The South African Civil Society Information Service

What to Make of China's Growing Economic Power

By Saliem Fakir · 19 Jun 2009

Think Darfur, think genocide and then straight to China. Think Tiananmen Square, think China and repression. Think Africa, think neo-colonialism, think China. Think Tibet, think the Dalai Lama and the South African government buckling under Chinese government pressure, denying the Dalai Lama entry.

Think Wal-Mart, cheap labour and the countless Chinese suppliers producing cheap goods for US consumers. Think Google, think censure, as Google bends to the Chinese government's pressure to block dissident websites.

Think back on the SARS virus and the way in which Chinese authorities dealt with the epidemic. It was rough and swift. Think Olympics and one remembers most spectacular opening and closing ceremonies.

Think of last year’s earthquake in China and remember how President Hu Jintao, within a few hours, was himself orchestrating a national rescue mission. Recall the works of Gavin Menzies or Joseph Needham and one is reminded of the great Chinese Civilization and its splendid gifts of invention and thought to humanity for eons to come.

These associations of negativity and positivity bring conflicting emotions at every calling of China’s name. They at once display an array of ways, the construction of China’s image is being built and even fought for both within and outside of China.

At best we can rely on a chimera of views and images that can lay claim to being authentic pieces of knowledge about China. 

Neither must one take lightly attempts by the mainstream media to caricature the Chinese global footprint, especially in Africa, under the guise of moral platitudes, given the jealous rivalry between old and new powers where old powers are losing their grip in the wake of deft Chinese inroads in their former fields of spoils.

Everything said about China must be judged astutely. Nothing is black and white.

What we want to know about China depends on the vantage of bias we adopt when we enter its world to understand its logic within the present. China is not one picture, but many.

China is a vast country with a vast population sprawled across its varying landscapes over-laid with economic, cultural, historical, natural and social diversity yet governed by a one party state that has kneaded itself throughout the fabric of Chinese life and left its indelible stamp on the modernization of China.

Despite the country being run by the Communist Party, its relations with the rest of the world have been driven remarkably by pragmatic concerns rather than ideology. In contrast to the western world’s evangelical promotion of democracy and free market ideas, the Chinese make no mention of wanting to convert the world to a communist world order.

In fact, the Chinese are reluctant to use the word 'jueqi', rise, to describe their mission and prefer the word 'development' as a substitute, partly as Mark Leonard in his book 'What Does China Want' argues, for reasons of deliberate obscurity or wanting to go about their business without attracting too much attention to what the Chinese do elsewhere.

The late premier, Deng Xiaoping’s slogan, "hide brightness, nourish obscurity," guides most of China's strategy as far as the world is concerned. The policy was designed to avoid conflict, seek to reinforce multilateralism, play to neutrality and focus on domestic economic development within the international setting.

Much of what Xiaoping articulated remains part of Chinese thinking. There was a point in 2003 where Xiaoping's approach was abandoned to encompass a slogan that was less shy of China’s intents, 'Peaceful Rise', by hawkish elements.

But later, under President Hu Jintao and Prime Minister Wen Jiabao, this slogan was once again modified to reflect a modest stance of 'peace and development' and 'a harmonious world'.

China contentiously and relentlessly sticks to the view that the domestic politics of its trade partners and allies are an internal matter. This partially explains why many developing countries are more than willing to foster relations and trade deals with China – its sets no conditionalities on how they should behave.

The Chinese strategy goes against the liberal political establishments' interest in promoting democracy and free markets. In many cases, China is busy undermining the liberal project.

China understands the world as a complex terrain just like it understands its own country's diversity as a complexity of different interests that require tailored responses, not evangelical-like political prescriptions.

China itself is not new to ideological evangelism. It had its own share and dose of this during the Mao era with horrible consequences.

From radical experiments and piloting of state led capitalism through its myriad of state enterprises, China's biggest concern is domestic stability and dealing with inequality.

Despite having taken 400 million people out of poverty, every year China is witness to 80,000 reported incidences of strikes and civil unrest. It is one of the reasons why it won't so easily liberalise its political system. China is too afraid of sudden and mass upheaval.

