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China's century: on the march
http://www.theaustralian.com.au/news/opinion/chinas-century-on-the-march/story-e6frg7e6-1225815239852
China's century: on the march
Verdant mountains cannot stop water flowing; eastward the water keeps on going.
THUSthe headline for an article in which China's Xinhua newsagency hasresponded to Western critics of the country's role in the recentclimate change conference. It included a detailed account of thegovernment's efforts, and of Premier Wen Jiabao's meetings during his60 hours in Copenhagen for the summit.
It said, in defiance ofattacks such as that of Britain's Climate Secretary Ed Miliband, whoaccused China of hijacking the event: "The Copenhagen conference hasput China on a higher and broader world stage. China has reason to beproud, and China will work even harder!"
This process is nowviewed in China -- and also in the rest of the world, underlined byChina's crucial role, for better or worse, in Copenhagen -- asunstoppable as the rivers that flow east across its plains from theHimalayas.
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Themetaphor can be taken -- as appears to have been intended -- further:that the world's attention, its power and its wealth, will keep ongoing eastward too.
At the start of 2000, the professional seershad a common theme. The cautious prophets among them put their money ona place bet: this would be Asia's century. Those with more nerve castit all on China.
Ten years on, the latter now look like clearwinners. Asia is mostly doing fine. But the real influence on our dailylives is coming from China.
Everything is shifting into focus aswe prepare to start the century's second decade with the Year of theTiger, a year astrologers traditionally associate with courage,assertiveness, turbulence, competitiveness and dynamism.
China is not exerting an influence that is unbalanced or bizarre, though. It is commensurate to its size.
Itspopulation is one and a half times that of Europe even including Russiaand Turkey, and four times that of the US. Its land area is about thesame as Europe without Russia and Turkey.
As its economy catches up, it is natural that its overall influence is also building inexorably.
Thisbegan with Deng Xiaoping's opening of the manufacturing sector toforeign investors. Factory owners shut up shop in Taiwan and Hong Kongand re-opened in China, with dormitories alongside to accommodate themillions of workers who flooded from the countryside where they hadbeen underemployed.
By the start of the 21st century, most goods bought in Australia already carried the stamp Made in China.
Thatremains the case. But some of those items are now being made by China:with some Chinese industrialists taking over from the foreign pioneers,developing their own businesses, and taking them offshore to placessuch as Vietnam or west Africa, where labour costs are even lower.
Duringthe past decade, China's efficient production -- through whichmanufactures have become commodities, prone to constant price pressure-- has smothered inflation in the industrialised world, including inAustralia. The prices of our flat-screen televisions, airconditioners,jeans and suits have mostly gone down.
No wonder Time magazinemade "the Chinese worker" its runner-up to the US Federal ReserveBoard's Ben Bernanke as person of the year for 2009.
In thefinancial year 1998-99, China was Australia's fifth biggest exportmarket and total trade between the countries was $10 billion. Ten yearslater, trade had soared to $76.4bn and China had become Australia's topoverall trading partner and second buyer of exports after Japan.
ButChina has also become a huge influence on daily life well beyond theMade in China products Australians buy, and the high proportion ofAustralian exports that China buys.
In 1999, there were 9000 Chinese students in Australia. Last year, there were almost 130,000.
In1999, 40,000 Chinese tourists visited Australia. In 2008 356,000 came,and each spent on average more than visitors from almost every othercountry.
It would be unusual not to overhear at least oneconversation being held in Mandarin on almost any train, tram or bus inAustralia's main cities.
In the four months to last October,migrants from China for the first time exceeded those from Britain andNew Zealand. There were 6350 from China -- increasing at 15 per cent ayear -- 5800 from Britain and 4740 from NZ.
The extent of thecontroversies between China and Australia that flared last year -- thearrest in Shanghai of Rio Tinto executive Stern Hu, attacks onAustralia's governance of Chinese investment, protests by Beijingagainst the visit of Uighur activist Rebiya Kadeer and the showing of afilm about her at the Melbourne Film Festival -- and the focus on thesestories in the media, served to underline the importance of Chinarather than its remoteness.
Australians today respond in a more animated way to relations with China than with almost any other country.
China'sspirited and articulate ambassador to Australia Zhang Junsai says:"Both countries have come to a consensus that we have to manage thedifferences that naturally occur when we have such different historiesand cultures and levels of development.
"The leaders have kept incontact and kept talking" during the past year, despite the issues thathave created friction, he says. These problems have emerged in a sense"because the relationship is getting closer, and the countries mattermuch more to each other".
Zhang, who has been living in Australiaon and off for more than 11 years, adds: "Chinese people see inAustralia a beautiful country with friendly and easygoing people, whoare very frank. It's very easy to deal with. We share the same sense ofhumour."
The new visibility of Chinese people and culture on Australia's streets is starting to match the country's economic reach.
Oneof the crucial elements in China's newfound "soft power" is itssustained support for globalisation. It was formerly believed that theUS was destined to be the prime beneficiary not only of the "end ofhistory" following the collapse of the Soviet Union 20 years ago, butof the internationalisation of economies.
But China, too, is sharing in those benefits, as it becomes the new engine-room of global growth.
Manycommentators anticipated that as China grew wealthier and more enmeshedwith the global economy, it would not only become, in the words ofWorld Bank president Robert Zoellick, a "responsible stakeholder" inthe international system, but would also become more normal in aWestern sense.
It was assumed that its growing middle class woulddemand greater liberalisation and democratisation. But that hasn'thappened. That middle class, as the prime beneficiary of theestablished Chinese system, has become its staunchest supporter.
China'sruling Communist Party, recently celebrating 60 years in power a yearafter presiding over an extremely efficiently organised Olympic Gamesin Beijing, is cautiously -- because it still fears that its legitimacyremains fragile -- insisting that it will continue to rule alone,through the same institutions.
Despite the appeal, especially toThird World leaders, of the China model of governance, China hasrecently been reluctant to export its system. Projecting its nationalinfluence through "soft power" is one thing, but having other countriescopy its institutions makes it uneasy.
If the China system fails to work elsewhere, failure could rebound on Beijing.
Thus,Wen said in November: "It seems to me that Africa's development shouldbe based on its own conditions and should follow its own path, that is,the Africa model. All countries have to learn from other countries'experience in development."
At the same time, freed from being aself-conscious model, while also revelling in its economic success andits pervasive diplomatic influence, China feels more capable ofexercising its judgments autonomously, at home and abroad.
Inlate December it persuaded Cambodia to round up 20 Uighurs who hadescaped there and had begun applying to the UN for refugee status, andto fly them back to very uncertain futures in China.
On December29 it executed Briton Akmal Shaikh for drug trafficking withoutconducting any assessment of his mental health despite his family'sstrong contention that he was suffering from bipolar disorder.
Theseare manifest signs of its self-confidence. It no longer "trades" suchprisoners. There is nothing much that Britain, for instance, can offerany more.
In 1840, when Britain wanted China's porcelain, silkand, above all, tea, emperor Daoguang declined to trade because it hadnothing, he said, that China wanted. But Britain pressed on China theopium it had begun growing in India for that purpose. And China was tooweak to resist. Today, the balance of power is reversed.
What hasChina achieved in the past decade? For its own population-- whose 20thcentury comprised a centuria horribilis with warlords, the Japaneseinvasion and Mao Zedong's purges -- it has enjoyed sensational economicgrowth.
In 2000, China's economic output was just 3.4 per cent ofthe world's. By 2008, it was 7.9 per cent and this year -- when it haspulled away from the West, which has been treading water or fallingback -- it has further increased that share of the global economy,growing by 8.5 per cent. Its economic output has more than quadrupledduring the decade, a target it originally set for 2020.
ReserveBank governor Glenn Stevens and Treasury secretary Ken Henry keeppointing to China as a key contributor to Australia's easy passagethrough the financial crisis in 2008-09, which has been more aUS-Europe downturn than a global recession.
China remains themost populous country in the world, with 1.33 billion people. Butthanks to the one-child policy, its demographic growth has slowed,ensuring its increased income does not have to be shared more widely.At the start of the decade China comprised 21 per cent of the globalpopulation; now it is 19.9 per cent.
It receives more than 40 percent of the foreign direct investment that goes to all developingcountries. But its population is also about 30 per cent that of theentire developing world.
Its continued economic power isrelentless, pulling like gravity until its share of the world's economyat least equals its share of the global population. In more palpableterms, as its people gain the freedom and wealth to travel, they arebecoming aware of the gap they still have to bridge to catch up withthe living standards of their neighbours in South Korea, Taiwan, HongKong and Japan.
