Features | Politics | East Asia

China’s Premature Great Power Label

China’s past performance is not necessarily indicative of future results, says former British Foreign Secretary Malcolm Rifkind.

Even just a decade ago, the impact of ‘China’s rise’ used to be spoken of in the long term. Yet those days are already behind us. Economically and diplomatically, China’s influence is now felt across the globe. In Africa, exports are dependent on Chinese domestic demand. In Latin America, interest rate policy is determined in reaction to policies set in Beijing. In time, China’s growing military prowess may also grow to the point that the country can truly be recognised as a superpower.

But in the near term at least there’s been an unhelpful tendency to exaggerate the impact China will have on international affairs. Setting aside the question of whether China’s rise is cause for celebration or concern, far too much is being extrapolated from current trends. The full realisation of its potential remains a long way off, and in the coming decades China won’t be a rapidly rising power, but a slow, steady and uncertain one.

The problem is that many of the indicators used to judge China’s success are misleading. Having constructed the world’s second largest economy, China’s wealth is increasingly measured against that of the United States—and the sense that Beijing’s position is strengthening in relation to Washington’s is pervasive. Many analysts are quick to point to graphs, for example, that suggest that China’s growth will overtake the United States within the next two decades, implying that when it does it will mark an eclipsing of US influence too.

But focusing on China’s overall GDP is deceptive. The day at which China’s overall goods and services eclipse those of the United States will see no sudden and remarkable realignment of the world order. The Allies’ victory in World War II, which created the bipolar world overseen by the US and USSR, and the collapse of the Berlin Wall, which elevated the United States to a position of unipolarity, aren’t suitable comparisons.

For all its progress, per capita GDP in China remains low.  Last year, when spread across its gigantic population, China’s GDP amounted to just $6,600 per person compared with the $46,400 for the average American. Such figures highlight an important point—while China’s overall GDP is fast approaching that of the US, the level of disposable income in the country remains low. It will be decades before China is able to introduce the tax rates that would be necessary to fund a global presence akin to that adopted by the US military.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

In addition, though China’s growth rates are high, it needs to maintain them indefinitely if it’s to provide employment to those entering its workforce. Doing so will be far more of a challenge than is publicly conceded. The last two decades of China’s growth has relied upon a quantitative expansion of its capacity, namely the construction of new factories, an increase in manufacturing and export-led growth fuelled by demand in the West. Yet this model simply can’t form the basis for another two decades of expansion. Chinese goods are more likely to saturate the Western market long before current long term predictions could be realised. This means that China’s growth will level out unless its economy moves into a more advanced stage, where the sources of productivity are diverse. In short, there will need to be a qualitative change in the goods and services China produces. Investment in education and job training will enable that process, but it’s a long process, and the taxes needed to fund it may restrict prosperity in the medium term.

Ultimately, even as China successfully positions itself for a new wave of production, it will start to encounter all the problems of a developed state. Economic disparities across the country will make the welfare of Chinese citizen a pressing political issue, breeding support for greater government intervention.

This will be especially relevant as China’s population begins to age. What was once a boon to China—namely a large workforce that depressed costs—will become a burden as it ages.  Indeed, it was recently suggested that by 2050, a quarter of all Chinese citizens—some 330 million people—will be over the age of 65.  How Beijing will respond to the health, pension and care needs of these people remains uncertain. But whatever policy course it chooses is almost certain to have a significant impact on its economy. 

China has travelled an enormous distance in the last 20 years, but it’s far too early to be predicting its rapid and inevitable rise to superpower status. For Beijing, the hard part is just beginning. 

Sir Malcolm Rifkind is the Conservative Party Member of Parliament for Kensington and a former British Foreign Secretary. He is currently chairman of the Parliamentary Intelligence and Security Committee.