Back in the early 1980s, when the Japanese economy was on a roll, the number of books, journal and media articles extolling its strength and impact  became  almost a weekly staple of  publication  that the late Dr. Hadi Soesastro remarked  at a CSIS Jakarta  seminar “I’m going to commit suicide if another speaker is going talk again about the virtues of  Japanese economic model.”

It is with the same sense of measured reluctance   that I read through   China’s Rise by Gary Schmitt,  China Megatrends by John Naisbitt and  When China Rules the World by Martin Jacques. All this  after scanning through The Beijing Consensus by Stephen Halper and, tellingly, during China’s current troubles facing devastating floods, landslides, acute rural and urban problems and lowered pace of economic growth.

China’s impact has been analysed by so many experts, businessmen,  financial analysts as well as military strategists  that it is convenient to review the China challenge into   three basic themes.

The first is to  view  the  challenge in terms  of  China’s  vaunted  economic size  relative to its actual economic strength.  Economic strength, as many political and economic consultants  would say, is not necessarily a function of size.

The China market, as viewed by business consultants and people who love touting China at international business conferences, has been primarily seen as an opportunity for American and European multinationals to push their drive for greater benefits  for their companies and shareholders who find cheap Chinese labor working to their advantage, by  reducing  production costs and increased profit margins.

But early 2010 saw  the overheating of the economy leading it into the threshold of the “overhead  trap”.

Chinese leaders  realize  that  other  nations in certain sectors can still hold heir own, Vietnam and India being chief examples.

Though Naisbitt and Jacques recognize that dynamic competitive advantages can and do  change  over time, both believe that China’s political and economic leaders are well aware of the imperative to adapt quickly and retain price competitiveness.

China’s economic strength has seen  marked improvements, including in infrastructure and manufacturing technology, establishing  near world class universities/technology centers to compete with the best in North America, Europe and Japan.

But China’s economic and political institutions are still opaque and fragmented, less agile to innovate, despite the Communist Party’s firm grip on the trajectory of internal change. Claims  by Halper in asserting the unique  impact of the Beijing Consensus (itself an unashamed adaptation of Lee Kuan Yew’s “Singapore Model” since  the late 1960s) to other developing countries have  yet  to be seen.

The second theme is to link China’s economy to its  voracious need for all manners of energy resources from all points across  the world.  From iron ore, wheat and beef in Australia, to oil  and gas in the Sudan, minerals in Southern Africa,  the Middle East and Latin America, China’s leaders know that they  must secure  the country’s  energy needs to  propel its 9 percent annual GDP growth rate in order to sustain  economic performace, which in turn underpins  the Communist leaders’s legitimacy.  Or  at least among its 350 million middle class in the modernizing clusters of its larger cities.

The numerous state companies  and sovereign wealth funds dealing with banking, finance and energy developed over the past 10 years are  testimony to the Chinese leaders foresight in linking national interest to changing international power configurations.

Economic growth must be constantly linked to secure China’s financial reserves  as well as to the  changing  “energy mix” it must balance. Economic “performance legitimacy” is key to the Communist  Party’s grip over  an emergent and critical   middle class.

“Chinese leaders continue to be discrete in their preference that the US continue to check against Japan’s aspiration for a more prominent role within the East Asia rebalancing process.”

The third theme focuses on China’s growing military power as a consequence of its economic rise  over the past 25 years. For many military strategists, the question is how much China’s leaders see the need to strengthen its military capabilities relative to the economic  strength and influence  of its near neighbors (Japan, Russia, South Korea). More importantly, China’s third and fourth generation leaders  must specially deal with  the sensitive issue of American military dominance  in Asia and  the Pacific.

Debates within the Chinese leadership are constantly monitored by “China watchers” seeking  to gauge  China’s sense of regional entitlement in Northeast Asia and Southeast Asia.

Leaders in Beijing continue to be discrete in their preference  that  the United States  continue to check against  Japan’s aspiration for a more prominent role  within the East Asia rebalancing   process.

From time to time, even as it recognizes American stategic preponderance worldwide, China’s civilian  and military  leaders feel the  need to  assert  its  military  clout in its “core areas” of interest, Northeast and Southeast  Asia.

At the same time, like other Northeast Asian countries in the region, China grudgingly wants to retain the  relative “free ride” it gets from American security presence.

In matters of its vital trade, investments and exports interests in East Asia, the Indian Ocean and points beyond, United States forces and bases throughout the world provide that  vital security assurance.

As with India, Japan, Russia and the European Union, China must come to terms with the reality that the world’s oceans and trade routes remain under the constant surveillance of American “full spectrum dominance” (satellite based, cyber defense, strategic nuclear, theater nuclear, conventional force superiority). Even under current US government policy  to trim the  defense budget, only American forces have the ability to project its conventional power through its six carrier strike group plying through the oceans and seas worldwide.

– Juwono Sudarsono is professor of international relations at the University of Indonesia, Jakarta. He was defense minister in the first Cabinet of President Susilo Bambang Yudhoyono (2004-2009) and a former ambassador to the United Kingdom.

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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