China: A Satiated Power?
A Rising Hegemon in International
Perspective
Prepared by Sean Clark
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CHINA: A SATIATED POWER?
A RISING HEGEMON IN INTERNATIONAL PERSPECTIVE
Sean Clark, Centre for Foreign Policy Studies
Dalhousie University, Nova Scotia
Prepared for the International Security Research and Outreach Programme
International Security and Intelligence Bureau
1
PREFACE
The International Security Research and Outreach Programme (ISROP) is located
within the Defence and Security Relations Division of The International Security and
Intelligence Bureau. ISROP’s mandate is to provide the Department of Foreign
Affairs and International Trade Canada (DFAIT) with timely, high quality policy
relevant research that will inform and support the development of Canada’s
international security policy in the areas of North American, regional and
multilateral security and defence cooperation, non-proliferation, arms control and
disarmament. The current ISROP research themes can be found at:
http://www.international.gc.ca/arms-armes/isrop-prisi/index
ISROP regularly commissions research to support the development of Canadian
foreign policy by drawing on think-tank and academic networks in Canada and
abroad. The following report, China: A Satiated Power? A Rising Hegemon in
International Perspective, is an example of such contract research.
Disclaimer: The views and positions expressed in this report are solely those of the
author and do not necessarily reflect the views of the Department of Foreign Affairs
and International Trade or the Government of Canada. The report is in its original
language.
2
PRÉAMBULE
Le Programme de recherche et d’information dans le domaine de la sécurité
internationale (PRISI) fait partie de la Direction des relations de sécurité et de
défense, qui relève elle-même de la Direction générale de la sécurité internationale.
Ce programme a pour mandat de fournir au Ministère des Affaires étrangères et du
Commerce international (MAÉCI), en temps utile, des études stratégiques
pertinentes et de haute qualité qui permettent d’orienter et de soutenir l’élaboration
de la politique canadienne en matière de sécurité internationale concernant la
coopération nord-américaine, régionale et multilatérale en matière de sécurité et de
défense, ainsi que la non-prolifération, le contrôle des armements et le
désarmement. Les thèmes de recherches actuels du PRISI figurent à l’adresse
suivante :
http://www.international.gc.ca/arms-armes/isrop-prisi/index
Le PRISI commande régulièrement des études à des groupes de réflexion et à des
réseaux d’universitaires au Canada et à l’étranger afin d’appuyer l’élaboration de la
politique étrangère canadienne. Le rapport sommaire suivant, intitulé, La Chine :
Une puissance rassasiée? Le nouvel hégémonisme chinois dans une
perspective internationale, est un exemple de ce type d’étude.
Déni de responsabilité : Les vues et opinions exprimées dans le présent rapport
sont exclusivement celles de l’auteur, et ne reflètent pas nécessairement la position
du Ministère des Affaires étrangères et du Commerce international, ou celle du
gouvernement du Canada. Le rapport est présenté dans la langue de rédaction.
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Executive Summary
For all the fear and concern accompanying discussions of China’s spectacular
reemergence, the central conclusion of this paper is that current behaviours and
contemporary trends point to a future where China maintains its current satisfaction with
the international system. In terms of security, China’s neighbours are too weak
individually to pose much of a threat, yet at the same time powerful enough in tandem to
make military expansionism impractical. This is not to suggest that China lacks those who
yearn for the return of lost territory, such as ‘rebel’ Taiwan or the ‘nine-dash line’ in the
South China Sea, but that there is very little reason to think these revanchists have the
strength to carry the day. This is in large part due to the central pillar of the CCP’s rule: the
achievement of steady economic growth. For all its flaws, the CCP has overseen the most
impressive economic catch-up of all time. The conclusion amongst the Chinese public is
that continued communist rule is thus a laurel worth bestowing.
The remaining key aspect of great power satiation is wealth. Here again there is
nothing to suggest that China will find the international system discomfiting. Chinese
exporters have gone from strength to strength, with little opposition from overseas
markets shown. Rather than slapping on anti-dumping duties and erecting tariff walls,
foreigners have lined up to buy cheap Chinese goods. Moreover, what little tension does
exist can be expected to diminish as China’s economy continues its trend of shifting away
from exports and more towards domestic consumption. The consequent forecast is for
smaller current account surpluses and thus even less international wrangling over Chinese
market gains.
In short, the future of economic growth in China will lie primarily on the strength
and vigour of the domestic reforms that must now be undertaken. Even here there is good
reason for optimism, given that a clutch of economic reformers has been installed at the
very heights of the Chinese economy. If the success of these able technocrats in the late
1990s is any indication, markets will be further freed and the concomitant productivity
gains made plentiful. Such a result would set the stage for a China quite unlike the
Germany of 1914, a power deeply unsatisfied with the contemporary international system
and surrounded by mutual hostility. Instead, China would appear much more similar to the
United States of 1890, steadily—and contentedly—gaining in power and influence but to
the anger and detriment of few.
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Sommaire
Malgré toutes les craintes et les préoccupations exprimées dans les discussions sur
la renaissance spectaculaire de la Chine, la principale conclusion de ce document est que
tous les comportements actuels et toutes les tendances futures laissent présager un avenir
où la Chine continuera de s’estimer satisfaite du système international. S’agissant de la
sécurité, les voisins de la Chine, pris individuellement, sont trop faibles pour constituer une
quelconque menace. Dans le même temps, ensemble, ils sont suffisamment puissants pour
amener Beijing à renoncer à tout projet d’expansion militaire. Cela ne veut pas dire pour
autant que la Chine ne souhaite pas récupérer le territoire perdu, comme Taïwan la
« rebelle » ou la zone dite de la « ligne en neuf traits », dans la mer de Chine méridionale. Il
semble cependant très peu probable que les revanchards exercent suffisamment de
pouvoirs pour mener à bien leurs projets. Dans une large mesure, cela s’explique par l’un
des objectifs centraux du programme du Parti communiste chinois (PCC) : l’instauration
d’une croissance économique durable. Et c’est sous la direction du PCC, malgré tous ses
défauts, que s’est effectué l’un des rattrapages économiques les plus impressionnants de
tous les temps. En conséquence, pour le public chinois, le maintien du communisme en vaut
le prix.
Le dernier besoin qu’une grande puissance cherche à satisfaire, c’est la richesse. Or,
sur ce point encore, rien ne laisse penser que la Chine trouvera à redire du système
international. Les activités des exportateurs chinois ne cessent de se développer, alors que
le reste du monde se contente de regarder passer les trains. Au lieu d’imposer des droits
antidumping et d’ériger des obstacles tarifaires, les étrangers font la file pour acheter des
marchandises chinoises bon marché. Qui plus est, les tensions restantes, si petites soientelles, devraient s’estomper à mesure que l’économie chinoise continuera de se rééquilibrer
au profit de la consommation intérieure, et au détriment des exportations. Aussi faut-il
prévoir des excédents moins importants du solde du compte courant et, par voie de
conséquence, moins de discorde encore sur la scène internationale.
Autrement dit, l’avenir de la croissance économique en Chine sera tributaire, d’abord
et avant tout, de la force et de la vigueur des réformes à engager dès maintenant au niveau
national. Même dans ce domaine, l’heure est à l’optimisme, étant donné que l’on a confié à
une poignée de réformateurs économiques les rênes mêmes de l’économie chinoise. Si l’on
se fie au succès de ces technocrates efficaces, à la fin des années 1990, une libéralisation
accrue des marchés est à prévoir et, dans la foulée, des gains de productivité considérables.
