Superpower Denied? Why China's 'Rise' May Have Already Peaked  (Page 2 of 2)

The most serious long-term obstacle to Chinese growth is its state capitalist system.  In the last decade, Beijing has largely reversed pro-market reforms and embarked on a decidedly statist developmental path.  Consequently, state-owned enterprises have gained enormous clout in the economy and enjoy monopolistic privileges.  The financial system favors such firms at the expense of private entrepreneurs.  Household income, at 43 percent of GDP, is too low to support a higher level of consumption, a critical factor in rebalancing the Chinese economy and providing a source of future growth.  Without systemic reforms, according to an influential World Bank study, growth in the coming two decades will fall well below 7 percent per annum.   But reforming state capitalism is almost impossible politically because that will undermine the very foundations of the Communist Party’s rule.

On the political front, the coming decade will likely be one of rising opposition against the party’s political monopoly.  Chinese citizens have become far more outspoken and willing to contest the party’s authority.  Despite the regime’s huge investments in censorship, it now even concedes that the Internet has given ordinary Chinese people a powerful collective voice in shaping public opinion. Government policies across a wide range of issues, such as the one-child policy, budget transparency, education and healthcare policies, are being challenged for their reasonableness and legitimacy.  Behind these developments is a fundamental crisis of legitimacy of the current regime.

As for the ruling elites, their unity can no longer be taken for granted.  The Bo Xilai Affair has revealed the rift at the very top of the regime.  Worse still, a sense of political malaise and loss of direction today pervades the party.  Many of the party’s best and brightest now realize that the regime’s best days are probably behind it and, without fundamental political reforms, it will not be able to hold on much longer.

Externally, China’s benign external environment is beginning to deteriorate.  Its relations with many of its neighbors have become far more contentious due to territorial disputes.  China’s major trading partners have lost patience with its mercantilist policies.  The all-important Sino-American relationship is growing more competitive.  The fundamental fissures in this relationship have widened because of ideological conflict, geopolitical rivalry, and strategic distrust.  As countries around the world, for their own reasons, raise their vigilance against Chinese influence and start to push back, Beijing no longer enjoys a free hand in expanding its economic foothold and securing access to markets and resources.

What this analysis reveals is that the growth of Chinese power under one-party rule has peaked. The seductive authoritarian state-capitalist development model may have delivered an economic miracle in the post-Tiananmen era, but for all practical purposes this model has lost its magic, if it has not gone totally bankrupt.  However, China’s future does not have to be a dismal one.  The obverse of this analysis is that, with the right reforms, particularly a return to a pro-market growth strategy and a transition to democratic rule, China can comfortably confront these domestic and external challenges.  A more liberal market-based economic system will utilize resources more efficiently and equitably than state-capitalism.  Democratic reforms will give the regime a fundamental source of political legitimacy at home and also help reduce animosity and distrust of China abroad.  China will have an excellent chance to lay the economic and political foundations for a 21st-century superpower.  If this were to occur, China’s best days would still be ahead, not behind.

Comments
121
sfphoto
February 14, 2014 at 01:22

Has China’s rise peaked yet? At least Minxin Pei doesn’t want to predict the coming collapse of China as Gordon Chang has been predicting for the past decade or so. But both earn a good living as highly-paid stars in the anti-China porn industry in the U.S.A.

Bongskie
February 24, 2013 at 13:04

Chinese propaganda is everywhere in this thread. China has long lost credibility not only in her region but practically everywhere. They are behind many prostitution rings and drug rings in the Philippines and in other countries as well. Their government can only maintain power in their country because they have no reluctance to use force or violence against their people. I pity the people of China, they have to endure an inhuman regime.

landblink
January 13, 2014 at 17:45

Thank you for your “pity”.
Actually, Chinese people is not in those who really need that “pity”

j.b. diGriz
February 24, 2013 at 10:44

TL; DR.

[...] De todos los problemas que enfrenta China en los próximos 25 años, la brecha de ingresos y todas las cuestiones conexas, es quizás el más peligroso para el Partido Comunista y la estabilidad social en el futuro.Por ejemplo, en su libro 2013 de Desarrollo Social Azul, de la Academia China de Ciencias Sociales señala que se han producido 100.000 “incidentes masivos” (protestas grandes) cada año durante varios años, y que la mitad de estas protestas están relacionadas con la apropiación de tierras. [...]

Rdm
January 26, 2013 at 05:26

Why my reply to Jerry Seinfeld was not approved here? No offense in the reply, no insult, no profanity of swear words. Why? 
 

