Rise of China

 

Introduction

  • The rapid rise of the People’s Republic of China in the last part of the 20th century and early decades of the 21st century represents a paradigm shift in global affairs comparable in magnitude to the collapse of the Soviet Union.
  • According to the World Bank, India and China had roughly similar GDPs in 1990, but China now has a far larger GDP of $14.5 trillion, compared to India’s $3 trillion GDP; indicating China’s rise

 

The Aspects of China’s Rise

  • Economic Rise
    • China’s Economy Prior to 1979
      • Prior to 1979, China maintained a centrally planned, or command, economy:
        • To support rapid industrialization, the central government undertook large-scale investments
        • Private enterprises and foreign-invested firms were generally barred
        • Foreign trade was generally limited to obtaining those goods that could not be made or obtained in China.
      • Such policies created distortions in the economy
      • In 1978, the Chinese government decided to break with its Soviet-style economic policies by gradually reforming the economy according to free market principles and opening up trade and investment with the West
    • The Introduction of Economic Reforms
      • Beginning in 1979, China launched several economic reforms.
        • The central government initiated price and ownership incentives for farmers
        • The government established four special economic zones along the coast for the purpose of attracting foreign investment, boosting exports, and importing high technology products into China
        • Economic control of various enterprises was given to provincial and local governments, which were generally allowed to operate and compete on free market principles, rather than under the direction and guidance of state planning
      • Thus, removing trade barriers encouraged greater competition and attracted FDI inflows.
      • Since the introduction of economic reforms, China’s economy has grown substantially faster than during the pre-reform period, and, for the most part, has avoided major economic disruptions
        • From 1979 to 2018, China’s annual real GDP averaged 9.5%
      • From 1990s onwards
        • In the 1990s, China joined the World Bank, the International Monetary Fund, and the Asian Development Bank
        • These new connections pushed Chinese policies even further toward open markets
        • In 2001, China joined the World Trade Organization. After China entered these international networks, they began to replace Japan as the leading producer and distributor of goods around the world.
    • The Agricultural Reform
      • China had a huge labour force, but it was largely uneducated and unskilled. The primary cause for such a high concentration of unskilled labour was Mao’s(Leader until 1976) demolition of schools and universities in order to crush the rebels.
      • Later after 1976, Deng’s China abolished the government’s control over agricultural land and promoted private farming.
        • As a result, China’s agricultural industry exploded. China transitioned from a food deficit to a food surplus
        • The expansion of China’s agricultural sector lifted millions out of poverty and increased farmer incomes
        • Farmers were encouraged to invest in commercial crops such as sugarcane and cotton as a result of the unexpected increase in revenue.
    • The Textile Revolution
      • Commercialization of agriculture promoted cash crops, and in the 1990s, China became the world’s largest producer of cotton. This resulted in a significant expansion of China’s textile industry
      • Locally accessible inexpensive labour and cotton aided in the expansion of the textile industry, which grew at a rate of 95% by the end of 1993
      • China began exporting textiles as part of the “open-door policy,” and its economy merged with the global economy
    • Skilling of Labour Force
      • Deng(leader after 1976) made a concerted effort to educate and skill the population. In the 1980s, the Chinese government subsidized up to 70% of schooling, skill development, and other expenses
      • This education reform mandated a nine-year schooling period that included vocational education. Primary education became ubiquitous in China in 1990, and the number of graduates increased from 0.16 million in 1978 to nearly one million in the 1990s as a result of these concerted efforts.
    • Shift to Electronic Goods
      • In the early 1990s, Japanese and South Korean brands such as Samsung, Sony, Panasonic, and LG were wildly successful in the west; however, these companies needed to expand their production in order to maintain the distribution network but were unable to do so due to a lack of available land and expensive labour.
        • This is where China entered into the picture; the country’s vast skilled workforce drew investment from industrial companies in Japan and South Korea that were experiencing labour shortages
      • China implemented this plan by establishing a number of Special Economic Zones, or SEZ, throughout the country
    • U. S Technology Boom impact
      • Internet and computer technologies were booming in the late 1990s in the United States. Which gave birth to tech behemoths such as HP, Dell, and Apple, all of these companies have one thing in common: they require cheap and skilled labour.
      • These requirements resulted in the establishment of ‘Manufacturing outsourcing‘
      • China implemented a ‘Conditional Foreign Investment’ policy in which they encourage foreign firms to partner with domestic firms and also to share their technologies with domestic Chinese firms. As a result of this policy, modest Chinese firms can now manufacture advanced-tech products
    • Shift to Service Sector
      • In the mid-2000s, as the service, IT business grew in the United States due to the development of Microsoft, Facebook, and Google, China benefited from it as well, owing to their skilled labour.
        • As a result of this transformation, China’s service industry rose from 25% in 1975 to 54% in 2019
      • Going ahead, China is also racing to adopt new technologies such as artificial intelligence and 5G
    • 2008 Financial Crisis & Aftermath
      • Rising labour costs, an ageing population, and the 2008 financial crisis all had a significant effect on the Chinese economy
      • It is then, when the Chinese President ‘Xi-Jinping’ has vigorously pursued the ‘Go Global’ Strategy, ordering all enterprises to invest in international markets
        • The Belt and Road initiative is the most visible manifestation of the Go Global strategy.