Si tel est le cas, la Chine ressemblera non pas à l’Allemagne de 1914, mais plutôt aux ÉtatsUnis de 1990, de sorte que son pouvoir et son influence augmenteront constamment, sans
susciter la colère, ni au détriment d’autrui.
5
Introduction 1
The most dominant political economy trend of the past two decades has been the
reconvergence of wealth between East and West. After two centuries spent languishing in
deep poverty, China has roared back to the front rank of world economies. Beginning with
the cautious reforms of Deng Xiaoping in 1978, markets have been freed, property rights
promulgated, and profit once again made legal. With the vibrancy of capitalism unleashed,
Chinese productivity has soared and entrepreneurialism flourished. Combined with a
large, disciplined, and low-cost workforce, China has become extremely attractive to
overseas investors. Even more, the country’s high rate of domestic saving and persistent
current account surpluses has led to unprecedented capital accumulation. At over $2
trillion, 2 China has already built up the world’s largest stock of financial reserves.3
Meanwhile, the country continues to build schools, factories, and airports at breakneck
speed. Hundreds of millions of Chinese have been lifted out of poverty during this
transformation from agrarian backwater to ‘workshop of the world.’ From Shanghai to
Shenzen, endless rows of gleaming new skyscrapers have gone up seemingly overnight,
transforming the skylines of cities once trapped in drab Maoism into the cutting edge of
architecture and design. In short, China now boasts the most impressive economic catchup of all time.
The reverberations of China’s tremendous economic expansion have been felt in
many fields, but perhaps nowhere are the implications more profound than the matter of
international power. Realists have long contended that economic strength underlays
military capability. 4 This notion finds agreement within Chinese strategic culture, where
the expression “prosperous army and strong country” is commonly espoused. 5 The recent
purchase of new fighters, ships, and missiles, to say nothing of the dramatic improvement
in the People Liberation Army’s (PLA) basic kit and training, has certainly been made
possible by the country’s buoyant economy. Further growth will enable military spending
to become even more lavish. The International Institute for Strategic Studies (IISS)
suggests that given potential American budget cuts China could conceivably be
outspending the United States on defence by 2022. 6 Some fear this buildup signals a much
more aggressive Chinese international posture. Arthur Waldron suggests that “sooner or
later, if present trends continue without change, war is probable in Asia….China today is
actively seeking to scare the United States away from East Asia.” 7
It is possible that such estimations are overly dramatic. True, the country will, as
rising powers are wont to do, develop new and more sophisticated military capabilities.
But these need not upset China’s ‘Big Switzerland’ policy of conducting their affairs while
This section draws from Sean Clark, “In the Dreadnought’s Shadow,” Canadian Naval Review, (Fall 2011).
Note that all figures are in nominal USD, unless otherwise stated.
3 Anthony Faiola, “China Worried About U.S. Debt,” Washington Post, March 14, 2009.
4 Jacob Viner, “Power Versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth
Centuries,” World Politics (1948).
5 Peter Hays Gries, China's New Nationalism: Pride, Politics, and Diplomacy, (Berkeley: University of California
Press, 2003, p105.
6 International Institute for Strategic Studies, The Military Balance: 2013, (London: IISS, 2013).
7 Arthur Waldron, “How Not to Deal With China,” Commentary, (March 1997).
1
2
6
“hiding their light under a bushel.” 8 Chinese scholar and Communist Party (CCP) theorist
Zheng Bijian asserts that China will “not follow the path of Germany leading up to World
War I or those of Germany and Japan leading up to World War II.” Instead, it shall
“transcend the traditional ways for great powers to emerge” and “strive for peace,
development, and cooperation with all countries of the world.” 9 Such a pacific strategy is
eminently plausible, given that “China is stronger today and its borders are more secure
than at any other time in the last 150 years.” 10 There is also good reason for China and the
other great powers to remain on friendly terms. China and the United States, for example,
enjoy close trading ties, a common enthusiasm for basketball and free enterprise, and even
fought alongside one another in the Second World War. Nowhere is it preordained that a
young colossus must come to blows with the powers who preceded it.
Yet what if this assumption of enduring tranquility does not hold true? We need not
travel far to uncover such sentiment. It is certainly discomfiting to the Party leadership
that so much of the economy depends on raw materials obtained from abroad. 11 Never
before has China had to worry about foreign supplies keeping the lights on and the
factories humming. 12 So too does Beijing remember that in the early 1800s China’s role as
regional hegemon was upset in dramatic fashion. During this period China found itself
brutally “thrown out to the margins” of a suddenly Eurocentric world. 13 A “century of
humiliation” ensued, a wrenching memory that still lingers, ever feeding the conviction that
the nation’s ‘middle kingdom’ status must one day be restored. 14 In the mid-1990s Chinese
nationalists marched under the banner of “China Can Say No” 15 and today nationalist
websites seethe with rage at every perceived international slight. Even the former Chinese
Premier, Wen Jiabo, has openly accused the United States as “trying to preserve its status as
the world’s sole superpower, and [denying] any country the chance to pose a challenge to
it.” 16 In fact, most of the Chinese leadership assumes that strategic rivalry with America
will only “increase with the ascension of Chinese power.” 17 Perhaps this is why a country
facing minimal chance of invasion is now the world’s second largest military spender.
“The Trillion-Dollar Club,” The Economist, April 17, 2010.
Zheng Bijian, “China’s ‘Peaceful Rise’ to Great-Power Status,” Foreign Affairs (vol. 84, 2005), p22.
10 Andrew J Nathan and Robert S Ross, The Great Wall and the Empty Fortress: China's Search for Security,
(New York: W.W. Norton, 1998), p226.
11 Y Deng and F Wang, China Rising: Power and Motivation in Chinese Foreign Policy, (Lanham: Rowman and
Littlefield, 2005).
12 Jad Mouawad, “China's Growth Shifts the Geopolitics of Oil,” New York Times, March 19, 2010.
13 Chen Zemin, “Nationalism, Internationalism and Chinese Foreign Policy,” Journal of Contemporary China 14,
no. 42 (February 2005), p36-7; Robert Kagan, The Return of History and the End of Dreams, (Toronto: Vintage,
2009), p27.
14 Michael Swaine and Ashley Tellis, Interpreting China's Grand Strategy: Past, Present, and Future, (Santa
Monica: RAND, 2000), p15.
15 Robert Kagan, The Return of History and the End of Dreams, (Toronto: Vintage, 2009), p30.
16 Andrew J Nathan and Bruce Gilley, China's New Rulers: the Secret Files, (New York: Review Books, 2003),
p208.
17 Rosalie Chen, “China Perceives America: Perspectives of International Relations Experts,” Journal of
Contemporary China 12, no. 35 (May 2003), p290.
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7
Theory & Research Design
This leaves us with a crucial a question: how likely is a growing China to conclude the
current international order is sufficiently accommodating to its national interests? The
model posited here is simple, assuming that great powers are primarily concerned with
security, national grievances, domestic politics, and wealth. If ‘satiation’ can be achieved on
these fronts, a growing power will be sure to keep any revolutionary intentions it harbours
in check. If not, the expectation is for ever-greater levels of animus, belligerence, and the
growing prospect of war.
A fair question is to ask why these variables and not others? Their selection is the
product of the author’s previous research, 18 as well as their service as a rough
encapsulation of the major bodies of international relations thought. Realists, for example,
hold security as a statesman’s ultimate concern. Authors from Machiavelli to Morgenthau
emphasize that in the absence of security, no other political good is obtainable. 19
Successful invaders impose their own legal and moral codes, domestic preferences
notwithstanding. The precondition for international tranquility is therefore a relative
balance of power among rivals. Only with force sufficient to keep all neighbours at bay
does international cooperation become possible.
