THE RISE OF CHINA IN THE LIGHT OF
WORLD SYSTEM THEORY
Coursework
Cultural Characteristics and Business Regulations in East
Asia
Sofia 2022
Sofia University “St. Kliment Ohridski”
Prepared by: Dobrin Dobrev
Supervisor: Prof. Nako Stefanov, Dr. Habilis
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
Table of Contents
Table of Figures ............................................................................................................................................... 2
Abstract ............................................................................................................................................................ 2
Key terms ......................................................................................................................................................... 2
1.
Introduction ..................................................................................................................................................... 3
2.
Problem Formulation and Methodology.......................................................................................................... 4
3.
2.1.
Problem Formulation................................................................................................................................ 4
2.2.
The objective of the coursework .............................................................................................................. 4
2.3.
Methodology ............................................................................................................................................ 5
2.4.
Research plan ........................................................................................................................................... 5
The rise of China in the light of the World-system theory .............................................................................. 6
3.2.
World-System Theory .............................................................................................................................. 6
3.3.
The Rise of East Asia and China explained by World-system theory ..................................................... 7
3.3. Main strategic areas for the rise of China .................................................................................................. 10
4.
3.3.1.
Economic rise.................................................................................................................................. 10
3.3.2.
Technology and Innovations Rise ................................................................................................... 11
3.3.3.
Military rise ..................................................................................................................................... 12
3.3.4.
The rise of China within International world order ........................................................................ 13
3.3.5.
Chinese Strategic Planning ............................................................................................................. 13
3.3.6.
China’s strategic partnership diplomacy ......................................................................................... 14
Visions of the future ...................................................................................................................................... 14
4.1.
The need of new science and knowledge ............................................................................................... 14
4.2.
Future Challenges ................................................................................................................................... 15
4.2.1.
Population Growth .......................................................................................................................... 16
4.2.2.
Inertia and inadequate governance.................................................................................................. 16
4.2.3.
Degradation: Climate change and deteriorating ecosystems .......................................................... 16
4.3.
Future Visions ........................................................................................................................................ 17
4.3.1.
Diversity and interdependence ........................................................................................................ 17
4.3.2.
Different economic reality .............................................................................................................. 17
4.3.3.
Multi-partner governance................................................................................................................ 17
4.3.4.
Markets: Innovations and new solutions......................................................................................... 18
4.3.5.
Dealing with Climate change .......................................................................................................... 18
4.3.6.
An evolved workplace and evolved employers .............................................................................. 18
1
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
5.
Conclusion ..................................................................................................................................................... 19
References ............................................................................................................................................................. 20
Table of Figures
Figure 1. Research plan diagram. ........................................................................................................................... 5
Figure 2.Wallerstein World Systems Theory Model .............................................................................................. 6
Figure 3. The Rise of China and Emerging Powers from the World-System Perspective ..................................... 9
Figure 4. The Biggest Economies in the World by GDP 2021 ............................................................................. 10
Figure 5. Leading countries by export in 2020 ..................................................................................................... 11
Figure 6. Science and R&D Funding and Patent applications by country............................................................ 12
Figure 7. Defense spending forecast ..................................................................................................................... 12
Figure 8. GDP forecast for 2050 ........................................................................................................................... 15
Figure 9. Forecast for 2050 – Population Growth ................................................................................................ 16
Figure 10. Forecast for 2050 – Environmental degradation affecting quality of life ........................................... 17
Abstract
Over the past forty years, China has experienced unseen economic and technology rise and nowadays is the
second-largest economy in the world. The rapid growth of China has been one of the most significant discussions
of our times in the fields of economy, social science and international relations. This study provides an analysis
of the Rise of China through the prism of World Systems theory. Synthesized overview of World-System Theory
and World-System Analysis developed by Immanuel Wallerstein is presented in the coursework. Main strategic
components for the rise of China (economic rise, technology and innovations rise, military rise, and the rise of
Chinese influence over the international world order) are observed and analyzed. Empirical data are used for the
analysis and prove of theories and concepts. The growth and success of China is due to systematical and long
term strategic planning. Success is supported by the large population, which provides an opportunity for division
of labor and a high degree of specialization. The challenges of present and future are observed. Visions and
directions for the future are presented in the end of the study.
Key terms
Rise of China, East Asia, World Systems Theory, World System Analysis, Economic rise, Technology,
Innovations, Strategic planning, System and Analytical approach, Future challenges, Future visions
2
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
1. Introduction
"The only constant in life is change"-Heraclitus
We live in a very dynamic and rapidly changing World facing various problems and challenges. The rise of
China has been one of the most discussed topics in the international relations. The fast growing economy and
active politics of China has started showing its increasing influence over the World System. Scientists and
analyzers believe that in the future decades the world will experience even greater Chinese power and influence.
With its unstoppable economic growth, China has turned into an “economic powerhouse” and key player in the
current global world. Despite the enormous growth, China still remains as a country of contradictions and
complexity. Due to its unbalanced economic and social inequality, China raises questions about its domestic and
international development. As China increases its national power and is searching for the ways to improve its
image and positions, the main question is: “How the rise and development of China will transform the World
system?”
Not so long ago Western policy makers neglected Chinese technological advancements and economic
advancements, but now China is on the top of world economies and is superpower. Analysis and strategies have
been taking into account Chinese growth and influence over Western and Global World systems.
The scope of this study is to analyze Chinese growth and influence in the perspective of World System Theory
and their position in the World system developed and lead by US and Western World. Using Immanuel
Wallerstein’s framework of World Systems Analysis and World Systems Theory, this coursework will aim to
describe the position of China in world system and to identify structural phenomena within the system. The main
goal is to present an objective analysis of the Chinese growth through the prism of Wallerstein’s World System
Theory. This coursework provides synthesized explanation of World Systems Theory and World Systems
Analysis used for the scope of the study.