 

Interpreting the Rise of China

The competing Visions of China’s rise can be interpreted as follows:

  • A Rising Power in Pursuit of Hegemonic Status and a New Order
    • The Anarchic State of Nature
      • It is often argued that all great powers have some offensive military capability and no state can know the future intentions of the other with certainty
      • As China’s impressive economic growth continues over the next few decades, the United States and China are likely to engage in deep security competition with considerable potential for war
      • The ultimate goal of every great power is to maximize its share of world power and eventually dominate the system
      • Hence, the potential of USA to reduce China’s power influence
    • The Threat of China’s Regional Rise
      • China with its rise, seems to be on the path to secure Hegemony
      • China with its economic clout, is trying to influence other weaker economies in the Indo-pacific region with its Belt and Road initiative, String of Pearls initiative
        • This particular impact is evident in the way how SriLanka has been dumped into an Economic Crisis
  • A New Interconnected and Cooperating World
    • Responsible Regional Leader
      • According to Economists, China has shown capability and potential to become a responsible and international “citizen,” an upholder of world economic stability when the crucial moment may come around
      • In this pursuance, China is expected to play alongside the United States at the head of a multilateral system of global governance
      • This role of China, could be interpreted in the way it is supporting the Regional Economies in Asia with Loan grants, Infrastructure support etc.
    • China’s International Engagement
      • China has not tried to radically alter or undermine current rules or institutions. Rather, it has been mastering them to further its own interests
      • Also, China is working with leading powers in an attempt to tackle prominent issues that engulf the international system today, and nullify the speculation of a growing China as a ‘threat’.
    • Increasing role in Climate Change
      • The Chinese central government has been demonstrating its increasing awareness of the severe ecological and economic damage associated with climate change.
      • In 2003 Beijing established the National Coordination Committee on Climate Change and in 2007 the National Development and Reform Commission (NDRC) issued China’s National Climate Change Programme, outlining basic principles and keys areas of action to address climate change
      • Additionally, China has been a visible and active player in the international effort to address climate change. China ratified both the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, the two most important international climate agreements
      • China has always implemented its obligations under the Convention and Protocol since ratification. The Chinese government has made environmental protection a fundamental state policy and adopted a series of proactive policies and measure regarding environmental protection and climate change
      • This shows clearly that China is not only accepting its responsibility as a global power but working with international community and within the international norms in an effort to secure the world’s peace and prosperity.
    • Nuclear Non-Proliferation
      • China has become a believer in and vocal supporter of the international non-proliferation regime
      • Since 1992, the Chinese government signed a number of international arms control regimes, including the Comprehensive Test Ban Treaty (CTBT), the Nuclear Suppliers Group, and willingly complied with the requirements of the Missile Technology Control Regime
      • Thus, China’s shift in non-proliferation behaviour signifies the support it has for current international institutions and norms, seeking to work within the existing global order

 

Conclusion

  • It is becoming increasingly evident that the power of US hegemony is shifting.
  • China’s breath taking rise is evidence that a new peer-competitor is rapidly emerging. China is on course to overtake the United States as the world’s largest economy.
  • However, China’s “quiet rise” has given way to more vocal expressions of great power aspirations and a more assertive international posture, particularly with regard to China’s territorial disputes in the South China Sea
  • Combined with Beijing’s military modernization program, that has put Asia, as well as the United States, on notice that China’s economic power will have geopolitical implications
  • Further, now the global spread of the COVID-19 pandemic has opened up opportunities for China to expand its influence, even as it has called into question both China’s credibility as a responsible stakeholder and the future of the supply chains that have fuelled its economic success story.

 

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