Rdm
January 26, 2013 at 02:13

@intellectual merc, … amen, your wish will be fulfilled in no time. 
With such a fickle, fleeting want from Philippines to US like "I don't want you" …and .. "come back, I need you" attitude, US will definitely love your country. Of course US will provide you an illusory golden cage while you can enjoy eating your home-grown banana after Chinese Embargo. 

intellectual merc
January 25, 2013 at 20:40

@Jerry Seinfeld – amen…
-to be honest as a filipino, looking back at both powers’ history, we can’t deny the past but looking at china now, in terms of how it treats its own lesser classes… Well, I would rather be treated as a pet than as a form of livestock… I would prefer a golden cage for my people rather than a pig sty that china will provide…

blert
January 25, 2013 at 11:45

Red China is destined to follow the standard ultra-rapid development track — just a bit further and faster than ever before.
Then, like every other nation, she will 'hit the wall.' The easy improvements will have been made. From that point onward, it's a real challenge to figure out newer, better, ways of doing things.
Red China does massively benefit from having an above average national IQ. It approximates 98 to 102 on the verbal scale — and even higher on the math scale. (102 to 106) These figures run even higher in China's major cities.
Beyond that, Red China has massively benefited from wider inter-marriage. Like Japan and Korea, those living back on the village farm became inbred over the centuries. As seen all over the world, this phenomena lowers IQ. Some estimates place the effect as high as 15 to 20 IQ points. So, when the kids move off to the big cities, and intermarry, their sons and daughters 'magically' get a lot smarter. This effect is the primary reason why the urban Chinese hold such disdain for country farmers.
That, and the infusion of fresh ideas and methods, caused Red China to absolutely explode in per capita performance. It's an un-repeatable, un-extendable, jolt of improvement.
Japan and Korea are illustrative: per capita GDP growth slows down to 'maturity.' The super-boom never comes back — and the society becomes a steady, major, player in global events.
As for Red China's PLA, PLAN: they're out of political control. This was last seen eighty-years ago in Japan. It didn't have a happy ending.
The PLA is so self-sufficient that it effectively can disregard the CCP — and it does. The PLA already has an atomic throw weight larger than America and Russia combined. This is now realized by everyone important. (Exception: the Pink House)
Consequently, the next stage in events is the hyper-rapid expansion of atomic powers with ballistic missile delivery systems. Red China is certain to be ringed by fulsome atomic arsenals before this decade is out.
Japan, Korea, Taiwan, Australia will join India, Pakistan and Russia. Red China will face atomics at every point of the compass.
The Japanese navy will be entirely re-born, almost certainly as a submarine force. (It had the world's largest submarine fleet in 1940.)
Red China is too big to gain ANY allies. Not one single neighbor wants their border 'adjusted' by Beijing.

Ealoseum
January 14, 2013 at 15:14

I gues 230 million counts as "no middle class." And quit it with these "if it werent for me youd be poor" type comments.  If it werent for Chinese and Muslim innovations, the west would be a backwater, feaudalistic dunghole with half the population dying of plague and the other half praying to their imaginary savior.  More Eurocentric bs from a person seething of jealousy.

glenn
January 15, 2014 at 21:19

You obviously know nothing of European history. The Europeans invented the modern age – engineering,medicine,physics – every “ology” you can think of. Whatever the muslims have contributed is taken from the Greeks and the Hindus….And China? Well they invented gun powder to scare away demons.

TheTruth
March 4, 2014 at 00:49

No, he obviously knows real history, unlike the garbage shoveled into your waiting mouths by your corporate owners. Without the Middle East and China developing agriculture and government you’d still be in the Stone Age. Get back to us once you find some excuse to dodge that one.

Monseneur Dokdokhun
February 2, 2014 at 19:27

Eurocentric? Sounds like someone here fails to see the truth and never will because of his or her inability to critically think. No doubt due to a substandard totalitarian education system.
Regarding your attempted insult and poorly delivered argument (again the result of not being able to critically think), if you must no those who are brilliant apply others ideas.
Finally, I think anyone who uses the word Eurocentric somehow feels less than adequate knowing that all there countrymen still aspire for what they consider to be European luxury, which Europeans consider normal. You see it’s all about standards.
Finally, why is it that supporters of China (one of the worst human rights violators in history, and easily the must at present) have such a hard time hearing criticism? Oh, yes, they are brainwashed like robots that you can’t criticise the state. In a word, pathetic.
China should be stopped in all areas. As a state it has failed, a large portion of HK parents are hearing their children being brainwashed by Red robotic ideals and protest carrying British flags, obviously they are Eurocentric too??? Or they value transparency and can think for themselves.