I have visited China (Shenzhen, Hong Kong, Guangzhou and Beijing) and have experience as telecom consultant
with Chinese company Huawei on various projects and this will give me additional value and point of view toward
the growth of China and its influence to the world economy and innovations.
Chapter two is focused on problem formulation and methodology, main targets and objective of the study are
defined. Chapter three observes World Systems Theory, main reasons and aspects of the rise of China. Empirical
data is added for analysis and prove of the concepts and theoretical investigation. The fourth chapter of this
investigation is an explanation of the need for change based on knowledge and values, some visions for the future
are presented. The intention of this coursework is to further support analysis of the Chinese growth and influence
over the global world through Wallerstein’s World-systems theory prism. Chapter six is conclusion of this
investigation and path forward.
Analysis of Chinese strategic rice and development in the light of World Systems Theory is important, because it
can be used for further investigations and predictions for future relationships between China and the World
System. It is important also for the international strategy and concept that the World is singular system and there
is important shift from World of Capitalism toward World of Knowledge and Values.
Main References used for this coursework are: 1) Wallerstein’s books dedicated to World Systems Theory and
Analysis (Ref. 1, 2, 3 and 4); 2) Several main reports, analysis, investigations and articles dedicated to the rise of
China and integration in the world economy, political and global system (Ref. 5, 6, 8, 10, 11 and 12); 3) The book
of Prof. Nako Stefanov about the innovation development of the countries in South Asia, his lectures and visions
for the growth and development of East Asia ( Ref. 14); 4) The report “Innovative China – New Drivers of
Growth” by Development Research Center (DRC) of the State Council of China (Ref. 15); 5) Vision 2050 project
by the World Business Council for Sustainable Development (WBCSD) (Ref. 9); 6) Empirical data is obtained
from the above mentioned sources and also from www.visualcapitalist.com, www.statista.com, etc.
3
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
2. Problem Formulation and Methodology
2.1.
Problem Formulation
The growth of China and East Asia (Japan, South Korea) is one of the most influential process for the world
system in the 21st Century. The important question is how the Rise of China will continue to unfold and what the
influence for the existing world relations and the global economy will be. Will China and its partners overthrow
the international liberal order? Answering these questions require comprehensive analysis of historical, economic,
geopolitical, technological and other spheres of the world system.
China’s development has changed the balance of power by its increasing influence in multi-polarized global
economy and political affairs. China has offered a new alternative in terms of strategic planning, international
relations, but also in terms of economic development, appealing especially to developing countries.
This coursework aims to provide analysis and description of the rise of China through the model of World System
theory.
Problem formulation:
"What are the main aspects and reasons for the rise of China and East Asia? What is the current situation in
global economy and what are the measures to cope with the crisis? What are the main transformational goals
and future visions for the World?"
To shortly elaborate on the problem formulation, the observation is that the world is currently facing a major
transformation and power transition.
2.2.
The objective of the coursework
The rapid growth of China has been one of the most significant discussions of our times. China has not just
become a superpower in terms of production, but also in technology and innovation. The contribution and impact
of China's rise for the World System have been analyzed from various perspectives.
China is now at a crossroads in its development. Rapid industrialization, urbanization, and efficiency gains
resulting from several decades of reform and opening-up are no longer sufficient to sustain past growth rates.
Declining returns to public investment, a rapidly aging population, and a less favorable international environment
add to the urgency of finding new drivers of economic development.
The main object of this study is the economic, technological rise of China and Chinese influence over
international relations through the lens of World System Theory.
The World Systems theory developed by Immanuel Wallerstein provides a broad theoretical perspective to
understand historical evolutions and transformations involved in the rise of the modern capitalist world system.
This system evolved and expanded over a long span of time and brought different parts of the world under its law
of value and division of labor. A perpetual inequality in the international division of labor is leading to a
permanent condition of economic core-peripheral relations. Under this single division of labor within one single
world market, a political structure consisting of sovereign states and multiple cultural entities interacts within the
framework of an interstate system. The world system is conceptualized as a dynamic one in which changing
positions within the system’s structural morphology is possible by taking advantage of global capital mobility
and relocation of production.
From the systematic point of view China is large country with a huge human resource, which allows great
specialization in the division of labor. This is one of the keys for economic growth and success.
4
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
2.3.
Methodology
This chapter is designed to present primary methodology used for this coursework.
Key methodological approaches used in this coursework are:
• System approach
The world-systems theory used for these study is a fundamental unit of analysis for social evolution. Also known
as world-systems analysis or the world-systems perspective, it is a multidisciplinary, macroscale approach to
world economy and social change used to investigate the growth of China.
• Historical approach
Based on the fact that China had ancient culture and if it is analyzed historically most of the current processes
and trends can be chronologically followed and explained. The roots of current development lay down on cultural
and historical fundaments of Chinese empire.
• Analytical-structural approach - "breaks" the Chinese growth into the most important components economic rise, technological and inovation development, military rise and political influence. Based on these
analysis the Rise of China is investigated and explained.
• Proactive approach - based on the present situation and the research future forecast and vision for the future
of China and World System is given;
• Logical approach – schemes and diagrams of interactions and relationships between China, US, Western
Europe and the whole World are presented. Logical analysis and conclusions are done based on the theoretical
study and empirical data analysis.
2.4.
Research plan
This coursework is a research project based upon existing qualitative and quantitative data. On one hand, I will
address the problem formulation guided by a comprehensive theoretical application to conceptualize and analyze
the reasons and impact that the rise of China has brought to the World System. On the other hand, main findings
are empirically proven through real data and analysis. Figure 1 illustrates research plan:
Theoretical study
What are the main aspects and
reasons of the rise of China and
East Asia? What is the current
situation in global economy and
measures to cope with the crisis?
What are the main transformation
goals and future visions?
Empirical data and
investigations
Figure 1. Research plan diagram.
