US is an Asia-Pacific power and it is here to stay. As the US unwinds its military involvement in Afghanistan and Iraq, it is shifting its focus to Asia-Pacific where the history will be made in this century. Obama said, “The United States has been, and always will be a Pacific nation.” Therefore: “Let there be no doubt. In the Asia-Pacific in the 21^st century, the United States of America is all in.”

The choice of Australia to make this declaration is important as both the US and Australia are further expanding their military and strategic alliance against the backdrop of a perceived threat from a rising China. The US-Australia military alliance under the ANZUS treaty is being beefed up with the stationing of US marines in the country’s north, and with the use of naval and air facilities in the country’s west. Both the US and Australia deny that their expanded military relationship is directed against China, but there is very little doubt that China is seen as a likely threat.

President Obama said in Canberra that, “The United States will play a larger and long-term role in shaping this region and its future, by upholding core principles [of human rights] and in close partnership with allies and friends. “ In other words, China is forewarned that the US will not quietly fade away, and that it will not have an easy time with its neighbors unhappy with maritime disputes with China. These smaller countries are being assured that they can bank on the United States to stand their ground. At the same time, the United States will not let up China on violation of human rights and the promotion of democracy.

The assertion of China’s sovereignty over South China Sea is likely to become a regional flashpoint at some point. China’s smaller neighbors, like the Philippines and Vietnam, have competing claims to the Spratly group of islands in South China Sea, that have caused some naval incidents blamed on China. The US and the Philippines are taking steps to boost their defense relationship. The US and Vietnam are also forging closer political and military ties, and there has even been talk of a former US military base (of the Vietnam war time) being revived. The US and Japan are already close military allies, with their alliance further beefed up in the last few years. China and Japan too have competing maritime claims in East China Sea, leading to naval skirmishes not long ago. At the same time, the Korean peninsula remains a live wire with North Korea unwilling to give up its nuclear capability. Though China is opposed to North Korea’s nuclear ambitions, it is not inclined to team up with the US and Japan, among others, to turn on Pyongyang.

And Taiwan, of course, remains a live issue, with China claiming it as its own territory with the right to take military action if it were to declare independence. The US acknowledges China’s sovereignty over Taiwan, but is against the use of force by China to achieve it. At the same time, China’s sovereignty claim over South China Sea is creating nervousness that it might interfere with open sea-lanes. All in all; Asia-Pacific is potentially a time bomb with all these claims and counter-claims.

The South China Sea featured in the just-concluded East Asia Summit in Bali against China’s wishes, and is likely to become part of its agenda in subsequent summits. Beijing would prefer its discussion at a bilateral level between the concerned countries with competing claims. It regards the US as an external force that shouldn’t have anything to do with regional disputes. The US, of course, is determined to raise its Pacific profile as the one that is and has always been a Pacific power. In other words, the US decision to make its Asia-Pacific policy a priority is likely to further complicate US-China relations.

And Australia is right in the middle of it, being a willing, if not enthusiastic, partner of the US’ policy to contain China, if necessary. China’s People’s Daily warned Australia that it cannot play both sides of the coin hoping to maximize its economic gains from a booming trade relationship with China while siding with the United States strategically. It said, “Australia surely cannot play China for a fool. It is impossible for China to remain detached, no matter what Australia does to undermine its security.”

More importantly, though, Barack Obama’s revitalized Asia policy goes beyond Australia. In a way, it tells Beijing that gloves are off and the United States will make a determined stand in the Asia-Pacific region to stave off China’s push into the region and to push out the United States. And for this, the US will foster new and reinforce old military and strategic ties with regional countries with maritime disputes with China or otherwise keen for a countervailing force to China’s rise. How will this US-China competition for power will unfold is anybody’s guess? One thing is for certain. Which is that the Pacific Ocean is unlikely to live its pacific name with the new unfolding power game.

Note: This article was first published in the Daily Times.

Will China Lend Europe a Helping Hand?

By S.P.SETH

While Europe is undergoing economic self-flagellation, China appears to be sitting pretty with its foreign currency reserves of over $3 trillion. Despite approaches from European leaders for China’s help, Beijing is acting rather coyly. Apparently, the Chinese would like Europe to approach them formally and, in the process, make China the crucial player in the European salvage operations.

Besides Europe, even the US is not too great a shape economically. In other words, the entire global financial architecture needs overhauling. And China has deep pockets in terms of its foreign exchange reserves to be able to play a leading role. And in the process demand a determining role in the global financial institutions, like IMF.