BarryG
January 12, 2013 at 10:22

Except for extreme recession years, the US has been growing. China is no where close to its percapita production:
http://www.indexmundi.com/map/?v=66
And in fact, with energy and transportation costs, it is once again cheaper to manufacture in the US than China, so manufacturing has slowly been moving back since 2010. Also this year, US became a net energy exporter due to the boom in natural gas. Will shell sands it is also on track to become self sufficient in oil again. The population rate of the US is growing, it still attracts top talent immigration. China's population rate is negative.  Even the "debt problem" is overblown — the resession made it look bad, but it is stable and easily made to go away (as in California that passed a fairly small tax increase and suddenly it is already making a surplus this year). 
I don't know what will happen with China, but thinking that the US is a declining power is likely to be a mistake. It is likely that 2020-2030s, the news will be about the resurgence of US power. 

BarryG
January 12, 2013 at 09:44

So much nationalism.  In the long term the US has an advantage that it isn't a "tribal/racial" state. Any Chinese can become an American but it doesn't really work that a white, black or hispanic American can become Chinese. There is also the issue of ideology. In most of the US, the citizens still hold to freedom and democracy, universal rule of law, justice. These are universal, even for Chinese. What does China offer? Letting state supported industries pollute in the name of market share? Making money by any means probably.
But, looked at another way. If the US fell, world trade would dry up, many many nations would be at war. It would be a dark age and China, with little internal demand would probably not survive the fall of the US in once piece. It would probably break down into 2 coastal regions and the inland areas. I mean, this would happen with no war, just the economics. 
But, for the world, it would be best if China became an open, democratic, rule of law power. That would be better for China and the US. It would also be better for the US to reform its economic policies etc. Better for everyone.

Jerry Seinfeld
December 14, 2012 at 04:41

At the end of the day who here can actually imagine themselves living in a world dominated by China?  No one.

Zen
December 11, 2012 at 04:15

 
@Fred Freeman,
Read this, 

http://tinyurl.com/d4hxc5a

1) Rule by Constitution, Yes, US has its own multi-parties system. At the end of the day, Constitutions and Democracy means choosing two puppets. That's all. Who holds the strings? You know the answer. Constitutions, the most sacred upheld bible, to serve its people, citizens, law-abiding residents in all corners turned back when it comes to serving jail time for Vincent Chin murder case. You might be happy living in this White dominant country, but Ask your Mao Yushi's mother if she likes to emigrate to US. There is a solid democratic form of electing and choosing the people you want in US, nobody can't deny that. But at the end of the day Where is Ron Paul? The one who declared he will cleanse the Fed, the most beguiling con artist on this earth. Where is he now? Of course you've got to choose to vote out of 2 candidates at the end of the day. But who is really pulling the strings? Not that Communist party system is doing a great job, but neither is Democratic system superb either. 
 
2) Open and Popularly elected government. You and your forefathers openly elected any government of you like, be it Democratic or Republican party. Tell me exactly how long it has been any officially elected government cleaning up the mess passed down by any previous government or just simply playing along with the one who is actually controlling this game. Of course people feel happy because they get to choose at least. Comparing popularly elected government and PRC party is nothing different than choosing two rotten apples in US and only one rotten apple given in China. What's the difference? 
 
3) Contribution to Knowledge and Innovation. Yes, this one goes to US. Nobody can't deny that. But how? US attracts great talents from all over the world. I once mentioned that US Vs China is like "The whole world VS China" because US is where all talented people come and contribute, not to mention Chinese immigrants as well. But China? It's one nation state, trying to get out of mass poverty status. Remember all knowledge and innovation in US come only after US became very rich and spent indefinite amount of money on research and science. Again, this feature "Knowledge and Innovation" is a socio-economic side effect, in a positive way. Only after does one become full of stomach, one can start working steadily and efficiently. No innovation and knowledge comes when you're hungry. So you can imagine China will lack in this aspect. But it's not that China is inherently lacking this trait. Now its economy booming and the inevitable side effect of higher socio-economic status will facilitate the growth of innovation and knowledge. There are a lot of Chinese Nobel Laureates in US. You may claim they are American born in US. But ask yourself honestly, don't be hypocrite. In other times, you label them as Asian Americans or American Born Chinese. But in times of claiming US laying superpower in Science and Innovation, you may want to claim them as Americans. That's how it is. So ask every chinese born or immigrated to US, how they feel? Yes, they feel foreigners still because White Americans ideology never allows them to integrate into American society. The end result? Read this http://tinyurl.com/aat7x32, this is only the beginning. 
 
