The Dragon stirs in a wary
world By Antoaneta Bezlova
BEIJING - As a year of subtle but significant
geopolitical shifts draws to an end, China looms ever
larger in a world unable to decide whether its rise is
an opportunity or a threat. For better or worse, every
ripple from this giant economy, which is driven by the
fast-expanding needs of its 1.3 billion consumers, can
now be felt across the world. The country's frenetic
construction is driving up world prices of nearly every
commodity, while large-scale foreign investment is
powering a flood of exports, which is bringing down
global prices for manufactured goods.
Without
China, even the mighty United States could not run its
huge trade and budget deficits. China is the world's
second-largest buyer of US government debt as it
recycles a US$124 billion trade surplus with the US. Not
less significant, a series of recent multibillion-dollar
acquisitions announced by Chinese companies around the
world show that Beijing is aiming for a even bigger role
on the global stage. China has long been the world's
strongest magnet for foreign investment and is now
sitting on a nearly $540 billion pile of hard currency,
which it seems anxious to spend as the dollar plunges.
Intended buy-offs are in industries that include
car manufacturing, minerals, airlines, banks, consumer
electronics, oil and telecommunications. Not all of them
have taken off. A reported $5 billion bid to buy
Noranda, Canada's largest mineral company, faltered this
autumn amid concerns about Beijing's potential use of
leverage in the North American country. Nevertheless,
the announcements are causing a buzz of excitement
around the world.
Officially, China represents
less than 4% of the world's economy. But its spectacular
rate of industrial production - which grew by 16.3% last
year alone - is making its effects felt all over the
world. Last year, China accounted for 7% of global oil
consumption, 27% of steel, 31% of coal and 40% of
cement. And just as optimists are busy making plans on
how to make money by satisfying China's growing demand
for raw materials - everything from timber to grain -
others are looking at China with a feeling of impending
gloom.
Take textiles, for instance. The lifting
of global restrictions on textile trade from January 1
means China will be able to flood the world with even
more low-cost clothing. The world's most populous
country already accounts for 20% of the global textile
trade, but industry analysts are predicting that this is
set to go up by 2007. Manufacturers in both rich and
poor countries are already feeling the threat and local
textile industries are lobbying governments to take
fresh measures to keep down the volume of imports from
China.
The damage of China's emergence as a
textile giant could be particularly devastating for
smaller developing countries with less diversified
economies, especially in Africa. Earlier this year, the
US International Trade Commission issued a report on the
impact of quota termination, identifying Lesotho, Kenya
and Mauritius as particularly vulnerable. Yet, textile
industries in more mature developing countries such as
Bangladesh, Vietnam and Sri Lanka are also under threat
from competitive Chinese clothing produced by a
workforce that cannot form independent unions and has
one of the worst industrial accident rates in the world.
For the industrialized West, China has also
become both a key engine of global trade and a major
source of instability should, as doomsayers predict, its
high-flying economy crash. True, Chinese tourists have
been pouring into Europe and spending money. Also,
European companies have doubled their sales to China
during the last four years and the European Union is set
this year to become China's biggest trading partner,
bypassing Japan and the United States. But fears are
rising that from cars to textiles, China may soon start
forcing closures of factories across Europe. Take the
car industry, for example. By 2010, China expects its
car exports to top $50 billion. This year it bid to buy
Britain's last remaining car manufacturer, MG Rover, but
the EU is still uncertain whether China qualifies as a
viable high-end consumer market.
Similar
hesitation marks the EU's protracted decision-making
process on whether to lift the arms embargo imposed on
Beijing after the 1989 Tiananmen massacre of unarmed
students and demonstrators. EU members seem torn between
the lure of China's market and moral scruples, which
back in 1989 dictated that China should be treated as a
giant rogue state for murdering its youth. Supporters of
lifting the ban, such as France and Germany, are
confident that China is moving in the right direction.
But evidence is slim.
Detractors argue that
Beijing is blocking democracy in Hong Kong and
threatening to use military force against Taiwan.
Chinese leaders have just announced their intention to
enact anti-secession legislation - the sign of a
dramatic hardening of Beijing's stance toward Taiwan's
independence movement, which may provide the legal
ground for launching a war against the island. Taiwan
and China have been governed separately since 1949, and
Taiwan remains the only functioning democracy in Chinese
history.
This year, China said it had its first
ever peaceful transfer of power. Jiang Zemin
unexpectedly stepped down from his post as head of the
military after 15 years in power. But hopes that his
successor - president and party chief Hu Jintao - would
allow more freedom of expression, initiate negotiations
with Taiwan and advocate political reforms, have been
upset by Beijing's latest campaign to stifle dissent.
In recent months, the Communist Party has
rounded up and threatened at least half a dozen
intellectuals who had been vocal on the Internet and in
the media about the country's growing gap between rich
and poor, pervasive unemployment and the increase of big
protests in the provinces. And Beijing is now trying
hard to silence the remainder - those that say its
growing economic power is propped up on a shaky
foundation.
