Americas

The spats between the United States and China appear to be getting more numerous and more serious.

The Chinese strongly objected to Washington’s latest arms deal with Taiwan. President Obama accused the Chinese of currency manipulation, while at Davos, Larry Summers, the director of the White House’s National Economic Council, made an oblique attack on China by referring to mercantilist policies. The disagreement between China and the United States at the Copenhagen climate summit in December has continued to reverberate.

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I was unaware when I was planning my trip to China, starting today, that the timing would be quite so good

The past week has provided a decent statistical insight into the health of the world’s second biggest economy and I’m looking forward to seeing how the numbers compare with the reality on the ground. What is happening in China is particularly important right now because an apparent moderation in the US recovery and renewed sovereign debt worries in Europe have put the onus back on China to keep the show on the road. Whether its landing is soft or hard matters more than ever.

In the run-up to last week’s announcements, that debate had been unusually lively, fuelled by two conflicting indicators, one from the Chinese government and one from HSBC. The government’s purchasing managers index surged in March to a level indicating robust growth while the bank’s own measure fell to a level indicating a slowdown. Chinese manufacturing is either growing at its fastest rate in a year or contracting at an increasing rate.

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In A Contest for Supremacy: China, America, and the Struggle for Mastery in Asia (Norton, $27.95), Aaron L. Friedberg ’78, Ph.D. ’86, dissects the present and future of Sino-American relations, stating that “despite several reasons a closer relationship between the two economic powers is possible, two main factors—a growing clash of interests and deep ideological and political differences—will prove more decisive and will make the relationship more tense and competitive,” according to a review by the New York Times Book Review.

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The Western financial crisis heralded a significant shift in the balance of power between the United States and China. Most starkly, it brought forward the date when the Chinese economy will overtake the US economy in size from 2027 (the Goldman Sachs projection in 2005) to 2020. The reason is simple: while the US economy is around the same size as it was in 2008, with the prospect of perhaps a decade of very weak growth ahead, the Chinese economy has continued to grow at around 9 percent and future economic growth is likely to be in the region of 8 percent. While 2027 sounded sufficiently far in the future to sound speculative, 2020, in contrast, is less than a decade away and feels much more like an extension of the present. The rise of China and the decline of the United States is becoming more tangible by the year.

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Begin by remembering who the author of this book is. Henry Kissinger, most familiar to Americans as Richard Nixon’s Secretary of State, is, even if we ignore Christopher Hitchens’ allegation that he is a “war criminal,” nonetheless a profoundly problematic character, especially on the subject of China.

For one thing, he is chairman of Kissinger Associates, an international political consulting firm based in New York City and counting among its clients some of the biggest American companies doing business in China. So the man clearly has a financial incentive to relate a version of Chinese affairs conducive to the interests of these companies — the very ones that have been offshoring American jobs and worsening America’s trade balance through their imports.

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China’s indefatigable rise — especially in stark contrast to sluggish growth in the US, fiscal crisis in Europe and the shrinking of Japan — is helping to spawn an “anti-Fukuyama” school of thought that sees Chinese-style authoritarian capitalism as the next beginning of history.

Stefan Halper has written one of the school’s primers. He borrows a term coined by Joshua Ramos, “Beijing consensus,” to describe the real China threat: a state-led model of developmental capitalism without democracy, and a neo-Westphalian model of international relations where states limit their interactions to pure business. This model, Halper argues, is ascendant across the developing world, displacing the liberal internationalism and economic neo-liberalism of the Washington Consensus.

After finishing Halper, the reader can move on to Martin Jacques’ When China Rules the World and Ian Morris’ Why the West Rules — For Now for deeper exploration of how the China model might transform the international system.

 

“China is the toughest to beat,” said Saina Nehwal, India’s ace badminton player, just before a match with Lin Wang during the 2009 Badminton World Championship.   

While Nehwal lost the match to the Chinese player, her apprehension foreshadowed what was to be a complete sweep of the championships by China, whose players went on to win all the major titles—the men’s single, the women’s single, and the men’s and women’s doubles. Nehwal was perhaps echoing the sentiment of many Indian sportspersons who have had to pit their skills against China’s formidable strength as a sporting nation.

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What our country’s nineteenth century experience teaches us about China today

One of the central national security questions of our time is whether a rising China will be a threat to the United States and the American-led international order. The Director of National Intelligence, James Clapper, told Congress recently that China is the main threat to the United States. The Economist has proclaimed that the U.S. and China are “bound to be rivals.” Niall Ferguson decries “the descent of the West” and power shifting to Asia. Martin Jacques’ latest book is titled When China Rules the World. And even level-headed liberal internationalist John Eikenberry considers the rise of China “one of the great dramas of the 21st century.”

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A year of exploration in the Far West

In 2009 I left Beijing and moved to New York. It was a return to the United States for me: until 2004 I had lived on the other coast, in San Francisco. Those five years in between in China seemed as long as a century. Not for me, but for the balance of power between Asia and the West. When I left California, China was still a student, busy emulating its American teacher. I returned to find an America exhausted by the greatest economic crisis since the Great Depression, a crisis that China avoided, in a masterly way, using the leverage of its state capitalism or “market dirigisme.” And so history had a sudden acceleration. It was clear that the 21st Century would be Asian, but the East’s fast rise soon gave the impression that the die had already been cast. China seems master of its own destiny, set on a fast track to modernization while America laboriously drags itself out of the darkness.

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It was significant but not astonishing news last week that China has eclipsed Japan as the world’s second-largest economy

More surprising is that the great economic strides have given rise to uncertainty about China’s prospects.

Can China hope to maintain its torrid growth, avoiding more of the social upheaval hinted at when sporadic riots broke out among furloughed factory workers during the Great Recession? Can a traditionally frugal 5,000-year-old society transform itself into a consumer economy like the U.S.? Or will continued reliance on exports culminate in the economic stagnation endured by Japan these past two decades?

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Updated and expanded new Chinese edition just released.

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Turkish edition just published!

When China Rules the World is the first book to fully conceive of and explain the upheaval that China’s ascendance will cause and the realigned global power structure it will create.

New edition available now from:

Amazon UK
and all good booksellers.

US second edition is available now via: 

Amazon US