4) The qualities and size of solid allies. Tell me exactly which are US solid allies? Every country tries to stabilize their economy and financial status. UK comes into US closest allies because UK was shackled in US financial aids after WWII. Is US closest ally to Japan? How about WWII? Did US bomb Japan Hiroshima? Ask every Taiwanese if they believe US is their closest ally. Every taiwanese know US is just a economic backdrop. If there's a conflict between Taiwan and PRC, US will sit tight and watch. That's how it is. US quite know the lessons from Vietnam and Korea. Taking the size of allies or number of allies does not reflect the world superpower status. You have a lot of clients because you have tons of money, to help, to aid, and to build. You won't have a lot of clients if you don't have a penny. That's how simple it is. I scratched my head if Mao Yushi thinks US receive a free load of money from its allies? 
 
5) The only reason those Chinese wanting to emigrate to US or other European countries is they don't know the history of US on Chinese (Chinese Exclusion Act), Geary Amendments, Vincent Chin case, Racial discrimination in US. All they hear back from their relatives, families in US is they can open small shops or food restaurants to earn money. That's all. They don't realize US has a ceiling for their hard-working ethic and achievements too. And further analyze who exactly are those Chinese? Are they from Shanghai, Beijing, Shenzhen, Guangdong, Zhejing? Mostly who wanted to emigrate in the first place is from those living in inner side of the China. Just like you people living in Utah, Wyoming wanted to emigrate to New York or California to get a job. Now situation is changing and a lot of Chinese from inner cities wanted to move to Coastal Areas like Shanghai and Beijing. 
 
Superpower status
Remember US was established 200 years ago, but it came into dominant world power only a couple of decades ago. 19th Century witnessed British Empire. Tell me exactly how British achieved world power status? British was not a new found land. It had to fight with all other neighboring countries, some became its allies, some its adversaries, all depends on time and circumstances. British troops looted, invaded, plundered villages, colonized other countries, and seized jewelry, goods for free. You remember how wicked it is to smuggle opium to invade the most ancient civilization on earth? Of course I want to sit down and ask Mao Yushi which metrics he'd be using to measure the British Empire status? Obviously her constitutions might as well clearly state that "British can invade whichever countries they deem resources rich enough." By what standards Mao Yushi calls that Constitution to be the world most admired one? 
Chinese PRC already made a claim that the rise of China will not be exactly the same as Western Style, nor it will not copy their ideology. China will not bomb other countries, in the name of Weapon of Mass Destruction. China will not spread it ideology aggressively as Western countries used to do. The rise of China will be totally different from what we used to learn, what we used to witness, and lastly what we used to think what superpower actually is. 
Mao Yushi can analyze a variety of metrics to measure World Superpower. If World Superpower status is disseminating one's ideology (Like British empire aggressively spreading their ideology through building Christian Church, US influencing via its media), yes, China will never come close to those ideology disseminating tactics because Chinese civilization is not disseminating, but absorbing within itself. If Mao Yushi thinks one's assertiveness is what world superpower should have, I'm dead sure that he was brainwashed by Western media already. 
 

Bernard M.
November 25, 2012 at 06:33

I love how JC is using his western education to talk a lot of his nationalistic garbage about China being a super power. Don’t get cocky, if it wasn’t for trade and international cooperation you’d be working in a rice paddy right now.

Fact is China is its own worst enemy. There is NO middle class there, and the disparity of wealth is massive between the ultra rich, and the dirt poor. Leave it to the idiot and corrupt party leaders and business moguls over there to build a nation on the backs of its people….the only true natural resource china has. Give it time, and all the wanton display of wealth and flagrant disregard for the lives of its own people will lead to another civil war and cleansing of capitalist ideologies. Maybe then you guys would realize instead of blaming the west for everything, it is an internal Chinese problem.

I love how the Chinese state propaganda whines about western companies exploiting the workers. Maybe you guys didn’t study economics as well as you should have, because the supply determines wages…. not the state. When there’s 1.5 billion people, and a huge portion of them are uneducated, well sorry to say but those people are NOT entitled to the same standard of living as those of us that are educated. Once again, the state is to blame… not the west. No ones forcing china to be the worlds cheap manufacturing source, it is China that opened its doors.

neighbor
November 4, 2012 at 06:14

When the west giant gets tired of cheap laptops, ipods, ipads, t shirts, makeups and bla bla bla…the east giant goes down…but west is greedy… East is ambitious

Perplexed
October 15, 2012 at 02:17

I'm astonished by the poor level of debate in this thread. And perplexed by how childish the rhetoric is. 

[...] questions are by no means the products of idle minds.  By many measures, the party’s rule is about to enter a decade of systemic crisis.  Having governed China for 63 years, the party is approaching, within a decade, the recorded [...]

Share your thoughts

Your Name
required
Your Email
required, but not published
Your Comment
required

Newsletter
Sign up for our weekly newsletter
The Diplomat Brief