In this study the goal is to use combined approach of world-systems theory, economic, sociological analysis and
empirical data for a holistic understanding. This means that the thesis will be theory-driven, as diversified
theoretical data is necessary to address the investigation object. Research target is not to provide a solution to any
problem but rather to provide analysis of the challenges and opportunities caused by increased Chinese economic
and political influence on World System.
5
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
The chosen topic is considered to be deeply complex, but by adopting these system and analytical approaches, I
believe that our research goal will be addressed comprehensively.
3. The rise of China in the light of the World-system theory
3.2.
World-System Theory
The world-systems theory was developed by Immanuel Wallerstein and sought to explain why states have
different levels of economic development by analyzing the global capitalist system as a single unit. According to
the world-systems theory, it is the world-system that generates "unequal exchange", and thereby, to explain the
economic development and changes of states, we must first understand the global capitalist system. According to
the world-systems theory, all states are unified by the global division of labor, which can be understood as the
global capitalist system's labor force and supply chain. The global division of labor is structured on a three-layered
hierarchy, consisting of core, semi-periphery and periphery.
The global division of labor is not fixed since the relocation of capital and production takes place continuously,
meaning that countries periodically occupy different positions in the hierarchy in terms of consumption,
production and profit. The world-system is considered to be a non-static and dynamic system, which allows
movement and change within the system. In other words, countries can move up and down in the hierarchy. They
are not stuck in the semi-periphery or periphery but can move up the hierarchy and into the core by, for example,
nurturing domestic industries or decreasing dependency on the core. At the same time, countries in the core are
not guaranteed its continuing position but can move down the hierarchy.
Figure 2.Wallerstein World Systems Theory Model
Countries in the periphery usually export commodities, raw materials and produce industrial products with the
use of its cheap labor force to the core and semi-periphery. The periphery does not benefit from the extraction of
commodities since most of the surplus is transferred to the core. Countries in the periphery are dependent on
finished products, knowledge and technology imports from the core. Countries in the semi-periphery contain
features of both the periphery and core and thereby in terms of economic power stand between the periphery and
core. The core uses the semi-periphery for capital investments when the core counties organized labor forces
6
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
succeed in pressuring up the wages. The core countries exports its manufacturing industries to the periphery and
semi-periphery to reduce labor cost. The core countries rely on its highly educated well-paid labor force
specialized within advanced industries and technology. The core needs the periphery to invest its surpluses, which
results in their expansion.
3.3.
The Rise of East Asia and China explained by World-system theory
According to Wallerstein in his book The End of the World as We Know It the worldwide discussion has centered
around two questions:
1) What is the explanation of this growth, especially since it seemed to occur primarily at a point in time when
growth elsewhere was much less significant, and in some regions even negative?
2) What does the economic growth of the East Asian region portend for the World-system in the twenty-first
century?
Following list of the propositions most relevant to these questions is given:
 The modern world-system is a capitalist world-economy, which means that it is governed by the drive
for the endless accumulation of capital, sometimes called the law of value.
 This world-system came into existence in the course of the sixteenth century, and its original division
of labor included in its bounds much of Europe (but not the Russian or Ottoman Empires) and parts of
the Americas.
 This world-system expanded over the centuries, successively incorporating other parts of the world into
its division of labor.
 East Asia was the last large region to be incorporated, and this occurred only in the middle of the
nineteenth century, after which the modern World-system could be said to have become truly
worldwide in scope, the first world-system ever to include the entire globe. The capitalist world-system
is constituted by a world-economy dominated by core-peripheral relations and a political structure
consisting of sovereign states within the framework of an interstate system.
 The fundamental contradictions of the capitalist system have been expressed within the systemic
process by a series of cyclical rhythms, which have served to contain these contradictions.
 The two most important cyclical rhythms have been the 50/60-year Kondratieff cycles in which the
primary sources of profit alternate between the sphere of production and the financial arena, and the
100/150-year hegemonic cycles consisting of the rise and decline of successive guarantors of global
order, each one with its particular pattern of control.
 The cyclical rhythms resulted in regular slow-moving but significant geographical shifts in the loci of
accumulation and power, without however changing the fundamental relations of inequality within the
system. These cycles were never perfectly symmetrical, but rather each new cycle brought about small
but significant structural shifts in particular directions that constitute the secular trends of the system.
 The modern world-system, like all systems, is finite in duration and will come to an end when its secular
trends reach a point such that the fluctuations of the system become sufficiently wide and erratic that
they can no longer ensure the renewed viability of the system's institutions. In light of China's enormous
economic rise and increasing domination in international trade, different scholars and experts now
predict that the rise of China seems to represent yet another "hegemonic cycle" in the world-system.
More generally, the global capitalist system is over time affected by cyclical rhythms, which represents both short
upturns and downturns in the economy and long-term trends of either economic stagnation, growth or decline
(Wallerstein 2011). These cyclical rhythms are followed by "hegemonic cycles", which describes the rise and fall
7
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
of hegemonic powers in the world-system (Li 2016). According to the world-systems theory, a hegemonic power
is a single state that has "simultaneous superior economic efficiency in production, trade and finance" (McCormik
1990). From the perspective of world-systems theory, the rise and fall of hegemonic powers (hegemonic cycle)
can be understood as a multilayered process that follows three specific steps. Firstly, the rising hegemonic power
China achieves supremacy in productivity, which secondly, enables the rising hegemonic power to dominate
international trade. Thirdly, the achieved dominance in international trade provides the rising hegemonic power
with exceedingly wealth and capital that enables it to dominate in global finance. Synchronized with this process
is the decline of the existing hegemonic power, which loses its dominance following the same chronological
order: production, trade and finance (Wallerstein & Chase-Dunn & Suter).
