New Internationalist

The next dynasty

Issue 423

It’s a year of anniversaries in China – 60 years of government by the Chinese Communist Party; 30 years since China opened its economy to world trade; and 20 years since tanks rolled over Chinese reform movements in Beijing’s Tiananmen Square. But where to now? While some say Chinese communism will save world capitalism, others think the country’s manic economic growth will kill us all. The NI offers the good news, the bad news – and projects current trends into the future.

FEAR:
China’s greenhouse gases will melt the polar ice caps

The good news: China aims to have 15 per cent of its total energy needs met by renewables within the next 12 years. It will soon become the world’s biggest manufacturer of wind-energy equipment and – already one of the top three countries manufacturing solar photovoltaics – it has now installed more solar heating systems than the rest of the world put together. A proposed 30,000 energy-saving and alternative-energy-powered vehicles are to be on the streets of Beijing by the end of this year.

The bad news: To generate every dollar of GDP, China uses three times more energy than the global average.1 Despite its leading role in the development of alternative energy, more than two-thirds of this energy supply comes from coal – a higher ratio than either Japan or the US. This is expected to more than double by 2025. As a consequence, the country is, and will continue to be, the largest emitter of greenhouse gases such as sulphur dioxide and carbon dioxide: both of which come from burning coal.2

Projection: An over-riding principle of China’s diplomacy has been to act in its own interest. In making this assessment, it has given economic growth precedence over environmental protection. The Government argues that, as a developing nation, it wants to see significant financial incentives from richer countries (whose consumption has caused global warming) before it commits to reductions under the climate pact to be negotiated in Denmark this December. To abandon its resistance to limits on carbon emissions, it will need to be convinced that it will suffer greater detriment from climate change than from a fall in economic growth. There are signs that it is shifting. If not, the results for global warming are likely to be catastrophic.

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FEAR:
When the Chinese economy sneezes, world economies get pneumonia

The good news: Despite the world financial crisis, China’s economy is tipped to grow between 5.5 and 8 per cent this year.

The bad news: China’s growth will decrease between 1.5 to 4 per cent. In the short term, any decrease in China’s exports will reverberate through Asian markets. An estimated 55 per cent of China’s exports are made with imported parts supplied by Taiwan and the Philippines, Japan, South Korea, and Malaysia.2 As demand for Chinese exports from the US and the EU slows, so will Chinese demand for imports relied upon by these Asian economies.3 The slowing of China’s economy will also affect Latin America and Africa, where China is dumping excess exports that fail to find buyers in the more lucrative markets of the West. The dumped goods swamp domestic competitors and drive local producers out of business.4

Projection: The continuing strength of the Chinese economy could affect the long-term world balance. World Bank figures listing the share of global GDP held by major countries in December 2008 gave the US a little over 30 per cent and China under 5 per cent. High in debt and low in savings, the US has less economic stability than comparatively debt-free, cashed-up, China to maintain this position. A redistribution of income from the US to China is likely, increasing the level of poverty – and protest – in the US as a result.

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FEAR:
The commies are coming!

The good news: Internationally China is seeking to extend its power through more subtle means than military might. Excepting its territorial claims to Taiwan and Tibet, and protection of shipping routes, China’s general approach is to avoid confrontation with other countries.

The bad news: A policy against intervening in the affairs of other countries combined with an attitude that ‘business is business’ means that China is giving aid and arms to regimes committing gross human rights abuses in Burma, Zimbabwe, North Korea, Uzbekistan and Kazakhstan. China is already the biggest trading partner of oil-rich but authoritarian countries such as Sudan and Angola. Beijing’s support of autocratic rulers may mean a global resurgence of this style of government.

Projection: China’s ‘capi-communist’ influence in international markets and politics will continue to grow. But unlike the US – whose approach has been prescriptive, demanding, and interventionist – China seeks to increase its influence by changing the way people understand the world. Its leaders have unleashed ‘soft power’ to heighten the moral authority of Chinese values and norms over Western ones in determining the course of world events.5 (An example is on page 10.) In addition, the sheer numbers of Chinese now living in other countries – an estimated 31 million in Asia and 8.5 million spread elsewhere6 – means that China’s worldview will increasingly be experienced directly by people around the world. The way the world understands itself is likely to change as a result. McDonald’s and the Gettysburg Address will be out. Green Tea and Confucius will be in.

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FEAR:
China’s increasing demand for minerals and energy will lead to resource wars

The good news: To meet its ever-increasing demand for oil and resources, China offers aid and investment to countries across Latin America, Africa and the Middle East in urgent need of infrastructure and development. Its deals are undermining the supremacy of the US-styled free trade that has so disadvantaged the Majority World: when Chinese officials seek to establish economic ties with African and Latin American states, they bring with them no political conditions to economic relations.

The bad news: With mining economists predicting that China is likely to consume more than half of the world’s key resources within a decade (see On the world’s factory floor), the ability of other states to guarantee their own energy security in the long term is being undermined. Because of the enormity of its demand, as China demands more steel, oil and grain, the world price goes up accordingly. Thus in 2004, world steel prices rose dramatically largely as a result of increased Chinese imports. At the same time its decision to redirect its coke from export into domestic use in the steel industry led to coke prices rising from $120 a ton to $450 a ton within a year.4

Projection: Any resource war developing between China and the rest of the world is likely to be fought in the commodities markets, at least in the short term. The global culture of on-tap consumption will be challenged as a result, making the greater certainty of local markets increasingly attractive.

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OPPORTUNITY:
China’s new-found global status will help shift international power from the developed to the developing world

Projection: After the London G20 meeting in April, this seems unlikely. The G20 comprises the G8 countries in addition to Majority World countries like China, India, Indonesia, Mexico, Brazil and Argentina. It should have substantial clout. Yet at its 2 April meeting, convened to help stem the global financial crisis, there was no rewriting of trade rules to make them fairer for developing countries and no meaningful change to policies and power structures dictating the way the World Bank and International Monetary Fund (IMF) do business. Instead the US and the European Union proposed that $250 billion to $500 billion be provided to the IMF for loan funds to stimulate the economies of developing countries. Rich countries remain over-represented in the IMF’s decision-making executive board: Europe holds a third of the seats and the US has nearly 17 per cent of voting power and a right of veto. China’s $40-billion contribution to the IMF may buy it a seat on the top table, but that won’t help developing countries in Asia and Africa that remain grossly under-represented.7

  1. Will Hutton, The writing on the wall – China and the West in the 21st Century, Abacus, London 2007.
  2. A Harney, The China Price – The true cost of Chinese competitive advantage, Penguin, New York 2008.
  3. Walden Bello, The end of an era, www.newint.org
  4. Shaun Breslin, China and the Global Political Economy, Palgrave Macmillan, New York 2007.
  5. Mark Leonard, What does China Think? Fourth Estate, London 2008.
  6. A thoroughly researched list appears on Wikipedia – http://en.wikipedia.org/wiki/Overseas_Chinese.
  7. Walden Bello, U-20: Will the global economy resurface? www.focusweb.org

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