Rethink China as a Rising Power

By May 19, 2010Economy, General, Trade

Our reading on the bus these days is “The Next 100 Years: A Forecast for the 21st Century” by George Friedman, founder of STRATFOR, the strategic intelligence consulting firm. It’s a good, fun read, an informed speculation about global economic and political power in the coming century. America still dominant even as Poland and Turkey become rising powers? Sure, and Friedman explains why. (Geography+population+economy+control of the seas = American predominance.)

His analysis of China is timely and runs contrary to the popular, pessimistic view that China’s economic might and population mean it will overtake the United States. Short version: History shows us that any nation’s economy cannot continue to grow at China’s pace, and when the inevitable slow-down occurs, China will turn inward and more authoritarian to counter the great regional disparities in population and wealth. As Friedman wrote in a New Statesman: column last year

About 65 million Chinese people live in households with more than $20,000 a year in income. Around 165 million make between $2,000 and $20,000 a year. Most of these live within 100 miles of the coast. About 400 million Chinese have household ­incomes between $1,000 and $2,000 a year, while about 670 million have household incomes of less than $1,000 a year. China is a land of extra­ordinary poverty. Mao made the Long March to raise an army of desperate peasants to rectify this sort of extreme imbalance. The imbalance is there again, a volcano beneath the current regime.

China would have to triple the size of its economy – and the US would have to stand still – if China were to pull even with the US in GDP. Militarily, China is impotent. Its army is a domestic security force, its ability to project power blocked by natural barriers. Its navy exists mostly on paper and could not possibly pose a serious threat to the US. Casual assertions of China surpassing the US geopolitically ignore fundamental, overwhelming realities. China could conceivably overcome its problems, but it would require most of the century to overcome problems of this magnitude.

We remember interviewing David Halberstam in Corvallis, Oregon, after the 1986 publication of his book about Japan’s inevitable economic defeat of the United States. “The Reckoning” was a thoughtful book even as it embodied the conventional wisdom of the time. But in the 1990s, Japan’s bubble economy popped and decades of stagnation followed. The reckoning was Japan’s.

China economic challenges to the United States are many and they’re serious. Still, in preparing for their trip to Beijing, members of President Obama’s cabinet would do well to add Friedman’s “The Next 100 Years” to their briefing materials. America’s strengths are many, and so are China’s difficulties, today and over the next century.

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