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The China global challenge: A review
Back in the early 1980s, when the Japanese economy was on a roll, the number of books, journal and media articles extolling its strength and impact became almost a weekly staple of publication that the late Dr
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ack in the early 1980s, when the Japanese economy was on a roll, the number of books, journal and media articles extolling its strength and impact became almost a weekly staple of publication that the late Dr. Hadi Soesastro remarked at a CSIS Jakarta seminar “I’m going to commit suicide if another speaker is going talk again about the virtues of Japanese economic model.”
It is with the same sense of measured reluctance that I read through China’s Rise by Gary Schmitt, China Megatrends by John Naisbitt and When China Rules the World by Martin Jacques. All this after scanning through The Beijing Consensus by Stephen Halper and, tellingly, during China’s current troubles facing devastating floods, landslides, acute rural and urban problems and lowered pace of economic growth.
China’s impact has been analysed by so many experts, businessmen, financial analysts as well as military strategists that it is convenient to review the China challenge into three basic themes.
The first is to view the challenge in terms of China’s vaunted economic size relative to its actual economic strength. Economic strength, as many political and economic consultants would say, is not necessarily a function of size.
The China market, as viewed by business consultants and people who love touting China at international business conferences, has been primarily seen as an opportunity for American and European multinationals to push their drive for greater benefits for their companies and shareholders who find cheap Chinese labor working to their advantage, by reducing production costs and increased profit margins.
But early 2010 saw the overheating of the economy leading it into the threshold of the “overhead trap”.
Chinese leaders realize that other nations in certain sectors can still hold heir own, Vietnam and India being chief examples.
Though Naisbitt and Jacques recognize that dynamic competitive advantages can and do change over time, both believe that China’s political and economic leaders are well aware of the imperative to adapt quickly and retain price competitiveness.
China’s economic strength has seen marked improvements, including in infrastructure and manufacturing technology, establishing near world class universities/technology centers to compete with the best in North America, Europe and Japan.
But China’s economic and political institutions are still opaque and fragmented, less agile to innovate, despite the Communist Party’s firm grip on the trajectory of internal change. Claims by Halper in asserting the unique impact of the Beijing Consensus (itself an unashamed adaptation of Lee Kuan Yew’s “Singapore Model” since the late 1960s) to other developing countries have yet to be seen.
The second theme is to link China’s economy to its voracious need for all manners of energy resources from all points across the world. From iron ore, wheat and beef in Australia, to oil and gas in the Sudan, minerals in Southern Africa, the Middle East and Latin America, China’s leaders know that they must secure the country’s energy needs to propel its 9 percent annual GDP growth rate in order to sustain economic performace, which in turn underpins the Communist leaders’s legitimacy. Or at least among its 350 million middle class in the modernizing clusters of its larger cities.
The numerous state companies and sovereign wealth funds dealing with banking, finance and energy developed over the past 10 years are testimony to the Chinese leaders foresight in linking national interest to changing international power configurations.
Economic growth must be constantly linked to secure China’s financial reserves as well as to the changing “energy mix” it must balance. Economic “performance legitimacy” is key to the Communist Party’s grip over an emergent and critical middle class.
“Chinese leaders continue to be discrete in their preference that the US continue to check against Japan’s aspiration for a more prominent role within the East Asia rebalancing process.”
The third theme focuses on China’s growing military power as a consequence of its economic rise over the past 25 years. For many military strategists, the question is how much China’s leaders see the need to strengthen its military capabilities relative to the economic strength and influence of its near neighbors (Japan, Russia, South Korea). More importantly, China’s third and fourth generation leaders must specially deal with the sensitive issue of American military dominance in Asia and the Pacific.
Debates within the Chinese leadership are constantly monitored by “China watchers” seeking to gauge China’s sense of regional entitlement in Northeast Asia and Southeast Asia.
Leaders in Beijing continue to be discrete in their preference that the United States continue to check against Japan’s aspiration for a more prominent role within the East Asia rebalancing process.
From time to time, even as it recognizes American stategic preponderance worldwide, China’s civilian and military leaders feel the need to assert its military clout in its “core areas” of interest, Northeast and Southeast Asia.
At the same time, like other Northeast Asian countries in the region, China grudgingly wants to retain the relative “free ride” it gets from American security presence.
In matters of its vital trade, investments and exports interests in East Asia, the Indian Ocean and points beyond, United States forces and bases throughout the world provide that vital security assurance.
As with India, Japan, Russia and the European Union, China must come to terms with the reality that the world’s oceans and trade routes remain under the constant surveillance of American “full spectrum dominance” (satellite based, cyber defense, strategic nuclear, theater nuclear, conventional force superiority). Even under current US government policy to trim the defense budget, only American forces have the ability to project its conventional power through its six carrier strike group plying through the oceans and seas worldwide.
The writer is professor of international relations at the University of Indonesia, Jakarta. He was defense minister in the first Cabinet of President Susilo Bambang Yudhoyono (2004-2009) and a former ambassador to the United Kingdom.
