| |
China and the global security
web
By Francesco Sisci
Part 1: Crisis
in confidence
BEIJING - There is more to the
world economy than dollars and euros. Japan has a gross
domestic product (GDP) about half the size of the US or
Euroland. However, Japan's economy has been slumbering
for the past 12 years.
By contrast, China in the
past seven years has had a growth rate of about 7-8
percent per year with zero or negative inflation. Even
if we bear in mind the possible errors in Chinese
statistics, and the many bad loans burdening the Chinese
financial sector, it is undeniable that China has
managed to establish a system conducive to economic
growth. There have been significant improvements in
efficiency (Chinese deflation comes from the fact that
industries produce more at lower costs, thus prices go
down), and foreign-funded enterprises have witnessed
growth rates often far greater than the national
average.
This indicates that 1) there is an
important privatization process going on, in which
private individuals find ways to appropriate parts of
the huge and inefficient state assets; 2) a large part
of these assets is reinvested in China, because the
appropriators think that here it is possible to get high
returns for their investments.
What is more
interesting is that they do not invest in Europe or the
United States, but in China. Their judgment is grounded
on facts. Despite the caution with which we may decide
to view Chinese economic figures, in the past 25 years
the country has seen continuous and widespread growth.
And now, while fears of a long-term US slump loom and
while the European economy stagnates and the Japanese
economy rests in a pit, where can investors put their
money? China stands out as a unique opportunity.
Chinese wealth creation is no longer confined to
China. Chinese investment in Southeast Asia and South
Korea has greatly increased in the past couple of years,
whereas Japanese and US investment has dwindled there.
China after the 1997 financial crisis proved to be the
engine of the Far East economy, although its size is
still modest compared with Japan's. But Japan, despite
its might, continues to withdraw from Southeast Asia,
while China pours money in.
Furthermore, growth
in the past 20 years in China has proved not only
buoyant but resilient. In spite of crisis in one year or
another, the economy has never plunged into a real
recession, and the nation has forfeited the whole
socialist welfare system in a matter of a couple of
years. Education and health assistance are now organized
on a strictly profit bases, without state support,
housing has been privatized and jobs are no longer for
life. These changes would have caused more than one
revolution in any other country, but in China they were
digested without major uprisings. Therefore in the
future China can well be expected to carry on with
economic reforms that appear modest compared with the
ones it has already achieved, and continue its high
growth.
There remains a worry, however.
Politically, while Japan and Euroland are safely within
the same security and political basin as America, China
is not. This implies concerns about security but also
about the economy. The security concerns are obvious:
will all this wealth be used to undermine the existing
security web centered on the US? This security web is
the hidden hinge upon which economic order turns. The
fact that it is hidden should not create the illusion
that it doesn't exist or is unimportant. On the
contrary, it is like one of those invisible files in
your computer - it is more important than the files you
can see on the desktop.
This security web
guarantees long-term predictability, political and
military. The US, with a GDP of some $8 trillion, can
link with the $8 trillion to $9 trillion economy of
Euroland and the $4 trillion economy of Japan. In all
this makes more than $20 trillion, a staggering amount
in comparison with the approximate $1 trillion of the
Chinese economy. Therefore China is not large enough to
substitute in any foreseeable future the US bloc, but
its size and dynamics might well subvert the regional
balance of power and trigger a chain reaction that could
send shock waves throughout whole globe, thanks to its
gigantic population.
This is true even without
thinking of a war over Taiwan. An implosion within China
- a massive peasant or urban rebellion, or a bloody
power struggle in Beijing - would rock Asia and thus the
world. The fall of the USSR led to globalization (which
prima facie is about the economy, but underneath is held
together by military might) that ultimately lies in the
hands of the US. The fact that China is not integrated
in the global security web adds costs to its economic
growth. It is far less predictable, politically and
militarily, than other integrated states, and thus
investments, both by Chinese and by foreigners, tend to
focus on short-term gains.
Both China and the US
would gain from a full integration of China into the
global security web, but the issue is on which terms can
this integration take place, and does either China or
the US want it?
The answer to this question
remains obscure, which permits doubts about the
long-term sustainability of China's economic growth. And
it is the real question, perhaps, that the forthcoming
Communist Party Congress should address. It could
arguably also be the key to the United States' role in
this century.
(©2002 Asia Times Online Co, Ltd.
All rights reserved. Please contact content@atimes.com
for information on our sales and syndication
policies.)
|
| |
|
|
 |
|
