State Capitalism & Western Society (Part One)

Putting China Into Perspective…

Image source: The Guardian Online http://www.theguardian.com/news/datablog/2013/jun/07/china-us-how-superpowers-compare-datablog

Image source: The Guardian Online
http://www.theguardian.com/news/datablog/2013/jun/07/china-us-how-superpowers-compare-datablog

The increasing importance in recent years of China as a world power, and to a much lesser degree Russia’s emergence, have arisen some logical unease and questioning about how Western societies will fare in the new world order over the coming decades, given the inevitable interconnectedness among nations.

China’s share of the world’s economy has grown in an accelerated manner during the past three decades. The repositioning of China in the world economic scene during that period has been near miraculous, essentially due to a couple of factors:

  • The huge economic growth differential, particularly noticeable when comparing China’s growth rate against the average growth rate of developed nations.

At present, China’s share of the world’s total output is around 14% —versus the US’ 19% contribution, and the EU’s 18%—; that is China contributes 1/7 of the aggregate global product. Three decades ago it used to contribute less than 1%!

  • The substantial critical mass of the most populated nation on Earth, accounting for almost ⅕ of the total world population.

Stating the obvious, China’s growing world influence —particularly in the economic and the political arena— is chiefly due to its growing economic presence, in a comparative basis.

Through the ages, China has been one of the largest economies, and most powerful nations on the planet in multiple occasions. That status, however, although maintained throughout a great deal of its history, was last held over two hundred years ago, during the Qing Dynasty —1644 to 1912. So, for practical purposes, the contemporary emergence of China as a world superpower has all the feeling of something new.

superpower-showdown-shareAlthough it seems highly unlikely that China will ever again return to the low double digits rates of economic growth achieved during most of the past three decades, it is very probable that China can sustain growth rates of about twice as much as the average of the rest of the world during the coming two decades or so. If that growth differential proves to be right, there are two certain outcomes:

  • China’s economy will become the largest on earth, volume wise, surpassing the US. According to recent statistics, the US’ $16.24 trillion dollar economy is currently only about one third larger than China’s, at $12.26 trillion. Thus, China’s economy is at a relatively striking distance to match and eventually overtake the US economy in size, most likely within the coming 10 years or so, depending on the growth rates of these two of nations.

  • The anxiety and general uneasiness of the developed world will only grow larger, in direct proportion to the differential in economic growth rates of the developed world versus that of China’s.

History shows that every time an emerging world power has jumped into the scene, the internal recomposition among the displaced leading nations has been both painful and unsettling.This threat is more menacing if the emerging superpower, China in this case:

  • Comes from outside the inner circle of the prevailing ruling elite of nations.

  • If the emerging superpower quite often resorts to aggressive and even hostile tactics and attitudes in the multiple interconnections and day-to-day interactions: trade, financial, political, and even military, to name a few.

For China to become again the largest economy in the world will be a feat in itself.

Nonetheless, as previously stated, China’s sheer economic power is currently owed more to volume and huge population mass than to efficiency. In fact, on a GDP per capita basis, China is a rather poor nation, way below the developed world’s minimum level, currently around US $30,000.

China’s present US$9,100 per capita GDP is just a fraction of the US’ $51,700, and still painfully lower than a host of developing nations, like:

  • Romania’s US$12,700,

  • Montenegro’s US$11,600,

  • Peru’s US$10,600,

  • Cuba’s US$10,200,

  • and Thailand’s US$9,500, to name just a few countries.

As previously stated, the major unsettling factor about China’s emergence as a world superpower among the current ruling elite is more due to China’s frequent hostile attitudes and lack of harmony towards the general spirit and tradition of Western civilization than to anything else.

If China’s government leadership learns to abide more by the present world order rules of the game, becoming a powerful yet respectful and harmonious player, the general atmosphere of unease will very likely be drastically reduced. That case in no way would imply any sort of blind submission from China to an already relatively well established world order, but a constructive attitude to learn, to negotiate, and to contribute to the continuous improvement of that world order, which  anyway is a work in progress, far from perfection.

Most fortunately, China’s case appears to be significantly more hopeful than Russia’s.

In the second part of this series…State Capitalism & Western Society (Part Two): China vs Russia, and Then Some

Related Posts Plugin for WordPress, Blogger...
About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.

Comments

  1. Thanks for giving me the link on twitter. Very well presented. A couple of thoughts though. How did this come about? The pursuit of profit at any cost by resorting to low cost Chinese manufacturing which destroyed domestic manufacturing be it in America or in Europe or even in India. A super power in my view has super responsibilities as power without responsibilities creates a vacuum which in this case China exploited to the hilt. Who is responsible for this state of affairs? America should take the blame for this as the lead nation of the so called elite governing nations of the world. Only a few decades ago Nixon&Kissinger were glorified as the holiest icons of diplomacy for engaging with China. Now its diplomatic icons must be brought down from the pedestal and re-evaluated in view of this article. America gambled all her advantages it had against China and all her trump cards up its sleeves in pursuit of a so called liberal/leftist agenda,, some divide&rule, some flirting with terrorism, some evangelism and other pet ideas. And is now reduced itself to criticizing China. Is this what a lone Super Power should do and should have done? With the defeat of the USSR America had its way without any checks and balances and created a vacuum of its own allowing America to make mistakes liberally. The USSR although I despise communist ideologies allowed US a much needed checks&balances in geopolitics. Once it disappeared America was put in a position where it no longer had to look over the shoulders or be cautious. In my view there is something called an American mind which has nothing to do with the individual minds of 300 million American citizens. That American mind is an amalgam of its thought leadership,executive leadership and their actions, priorities, ideals, intellectual engagement with the rest of the world instead of rant self-glorification. I think that American mind or body language has now reduced itself to the status of a double agent of China. Instead of becoming a real checks&balance against China America went along with China. China kept quiet giving America more room to make more mistakes. Look at the American charity industry for example. I’m sure trillions of dollars were collected in the name of charity for “saving” the poor humans, animals etc in Africa, Asia and South America. The American corporate was happy due to the tax exemptions so were the charities but did they build one worthwhile infrastructure in the developing world with that huge reserve of cash under their charity mattresses? No they didn’t. Again China exploited that vacuum and poured money in to Africa, Asia and South America building roads, ports, rail lines, air ports all creating jobs. Whilst all this was happening the charities and their champions in America with ever more bleeding hearts collected more money and did nothing earth shattering for removing poverty or creating jobs. Look at Harvard as a thought center. Who have got over there economists like Amartya Sen. Look at your media of Farid Zakaria, an ex Daily Mirror UK editor, Martin Basheer, Salman Rushdie and the like. Some wise American Congressmen told Obama to set up a Sovereign Wealth Fund with India to engage in rapid development projects but Obama never listened. Such a fund would have checkmated the Chinese takeover of the infrastructure building in the developing world. If America took the lead it could have even persuaded the tax havens to pour some money in to such a win win sovereign fund. The other day I read China is poised to over take America in global trade with its $4 trillion against America’s yet to be declared $3.5 trillion or so. Now please tell me who should be blamed more for this although our priority is not to engage in any blame game. We need to mull over these issues in a non-partisan manner.I’m a critic of America but not an enemy. A critic in my view is your best friend and not a flirtatious acquaintance who will please America for a Visa, award, Nobel, scholarship.self-promotion, media citation, money and the like. I hope I didn’t talk too much….

Trackbacks

  1. […] State Capitalism and Western Society (Part One): Putting China Into Perspective… […]

%d bloggers like this: