How China Ends West's Domination
Image Credit: Photobucket / Chinatrip

How China Ends West's Domination

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Since China’s reform and opening up policies began in the late 1970s, the country’s average annual economic growth rate has hovered near 10 percent. Currently, China’s gross domestic product is second only to the United States; it's the world’s largest exporter and importer and the largest holder of foreign exchange reserves. And along with China’s remarkable economic rise has come a significant increase in China’s role in both regional and global development and governance.

With the economies of the United States, the European Union and Japan reeling from weak growth and burdensome debt levels, China has emerged as a key driver of global economic growth, contributing, along with other major emerging economies, nearly two thirds of new global economic output. As Daniel Burstein has argued, a power shift toward Asia is under way, and “China lies at the heart of this Asia shift." According to many projections, China will surpass the United States as the largest economy in the world by 2030. China has benefited greatly from integrating into the world market and participating in the existing international economic system, because this has helped the country reform its old planning system and rapidly assimilate into the global economy. This process is set to continue in the future because China has no reason to reverse a course that has had such positive results. As a newly emerging power, China will naturally become a more important player in helping to shape regional and global development and governance.

To sustain growth in the future, however, China will have to restructure its economy from an investment- and export-led model to one based on innovation and domestic-led demand. It will also have to adopt policies that ensure social safety nets and equitable distribution of wealth. China also needs to establish a new, sustainable economic foundation by implementing a green development strategy and establishing a good governance system that redefines the role of government and enhances the role of the market. With its economy moving into a new phase through steady technological innovation and an explosion of domestic demand, China will surely play a bigger role as a major market and capital resource for regional and global economic growth.

Clearly, though, the global economy is facing many serious challenges. According to a survey released in November by the World Economic Forum, the “confidence deficit” continues worldwide, with international experts remaining pessimistic about the state of the global economy and global governance over the next year. An immediate concern is whether the U.S. economy will continue to move out of the shadow of the financial crisis. Currently, it's marked by low growth, high unemployment and mounting trade and budget deficits. The European Union, meanwhile, is suffering from the contagion effects of its sovereign debt and euro crisis. There are widespread fears that a default by one or more EU member states could well push the EU economy back into recession and plunge global financial markets into uncertainty. The declining demand from these developed markets has a profound impact on emerging economies since most of them depend on developed markets.

In order for the United States to stimulate its vulnerable economy, the administration of President Barack Obama needs to adopt more effective measures — especially ones aimed at stabilizing the dollar and combating trade protectionism. As for the European Union, it's critical to restore market confidence through fiscal consolidation, structural reforms and more effective economic governance. Bolstering the financial sector and strengthening governance of the euro zone is vital for the survival and reinforcement of the common currency. The good news is that EU member states agreed to a treaty that would submit member states to greater budget oversight, agreed to increase the size of the European Financial Stability Facility and decided to provide more assistance to debt-crisis economies. Having said this, fundamental reform of the European Union’s fiscal system is still urgently needed.

The current crisis also shows the weakness of the international system and global governance. The International Monetary Fund needs reform if it is to better represent the interests and concerns of the emerging economies and enable them to play a greater role in global governance. New and effective regulations for governing international financial markets need to be formulated and implemented. In this respect, the Group of 20 nations can play a major role. By bringing major developed and developing economies together in a larger forum with a more important role in global crisis management and macroeconomic co-ordination, the G-20 can make world economic growth more sustainable and balanced. The ongoing agenda for economic restructuring and support for the global multilateral system are critical to the process of restoring confidence.

China’s economy is highly integrated into the global market, so the country should participate actively in initiatives to reform the international system. While a stable and evolutionary reform process is important to China, the desired outcome should see structural changes that produce a new, more effective international system. Some have worried that China may “operate both within and outside the existing international system, seeking to transform that system while at the same time, in effect, sponsoring a new China-centric international system." The fact is, though, that a China-centric system would neither be acceptable to other nations nor in China’s own interest.

China’s leadership believes that the current trade imbalance between China and the United States is largely rooted in irresponsible U.S. fiscal and monetary policies, so the United States should focus on adopting more responsible and credible policies. To be sure, China itself should also make efforts to restructure its export-led growth model and generate stronger internal demand in order to reduce its dependence on external markets and trade surpluses to drive economic growth. The economies of China and the United States are highly interconnected and complementary, which requires them to co-ordinate and co-operate closely as they seek to rebalance and restructure their relationship. A trade war wouldn't only hurt both countries, but also the regional and global economies.

Comments
34
pappu
January 26, 2014 at 06:18

I want a democratic and peaceful China you ride abd challenge the west. Not the present day bellicose CCP controlled communist China which violates human rights on a continental scale abd threatens to gobble up her neighbors.

dan
August 13, 2013 at 01:40

Self praising and self proclaimed superiority over other races has become second nature of these people. Not satisfied with historical killing and looting of helpless people, still now tends to emulate the same act in the name of democracy and liberty has become the order of the day. These people should understand that this earth does not belong to them only but also to all other races as well.

dan
August 12, 2013 at 18:17

Jealousy of white against prosperity of other races knows no boundary. But ultimately justice shall prevail.

dan
August 12, 2013 at 12:47

West should fall and east should rise. It is natural cycle of up and down. Nobody can challenge the nature. East is rising slowly but steadily and at the same time west is falling slowly but steadily. It is a slow natural phenomenon, most people wont notice.

Mike
May 13, 2013 at 21:37

Go and live in China and you will soon learn that the number of internal problems are so great that there is no conceivable means for China to be dominate.  They might be able to dominate their own people and other countries in Asia, but no way will they ever dominate the world.  More people need to wake up and understand what China is all about – the continuation of the corrupt CCP.   Sorry folks, but after living in China for a decade, there is no way that I feel threatened or even worried that China will control the world.  When the housing bubble bursts, bye-bye China.

phillip
July 19, 2012 at 23:59

Best? 
Best in what? Most of your engineers are either East Asian, or Indian.

phillip
July 19, 2012 at 23:38

Yes, War is unavoidable, but you do realize billions will die, right? What are we fighting for?

netcizen
April 30, 2012 at 23:56

According to many projections, China will surpass the United States as the largest economy in the world by 2030?

I saw the similar boasting about Japan in the 80s.

cate
April 27, 2012 at 13:51

Both the US and China have made mistakes and yes done things that were wrong – it is the human condition. One hopes that the leaders of both the US and China can find the wisdom to negotiate the transitions occurring in the world today in a way which promotes peace and prosperity for all. I think all of humanity requires this – sadly there are those consumed with hatred and ignorance who think domination is the only way.

China had the largest economy in the world until the 1820′s – and Americans still had prosperity. If China returns to its former position – there is no reason that other countries cannot continue to prosper also. Given the size of China’s population it should have a larger GDP than other countries. But GDP is not the only measure of a nation’s power – focusing on such measures exclusively ignores the importance of self determination to people – the power of the idea of freedom. Western democracies may look chaotic to the Chinese people – but that seeming chaotic way of approaching decisions has brought stability to those countries.

There are still many obstacles in the way of China’s rise to prominence. I think that the leadership of China fails to understand that stifling creative expression in the arts also stifles creativity in technological advancement. And there is a logic in development – at some point Chinese wages will also make Chinese goods uncompetitve and China will need to find cheaper labor – just as the West had to source out to China. There also seems to be a tendency for some Chinese commentators to underestimate the US and the West. Recall that the Japanese before WWII thought the US was “soft” and a country full of “playboys” who would not fight. They learnt otherwise.

I’d note that in those countries where China is the leading trade partner – the US is often the second leading trade partner. This shows that China and the US together have helped to create prosperity and upgrade the standard of living in so many countries. It tells us also that together China and the US can improve so many other problems in our troubled world. Here is hopeing that is what our future looks like – a collaboration between these two great peoples.

MAYANK JHA
March 20, 2012 at 15:42

I do not know any economics or geopolitics. But, I know one thing for certain. Unless this mad obsession for growth and money stops, mankind is doomed. Consumerism must end, be it in China or America. All the world must come together in protecting the intersts of mankind as a whole.
This is obviosly a platonic idea and is unlikely to see reality. But then, the doom of mankind is also likely.

Prasad
January 21, 2012 at 15:41

It is a lesson to West as to how to not to do things in future. Every fall has a rise. China… toxic goods, cheap quality and there is exploitation of labour on every cheap product as labour component is the major stake holder in out put expenditure. And, there is a difference between swelling and muscle. Though costly people proud to say their belongings as Made in Germany or Made in USA and people often feel shy to declare their goods as Made in China. Every nation knows what China was and is and what type of attitude it has. West has nothing to worry because best sometimes faces difficulty in the march but every one loves best and west is best.

Passerby
January 21, 2012 at 00:27

@Matthew Rice
“…Also, the western world, Japan, Australia, and SK will not buy Chinese goods designed in China because they will forever have a brand issue of being cheap, toxic, and poorly made…”

You have absolutely no idea what you are talking about, which is typical of many drive-by web commenters. Check out the NAIC database (if you know what it is)before you mouth your ignorance. Give you another hint, check out a major study done by one of the top busness schools in the world in that regard – meaning the depth and breadth of Chinese product penetration in the low end, the higher end and the ultra high end of industrial products categories.

Matthew Rice
January 19, 2012 at 07:15

Funny you mention Huntington, as he served as a coordinator of security planning under Carter (everyone knows how that ended) and Hubert Humphrey (who was a spectacular wack job and failure).

Europe is doomed, their socialist policies have bankrupted the entire zone, and America is behind it unless it cleans up its act.

With regards to this quote from the author: “China will have to restructure its economy from an investment- and export-led model to one based on innovation and domestic-led demand”, don’t count on china being a world innovator anytime soon. Years of valuable cyber threat will only grant then an advantage in the short term. In a classic case of looking at the ‘cheater’ in the classroom, they may be able to ace there workload but they are missing valuable lessons that strengthen a person in the long run in life especially in learning what it takes to be self sufficient. Also, the western world, Japan, Australia, and SK will not buy Chinese goods designed in China because they will forever have a brand issue of being cheap, toxic, and poorly made.

Dave
January 19, 2012 at 05:33

And sadly, China is also the main culprit in the 2008 global financial meltdown due to its mecantilist policy!!http://www.foreignpolicy.com/articles/2012/01/17/how_china_s_boom_caused_the_financial_crisis

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