Neither is it entirely accurate to suggest that the Chinese pursuit of foreign interests in the form of assets, commodities, construction contracts or movement of people, are signs of an active imperial agenda. China is merely in pursuit of strategic interests, like everybody else, in order to ensure secure lines of trade and movement of commodities. The only difference is that its interests are much larger, given the size of its fast growing economy.

The Chinese journey into world dominance may partly be conscious engineering, but certainly a spate of historical accidents have favoured China's ascendance as an economic power - not all of which is its own doing. It, like the US, may accidentally be given the throne to run with.

The economic collapse that followed General Mao's rural collectivisation (The Great Leap Forward) and the Cultural Revolution necessitated a process of reform that has strengthened the current policy of state led capitalism and accumulation. One thing has led to another.

China is a great power in the making - not a great power yet. It doesn't have all the balance of power and forces on its side to universalize its preferred world order. Making somewhat spurious the claim that China is about to take over the world.

The very countries cheering on anti-Chinese sentiments are also encouraging China to buy bonds in their countries or facilitate a greater role for their multinationals to gain access to China's market. China is being given an economic lending hand by the very hand that chooses to - now and then - bite it.

China has over 2,000 industrial development zones designed for foreign investment. Much of this investment comes from the Western world, South Korea, Japan and others. So, the China problem, if you want, is not entirely a Chinese creation.

Its economic growth is fuelled by a global surge in demand for Chinese goods. China has been made into the world's factory for cheap goods.

This shift has, in turn, allowed China to accumulate surpluses, as it has become the envied beneficiary of Western capital flows (China's foreign reserves, funds and other assets amount to about US$3 trillion). While one half of the major economic powers are running current account deficits, China has one of the largest current account surpluses.

As, Brad Setser, in an essay from the World Security Institute (2008) noted, "Never before has a country as poor as China lent so much money to a country as rich as the United States. And never before has the United States relied so heavily on another country's government for financing."

Where China is relying on its Sovereign Wealth Funds (SWFs) to finance its recovery, the US has had to print more money and increase its deficit spending. 

The rise of SWFs, nonetheless, parallels the liberalisation of global markets and finance. The instinctive reaction of those who can afford it was to establish SWFs as a way to insure themselves against global volatility, speculation and currency fluctuations. It is a perfectly rational thing to do in unregulated markets.  

The result though and inadvertently, is that the accumulation of SWFs has given China more bargaining power in international economic, global and regional politics.   

The Chinese approach to economic development and political reform is fast becoming an alternative model for other admirers of China.

The first speaks to an approach of economic gradualism rather than radical transformation, going against the false thesis that economic approaches in one socio-political context can be universalised in another, as the practitioners of Washington Consensus type economic shock therapy had envisaged developing countries should undergo in order to succeed.

Second, China has somewhat debunked the idea that there is necessarily a relationship between democracy and economic development.

They have shown the opposite is possible and have influenced some governments to go the route of engaging economic development and reform first before introducing political liberalisation.

By changing the facts on the ground, or what Leonard calls, "building pockets of alternative reality," China is hoping to shape the world order in its image. As the West is mired in extracting itself from the financial crisis, it is simultaneously losing ground and influence in those countries it once had exclusive rites of passage.

As Leonard writes in his concluding chapter, "And China's own emancipation from the West has created an alternative, non-Western path for the rest of the world to follow. The ideal of a 'Walled World' where nation states can trade with each other on global markets but maintain their control over their economic future, their political system and their foreign policy is emerging as an ideological challenge both to the US philosophy of a 'flat world' and the European preference for liberal multilateralism."

A series of historical events and accidents seem to have favoured China. But these events have been used astutely to guide China from its inward focus and obscurity from the world, to a more confident measure of itself and its potential future role as a great power.

Former President Clinton once made the barbed comment that China was on the wrong side of history. It feels more and more like the US is having to swallow a dose of its own wisdom, rather than China, it is the US that may be on the wrong side of history in the making.

China is unlikely to displace the influence of the US and Europe any time soon, but it is forcing a rethink on the character and structure of the future world order.

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