By this means, that China will become the next hegemonic power in the world-system after the United States
(U.S.). However, according to the world-systems theory, the fall and the rise of hegemonic powers are a slow
process. However, the existing hegemonic power will, over time, contribute to the economic strengthening of
other states since all states in the global capitalist system always need more markets to expand. As a result, the
existing hegemonic power, over time, loses its competitive and productive superiority over other states
(Wallerstein 2011). This tendency seems apparent in the context of U.S.-China relations. With the official
recognition by the U.S. of the Public Republic of China (PRC) and the break with Taiwan in 1979, the U.S. sought
to expand its market reach, take advantage of cheap labor production, and leverage the enormous Chinese market.
By signing the "U.S.-China Relations Act of 2000", the U.S. opened the door for China to join the World Trading
Organization (WTO) in 2001. Put differently, the U.S. has "helped" to facilitate China's economic rise in the
pursuit of its own economic interests, and thereby also, gradually lost its productive superiority over China as
American companies have outsourced their production to China.
From the perspective of the world-systems theory, the global economy is continuously changing and evolving.
The rise of new hegemonic powers China is a fundamental and normal process of the world-system, in fact,
understood as needed reoccurring driving force for the global capitalist system as a whole. China's rise to become
a new hegemonic power is not an existential threat to the global capitalist system taking into account that "the
system's fundamental law of value, especially the mode of production and capital accumulation, is maintained"
(Li & Zhang 2018). In fact, as China moves towards the core, it is increasingly benefitting from the global
capitalist system’s embedded unequal structure and unequal exchange and has, therefore, no reason to change or
overthrow the current global capitalist system. As explained by Professor Marilyn Grell-Brisk:
"China does not seek to fundamentally transform the system. Everything China has done, from opening
its market, to its major economic reforms and most recently, a supposed move toward domestic
consumption to stimulate economic growth, has been with the goal of profiting from the world-economic
system as it stands"
The rise of China as a new hegemonic power is not abnormal but rather illustrates how the global capitalist system
evolves and manages to accommodate and absorb new driving forces into the system. According to professor Li
Xing and Zhang Shengjun, the rise of China in the global capitalist system is regarded as both an opportunity and
challenge for other countries, as Prof. Li and Prof. Zhang explains: "It is an opportunity in terms of room for
maneuver and upward mobility for some countries, yet a challenge and downward mobility for other" (Li &
Zhang 2018). The rise of China will enforce structural changes in the global capitalist system and have a positive
spill-over effect for some countries. In this regard, China's friendly and deep relationship with countries in the
periphery (Latin America and Africa) or countries within reach of China's geopolitical strategies, could benefit
from the rise of China within the global capitalist system.
8
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
Figure 3. The Rise of China and Emerging Powers from the World-System Perspective
Nevertheless, the rapid development of China has led to a de-stratification of traditional global power structure
of the core, semi-periphery and periphery in terms of value and supply chain. From a historical perspective,
military, finance and knowledge have been monopolized in the core while the semi-periphery and periphery
countries have been specialized in labor-intensive industries, commodities and raw materials (Chirot 1984).
However, China has rapidly "jumped" from intensive labor to be one of the leading exporters of high-tech goods
and technologies (Cantin & Taylor 2008). China has with the strategies of the MIC-2025 plan clearly expressed
its ambition to move up the global supply chain, which inevitably will lead to resistance as it will increase the
competition for the traditional core states, and thus reduce their surpluses.
Historically, the structure of the world economy has been relatively stable in terms of a small core, relatively
larger semi-periphery and a large periphery (Grell-Brisk 2017). But what happens to the conventional structure
of the global economy when a country like China that has lifted 850 million people out of poverty over the past
four decades (World Bank 2020) and is averagely generating two billionaires every week (BBC 2018), is
marching towards the core?
According to research done by Prof. Marilyn Grell-Brisk, China moved from the periphery to the semi-periphery
around the year of 2001. This movement changed the traditional three-layered structure of the global economy
(small core, relatively larger semi-periphery and a large periphery), in which the semi-periphery became larger
than the periphery due to China's large population. According to Prof. Marilyn Grell-Brisk, this led to an
"overcrowded" semi-periphery, increasing the risk of "open military aggression" as there would be increased
intersecting interests in terms of exploitation of the countries in the periphery (Grell-Brisk 2017).
With the use of GDP (Gross Domestic Product) data, which, according to professor Salvatore Babones is "a
sound approach to delineating the zones of the world-economy" (Babones 2005), the research illustrates that
China is now moving closer towards the core.
The rise of China seems to have altered the conventional structure of the global economy. China's movement
towards the core could have the same effect, leading to an "overcrowded" core, in which some core countries
9
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
might be "pushed" back into the semi-periphery or a gradual shift towards a global economic structure with a
large core and periphery and a small semi-periphery. However, according to world-systems theory, the threelayered structure in terms of a small core, relatively larger periphery and a large periphery is the fundamental
condition of the global capitalist system and: "When this ceases, the world-system disintegrates" (Isaac 2017). In
sum, the world-systems theory illustrates the more multidimensional framework, in which the rise of China
involves both opportunities and challenges for the U.S. led-world order and the global capitalist system.
3.3. Main strategic areas for the rise of China
3.3.1. Economic rise
The economic rise of China has no historical precedent. China has experienced close to double-digit economic
growth in GDP annually since its trade liberalization in the late 1970s. Between 1979 and 2018, the Chinese
economy has doubled every eight years on an average, meaning that China today is the world's second-largest
economy in terms of total GDP, only surpassed by the United States. (The World Bank 2020).
Figure 4. The Biggest Economies in the World by GDP 2021
(www.visualcapitalist.com)
Nevertheless, in 2014, China overtook the throne from the U.S. as the world's largest economy on a purchasing
power parity (PPP) basis. This was a memorable and momentous achievement since the U.S. has been the
uncontested largest economy in the world for several decades. Nevertheless, China has already managed to
surpass the U.S. on several other economic indicators and measures. China is now the largest holder of foreign
currency reserves and the world's largest manufacturer and consumer of most products (Morrison 2019). China
has swiftly emerged as an economic superpower.