It would also like the Western countries to lay off China in terms of its currency valuation, market status of its economy, building up protectionist barriers against Chinese exports and so on. To give one example: Premier Wen Jiabao reportedly said in September that, “We have on many occasions expressed our readiness to extend a helping hand, and our readiness to increase our investment in Europe.”

He added that it would be good “if they should recognize China’s full market-economy status” before the 2016 deadline set by the World Trade Organization. This is the way, he maintained: “To show one’s sincerity on this issue a few years ahead of that time the way a friend treats another friend.”

In other words, China will exact a price ranging from re-arranging the global financial architecture to political and strategic concessions as things evolve.

The point, though, is it is in China’s economic interest to help Europe because, first, it is China’s major export market and, second, it has a big chunk of its foreign exchange reserves in euro. And if Europe slows down or falls into recession (as might happen with the US too), its repercussions on China’s employment situation will only add to social instability.

For instance, when global financial crisis hit in 2008 and 2009, China experienced a major slump in its export industry with millions of workers laid off. And there were fears that the returning rural migrants could create an explosive economic and social situation back in the countryside.

China’s massive stimulation package saved the situation in the short term, but resultant inflationary pressures, over-investment, developing asset bubbles, sectoral imbalances, new unaffordable apartment buildings with no occupants, increased internal debt--- all these anomalies have still to work their way out.

China is in the advantageous position of having large foreign currency reserves. But it also has a large internal debt estimated anywhere between 100 and 200 per cent, when one includes the borrowings of local, regional and other government instrumentalities. And it is creating serious distortions in the country’s economy.

To take one example: The interest on saving deposits in China is around 2 percent while inflation is around 6 per cent, which is eroding people’s savings. This, in turn, has created a black market in lending with usurious interest rates.

In other words, there is something about China’s economy that just doesn’t add up. As Larry Elliott writes in the Guardian: “Historically, an uncontrollable rise in credit has been the best indicator of a financial crisis, as the West knows from recent experience.” And he posits the question: “Can China buck this trend?”

He believes: “There is exaggerated confidence in the ability of the People’s Bank of China to finesse a soft landing, just as there was in the ability of the ‘maestro’ Alan Greenspan to prevent the American bubble popping a decade ago.” It looks like the Chinese situation has the “booming echoes of the [US] subprime crisis.”

The question arises: how healthy is China’s economy? The bullish view is that China’s economic growth (even if at a slightly lower rate than the usual of around 10 per cent) has a long way to go driven by the country’s urbanization and industrialization. Therefore, any slowdown will be short term.

The problem with this view is that it doesn’t take into account social and political factors that are complicating China’s picture. At some point, there is a need to interlink the country’s economic growth with social and economic equity and political reform.

China is said to be about 50 percent urbanized and in the next decade or two there is talk of taking it close 100 per cent. One shudders to think of a billion people living in a dog-eat-dog culture of greed, not to talk of the resultant pressure on social and related infrastructure.

We are talking here of a society with a long historical and cultural tradition of close family and clan traditions that have provided succor through times good and bad. And their displacement from such a close and known environment to an urban setting, putting them in the midst of an unfamiliar and, sometimes, hostile surroundings, is likely to create severe pressures and social breakdowns.

And even its rosy economic picture appears dubious at times. WikiLeaks reportedly revealed a conversation in 2007 between the then US ambassador to China and Li Keqiang (likely to be China’s next Premier), then governor of China’s Liaoning province, in which Li told the US ambassador that China’s gross domestic product number was “man-made” and “therefore unreliable.”

In other words, China’s economic statistics might be dodgy. If that is true, it changes the entire picture requiring a re-evaluation of what is and what is not true about China’s economy.

But that doesn’t detract from China’s capacity, based on its foreign reserves, to lend Europe a helping hand at its time of crisis. Apart from its own economic advantage of maintaining an important export market and the value of its euro holdings, it is an important opening for China to create a new strategic space in a fast changing Europe.

China’s Moral Vacuum

By S.P.SETH

Many Chinese and people around the world were aghast to see video pictures of a two-year old run over twice by a van, and then again by another van, when passers-by simply went about their business ignoring the grisly sight. At the end, a kindly old scavenging woman picked up the little one but to no avail as she died in the hospital.

The questions have been asked and answers demanded about such callousness dramatized in this incident, and others less spectacular but equally disturbing cases of indifference often displayed in modern day China.

One explanation, of course, is that the country’s obsession with growth and greed is making everyone selfish and self-centered. China is growing in a moral vacuum detached from its traditions and humanitarian values. There is no overriding vision of a compassionate society that China might become.