Liberals are more divided but no less adamant in their claims. Wealth, one school
argues, is the ultimate salve to perceived national slight. Become rich and all sins will be
forgiven. The capacity to generate wealth is therefore the central determinant of
international stability; a growing economy is expected to remain fat and happy. 20 Liberals
of the domestic politics persuasion argue instead that the stability of any regime rests on
its ability to deliver political goods to its main supporting constituencies. Failure to do so
risks political upheaval, with the aggrieved party rising up and casting the ruling class to
the street. International politics is thus a two-level game: 21 dealings at the international
level must not only make the state stronger and wealthier, but also improve the domestic
palatability and hence survival of those in charge.
This paper makes a similar effort to incorporate constructivist and cultural theories.
This is done by evaluating the extent of popular sentiment vis-a-vis the international
system. In some cases, such as France leading up to the Great War, 22 no manner of wealth
or security can quench a burning desire to have some perceived historical slight put right.
This is termed revanchism, from the French word for revenge. Having lost its provinces of
Alsace and Lorraine to Germany in 1871, many in France demanded the territory returned
no matter the cost. In 1873 the French poet Victor Laprade wrote:
See the complete collection at www.seanmclark.ca.
Niccolò Machiavelli, The Prince, trans. Harvey Mansfield, (Chicago: University of Chicago Press, 1998); Hans
Morgenthau, Politics Among Nations, (New York: Knopf, 1973).
20 Joseph A Schumpeter, Capitalism, Socialism and Democracy, (London: Harper, 1961); Norman Angell, The
Foundations of International Polity, (William Heinemann, 1914).
21 Robert D. Putnam, “Diplomacy and Domestic Politics: the Logic of Two-Level Games,” International
Organization, (vol. 42, 1988).
22 John F V Keiger, France and the Origins of the First World War, (New York: St. Martin's Press, 1983).
18
19
8
“Land of pity, sweet land of France; The honour I render, the love I owe; Inspire
nothing more in me than hatred and vengeance: A dream of bloodshed fills my mind
in your glades.” 23
When such views become pervasive the existing international order will be deemed
intolerable by politicians and public alike. Given the demonstrated power of this effect, it
too has been incorporated into the study.
Together these variables provide a useful means of evaluating just how satisfied
China is with the international status quo, and how likely this condition is to continue into
the foreseeable future. Of course, Beijing and its citizens may care about additional
matters, and there is no certainty that unhappiness with any of them will ensure war’s
instigation. But few would argue that a China threatened by regional insecurity, economic
uncertainty, or domestic upheaval would consider the current international arrangement
tenable over the long term. Similarly, no one would suggest that a China riven with
unbridled antipathy towards its neighbours could be trusted to keep its finger off the
trigger. On the other hand, a China that finds relative satisfaction in what the
contemporary order offers each of these needs can be expected to be a relatively
harmonious member of global society.
23
Cited from M J Cohen and John S Major, History in Quotations, (London: Orion, 2008), p703.
9
International Security
We are firm in our resolve to uphold China’s sovereignty, security and development
interests and will never yield to any outside pressure.”
Hu Jintao, Report to CPC Congress, November 2012
China lives in a dangerous neighbourhood. It is surrounded on all sides by countries
with whom it has a violent past. Many of these slights have not yet been forgotten;
memories in Asia run deep. It is therefore unsurprising that this well of grievance and
animosity recently passed Europe to become the world’s second-largest military market. 24
Revived economic powers, the thinking seems to be, require armouries befitting their
newfound wealth and status—all the better to settle old scores. Policymakers in Beijing
thus have good reason for casting a nervous eye to what has over the last two decades
become a highly militarized region.
There is certainly no shortage of candidates worthy of China paying close heed.
Taiwan and Japan, for example, boast advanced American-designed fighter planes and the
latest shipborne radar. South Korea, too, is home to a sophisticated army and is a growing
naval power, with four 14,000-ton flattop assault ships soon to be completed. In the west,
India’s military is undergoing a vast modernization program, including the deployment of
new main battle tanks and nuclear-powered ballistic missile submarines. In the north,
Russia deploys along its border plentiful military hardware of a sophistication China
cannot yet match. Most potent of all lies to the east, just offshore. Here the US Navy and its
peerless collections of ships and aircraft patrol as they have done since the closing months
of the Second World War, ever watchful.
24
Andrew T H Tan, The Arms Race in Asia: Trends, Concepts and Implications, (Routledge, 2013).
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Growing Power, Enduring Gap
Against this China can nevertheless look to its own burgeoning military strength. 25
Numerically, the country has always been at the front rank of armed forces. Even today the
People’s Liberation Army (PLA) boasts 1.6 million soldiers under arms, an air force of
420,000 personnel, and a navy of 270,000 sailors. More important, however, is the rapidly
improving quality of these forces. Much of this is due to China’s generous defence budget,
which although staying relatively steady in terms of GDP share, has grown rapidly in
absolute value thanks to the country’s torrid economic growth. Much of this spending is
cloaked in secrecy and buried within other departments; the Stockholm International
Peace Research Institute (SIPRI) and the IISS conclude the official defence budget
underestimates actual spending by some 30-50%. Yet despite this imprecision the overall
trend is consistent: China spends vastly more on its military than just a few years ago A
good guess today is a defence budget of about $140 billion US per year, or 2% of GDP and
roughly triple the amount spent in the mid-1990s. 26
Growing budgets have enabled the purchase of a vastly improved arsenal. From
Russia have come S-300 missiles, Su-27K fighters, and Kilo and Typhoon submarines.
Israel, another critical supplier, has provided laser-guided bombs and AWACs airplanes.
From Ukraine came a rusting Soviet-era carrier, recently refurbished and put to sea for
trials. But as much as China has paid in recent years to international arms dealers, efforts
regarding domestic production have been even more pronounced. 27 Her foreign-built
carrier, the Liaoning, is said to be followed by at least two domestically-produced vessels. 28
Already billions have been spent on the development of a naval air arm to accompany this
nascent fleet. 29 Three Type 052C guided missile destroyers have been put to sea, with
three more soon to follow. Another seven China-built, nuclear-powered attack and ballistic
missile subs are currently in the works. A further area of indigenous military development
is the stealth fighter program, with two separate models under development. 30 The star is
the Shenyang J-31, which bears uncanny resemblance to the rear section of the F-22 and
the forward of the F-35. 31 So too has the army deployed the world’s first ‘anti-ship ballistic
missile,’ a truck-mounted weapon that can strike rival fleets stationed in China’s littoral
waters hundreds of kilometres away. The PLA has even launched an aggressive push into
unmanned aerial vehicles, building variants that appear to be clones of the US Reaper and
Predator models.
25 David Shambaugh, Modernizing China's Military: Progress, Problems, and Prospects, (University of California
Press, 2004); Richard Fisher, China's Military Modernization: Building for Regional and Global Reach, (Stanford
Security Studies, 2010).
26 SIPRI Military Expenditure Database, available at www.milexdata.sipri.org.
27 Tai Ming Cheung, Fortifying China: the Struggle to Build a Modern Defense Economy, (Ithaca: Cornell
University Press, 2008).