This is also manifested by the increased global footprint of Chinese companies. The Chinese companies such as
Alibaba, Tencent and Huawei have entered the top ranking of global companies and have gradually become peer
competitors to some of the largest companies in the U.S. Today the number of Chinese companies on the Fortune
500 Global Companies list is higher than the number of American companies.
10
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
From 2000 to 2019, the United States had more Fortune 500 companies than any other country. In 2020, the U.S.
was surpassed by China, where 124 companies were reported, compared to 121 U.S. companies. This is an
impressive increase, as there were only 10 Fortune 500 companies in China in 2000.
The 2008 global financial crisis has proven to be a significant turning point for the global economy. Not only did
China manage to survive the crisis relatively unrestrained, but China quickly became the main engine for global
economic growth. While the West was struggling to recover, China in 2009, became the world's largest exporter
of goods. Just four years later, in 2013, China became the world's largest trading nation, in which China enlarged
into the biggest trading partner for 124 different countries.
Figure 5. Leading countries by export in 2020
3.3.2. Technology and Innovations Rise
In recent years, China has put the innovation and technology sectors high on the agenda, hoping to make these
sectors the engine for economic growth. More specifically, China has modernized its industrial capability. In
2015, the Chinese Communist Party (CCP) officially announced the "Made in China 2025" (MIC-2025) plan,
which aims to increase China's global technological competitiveness. The MIC-2025 initiative allows the Chinese
authorities to provide subsidy schemes, low-interest loans and support for domestic companies across ten key
industries, such as robotics and smart manufacturing. China seeks to increase its grip on the global supply chain.
Two years later, in 2017, the CCP officially released the "Next Generation Artificial Intelligence(AI)
Development Plan", a plan describing how China wants to become the world's leading nation in artificial
intelligence (AI) by 2030 (Zhihao 2019). China's ambitions and expectations are high, but so are the commitment
and investments. The automotive sector is a useful benchmark for capsulizing a country's technological
competitiveness as it combines many different technologies, manufacturing processes and cybersecurity.
Correspondingly, China is now the largest automaker, and the largest auto market in the world.
High-speed railways, facial recognition systems, QR code payments, and 5G communication, are a part of life in
the big cities in China. China is swiftly emerging as technology and innovations superpower. A few decades ago,
the Chinese city of Shenzhen, also referred to as "China's Silicon Valley", was a small fishing village. Today
Shenzhen is an advanced megacity and one of the leading tech capitals of the world. I have visited Shenzhen in
2005 and it was impressive back then and now is one of the biggest and most technological cities worldwide.
The Chinese tech giants Huawei and Tencent are both headquartered in Shenzhen and both ranks among the top
tech companies in the world.
11
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
Figure 6. Science and R&D Funding and Patent applications by country
(Sources www.nature.com and www.worldbank.org )
3.3.3. Military rise
Accelerated by the economic and technological rise, the China has set out to modernize the Chinese military,
making it more durable and more technologically advanced. Officially, China has hovered around 2% of its GDP
to its defense budget over the past two decades. Due to the enormous Chinese economic growth, the Chinese
defense budget has increased significantly. Between 2008 and 2018, the Chinese military defense budget has
increased from $108 to $239 billion. Today the People's Liberation Army is considered to be one of the most
advanced militaries in the world (Maizland 2020). Historically, China has criticized the U.S.' military bases
overseas. As a result, most political observers were probably taken by surprise when the CCP in November 2015
announced the decision to establish a permanent military base in the Horn of Africa country of Djibouti. China
has also displayed its military presence elsewhere, in particular, in the South China Sea. In this regard, some
observers emphasize that China has pursued a more assertive strategy which has increased the tensions between
China and some of its neighboring countries. The strategic partnership between China and Russia is creating very
big military union to oppose to US and NATO military union.
Figure 7. Defense spending forecast
(www.economist.com)
12
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
Global innovation is increasingly driven by digital technology. Digital technology is already an important
foundation for China’s innovation capabilities and a key driver of China’s future growth. The government has
prioritized the promotion of digital innovation and aims for the country to become a global leader in key emerging
digital technologies, such as artificial intelligence. There are indications that China is well on its way to building
the necessary capabilities and environment to promote the digital economy. But much like the overall innovation
system, significant potential remains to take advantage of catch-up growth by promoting the diffusion of existing
global digital technologies and innovations.
3.3.4. The rise of China within International world order
Since the late 1970s China has evolved from total isolation to opening and active participation in several of the
existing international institutions. This transition was also manifested when China in 2001 joined the World Trade
Organization (WTO). China also holds one of the five permanent seats in the United Nations (UN) Security
Council and is today the second-largest contributor to the UN peacekeeping budget (Yin 2019). Historically,
China has voiced its criticism of the division of power in the existing transnational organizations, claiming that it
represents another era and that it favors the U.S. and its allies. Even though the latest reforms of both the IMF
and the World Bank have allowed more Chinese influence, China has now built a network of new institutions
under China's leadership. This includes the New Development Bank (NDB), formerly BRICS Bank, and the Asian
Infrastructure Investment Bank (AIIB). Several scientists and analysts emphasize that the establishment of the
new Chinese institutions is motivated by the U.S.' unwillingness to reform the existing international organizations
to reflect the contemporary reality of today's world economy.
The new Chinese-led institutions are the cornerstones of the so-called Beijing Consensus (BC) which is starting
to be endorsed globally. The global endorsement of the BC is driven by the alternative and unique development
model that China offers in comparison to what the IMF and the World Bank historically have offered. The BC
has become exceedingly appealing for especially developing countries as China showcases how it managed to
secure steadily sustained economic growth and in record time, get millions of people out of poverty. With the
increased dissatisfaction with the Washington Consensus (WC) and the indisputable success of the BC, the former
Western-colonized continents of Africa and South America have gradually committed to the BC.
