China’s global role

Today the question is not about the rise of China but its role as a global power and how this will affect Asia and the world. The new US administration under President Barack Obama was to usher in a new and less conflictual relationship but has had to face opposition from rivals as well as allies and friends. Relations with the US have deteriorated fuelled by the differences in Copenhagen on climate change, US arms sales to Taiwan, and Obama’s meeting with the Dalai Lama.

The handling of Tibetan and Uighur protests, as well as concerns over environmental damage, and curbs on information and opposition have dented China’s image. Far from gradually becoming more open and allowing space for dissent, China has been increasingly restrictive, curbing even peaceful opposition with harsh prison sentences for those who fall out of line.

The Chinese media and policy makers seem to be far more assertive and perceive the world situation as transforming in their favour. In a recent talk here in Tokyo, at Keio University, organised by Kokubun Ryosei, one of Japan’s leading China specialists, the distinguished Chinese scholar Shi Yinhong, of Peoples University, while dismissing the idea of China and the United States forming a G2, argued that the current economic crisis and the relative decline of US economic power has put China in an advantageous position as the US cannot play the hegemon anymore. He sees it has a decisive step in the transfer of power to Asia. (China?) He also argued that current events have reinforced the Chinese view that the Anglo-Saxon model of market based economic development and political liberalism cannot work in China. Each country, he stressed, had its own historical conditions and should not follow any models.

There can be no debate that China is today playing a global role. The last two decades have seen a major shift. In East Asia it has strong relationships with both the Korea’s and Japan. Despite lingering problems with Japan over history, China is still a major source for investment and trade. There are some half a million Chinese living in Japan and Chinese students form the largest overseas student community, though foreigners are just under two per cent of the population. Mainland Chinese are now major buyers of luxury goods in Japan.

In Southeast Asia, China has built links with the Philippines, a long-term US ally and in Cambodia, it is a major donor and investor. Thailand long-wary of the Chinese bringing in communism now actively seeks collaboration.

The FTA with ASEAN which brings together a 1.9 billion population and a combined GDP of $6 trillion, effective from January 2010, is a sign of this economic integration taking place. Where they were once feared they are now welcomed. Australia is heavily dependent on China as it is a major supplier of minerals and ores. China has replaced the US in India as the biggest source of imports and the economic relation is strengthening.

In Central Asia, China offers an alternative market to Russia, which will lift the region from economic decline, a decline that started with the end of the Silk Route trade in the 17th Century. China relies on Iran for much of its energy needs. In Africa, where in the 1950-’60’s it supported liberation movements, now it is a major investor in oil and minerals and lends more to Africa than the World Bank. In the US backyard it has invested and is working closely with Hugo Chavez in Venezuela. It has close economic and political ties with the US and perhaps its biggest supporters so far have been US companies who are major investors in China and China a major buyer of US treasury bonds.

Aside from this China has also begun to play a role in disaster relief, contributing to Indonesia during the 2004 tsunami and the 2005 earthquake to Pakistan, and most recently it was the quickest to react with help to Haiti. It has increased its contributions to the UN and within the Security Council it is the largest contributor.
It has done “some things” says David Shaumbagh quoting Deng Xiaoping but has it done enough? Problems remain. The border with India is still not settled and ethnic tensions in Tibet and Xinjiang pose threat to internal stability. In Africa, Vietnam and India it has been criticised for bringing in Chinese labour. In countries where civil society is strong Chinese practices face criticism. The confrontation over Taiwan and the Dalai Lama is a reflection of how seriously China see these issues.

Chinese trade with Africa has made it a naval power in the Indian Ocean and Persian Gulf developing ports but also transferring arms to countries in the region. The possibility of conflict and increased tension in both Central Asia and the Indian Ocean cannot be ruled out. The question is, as a power with global ambitions is China doing enough to address these issues beyond the rhetoric of the need for cooperation and a peaceful environment?

While the collapse of China is pernicious wishful thinking, Chinese leaders are well aware of the fragility of their system and the problems they face. They have been taking decisions to address the growing disparities between rich and poor, urban and rural and between regions. Growth has slowed but a massive stimulus package of four trillion yuan announced in 2009 is being used to fund infrastructure and lending and stem job losses. Yet economists warn that the danger of excess capacity leading to inflation is very real. A decline in the value of the dollar has made imports costlier and raised food prices, creating a fragile situation.

The US has been trying to get China to revalue the yuan but is facing resistance as much of the current growth has been on the back of an undervalued yuan. Even more worrying for China is the decline in the replacement rate, that is the number of births it needs to keep existing population levels. China is a country with an aging population and the current replacement rate stands at 1.75 whereas it should be 2.3 for developing countries and 2.1 for developed.

China has been successful in raising living standards and creating a powerful economy but is still unable shed its powerful bureaucracy and centralised control. This has to be changed and a more responsive system created to address both the political and regional aspirations of its people. The lesson for China is not the West but its neighbours –South Korea, Taiwan, Philippines, Indonesia which have all gone through a democratic revolution, as is Thailand undergoing one. India and Japan provide variations. The concern that China is viewed with is real and though many express a vague hope of integration through trade until it can offer a creative response to shared concerns China will remain a very successful variant of the developmental state.

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* Brij Tankha is visiting professor, Hitotsubashi University. This article first appeared in Express Buzz on 25 February, 2010.
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