28 Richard Fisher, “China Has Plans for Five Carriers,” Aviation Week, (January 5, 2011).
29 The J-15 naval aircraft is roughly equivalent to the F-18, though with a shorter range and less sophisticated
sensors. The Ka-28 helicopter serves as submarine hunter. A Z-8 helicopter has been fitted with radar to
provide maritime airborne surveillance, albeit with a more limited range than an airplane like the USN’s E-2.
30 Richard Norton-Taylor, “Experts Surprised by Quick Development of Chinese Stealth Fighter,” The
Guardian, (January 11, 2011).
31 Although perhaps mere coincidence, it is worth nothing that the F-35 program was hacked by unknown
assailants and data stolen. John Reed, “China’s Newest Stealth Fighter Flies,” Foreign Policy, (October 31,
2012). The J-20 is the other stealth jet.
12
The overarching lesson is that the quality of China’s military hardware is rapidly
improving. The ill-equipped PLA that rushed into Korea in 1950 and stumbled into
Vietnam in 1979 is no longer. Whereas China’s military industry could once only produce
cheap knockoffs of simple Russian equipment, the country today boasts gear with
sophistication and real military value. Problems remain at the very edge of the technology
frontier, such as with aircraft engines and naval propulsion systems, but the overall quality
has improved remarkably. "On some technology, they are now competitive…with
European arms exports and very competitive on price."32 Chinese equipment is known on
the international market for its no-frills reliability and cost effectiveness. Because of this,
China has become the world’s fourth largest exporter of military equipment.
The caveat to this is that despite the rapid improvement in the quality of China’s
military equipment, it still does not equal the very best of China’s rich rivals, whose models
remain between ten and twenty years ahead. The Liaoning, for example, lacks the catapult
necessary to launch large aircraft and travels with a tugboat in case the ship becomes
unable to return to port under its own power. The Type 052 warship carries only 50% as
many missiles as an American Arleigh Burke destroyer and its radar is likely far less
advanced. China’s two Type 093 submarines are capable of long range patrols but lack the
Very Low Frequency radios necessary to transmit orders from aircraft to submerged
submarines, as well as the higher frequency radios necessary for ship-to-submarine
communication. The result is a lack of tactical control over the underwater fleet. Another
indication that China has a ways to go is that it built two separate prototypes for the J-20
Simon Wezeman, senior researcher at the Stockholm International Peace Research Institute, cited in Tim
Hepher, “China Pushes Exports, Flags Ambitions at Arms Fair, Reuters, (November 16, 2012).
32
13
stealth fighter, one with a Russia-made AL-31F engine because the other, the Chinesedesigned WS-10A, is simply too unreliable. The domestically-produced WZ-10 attack
helicopter faces similar engine problems. The aggressive push into cutting-edge military
equipment has thus not come without setback.
The struggle to improve troop quality has been similarly arduous, particularly in the
army, which is the least technologically-intensive, worst-educated, and most conservative
branch. A steep divide separates the ‘professionalist’ and ‘red’ camps, with the latter
emphasizing ideological purity and staunchly defending Mao’s outdated emphasis on
guerrilla tactics. Training and equipment are viewed as secondary matters in a true
‘peoples’ army.’ Instead, the red vision is of an entire nation rising up in arms, bound
together by a common patriotic consciousness. Opponents are to be overwhelmed by
superior numbers, hit-and-run tactics, and a greater moral commitment to the struggle.
The professionalists, on the other hand, advocate for a smaller, professional army, one
equipped with modern weaponry and sophisticated training. Having examined the
wreckage of America’s opponents in Saddam’s Iraq and Milosevic’s Kosovo, they fear
anything less is doomed to failure.
Although the latter school can be seen as ascendant, their mark has not yet been
fully felt. The PLA did, after all, respond quickly to the 7.9 magnitude earthquake in
Sichuan in 2008, and with an impressive degree of organization and eagerness to help. But
observers frequently noted the army’s primitive equipment and a marked lack of training.
China’s RMA enthusiasts themselves admit it will not be until the end of the decade before
the latest batch of advanced military platforms and their associated information networks
are fully rolled out. Even then the job will not be complete, as both the level of integration
and the overall technology itself will likely still be behind that of the West. 33 Few
anticipate, for example, that the deployment of the J-31 in the early 2020s will fully close
China’s fighter capability gap with the United States.
33
“The Dragon's New Teeth,” The Economist, (April 7, 2012).
14
Balancing in Asia
The Chinese debacle in late-1970s Vietnam signalled to its neighbours that despite
the country’s vast bulk, China’s military prowess was surprisingly limited. Her divisions
were poorly led, improperly trained, and woefully under-equipped. The schism with
Moscow in the 1960s left the country cut off from the latest military technology. The antimaterialism and anti-intellectualism espoused by the Cultural Revolution left the command
level bereft of modern and innovative military thought. China’s troops thus struggled
mightily to bring an exhausted, much-smaller country fighting a two-front war to heel,
leaving Beijing aghast and her rivals emboldened. A chastened Deng Xiaoping ensured
thereafter his country “kept its light under a bushel” and stayed away from foreign military
adventures. Military spending in the 1980s plummeted as the Party prioritized the
economy and other spending areas.
But growing power has brought serious reconsideration, both within the CCP’s
Zhongnanhai compound and amongst China’s neighbours. According to both RAND and the
Centre for Strategic and Budgetary Assessments, China will by 2020 be well on its way to
deterring foreign vessels from operating within the “first island chain”, the perimeter
running from the Aleutians in the north to Taiwan, the Philippines, and Borneo in the
south. 34 China’s neighbours know this and have begun to balance against her in evergreater fashion, relying primarily on the series of formal alliances signed between the
United States and its key Pacific partners following World War II. 35 The US for its part has
Ibid.
Formal defence pacts were signed with Australia and New Zealand (the “ANZUS” treaty), Japan, and the
Philippines. In 1953 and 1954 further agreements were formalized with South Korea and Taiwan. The
34
35
15
announced plans to “rebalance” its naval forces, raising the number of fleet assets in the
Pacific and Indian Oceans from roughly 50% today to 60%. 36 In the summer of 2012
Secretary of State Clinton traveled through southeast Asia to sell this “southern pivot” and
found receptive audiences at each stop.
What makes the reinvigoration of this US-led security structure so remarkable is
that it has taken place despite the emergence of China as a vital economic confederate for
everyone involved. China is now the largest trading partner of Taiwan, Japan, South Korea,
and Australia, yet each perceives China as its greatest long-term threat. As China’s military
has become bolder and more powerful, these countries have in turn been looking to the
United States for closer security ties. According to Satu Limaye, Washington director for
Hawaii’s East-West Centre: “the demand for American security has never been higher.” 37
There are several reasons for this. The first is that the United States remains the
continent’s strongest naval power and offers an unrivalled nuclear umbrella. For this
reason, “If you are buying security, [America] is the place to shop.” 38 The second is that
relations between China’s neighbours themselves are fraught with enduring suspicion.
Japanese-South Korea relations in particular remain frosty, requiring America to serve as a
much-needed mediator. Third and most important is that China’s growing bellicosity has
done little to calm the assumption that its intentions are less than purely benign. In June
2012, for example, the People’s Liberation Army Navy (PLAN) announced it would conduct
formal alliance with Taiwan lapsed when the US recognized China in 1979, though an informal arrangement
remains.