As China continues to play a more prominent role in global governance, the U.S. has gradually withdrawn from
the international system. President Xi Jinping has set out to defend the free market. At the World Economic Forum
(WEF) in Davos, Switzerland in 2017, Xi Jinping gave a speech that was embraced as a vigorous defense on free
trade and international cooperation. In the speech Xi Jinping stated: "we must promote trade and investment,
liberalization and facilitation through opening up – and say no to protectionism", clearly attacking Trump, who
himself was absent from the WEF. (Bruce-Lockhart 2017).
Finally, modifications to the order on the margins in response to Chinese preferences will typically pose less of a
threat to a stable international system than a future in which China is alienated from that system.
3.3.5. Chinese Strategic Planning
In contrary to Western world, China has developed and followed long term strategies in all main aspects of
economy, education, culture, health-care and international relations.
Such strategies for 20, 50 or more years allow a generation to grow with the idea and plan to be followed. Human
capital of China and the fact that they are using national strategic planning is giving them additional advantage
toward most of the other counties from the West.
Catching up rapidly with capitalist core states would be the main mission of the Chinese Communist Party (CCP),
while maintaining the leadership role of the party. This would explain the big leap to integrate into the capitalist
world system – China’s entry in the WTO in 2001.
13
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
These developments display the gradual changes in China’s behavior towards the international system,
showcasing an interest to advance its powers internally and externally. In spite of this, coining China’s grand
strategy remains a vague issue in International Relations scholarship as it has hardly ever laid down a clear policy
paper to illustrate its ambitions, such as what a superpower like the United States would do. This is because a
grand strategy is often loosely defined, but it can be agreed that it essentially concerns a State’s ‘clear
understanding of their country’s most essential interests, the primary threats to those interests, and the extent and
limits of the resources available to ward off these threats and advance core interests” (Brands, 2012:4). However,
it would appear that the question of a grand strategy is no longer a grey area for China’s situation under President
Xi Jinping. China’s grand strategy consists of domestic and foreign policy strategies that are interrelated because
unlike the United States, China has always made their national strategies upon the consideration of both their own
stability and the international situation (Lian, 2013). China is showing desire to assert dominance in Asia and is
attempting to rebalance regional and national development, given that in the past few decades, there is a large
disparity between the eastern coast and the central and western parts of the country.
3.3.6. China’s strategic partnership diplomacy
China has established strategic partnerships with over 47 countries and three international organizations, mostly
since the early 2000s.Strategic partnerships of China are across all the continents - Asia (21), Europe (15),
America (8),Africa(5), Oceania (1). This process influences China’s adaptation to the World and its efforts to
shape a favorable world order. China’s diplomacy has been largely successful in employing strategic
partnerships in order to guarantee a favorable environment for its growth. As China rises, and as a part of the
international community becomes increasingly suspicious of this ascent, Beijing’s strategic partnership
diplomacy will face unprecedented challenges and is likely to become more and more proactive and creative.
China has developed various titles and mechanisms for different strategic partnerships that reflect the distinct
characteristics of each partnership and which can change over time. Though the calculations behind each
strategic partnership vary, as a whole they are designed to protect China’s core interests and to construct a better
environment for China’s rise China has also employed strategic partnerships to meet diplomatic contingencies
and to regulate bilateral relations. Despite some shortcomings, strategic partnerships have helped China
constructively engage with the world and rise peacefully.
4. Visions of the future
“We cannot solve our problems with the same thinking we used when we created them.” - Albert Einstein
4.1.
The need of new science and knowledge
Obviously different problems that society is facing now require special knowledge and the transformation need
to be done not on the basis of political, economic or other interest of single nation or society, but based on the
science and knowledge achievements, as well as real values and needs of humanity. The economic crisis and the
COVID-19 pandemic crisis show that there are a lot of challenges and the long path to be walked by all the
countries and nations.
Wallerstein stated that sociologists and scientists should proceed toward a truer understanding of the real world,
to a better governance of the real society, therefore toward a greater fulfillment of human potential. He has
mentioned that the promise is that world-system will one day achieve a social order in which everyone will
enjoy adequate and roughly equal, material comforts, and in which no one will have privileges that others do
not have.
14
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
“We must turn ourselves around, if we are to have any hope of helping everyone else (or indeed anyone else) to
turn the world around. We must most of all lower our arrogance decibels. We must do all these things because
social science really does have something to offer the world. What it has to offer is the possibility of applying
human intelligence to human problems, and thereby to achieving human potential, which may be less than
perfection but is certainly more than humans have achieved before.” – Immanuel Wallerstein
Development Research Center of the State Council advised that China could consider setting up a new National
Center of Knowledge and Entrepreneurship Promotion. This could be either a new agency or an existing agency
tasked with the new role and responsibilities. The center’s main objective would be to analyze and develop
entrepreneurship promotion policies and disseminate relevant knowledge and experience. It would focus on
the “how to” of policy design and delivery, including providing best-practice advice and knowledge, identifying
good examples, learning from failed approaches, disseminating best practices, and developing knowledge
networks and monitoring and evaluation frameworks. The proposed center would not be a government
department or office that holds the power to issue or implement policies. Instead, it would help local policy
makers design and deliver best-practice policies, drawing on national and international research and
findings.
The center would develop national learning networks that diffuse local and international knowledge. It would
link coaching, training and mentoring with best-practice “linkage organizations,” such as incubators. It would
support cities to develop customized policy packages tailored to local contexts. It would facilitate competition
between subnational governments to improve the business environment. The center could also support secondtier cities in developing a “buddy system” with more advanced cities in the country and with market leaders
globally, facilitating learning networks in China and internationally. For second-tier cities, the center would
facilitate the transfer of best practices to initiate integration with more advanced regions. For example,
Shenyang is looking to Germany’s Industry 4.0 for best practices. Sharing best practices and potentially
bringing in international service providers to partner with local service providers and boost standards would
support further market development.
4.2.
