Thursday, December 31, 2009

Can China Dominate the World?

The Chinese Dragon shows robust economic growth, and some experts say that its GDP will surpass that of Japan next year, which will make this country the 2nd largest economy after the United States. Also, China is building up its military capability rapidly these days. The Chinese authority frequently defies the American, or more broadly, the Western world order. But how strong is China?

The media and opinion leaders often fail to think of this vital question when they talk about Chinese influence on global political economy in this century. Mixing Pei, Adjunct Senior Associate at the Carnegie Endowment for International Peace, casts doubt to overvaluation of Chinese power and its leadership role on the global stage (“Why China Won't Rule the World”; News Week; December 8, 2009). Let me review his recent article on Chinese strength.

In view of stagnant economy in industrialized capitalist nations since the global financial crisis, opinion leaders in the West praise that China overcomes the crisis very well. Some leaders in emerging and developing economies, who are disillusioned with Western-styled free market capitalism associated with democracy, are charmed by authoritarian Red capitalism in China.

However, Pei points out some negative aspects in overheated Chinese economy. The Chinese authority worried over lending by private banks and overinvestment by State Owned Enterprises to real estates and stock markets. While China produces more TVs, cars, and toys, Chinese consumers do not buy them. China’s attempts to secure natural resource supplies from the developing world face vehement resist by Western governments, multinational corporations, and local communities. If Pei is right, China cannot dominate global natural resource market as the Major does in oil.

The debate on Chinese production and financial power will be endless, because the Chinese economy is coincided with robust growth and uncertainties. In my view, the most important point is whether China has gained structural power to manage the world or not. In other words, can China exert influence on making the global system and framework, along with the West?

Susan Strange who was Professor Emeritus at the London School of Economics, says that power in global political economy is classified into relational power and structural power. “Relational power is the power of A to get B to do something they would not otherwise do”, while “structural power confers the power to decide how things shall be done” (States and Markets; p.24~29). China may have gained relational power through rapid growth in industrial production, but has the Dragon acquired structural power?

Pei asks a critical question, “If China is so strong, why doesn't it show more leadership in addressing global problems?” He points out that China has been obsessed with its self interest in international conferences from G20 London Summit to COP 15 in Copenhagen.

Certainly, China poses significant challenges to the American world order, and shows increasing defiance to Western systems and ideology. However, China is neither prepared for nor capable of setting global agendas and sharing burden of decision making to manage the world. Therefore, it is a dangerous idea to expect China to supplant the United States as the hegemony. Chinese leaders shall never provide global public goods of peace and stability embedded liberalism.