36 Jane Perlez, “Leon Panetta Outlines New Weaponry for Pacific,” New York Times, (June 1, 2012).
37 Cited from Banyan, “Where Asia Left It's Heart,” The Economist, (September 24, 2011).
38 Ibid.
16
“combat-ready patrols” of contested waters in the South China Sea. This followed an
escalating series of naval clashes between Chinese, US, and Japanese forces off its eastern
coast as well. So too did China’s failure to condemn North Korea after the sinking of the
ROKS Cheonan rattle the once-improving relations between Beijing and Seoul. In Taiwan,
booming trade with the mainland has not undone the fact that a thousand PLA missiles
remain trained upon the breakaway island. China, in other words, has poorly hidden its
recent efforts to reassert itself in East Asia. 39 That its neighbours would begin to balance
together more tightly is a natural response.
Chinese Security
But what about the other direction? If growing Chinese power is driving its
neighbours into a stronger alliance, should this not cause alarm in Beijing as well?
Germany’s rise in the late 19th and early 20th centuries caused great consternation in Paris,
London, and St. Petersburg, and did much to establish the ‘Triple Entente’ that German
military commanders found so unacceptably dangerous. In a classic example of the arms
racing dynamic, improved German military power made its neighbours more vulnerable to
attack. These countries constructed new armies and alliances in response, almost certainly
out of an entirely defensive motivation. Yet this newfound Entente power fed German
suspicions that its rivals sought to thwart the young country’s rapid rise. Germany then
built more of its own armies in return, endangering her neighbours once again. On and on
the circle went, until fear trumped reason and the Great War broke out.
The Chinese case faces two significant departures from this historical precedent.
First is that Germany shared a land border with its chief military rivals. As was shown in
1914, 1918, and 1945, invading French and Russian armies can simply walk onto German
soil. The China case is different in part because of the ‘stopping power of water’. 40 As both
Hitler and Napoleon would lament, projecting power is exponentially more difficult when
every bullet and bandage must first be transported by ship or barge. Fortunately for China,
it is separated from its two chief strategic rivals, Japan and the United States, by large
bodies of water. Even with the PLA’s qualitative inferiority, landing an army upon Chinese
shores would pose a significant military challenge. China’s plentiful littoral missile
defences alone would badly dent any invading fleet. The likelihood of such an event is
therefore unlikely to keep serious PLA commanders up late at night.
The second distinction is that China is armed with nuclear weapons and a relatively
robust second-strike capability. Conservative estimates put the number of Chinese
warheads at several hundred. Better understood are the platforms used to deliver them.
Under the command of the Second Artillery Corps (SAC), China’s nuclear forces field
roughly 66 land-based ICBMs and 24 submarine-launched SLBMs. To this total the SAC
adds 116 intermediate range ballistic missiles, capable of distances in excess of 1,750 km,
as well as 204 short range ballistic missiles (for ranges between 300 and 600 km) and 54
land attack cruise missiles, capable of striking targets 3,000 km away. The land based
missiles are protected by 5,000 km worth of military tunnels. Dubbed by state media as the
Aaron Friedberg, A Contest for Supremacy: China, America and the Struggle for Mastery in Asia, (New York:
W.W. Norton, 2012).
40 John Mearsheimer, The Tragedy of Great Power Politics, (New York: W.W. Norton, 2001).
39
17
“Underground Great Wall,” their task is to keep China’s strategic missile squadron safe for a
counterstrike in the event of a nuclear attack. 41 At sea, the PLAN is developing the Type
094 and Type 096 ballistic missile submarines, the latter likely to carry up to 24 JL-2
ballistic missiles each. The PLA Air Force (PLAAF) operates an aging H-6 bomber fleet,
composed of 120 aircraft modelled on the Tupolev Tu-16 Badger. These are capable of
dropping both conventional and nuclear payloads, but are due to be replaced by the
rumoured H-8 and H-9 strategic bombers. The lesson is that not only does China have a
significant number of nuclear weapons, it also boasts an impressive array of means to
deliver them. Both serve as an important deterrent to any would-be invader.
A Well-Armed Equilibrium
So how secure is China under the present international order? The short answer is
very. China is no longer an unwieldy collection of obsolete weaponry and ill-trained
cadres, incapable of standing up to a modern military opponent. Today it boasts a rapidly
improving arsenal and an ambitious young officer corps, much of which has taken the RMA
lessons of the past 20 years to heart. Under generals such as Fang Fenghui, head of the
PLA, the Chinese military is slowly becoming more professional. The dead weight is
being jettisoned and old equipment replaced with advanced platforms that operate in
conjunction with a network of sophisticated sensors and communications devices. Already
some analysts imagine Chinese military power denying the United States access to parts of
the Pacific in less than a decade. 42 As is, most areas within the first island chain have
become far too dangerous for anyone seeking to land on Chinese shores without welcome.
It is important, however, to recognized that this power is far from unbridled.
Chinese military technology remains at the leading edge a generation behind the US and its
allies. Though rapidly improving, China’s soldiers and sailors are nowhere near as potent
as those of the West, many of whom have honed their skills for over a decade at war.
Reinforcing this message of deterrence against China is the tightening trans-Pacific alliance.
The stronger China grows, the more resolute this balancing becomes. The paradoxical
result is that while China deploys an ever larger and more impressive military, the
country’s relative power remains basically the same. The addition of several more Liaoning
class aircraft carriers, for example, do Beijing no favours if they encourage South Korea and
Japan’s new flattops to sail to each others’ aid in the time of crisis.
“China Builds Underground ‘Great Wall’ Against Nuke Attack,” The Chosn Iibo, (December 14, 2009).
Ambrose Evans-Pritchard, “China, Japan and the World's Agadir Crisis (1911),” The Telegraph, (September
19, 2012).
41
42
18
China’s Central Military Committee is well aware of this. Hyper-nationalists like the
state-run Global Times may threaten that if “countries don’t want to change their ways with
China, they will need to prepare for the sounds of cannons,” 43 but few at the very heights of
China’s defence and foreign ministry establishment contend such logic is sound. Even
within the military itself—as neurotic and jingoistic an organization as can be found in
China—the belief that pre-emptive military force would bring tangible benefit is noticeably
mute. No one thinks that a quick march will deliver Beijing into foreign hands. By any
rational estimation, then, the great powers of East Asia are locked into an equilibrium of
military stability.
But what of the potential for irrational conclusions? What if reason is abandoned at
the hands of emotion? In the next section we examine this prospect.
43
Economist, “Dragon’s”.
19
Revanchism
“Diaoyu Islands Belong to China
We refuse to sell Japanese good in Silk Street Market”
Protest banner, Beijing (September 2012)
All nations harbour grudges. The ebb and flow of history invariably crowns some
winners and others losers. Whether by fair means or foul, armies are beaten, treaties are
broken, princes become paupers, and hegemony proves fleeting. The animus generated by
such traumas does not usually dissipate in their immediate aftermath, but is seared into
collective memory. This scarring process rarely consists of a straightforward recollection
of facts. Stories of kith and kin, after all, are seldom told with an unsympathetic eye.
Tragically, the consequence of such myths is that they make national grievances difficult to
address.
Before and After the Fall
Nothing builds national pride more than success. This is important, because of all the
great powers today, none carry a more distinguished pedigree than China. The Chinese
state traces itself all the way back to 221 BC, when Qin Shihuang united four contending
principalities into a single polity. His empire stretched for an area equal to roughly onethird modern China, encompassing the northern half of the country out to the western leg
of the Great Wall. At its peak, the imperial court at Xi’an presided over a population of
roughly 60 million. Even more impressive is that the bureaucracy the Qin established
remained in place under various guises until the 20th century. Twice the country was
seized by foreigners: the Mongols, who established the Yuan Dynasty in the 13th century;
and the Manchus, who founded the Qing Dynasty in 1644. Yet each time the conquerors
and their horse-borne armies were quickly assimilated into the peoples they overran.