Future Challenges
Under the Vision 2050 project of the World Business Council for Sustainable Development (WBCSD),
29 WBCSD member companies developed a vision of a world by 2050 well on the way to sustainability.
Figure 8. GDP forecast for 2050
15
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
4.2.1. Population Growth
Population, urbanization and consumption Between now and 2050 the global population is expected to increase
from 6.9 billion to more than 9 billion, with 98% of this growth happening in the developing and emerging
world, according to UN estimates. The global urban population will double. Meanwhile, populations are aging
and stabilizing in many developed countries. Local demographic patterns will become increasingly diverse.
There have been improvements in recent decades in terms of economic growth in many parts of the world, as
well as in areas such as infant and maternal mortality, food supply, and access to clean water and education.
However, extreme poverty continues to persist. Most of the economic growth will happen in developing or
emerging economies. Many people will be moving up the economic ladder toward a middle class standard of
living, consuming many more resources per capita. As this growth and development takes place, substantial
changes will be required in all countries in order for 9 billion people to live well, within the limits of one planet
by 2050.
Figure 9. Forecast for 2050 – Population Growth
4.2.2. Inertia and inadequate governance
The governance and policy responses to manage this growth often happen in silos and are limited by short-term,
localized political pressures, and thus fall short of the level of commitment needed to make significant progress.
In addition, the choices countries, companies, communities and individuals make are often characterized by
inertia due to short-term goals and self-interest. Continuing to invest in polluting or energy-inefficient types of
infrastructure and opting for high-footprint consumer lifestyle preferences are examples of such choices that
perpetuate the status quo.
4.2.3. Degradation: Climate change and deteriorating ecosystems
The Millennium Ecosystem Assessment found that 15 of the 24 ecosystem services they evaluated have been
degraded over the past half century. A rapid and continuing rise in the use of fossil fuel-based energy and an
accelerating use of natural resources are continuing to affect key ecosystem services, threatening supplies of food,
freshwater, wood fiber and fish. More frequent and severe weather disasters, droughts and famines are also
impacting communities around the world.
16
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
Figure 10. Forecast for 2050 – Environmental degradation affecting quality of life
4.3.
Future Visions
4.3.1. Diversity and interdependence
Countries and cultures remain diverse and heterogeneous, but education through secondary school and universal
connectivity have made people more aware of the realities of their planet and everyone on it. The “One World –
People and Planet” ideal is embedded and practiced globally, emphasizing interdependence among all people and
dependence on the Earth. There are still conflicts, disasters, shocks, crime and terrorism, but societies are resilient,
able to withstand disruption and quickly recover.
People, companies and governments are forward looking, problem solving, resilient and experimental –
understanding that security is achieved through working together and adapting rapidly in a fast changing world.
4.3.2. Different economic reality
Economic growth has been decoupled from ecosystem destruction and material consumption, and re-coupled with
sustainable economic development and societal well-being. Society has redefined the notion of prosperity and
successful lifestyles, as well as the bases of profit and loss, progress and value creation to include more long-term
considerations such as environmental impacts and personal and societal well-being.
The global economic landscape also looks different from that of the turn of the century. The term “developing
country” is rarely used, as most economies are either developed or emerging. Asian and American countries and
companies play a more significant role in and influence the norms of international trade, finance, innovation and
governance alongside a few of the nations that have established their success in the previous 100 years. Multiple
perspectives are integrated. Capital, ideas, best practices and solutions disseminate in all directions.
4.3.3. Multi-partner governance
Nations and the roles of governments continue to evolve. Governance systems skillfully make decisions at the
most appropriate local level. Nations “pool sovereignty” where necessary to manage international systems and
challenges such as disease, climate, water, fisheries, conflicts and commons. They encourage local governance
and connect neighborhoods to a mosaic of partners, be they grassroots groups or international organizations, to
help local groups manage issues like adaptation to climate change and access to water and sanitation. Much
governance happens at community, city and regional levels. It is a complex, yet efficiently connected world.
17
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
4.3.4. Markets: Innovations and new solutions
Governance also enables and guides markets by clarifying limits and establishing frameworks that promote
transparency, inclusiveness, internalized externalities, and other characteristics of sustainability. These systems
define targets, create a level playing field and eliminate barriers, enabling business to innovate and to develop
and deploy solutions. For business, this level playing field means that true values, including externalities such as
environmental impact and the benefit of ecosystem services, are built into the marketplace for all competitors.
Reward systems recognize sustainable behavior and as a result business can deliver solutions that are both
sustainable and competitive. Consumers can choose sustainable products not just because they are sustainable but
because they deliver better value.
4.3.5. Dealing with Climate change
Society prepares for, and adapts to, climate change; this adaptation is achieved largely through joint efforts
between different countries and communities. Integrated and systemic approaches are used to manage agriculture,
forestry, water and urban transport, energy and communications.
Efforts to mitigate further changes in climate continue. Harmful emissions have been significantly reduced and a
low-carbon society has been enabled through the efficient use of clean energy and resources.
Circular, closed-looped and networked designs that help people to live well and within one planet drive successful
industry and reduce the need for primary resource extraction. Closed-loop systems make the concept of waste
obsolete. They use waste as an input and resource, eliminating waste accumulation on land, in air or in water.
Used products and materials can be reengineered to function again for multiple and distinct purposes or reduced
to raw materials for manufacturing other products.
4.3.6. An evolved workplace and evolved employers
The leading companies are those that, through their core businesses, help society manage the world’s major
challenges. They have worked through the radical transformation of both internal corporate values and external
market restructuring that has occurred in the four decades leading up to 2050, a transformation that many other
companies have not survived but in which multitudes of new ones have been spawned.
As survivors, these companies are more flexible, more adept at engaging with diverse partners and customers,
and more skilled at responding to rapid changes on all fronts. As operations, they have demonstrated a focused
and proactive culture of eliminating energy and materials waste. They have discovered that this circular, closedloop culture not only reduces pollution: it also makes them more collaborative and competitive. As employers,
these businesses have helped train and develop a more creative society that is better able to manage the conflicting
challenges of creating and maintaining sufficient jobs while improving labor productivity. Training has also
resulted in a sufficient pool of talent available to implement the changes needed. People, as employees, have
learned to be more flexible too, and to move easily to where jobs exist.
