One interpretation of the global economic crisis is that it marks an important moment in the shift of power from the US to China. In his new book When China Rules the World (Penguin, Â£30.00) Martin Jacques argues that the fact that China is such a huge creditor and the US such a colossal debtor ”˜reflects a deep shift in the economic balance of power between the two countries’. He sees China seeking to establish a new international reserve currency to replace the dollar and pushing to create an alternative to the IMF, a body in which China participates but which it has criticised in the past.
Jacques makes a case for seeing the rise of China as making a major break in world history. China, he claims, is not so much a nation as a civilisation. We must stop fooling ourselves that as China grows in wealth and military strength it will become more like us. Instead it will offer the world an alternative to the hitherto dominant Western culture. Confucian values and a Chinese model of capitalism will become increasingly important as countries in Asia and Africa turn their backs on the US and Europe. Jacques is not alone in predicting China’s rise in economic and military might. Goldman Sachs has suggested China is set to equal the US economy by 2027. But Jacques goes beyond many other commentators in stressing that China will be different. It will not join the existing club and play by the rules: it will insist that some of the rules be changed.
There are grounds for caution. Even China’s high rate of savings and American indebtedness are not as straightforward as they seen. People in China save because they cannot depend upon social security to care for them in sickness or old age. Because they save such a large proportion of their incomes, domestic consumption cannot support Chinese industries which depend on international markets in the US and elsewhere to sell their products. China is worried about the size of its dollar holding but it will not be easy to reduce this without triggering a fall in the dollar’s value. One thing can be said for certain. The transfer of funds from China overseas helped to precipitate a disastrous expansion of credit in the US and Europe that triggered the economic crisis. In that sense, we are all paying the price of China’s rise.
Long-term a number of factors could slow China’s economic growth. Its population is set to increase only slightly over the next 20 years and then start to decline because of the one-child policy. At the same time America’s population will grow because of its birth rate and immigration. One Harvard economist has predicted that by 2030 America’s share of the world economy will have declined only slightly from 28 per cent to 26 per cent while China’s share will have risen from 5 per cent to 14 per cent. As long as China continues to impose censorship and restrict internet use, it is hard to see genuine creativity of the kind that stimulates economic advance flourishing. China’s universities are expanding but they are less impressive than they seem. Large numbers of engineers graduate every year but a McKinsey survey of resource managers in international companies found that only 10 per cent of Chinese engineering graduates were considered employable.
The absence of democratic controls and a free press makes it harder for China to combat corruption. It also means that people are forced to protest to make their voices heard. Low-level protests are taking place all the time across China and any one could easily escalate into a mass movement that would destabilise the regime. The Han Chinese may consider themselves heir to a great civilisation but this pride is not shared by China’s large population of ethnic minorities, most of whom would like to see genuine autonomy for their regions rather than the sham offered at present. It is not only Tibet that is seething with discontent. Xinjiang comprises about 20 per cent of China’s land mass. It was only incorporated into the country in the 18th century and the Muslim Uighurs make up 45 per cent of the population. Long-term discontent flared up in riots in July in which nearly 200 people died.
The breakdown of stability in China would be harmful to all of us. The best hope for China is that is continues to build on its past traditions by introducing democratic reforms and by offering a greater degree of autonomy to disaffected minority groups. One of the most alarming aspects of the Chinese as described by Martin Jacques and other observers is their sense of superiority to everyone else, an attitude with a strong racist component. It will not help in their relations with Africa and the rest of the world.
The same attitude was present in the old European colonial powers but it was tempered by Christian teaching. Christianity is spreading rapidly in China. It remains to be seen how much influence this is going to have on the course of development. It is one of a number of factors that render China’s future unclear.
–(The Rt. Rev.) Paul Richardson is the assistant Bishop of Newcastle. This article appears in the Church of England Newspaper, August 21, 2009 edition, on page 16