Obviously, for this to happen, the government and the system have to set the example and that, unfortunately is missing. The people of China find in their day-today-living that the system largely exists and serves those who hold power and exercise it in an uncaring, corrupt and venal way. It is becoming a dog-eat-dog society.

There are no role models now, and the corrupt political-business nexus rules the roost.

With political transition next year to a new generation of leadership, there is need for some serious introspection and debate about where the country is going. And this should be thrown open to wider participation.

But the CPC will resist any such obvious course for fear that it might get out of hand, threatening its hold on power. However, to any dispassionate observer, the problems are well known, and were spelled out in China’s Charter 08, signed by many Chinese seeking a change of course for their country.

According to the Charter, “The political reality, which is plain for anyone to see, is that China has many laws but no rule of law; it has a constitution but no constitutional government. The ruling elite continues to cling to its authoritarian power and fights off any move towards political change.”

The result: “The stultifying results are endemic official corruption, an undermining of the rule of law, weak human rights, decay in public ethics, crony capitalism, growing inequality between the wealthy and poor, pillage of the natural environment as well as of human and historical environments, and the exacerbation of a long list of social conflicts, especially in recent times….”

What should be done: “The decline of the current system has reached the point where change is no longer optional.”

But try telling this to the those in power and you will be thrown into dungeon as happened with the prominent dissident Liu Xiaobo, the leading light of Charter 08 movement, now serving 11 years in prison for seeking a new democratic direction for his country.

These dissidents are not self-serving politicians. They genuinely and honestly believe that China is on the wrong track. Indeed, even some of the children of the post-Cultural revolution ruling elite have started muttering such criticism.

The Sydney Morning Herald’s Beijing correspondent, John Garnaut, recently reported such criticism at a gathering at the Hall of Many Sages. One such participant, Ms Ma Xiaoli, with a pedigree of close relationship with other prominent Party families, reportedly said, “The Communist Party is like a surgeon who has cancer. It can’t remove the tumor by itself, it needs help from others, but without help it can’t survive for long.”

Ye Xiangzhen, daughter of Marshal Ye Jiangyang, said: “In today’s China we are facing tremendous challenges that range from the rapid decline of moral standards, to poisonous and genetically modified food, to rampant official corruption.”

Still another one, Lu De, told those gathered that the party and government officials spent a third of all government revenue on their own luxury cars, travel, healthcare, banquets and other perks. He added ironically, “And yet we still call it the Communist Party and socialism.”

Indeed, Ma Xiaoli unburdened herself with what might prove to be prophetic remarks: “In the 80s when the party faced criticism we defended it… In the 90s we sympathized with the critics but today we almost want to join them”

And significantly, according to Garnaut’s report in the Sydney Morning Herald, she went as far as to invoke the example of Taiwan’s Chiang Ching-quo who transformed dictatorship into a prosperous democracy.

Of course, these ‘princelings’ can say these things and get away with it because of their connections at the highest level of the party leadership.

But the point is that if they feel so frustrated with the existing state of affairs, one can’t avoid the conclusion that the Party is outliving its welcome (if they ever had it) with the people.

As Charter 08 says, “The decline of the current system has reached the point where change is no longer optional.”

But the Party seems determined to hang on until overthrown by the people, like they have done with their rulers in the Middle East.

But China’s rulers are further tightening the system to hopefully prolong their rule and the Communist Party’s monopoly on power forever. And to this end, among other repressive measures, they are turning their attention to social media like Sina Weibo, a Chinese version of Twitter.

It is reported that the Centrally Committee of the Communist Party has undertaken to “strengthen the guidance and administration of social internet services and instant communication tools [to ensure] orderly dissemination of information.”

And how will they do it? They propose to identify those who spread “false rumors” and make an example of them. Which means another coercive tool to virtually lock up anyone or everyone disseminating any kind of information that the Party finds unpalatable.

It is said that Sina Weibo has already hired 1000 people for this under pressure from the government.

Whether or not they can build an effective Great Firewall around social media, like they have already done generally with internet, is another thing because those who want to reach out will find creative ways to circumvent it.

But the Party leadership is petrified at the role of the social media in Arab Spring and increasingly in the Occupy Wall Street movement in the US and its versions elsewhere in the world.

It certainly is a terribly nervous Party constantly seeking to build flood levees to control anticipated floods of people’s frustration and anger.

Is China the “Inevitable Superpower”?

