China's Economic Rise and the New Geopolitics

Abstract

BACK TO THE FUTUREFollowing a quarter of a century of robust, double-digit economic growth, China is now poised to overtake the United States as the world's largest economy (in purchasing power terms) within two to three decades. When this happens, China will not only be ending a 150 years of US reign, but will also be reclaiming the primacy it first obtained a millennium earlier when it pulled away from western Europe to become the biggest economy on the planet. Today, the Chinese factory to the is producing not only garments and toys but computer components, cars, and aircraft, and sets its eyes even higher. The Chinese have successfully launched manned space missions, something only two other nations have managed before, and are planning further space exploration. They are investing heavily in the technologies of the future, such as nanotechnology and fuel cells, that will help their nation cement a leadership position in the economic arena as well as in world politics.Naturally, China's continuous economic progress depends on its ability to contain or overcome numerous problems. A manifestation of the remaining and often growing obstacles en route to China's modernization is social unrest-naturally a threatening phenomenon to a non-democratic regime whose legitimacy is underpinned by a modern mandate of heaven-that is, by its ability to continue to deliver economic prosperity. The discontent reflects a number of serious problems, such as China's rising inequality between rich and poor, whether individual citizens or provinces, and is amplified by past professed beliefs in egalitarianism and a long tradition of local squabbling, pervasive corruption at many levels of business and government, massive pollution, and a demographic time bomb resulting from the one-child policy, which means that a shrinking working population must support an ever-growing number of retirees whilst a national security system is still in its infancy. Just as these concerns are mounting, the dismantling of rural collectives and the decline of state-owned enterprises have taken away what used to be the regime's most effective control apparatus, making such challenges to the party's authority more ominous.Abroad, China is also facing challenges that may well spill into its own borders. On the Taiwan front, China has pushed itself into a corner such that quasi-declarations of independence may compel it to invade the island, jeopardizing its global and economic prospects. In Hong Kong, where prodemocracy forces are testing the limits of expression and offering an unwelcome alternative model to the mainland's residents, China has retreated, for now, from enforcing unpopular antisubversion measures, but remains hesitant about its future course. In the rest of east and southeast Asia, concerns about the rising economic, political, and military power of the Chinese are not too far from the surface, and may be triggered by a single crisis. Further ashore, China is facing the prospects of American and European protectionism, which represents a serious threat to an economy that is increasingly reliant on exports.OBSTACLES AND THEIR SOLUTIONCan China overcome those daunting challenges? I believe it can, as it did in some 25 years of reform, despite the early observations of multiple western economists that it was not possible to have a successful free market economy under a non-democracy. Most forgot that Hong Kong, Milton Friedmaris poster boy of a free market, was a British colony whose residents had even less power to elect their rulers than under the current Chinese rule. China, in my opinion, is likely to continue its economic march forward but is unlikely to follow the route laid by most western observers, that is, by edging ever-closer to a democratic, US-style system. Not only will that not happen in the foreseeable future, but China will instead develop and prosper with an alternative model that many nations, especially in the developing world, will find appealing: one-party control administered via a merit-based bureaucracy but without separation of powers, something not too removed from the imperial model, in which a dynasty ruled through a capable bureaucracy made up of a combination of generalists and professional experts, with the former in charge. …