More than a decade after China’s explosive growth began to trigger news headlines in the West, there remain two distinct schools of thought.
In one camp are those who say China’s continued ascent — and its eventual crowning as the world’s largest economy — is inevitable.
In the other are those who see the recent decline of the U.S. economy, and Uncle Sam’s reduced stature globally, as a mere historical blip, and that the idea of “American exceptionalism” (i.e., the spread of U.S. democratic ideals and free market principles) will soon reassert itself.
China believers say its huge population, superior growth rates, massive foreign currency reserves, pro-growth policies and cultural cohesion all but ensure that it will one day sit atop the global economy.
China skeptics, on the other hand, say the country’s bright future is already threatened by rising labour costs, soaring income inequality, political corruption, environmental degradation, lack of transparency and property rights, and increasing social unrest.
Martin Jacques, a British academic, journalist and author of the 2009 best-seller, When China Rules the World, clearly fits into the former camp. He believes China’s continued ascent is a virtual certainty, and that the days of U.S. hegemony are coming to an end.
Jacques was in Edmonton Monday to deliver a keynote address to mark the start of the U of A’s 28th annual International Week. In his talk and during a prior interview with the Journal, he touched on many of the key themes he explored in his book, reasserting his view that China will transform the world in coming decades.
Although he agrees that the U.S. economy is slowly healing, he insists that America’s glory days are behind it. Saddled with trillion-dollar annual deficits and a $16.4 trillion accumulated federal debt, Jacques says U.S. military spending will have to shrink, thus curbing America’s global influence.
Meanwhile, he notes, China’s insatiable demand for resources — from oil and gas to zinc, iron ore, copper, potash, cotton and lumber — and its multi-trillion-dollar war chest give it huge global leverage.
Not only are state-owned giants like CNOOC (China National Offshore Oil Corp.) flexing their muscles and acquiring major players like Canada’s Nexen Energy, but China’s state-owned banks are also usurping the role of global institutions like the World Bank by funding key infrastructure in mineral-rich, cash-poor countries around the globe.
The bottom line: the U.S. is about to repeat Great Britain’s experience, he says, as America’s economic might and global influence shrinks, and China replaces it at the top of the heap. By 2030, predicts Jacques, China will likely account for fully a third of global GDP (Gross Domestic Product), or roughly twice that of the U.S. economy.
“I think the Americans find it difficult. There’s an inability in America to grasp historically what’s happening. They’re so used to being on top that they find it almost incomprehensible that they won’t be in future,” he says.
“Meanwhile with the (shale) gas revolution and so on, they’ve decided that with manufacturing costs declining, the future is rosy and America will be okay. But I’m saying America is declining as a global force, and we’re going to see this with military expenditures. They are going to go down, and America is simply not going to have the presence in the world that it once did.”
Although Jacques readily agrees that China also has many pressing internal issues — “obviously China has got a barrel full of problems” — he says Western analysts consistently misjudge what’s going on, largely because they don’t understand the profound historical, political and cultural differences between East and West.
“This is a huge country, with four times the population of the U.S. In 1980, just a little over 30 years ago, it was one-twentieth the size of the American economy, and it was in a political mess. Today it’s about half the size,” he says.
“So China has travelled an absolutely huge distance, the greatest distance any country has ever travelled in that kind of period — much greater than what the U.S. achieved in the second half of the 19th century,” he adds.
“But despite frequent warnings (that China will implode) it didn’t . . . So yes it’s true, China still has got very big problems, and they’ll be very difficult to resolve, but I think there’s a fair chance they’ll be able to do it successfully.”
For Canada and other resource-rich countries like Australia, the rise of China spells enormous opportunity, says Jacques.
“You need to be less dependent on the American market, because (by exporting to China) you’ll get higher prices for your resources. So this is actually a very interesting situation for Canada, and its relationship with this part of the world,” he says.
“You can’t be in denial. You can’t just close the door — well you could, but you’d be cutting off your nose to spite your face. The other thing I’d say is not to consider this to be a threat, but consider it to be an opportunity. Not just an economic opportunity — which is probably how it would be viewed — but also to explore and have a relationship with a different culture.”
— Gary Lamphier