By S.P. SETH

There is much talk these days about China’s emergence as the next superpower in a decade or two. Indeed, Arvind Subramanian, a Senior Fellow at the Peterson Institute for International Economics, has predicted that China is the inevitable superpower. In an article in a recent issue of the Foreign Affairs Magazine titled, The Inevitable Superpower, (extracted from his forthcoming book), he argues why China’s dominance is a sure thing.

“The upshot of my analysis”, according to Subramanian, “is that by 2030, relative U.S. decline will have yielded not a multipolar world but a near-unipolar one dominated by China. China will 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 adds: “At that point, China’s per capita GDP will be about $33,000, or about half of U.S. GDP. In other words, China will not be dirt poor, as is commonly believed. Moreover, it will generate 15 per cent of world 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.” Case closed---as far as Subramanian is concerned.

It is a pretty confident thesis, with the author willing to stand by it like a proven mathematical formulation. Indeed, the subtitle of his article is: “Why China’s Dominance Is a Sure Thing.”

And he poses the question: Can the United States reverse this trend? His answer obviously is not likely.

He writes: “Its [US] economic future inspires angst: the country has a fiscal problem, a growth problem, and, perhaps intractable of all, a middle-class problem…. High public and private debt and long-term unemployment will depress long-term growth….”

He adds, “The middle class is feeling beleaguered: it does not want to have to move down the skill ladder, but its upward prospects are increasingly limited by competition from China and India.”

Subramanian even conjures up a horrible scenario in the future when China might be able hold US to ransom “by selling some of its currency reserves (by then likely to amount to $4trillion).”---Requiring the US to withdraw its naval presence from the Pacific Ocean as a condition of financial bail out, replicating the situation faced today by Greece and other vulnerable European countries.

In other words, China’s will use its economic dominance as a political tool to change the global strategic balance in its favor.

Against this backdrop of his racy and predictive account of China’s “sure” rise to preeminence, he does concede in passing, though, that: “China can radically mess up, for example, if it allows asset bubbles to build or if it fails to stave off political upheaval.”

Undoubtedly, the United States has serious economic problems of debt and sluggish growth. But to project that China will have a virtually smooth run to become the world’s new superpower is a gross simplification.

Subramanian’s thesis is too neat and predictive on a subject that doesn’t lend itself to such simple formulation. Generally speaking, economic forecasts are qualified to indicate that a certain outcome is likely if ‘other things remain equal.’

Even though the author believes that China might still mess up things, he says it in a throwaway line passing without any serious discussion of other variables. And these variables will eventually determine where China goes.

For instance, China’s rise is subject to two important qualifications. First is social and political stability. And this doesn’t seem very encouraging from the growing popular unrest in different parts of the country.

Indeed, the government has been so nervous about the ripple effect of the Arab Spring that it went on a hurried round up of political dissidents and human rights activists, as well as further tightening of internet censorship, to preempt any spontaneous uprising.

It doesn’t say much about China’s oligarchs’ capacity to manage political transition/change that is overdue. Beijing cannot pretend that the country will keep growing economically in the medium term without a corresponding political change toward greater political openness and popular participation.

At present, there is a serious disconnect between China’s partially capitalist economy and authoritarian/Leninist polity. The recent history shows that after a point political authoritarianism becomes counter-productive and destructive without the necessary transition to democracy. South Korea and Taiwan come to mind.

Political oxygen is imperative to continued economic growth. Otherwise, the entire edifice might collapse.

Second: Politics apart, even as an economy, China is facing serious problems. The statistical economic growth is not the true indicator of economic health. There are other important factors. China’s growth is lopsided, creating and widening income disparities, urban-rural divide and regional imbalances.

Economic growth, at any cost, has elevated greed into an overriding compulsion, creating an endemic culture of corruption at all levels; with the Party functionaries and bureaucrats riding roughshod over people, acquiring their land and property in the name of development.

The obsession with statistical growth has created terrible environmental problems, with polluted rivers and degraded landscape. In a word, economic growth has become an end in itself, and not a tool for social uplift.

This is untenable and unsustainable, as even Premier Wen Jiabao admitted recently. For instance, asset bubbles are already developing in the economy, particularly in the property and stock markets as happened in Japan during the nineties and is continuing to plague its economy to this day.

The difference between China and Japan, though, is that Japan’s stagnation started from a much higher base, and its democratic polity allows necessary safety valve for the system.

With inflation rearing its head, China’s political system is a closed shop with little or no safety valve. And if too much steam builds up in China’s pressure cooker society from wider social unrest, there is a danger of spontaneous combustion tearing down the entire edifice.

Therefore, whether or not China is the “inevitable superpower” is subject to a lot of variables than just its high economic growth.