Change was cyclical, not linear; new dynasties looked to recreate the old order rather than
build an entirely new one.
And what an incredible order it was. Centuries passed, but China retained its role as
‘middle kingdom’. Its armies were larger, cities more populous, and industry more
developed than any of its neighbours. Tribute flowed into the country, along with
obeisance from all but the most obstinate tribes along the inner steppes. As Maddison has
shown, China boast title as the world’s largest economy for virtually its entire existence.
When the Mediterranean was laid low by the war, pestilence, and political upheaval that
followed the fall of Rome, even per capita wealth stood for a time ahead. 44 The technology
gap was even more profound, with China well in front of the West until the 16th century. 45
Meanwhile, Qing military success roughly doubled the country’s territorial size between
Angus Maddison, Chinese Economic Performance in the Long Run, (Paris: OECD Development Center, 2007).
As late as 1820, China’s population dwarfed that of Western Europe 381 million to 170 million. Economic
metrics were no different, with China’s GDP outmatching all of Western Europe’s $229 billion to $160 billion.
(All figures in million 1990 International Geary-Khamis dollars). Angus Maddison, Contours of the World
Economy, (Cambridge: Cambridge University Press, 2007).
45 See, for example, Joseph Needham, Science in Traditional China: A Comparative Perspective, (Cambridge,
MA: Harvard University Press, 1981).
44
20
1680 and 1820. 46 These conquests, including Mongolia in 1696-97, Taiwan in 1683, Tibet
in 1720, and a huge area of central Asia in 1756-57, did much to secure China’s inner Asian
frontiers. An additional “outer perimeter of docile tributaries,” including Burma, Nepal,
Siam, Annam, Korea, and the Ryukus, provided an extra layer of security. 47 For century
after century, China stood as a bastion of relative calm in a world of upheaval and national
extinction.
The durability of China’s success manifest itself in supreme national self-confidence.
The Qing, for example, set up an office for managing modern-day Mongolia, Xinjiang, and
Tibet. They named it the Lifan Yuan or ‘barbarian management department’. Similarly
illustrative is the missive issued by Emperor Qian Long to an emissary of George III in
1793:
“The Celestial Court has pacified and possessed the territory within the four seas….
The virtue and prestige of the Celestial Dynasty having spread far and wide, the
kings of the myriad nations come by land and sea with all sorts of precious things.
Consequently there is nothing we lack…. We have never set much store on strange
or ingenious objects. Nor do we need any more of your country’s manufactures.”
This may have been true for a good deal of time. But the decades following Qian’s death
demonstrated that the European world had already passed China by. Whereas China once
employed iron-tipped plows when the West still struggled with wooden-tipped versions,
now it was China that lagged behind, sticking with iron even as Europe moved on to steel.
By the 1830s, China was facing a rising population, stagnating economic productivity, a
decrepit transportation system, and a steady drain of silver to British heroin merchants. To
make matters worse, in 1850 a madman named Hong Xiuquan instigated the Taiping
Rebellion, a civil war that lasted fourteen years and plunged the country into chaos and
starvation. When combined with two humiliating military defeats at the hands of Great
Britain, confidence in the central government evaporated. A proud nation fell prostrate
before a series of ruthless foreign predators, the last of whom did not leave until America’s
crushing victory across the East China Sea forced the evacuation of the Japanese army in
1945.
Festering Slights
China has, for the most part, regained its lost territory. Japan’s forces are long gone.
Hong Kong has been returned from Great Britain. Outside a few small border spats, largely
the legacy of a failed Indian gamble in 1962, the ‘great game’ played along China’s western
interior has been settled. Geographically, China today reflects almost completely the
borders maintained by the Qing. Tibet, provided de facto independence under British
auspices in 1912, was retaken by the PLA in 1951. Manchuria, first captured by Russia,
who then lost it to Japan, has been similarly given back. The diplomatic legations in Beijing,
whose imposition in the mid-1800s was so hated by the Boxers and their followers, exist
today at the mercy of China’s rulers. Firms now seek permission to enter Chinese markets
rather than rely on the Royal Navy to batter a way through. The middle kingdom, in other
46
47
Maddison 2007, p43. In 1820, China’s national territory stood at twelve million square kilometres.
Ibid.
21
words, boasts a degree of political independence not seen since the time of Qian Long’s
declaration.
But forgiveness for past transgressions has not been forthcoming. The wound to
China’s national pride inflicted by these colonial adventures lingers on. The least
worrisome of these grievances is the enduring sense that, because the contemporary
international system was built during a period of steep Chinese disadvantage, the country’s
voice is improperly represented on the international stage. 48 This is especially true when it
comes to America and its perceived global leadership. The assumption is the United States
has no desire to share this role and actively seeks to thwart the ambitions of others. This
sense of unease is helped by neither the constant USN patrols through what China
considers its backyard 49 nor the presence of 30,000 American troops on the Korean
peninsula. By contrast, Chinese observers have long pointed to the “superhegemonist”
ambitions of the United States, 50 arguing that the deployment of American military forces
to the region serve the interests of Washington alone. Episodes of Sino-American tension
during the Tiananmen massacre, the 1995-6 Taiwan Straits crisis, and following the 1999
bombing of the Chinese embassy in Belgrade have all fed the perception that the United
States is “not just arrogant,” but actively seeking “to prevent China from prospering and
gaining its rightful place at the top of the world system.” 51 Meanwhile, the close association
of the United Nations and Europe with this US-led structure ensures a similar degree of
suspicion towards them as well.
Song Qiang et al., Unhappy China: the Great Time, Grand Vision and Our Challenges, (2009); Zhang Zangzang
et al., China Can Say No: Political and Emotional Choices in the Post Cold-War Era, (1996).
49 The US views South China Sea as international waters and calls for the freedom of navigation.
50 David Shambaugh, Beautiful Imperialism: China Perceives America, 1971-1990, (Princeton: Princeton
University Press, 1991), p252-53.
51 Gries 2003, p142-43. See also Kagan 2009, p32-33.
48
22
Two factors mitigate this grievance. The first is that the basic architecture of the postWorld War II order was built to accommodate the war’s victors. Though largely the result
of forces beyond its control, China had the good fortune to emerge on the winning side.
Incorporating Beijing into this arrangement during the 1970s’ Sino-US rapprochement took
a degree of diplomatic dexterity—the United States had to quietly dump Taiwan and hand
over its UN security council seat to the communists—but the structures themselves were
ready-made to include Chinese participation. More recently, the United States has signalled
a similar willingness to bring China into the G-20 and other such fora, with the only proviso
that China brings along its chequebook.
For its part, China has eagerly embraced such opportunities, acceding to the WTO in
2001—a membership sought “voluntarily and with great tenacity.” 52 China similarly
responded to the Great Recession of 2008-09 not with a cascade of beggar-thy-neighbour
policies but rather a $585 billion stimulus package and an eagerness to cooperate. China
was a keen participant at the 2008 Washington and 2009 London G20 summits. In the
latter it committed to help Japan and the European Union in raising $250 billion additional
bail-out funds for the IMF. 53 China has been equally collaborative on the topic of climate
change. It is, for example, a signatory to the Kyoto Protocol and the Copenhagen and Ambo
declarations. More broadly, the Yearbook of International Organizations reports that the
number of Chinese memberships in intergovernmental organizations has grown steadily
over the last decade, returning to the country’s pre-Tiananmen peak. More importantly,
Jeffrey Sachs and Wing Thye Woo, “China's Economic Growth After WTO Membership,” Journal of Chinese
Economic and Business Studies 1, no. 1 (2003): 1–31.