18
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
5. Conclusion
In this study we have answered the research question: What are the main aspects and reasons for the rise of
China and East Asia?
The rise of China is analyzed through the lens of World Systems Theory and World Systems Analysis. The
rise of China as a new hegemonic power is not abnormal but rather illustrates how the global capitalist system
evolves and manages to accommodate and absorb new driving forces into the system. The rise of China will
enforce structural changes in the global world system and have a positive spill-over effect for some countries. In
this regard, China's friendly and deep relationship with countries in the periphery (Latin America and Africa) or
countries within reach of China's geopolitical strategies, could benefit from the rise of China within the global
system.
Main strategic components and aspects for the rise of China - economic rise, technology and innovations rise,
military rise, and the rise of Chinese influence over the international world order are observed and analyzed.
The rise of China is result from long term systematic and strategic planning and it is not random event. The
huge human resource and centralized economy allow to China to keep high division of labor, low labor costs, to
attract investments and to achieve impressive economy growth. State owned banks, low value local currency and
state owned companies and big share of the government into the Chinese business support continuous
development of China. The fact that China has been ancient empire with rich economy and culture is the historical
explanation of the growth of China.
The rise of East Asia and especially China is undoubtedly good for the world, not only for East Asia. But for how
long this rise will continue is a question for the future.
Obviously different problems that society is facing now and in the near future require special knowledge and the
transformation need to be done not on the basis of political, economic or other interest of single nation or society,
but based on the science and knowledge achievements, as well as real values and needs of the whole humanity.
The new digital world requires new economy based on knowledge and values with the center people and the
whole planet. The transformed economy will serve individual beings, communes and is going to be as
environmental friendly as possible. Multi-partner relations between the countries will be based on sharing,
learning and growing together and reduction of unemployment and poverty. New technological solutions and
innovations will be used for improved quality of life and reduction of environment pollution.
An evolved workplaces and evolved employers will target not only efficiency, productivity and growth, but also
individuals and common values and wellbeing. China will be for sure leading economic and political power and
will play major role in the world transformation.
“Are there still other possibilities? Of course there are. What is important to recognize is that all three historical
options are really there, and the choice will depend on our collective world behavior over the next fifty years.
Whichever option is chosen, it will not be the end of history, but in a real sense its beginning. The human social
world is still very young in cosmological time. In 2050 or 2100, when we look back at capitalist civilization, what
will we think?” – Immanuel Wallerstein
Everything that was done in our growth and evolution in all aspects of economy, technology, culture and life,
could be classified as right or wrong, but brought us to where we are now. Wise man said that everything that is
real at this moment was once only a dream and imagination. So let us imagine better world, based on knowledge,
values with focus to human beings and the nature and most important let us work hard and aim for it to come true.
I would like to finish with the moto of Huawei 5G Summit in Switzerland in 2019: “The best way to predict the
future is to create it.” Let it be.
19
THE RISE OF CHINA IN LIGHT OF WORLD SYSTEM THEORY
Cultural Characteristics and Business Regulations in East Asia
References
1. Wallerstein, Immanuel. 1999. The End of the World as We Know It., Minnesota: The University of
Minnesota Press.
2. Wallerstein, Immanuel. 2004. World-Systems Analysis: An Introduction World System Theory. Durham:
Duke University Press
3. Wallerstein, Immanuel. 1974a. The Rise and Future Demise of the World capitalist system: Concepts for
Comparative Analysis. Comparative Studies in Society and history, Volume 16, Issue 4
4. Wallerstein, Immanuel. 1974b. The Modern World System: Capitalist Agriculture and the Origins of
European World Economy in the Sixteenth Century. New York: Academic Press.
5. China’s Growth and Integration into the World Economy Prospects and Challenges, Edited by Eswar
Prasad, INTERNATIONAL MONETARY FUND Washington DC 2004
6. Brazilian Journal of Strategy & International Relations, v.2, n.4, Jul-Dec. 2013: INSIDE THE BRIC:
ANALYSIS OF THE SEMIPERIPHERAL CHARACTER OF BRAZIL, RUSSIA, INDIA AND CHINA
D.Ruvalcaba
7. Bao, Daozu. "US Denies China 'Containment'" China Daily, November 11, 2010
8. China’s Integration with the World Development as a Process of Learning and Industrial Upgrading, Justin
Yifu Lin, Yan Wang, The World Bank Development Economics & World Bank Institute Finance, 2008
9. Vision 2050 project, the World Business Council for Sustainable Development (WBCSD), www.wbcsd.org
10. China and the world: Inside the dynamics of a changing relationship, McKinsey Global Institute, 2019
11. China and the International Order, Published by the RAND Corporation, Santa Monica, 2018
12. China Q of International Strategic Studies, 2018.04:159-175, www.worldscientific.com
13. FOUR MAIN THEORIES OF DEVELOPMENT, Giovanni E. Reyes, University of Pittsburgh, USA, 2001M
14. "The innovation development of the countries in South Asia – Japan, the Republic of Korea and China",
Prof. Dr. Nako Stefanov, East-West publishing, Sofia, 2011
15. Innovative China – New Drivers of Growth, 2019 International Bank for Reconstruction and Development /
The World Bank and the Development Research Center of the State Council, P. R. China
16. EUROPEAN STRATEGIC PARTNERSHIPS OBSERVATORY WORKING PAPER 8: China’s strategic
partnership diplomacy: engaging with a changing world, Feng Zhongping, Huang Jing, June 2014
17. Review - Kissinger On China, ZACHARY KECK, JUL 2011, https://www.e-ir.info/2011/07/07/reviewkissinger-on-china/
20