Posted on 09/26/2009 9:09:11 AM PDT by SeekAndFind
As China prepares for its big military parade next Thursday, when it will celebrate 60 years of Communist party rule with a display of power, it is clear the country has come out of the global crisis with its prestige greatly enhanced.
It is not just the strong rebound in the economy. China is becoming more influential and confident overseas, shaping events rather than reluctantly reacting. President Hu Jintao even stole the show this week at the United Nations climate change summit with his pledge to restrain carbon emissions. Two years ago, environmental groups were terrified by China’s galloping energy demand and addiction to coal: now they brandish it as an example for others.
Amid all the praise and trepidation that China is currently generating, it is a good time to point out some of the many reasons why China will not come to dominate the world any time soon. Even proponents of “China’s century” do not think it will arrive in the next few years. If this sounds a little curmudgeonly, Chinese officials make some of the same points themselves, usually when they are asked to hand over a large chunk of their reserves to some worthy international project.
For all the cosmopolitan affluence of Beijing or Shanghai, with their luxury shopping malls and Champagne-soaked gallery openings, it is easy to forget just how poor China still is. One of the more surprising statistics about the Chinese economy is that, in terms of per capita gross domestic product, it is still not in the top 100 countries. According to the International Monetary Fund, China ranked behind Cape Verde and Armenia in 2008, and only just ahead of Iraq and the Republic of Congo. Despite the remarkable reduction in poverty, daily life for most Chinese families is still a struggle to get by.
The crisis has also given China, with its $2,000bn-plus foreign exchange reserves, a lesson in the harsh realities of economic power. Many developing countries have sensibly built up a foreign currency pile to insulate themselves from financial crises. Yet real power lies not with the country with the most reserves, but with governments that can easily borrow in their own currency. After all, who does the US borrow from? China.
Beijing has moved from a sullen resentment of the US and its dollar privileges to plot a different international monetary system – hence the proposal from central bank governor Zhou Xiaochuan to replace the dollar as the global reserve currency eventually. But before the renminbi can play a large international role, it will need to be fully convertible and China will need a deep domestic bond market – two reforms that could be a question of decades rather than years.
Chinese citizens know too well how arbitrary political power can be: it always surprises me how many well-to-do Beijingers I meet have quietly arranged a foreign passport, just in case. This year has been a wake-up call for multinationals operating here. Rio Tinto’s bosses thought the mining group was involved in a tough negotiation with the Chinese steel industry over iron ore prices; then one day in July they found four of their China executives had been arrested for stealing state secrets. That the charges were later reduced to bribery and information theft will not have changed their view on China’s legal system.
The Xinjiang riots over the summer were another important warning. Like the turmoil in Tibet the year before, they exposed how large parts of the local population on China’s western frontier does not feel included in the new economic dynamism, or feel part the grand national project. By treating almost all dissent as a form of “evil separatism”, these provinces seem destined to face years of instability.
The more competent and better prepared China’s leaders become, the more cautious they seem about the big political issues at home. China’s one-party state has proved much more resilient than was imaginable when the Berlin Wall fell. Yet, although society has rapidly become more sophisticated, the political system has only inched forward. Difficult questions about how the party will retain legitimacy, how rule of law will be implemented and how to include new voices in society get pushed to the sides.
Last week’s party plenum, the annual meeting of the 200 or so senior party members, was a case in point. The main topic was how to adapt to some of these challenges – or “party-building”, as they call it. But apart from paying lip-service to meritocratic promotions and more “inner-party democracy”, the 4,000-word communiqué offered little more than tired pseudo-marxist slogans. A sample: “It is imperative to vigorously promote, on a party-wide scale, the style of linking theory to practice, building closer ties with the masses and criticism and self-criticism.”
Given the abundant evidence of purpose and planning, from the building site that wakes me in the morning to the almost weekly billion-dollar energy deals in far-flung parts of the world, this might seem like a strange thing to say about modern China: but it sometimes feels as if the people at the top are running short of ideas.
It is tempting to chart China’s rise like a graph of its GDP, 9 per cent up every year, without fail. Better to expect quite a few big bumps on the road.
-- The writer is the FT’s Beijing bureau chief
Love you long time US!
Hi Charlie, can you teach me English? :-)
The author may be correct about China, but fails to take into account the Obama and Pelosi/Reed plans for the US. No nukes, few weapons, high taxes, socialized industry and healthcare, cap and trade or carbon taxes, etc etc.
It’s not a half-static situation, with China gaining and the US staying the same. The US will be folding up while China gains. The world may want to be able to rely on the US, but there won’t be anything left of that old reliable US to respond to them any more.
Go for the clean sweep in 2010. If there is a DemocRat left in the House in 2011, fear for the Republic. Some country club Republican will want to compromise with her.
yesterday, on Becks show he asked the audience if they though us currency would be gone in 5 years and they raised their hands.
He wants us to be a third world country and utterly defenseless with a dictator at the helm.
We are breaking all records and heading in the wrong direction.
How come even China doesn’t want to invest more in our record breaking debt?
This article is total B.S.!
Gay men are anti-militaristic, too (although they think men in uniforms are simply FABULOUS!)
Cheers!
But have you visited San Francisco lately...?
Cheers!
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