53 Rich Miller and Simon Kennedy, “G-20 Shapes New World Order with Lesser Role for U.S. Markets,”
Bloomberg, (April 2, 2009).
52
23
whereas China’s international participation in the early reform period was notably
“passive”, today the country is a much more active participant and displays a generally high
standard of regime compliance. 54
*Source: Reprinted from Hachigian et al 2009, p11-12.
A grievance of greater intensity are the territorial disputes that dot the country’s
borders. The descent from untrammelled empire to regional also-ran bred serious
disagreements over where China’s borders should lie. The resolution of these overlapping
claims, however, has generally gone smoothly. Through concerted effort and a willingness
to deal, China resolved fourteen of its sixteen post-1949 land-border disputes. 55 In each
case China came to the table offering compromise, and all but Bhutan and India found the
terms acceptable. Further negotiations in the 1980s with Britain and Portugal similarly
secured the peaceful return of Hong Kong and Macau, the last Asian holdouts of Europe’s
bygone imperial era. This leaves the territorial dispute with India as the only serious
remaining land border issue, and even this is more properly subsumed under the greater
Indo-Pakistan contest over Kashmir. The border squabble has certainly proved little
hindrance to the rapidly growing Sino-Indian trade, valued at more than $60 billion in 2010
and projected to increase further. Like those with the global north, China’s relations with
India harbour considerable mistrust and worry, but there exists no martial intent.
The South and East China Seas
At sea the story has not been nearly so pleasing. There China confronts both less
geopolitical necessity for concluding these quarrels and insufficient naval power to force a
Nina Hachigian, Winny Chen, and Christopher Beddor, China's New Engagement in the International System,
(Center for American Progress, November 2009).
55 These were Burma, Nepal, North Korea, Mongolia, Pakistan, Afghanistan, three with Russia, Laos, Vietnam,
Kazakstan, Kyrgyzstan, and Tajikistan. M Taylor Fravel, “Regime Insecurity and International Co-operation,”
International Security, (Fall 2005).
54
24
preferable outcome. The border disputes with Russia, for example, were resolved against a
menacing backdrop: the combination of millions of soldiers and nuclear weapons gave real
urgency to reduce tensions. By contrast, with maritime claims China has limited incentive
to deal and far less leverage to achieve the bargain it wants. In the immediate term, the
collection of tiny reefs and rocky outcroppings that so roil the East and South China Seas
are useful for stirring the nationalist passions that divert the public’s attention from CCP
transgressions. They also would make handy naval operating stations in the strategically
important first island chain. Chinese control of the Senkaku islands, for example, would
provide the PLAN with unobserved access for its ballistic missile submarines into the
Pacific Ocean. In the longer-term, there exists real potential for major oil and gas
extraction—both vital resources in a region with massive foreign energy dependence. At
the same time, the recent expansion of the PLAN’s ‘green water’ fleet has not dethroned the
USN as the Pacific’s most potent naval power. Japan boasts a powerful fleet as well,
including its somewhat inappropriately named coast guard. So too are the Taiwanese and
South Korean maritime forces rapidly improving. Indonesia, Canada, and Australia have
similarly begun ambitious naval armaments programs. This leaves China unable to bully
its way into the same degree of territorial concessions it could otherwise achieve on land.
Together, China has good reason to want to hold fast to its demands, yet at the same time
lacks the means necessary to achieve a profitable resolution. This is not a situation
conducive to resolving international tensions.
*Source: Perry-Castañeda Map Collection, http://www.lib.utexas.edu/maps/china.html.
The offshore islands, then, are a rather unpredictable wildcard. China has certainly
sent mixed signals, at least regarding the South China Sea. It has long been assumed that
Beijing seeks validation of the ‘nine dash line’, commonly printed on Chinese claim maps,
that encompasses practically the entire region. Such an entitlement would place the
Spratleys, Paracels, Pratas, and the Scarborough Shoal all under Chinese control. But in
February 2012 the Chinese foreign ministry released a statement declaring “no country
25
including China has claimed sovereignty over the entire South China Sea.” 56 This suggests
that despite China’s ‘escalation strategy’—deploying a crescendo of aggressive fishing
boats, armed coast guard vessels, and the occasional combat squadron into contested
waters—the country’s foreign policy on this front may not be quite as hawkish as it
appears. There is certainly little evidence that either the CCP politburo or the Foreign
Ministry are gearing up for a serious fight over the region. If anything, territorial spats
distract from China’s burgeoning trade efforts, including the 2010 free trade agreement
with ASEAN, which at $400 billion in goods and services now serves as China’s third largest
trading partner and the largest market for investment by Chinese firms.
This may hold true for the East China Sea as well, despite the disagreements there
being an altogether uglier affair. The complication is the long and bloody history between
China and Japan. The Second Sino-Japanese War in particular killed half a million Japanese
soldiers and another 20 million Chinese, most of them civilians. Massive Japanese air raids
and ferocious house-to-house fighting levelled many of China’s major coastal cities. The
war also included vile episodes such the infamous ‘rape of Nanking’ and the horrifying
germ warfare experiments conducted by Japan’s infamous Unit 731 on unsuspecting
captives. This ugly backdrop has been let fester by the hardline nationalists in each
country. Chinese websites and message boards are littered with anti-Japanese epithets.
Football contests held in China, such as the 2004 Asian Cup and 2008 East Asian Cup, have
become known for their ugly demonstrations. Chinese police even went so far as to
instruct Japanese fans not to wear team uniforms, in order to avoid mob provocation. In
2012 an anti-Japanese riot in Shenzen attacked the city government’s administrative
building and demanded the country declare war on China. 57 For its part, Japanese politics
courts a growing class of right-wing nationalists, who include among their number the
mayor of Japan’s largest and most important city, and approves textbooks that whitewash
the country’s barbaric imperial history. Visits by political leaders to the Yasukuni Shrine,
where fourteen Class A war criminals are interred among the rest of Japan’s war dead,
similarly precipitate Chinese outrage.
The tension between these two titans has spilled over into a series of heated contests.
The latest furor concerns the Japanese government’s purchase of the Senkaku islands, 58
which led to China sending a half dozen paramilitary ships in protest. Live-fire exercises by
China’s East Sea Fleet were also conducted, including 40 missile launches and sorties by
dozens of J-10 fighters. 59 But this is just the latest in a series of maritime conflicts. The
Chinese navy routinely incurs into Japanese waters, probing ever deeper under steadily
more skillful crews: a PLAN submarine was once spotted lurking off Okinawa, and a steady
rotation of survey ships has been sent to map the East China Sea, drawing the criticism and
anger each time. The regular nature of these clashes has given rise to fears that what we
“South China Sea,” The Economist, (March 24, 2012); M Taylor Fravel, “Clarification of China's Claim?,” The
Diplomat, (March 5, 2012).
57 Mark Mackinnon, “Growing Tension Between China and Japan Fuels Concerns Over Potential War,” Globe
and Mail, (September 16, 2012).
58 Ironically, the aim of the Japanese government was to keep the islands out of the hands of Tokyo's Chinabashing governor, who wanted to buy them himself.
59 Christian Le Miere, “China and Japan: Nationalism Rising?,” IISS Voices, September 17, 2012; Jane Perlez, “As
Dispute Over Islands Escalates, Japan and China Send Fighter Jets to the Scene,” New York Times, (January 19,
2013).