The size of China's middle class remains modest,despite the excitement in the West about this great new market. GlobalDemographics starts from the number of people who respond to China'slegal requirement to report to their local tax office once they earnmore than $20,000 a year. This indicates that the households earningmore than that sum are about 4.4 million: fewer than in Australia. ButGlobal Demographics forecasts this will triple by 2014 and double againby 2019.
Already, because of the low cost of manufacturing --enabling people of modest incomes, alongside vast numbers ofstate-owned enterprises replete with cash thanks to last year'smonetary stimulus package, to buy cars -- China has this year overtakenthe US as the biggest auto market in the world.
The past decadehas seen China start to go global, armed with its newfound economicmuscle. In 2000, it invested a mere $US1bn overseas. In 2008, itinvested $US41bn directly in foreign businesses, and a further $US11billion in international financial markets.
But this can be atough task, even for a country with China's cash. Last year, it lostits long Australian battle for a bigger stake in Rio Tinto. Minxin Pei,a prominent China "discounter" -- he contests the word doomsayer --said that Chinese bidder Chinalco "saw its cooked duck fly away".
OdedShenkar, the Ford Motor Company chairman in global business managementat Ohio State University wrote in his book The Chinese Century:"Economists and editorial writers often paint China's ascent as onemore case of an emerging economy on its way up, preceded by Japan andthe Asian Tigers, and soon to be joined by India.
"It is anythingbut. China's rise has more in common with the rise of the US a centuryearlier . . . We are witnessing the sustained and dramatic growth of afuture world power, with an unmatched breadth of resources, loftyaspirations, strong bargaining position, and the financial andtechnological wherewithal of an established and business-savvydiaspora."
The pace of China's economic catch-up is likely toslow as further reforms become harder to achieve. This is due partly tothe consensus-driven nature of the Chinese hierarchy, which to enhancestability has cut every conceivable faction in to the decision-makingprocess, and to China's having already implemented the lesscontroversial changes.
The influential book Capitalism withChinese Characteristics by Yasheng Huang at MIT's Sloan School ofManagement, views the 1980s as a decade during which the rural-basedprivate sector drove Chinese change and growth, before "the greatreversal" of the 90s, during which the economy came to be dominated bycapital-intensive, state-directed urban development.
But he isoptimistic the present leadership -- President Hu Jintao and PremierWen and possibly their expected successors Xi Jinping and Li Keqiang --whose rhetoric has championed equality and opposed corruption, mayrestore a better balance.
Leading Chinese economist Yu Yongding,warned Australia's Productivity Commission in November: "China'sinvestment-driven and export-led growth pattern is not sustainable." Asthe economy moves into investment overdrive, "China's overcapacity willbecome more serious."
Yu said the growth rate of China's exportscannot remain higher than that of the global economy. "With or withoutthe global financial crisis, overcapacity will surface and correctionis inevitable. The crisis exposed the vulnerability of China's growthpattern." But "China can spend its way out of the slowdown as long asthe government wishes", because of its strong fiscal position. Itfamously keeps its foreign currency earnings offshore in order to holdthe yuan down and thus retain as many export jobs as possible. Peiasks: "If China is so strong, why doesn't it show more leadership inaddressing global problems?"
But all empires have their troubles;it comes with the territory. The US had its crosses to bear in the 20thcentury and China will be no different. What matters for Beijing ismanaging them as "eastward the water keeps on going".
China hasdecided to equip itself with the capacity to project itself not onlywith "soft power" but also with "hard power" to ensure it can counterits challenges.
During the past decade, China has modernised itsmilitary even as it has reduced the number of soldiers in the People'sLiberation Army.
The US Council on Foreign Relations said in areport last year: "Since the 1990s, China has dramatically improved itsmilitary capabilities on land and sea, in the air, and in space."
Lastweek, Rear Admiral Yin Zhou said China should set up naval supply basesoverseas. China's military is now regarded as second only in capacityto that of the US.
In its first, mostly failed stage, the newcommunist Chinese empire was ruled by emperor Mao. Now, it is run bycommittee. The anthem of the early days of this empire started: Theeast is red, the sun is rising. / China has brought forth a Mao Zedong.
Hehas been consigned to the history books. But the final verse remainsmore pertinent than ever: The Communist Party is like the sun. /Wherever it shines, it is bright.
We too, in Australia, feel that sun. Sometimes scorching, sometimes soothing but always there. |
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