56
26
are now witnessing resembles the Agadir Crisis of 1911, 60 a foreign policy debacle that set
the stage for war’s outbreak in 1914.
A more compelling argument, however, is that this is all hyperbolic theatre. True, the
angry nationalism, sordid history, and poor dialogue do the region no favours. Yet the
benefits of upsetting maritime commerce for a few marginal scraps of rock would be
minimal. The depth of the economic relations between China and Japan, for example, make
war a dubious proposition. China is now Japan’s biggest trading partner, with $340 billion
US worth of goods and services transiting between the two in 2012 alone. 61 More broadly,
China is the world’s second largest trader, and a heavily commodity-reliant one at that. A
shooting war in the East or South China Seas would bring China’s steel mills and electronics
factories grinding to a halt. It would also likely close the Straits of Malacca tanker route,
through which 80% of China’s imported oil is shipped. 62 Tens of millions would be thrown
out of work. Inflation would skyrocket and protesters would take to the streets en masse.
As China’s 2006 Defence White Paper remarked, “Never before has China been so closely
bound up with the rest of the world as it is today.” 63 Thus despite what some
commentators assume, there is no war for these uninhabitable islets in the offing.
Evans-Pritchard 2012.
World Trade Organization, “Trade Profiles,” www.wto.org.
62 “Whoever is lord of Malacca, has his hand on the throat of Venice,” wrote Tomé Pires, the strait’s first
Portuguese governor. Cited from Ian Morris, Why the West Rules—For Now, (Toronto: McClelland & Stewart,
2010), p431.
63 China's National Defense in 2006, (Beijing: Information Office of the State Council of the People's Republic of
China, 2006).
60
61
27
Taiwan
The same can be said for the even bigger headache of Taiwan. For all the xenophobic
outrage and memories of World War II that colour relations with Japan, there exists no
nerve in China more raw than the one that sits just 120 miles off the Fujian coast. Here is
the last redoubt of the People’s Republic of China, the island refuge where KMT loyalists
fled when the civil war was lost in 1949. Despite its beginnings as a brutal authoritarian
regime, Taiwan has developed a vibrant, if raucous, democratic culture. For this reason
alone Beijing watches the nation of 23 million with keen intensity. Backed by a 2005 AntiSuccession law, China has constantly warned that an outright declaration of independence
would be met with force. There is little reason to doubt the veracity of this claim, given the
leadership’s oft-demonstrated unwillingness to unilaterally forgo the use of force again
Taiwan—no matter the potential economic or military costs, duration or intensity of
American intervention, or balance of forces in the region. 64 That the CCP would be so
aggravated by a de jure declaration of what is already de facto truth is on the face of it
absurd. But for the communists, Taiwan is ‘the province that got away’. 65 Its continued
independence signals to the world—as well as China’s own people—that an alternative,
democratic path is not only possible but perhaps enviable.
Doubly worrisome for the communists is that Taiwan harbours little desire to return
Beijing’s rule. Public opinion polls consistently find only a minority of Taiwanese favour
reunification. 66 Yet on the mainland the hunger for its return has not diminished. Whereas
it was once thought this view was limited to China’s old guard, it appears a new generation
has taken up the conclusion that Taiwan is a dangerous revolutionary model and its
independence must therefore be scuttled. For this reason the Chinese public is almost
universally supportive of the 400,000 PLA troops who stand permanently ready in Nanjing
military district, quietly deterring Taiwan from embracing too distant a public stance. To
this China has another 1.2 million soldiers from which it can draw. In contrast, Taiwan
keeps just 130,000 troops under arms and relies on a military budget of just $14 billion per
year, about a tenth of Chinese spending.
On the other hand, tensions have soothed substantially since the provocative Chen
Shui-bian left Taiwan’s top office in 2008. The current president, Ma Yingjeou, has
repudiated the pro-independence policies of his predecessors and ties with the mainland
have improved dramatically. China is Taiwan's top export market, a condition bolstered by
the eighteen cross-strait agreements signed between 2008 and 2012. This includes the
2010 Economic Cooperation Framework, a free trade deal which did much to please
business leaders in both countries. Beijing, too, has shifted its strategy from belligerence to
seduction, actively wooing moderate Taiwanese leaders. The dividends of this have been
large, with many in Taiwan now advocating a softer line towards China. Meanwhile, four
million Taiwanese visit China each year and some 750,000 have set up permanent
residence. Taiwanese investors have likewise invested $150 billion in some 30,000
Thomas J Christensen, “Posing Problems Without Catching Up,” International Security, (Spring 2001).
Deng and Zemin, for example, were willing to accept considerable Taiwanese autonomy, but in return the
country must stay under “one China.”
66 John Bryan Starr, Understanding China: a Guide to China's Economy, History, and Political Culture, (New
York: Hill and Wang, 2010).
64
65
28
Chinese enterprises, found mostly in Guangdong and Fujian and include the main
manufacturing hubs of high-tech giants Foxconn and HTC. Cross-strait trade now exceeds
$120 billion per year. 67
What further calms the prospect of future Sino-Taiwanese violence is the fact that a
Chinese military invasion would be extremely difficult. It certainly could not be achieved
without wholesale damage to the very province Beijing seeks to take back. More likely than
an all-out assault would be a naval blockade, either holding the 10,000 Taiwanese troops
stationed on Jinmen and Mazu islands hostage or of Taiwan itself. Such a move would
likely bring Taipei to rescind any outright declarations of Taiwanese independence. But
total capitulation would be an entirely different matter. It is hard to imagine a scenario
where the PLAN brings Taiwan to its knees, followed by the shell-shocked populace
blithely accepting a PLA garrison force as it moved ashore. More likely is it that war would
simply progress to a much more costly land-based guerrilla phase, bringing the question of
cost-benefit once again to the fore. Moreover, as reiterated by the 2005 US-Japan-Taiwan
joint security statement, the island boasts extremely well-armed friends. Thus no matter
how many land-based anti-ship missiles the PLA deploys, Beijing will have ample reason
for pause when considering the military option.
The result of these economic and combat realities is that while the 1990s and early
2000s were a time of mutual fear and increasing militarization, the situation today is much
healthier. There is far less anxiety and a great deal more cooperation between the two
nations, even if this is essentially constrained to economic matters. Reduction of the
mutual military distrust, let alone political reconciliation, remain a long ways off. But China
appears to be patient, a stance that diminishes the fear felt in Taiwan. It is therefore safe to
conclude that the Taiwan Straits will not be compelling the CCP leadership to abandon
international cooperation and embrace the use of force any time soon.
1914 No Longer
Much has been made of the similarities between the nationalist discomfort felt by
China today and that of Germany prior to the Great War. As we have seen, contemporary
China demonstrates a worrying mix of hyper-nationalist tendencies. Yet this revanchism is
far less potent than generally assumed. No doubt the hard-liners who riot against Japanese
footballers 68 and clamour for a military solution for ‘rebellious’ Taiwan would find
common cause with the prewar Pan-German league. 69 But China’s foreign relations do not
Starr 2010, p336.
During an anti-Japanese riot in 2005 “protesters used slogans that echoed anti-Japanese campaigns of a
century ago, denouncing ‘little Japan,’ calling Japanese dogs, urging China to ‘stand up,’ and calling for a
boycott of Japanese products.” Howard J French, “China Allows More Protests in Shanghai Against Japan,” New
York Times, (April 17, 2005). A year earlier at the Asian Cup final in Beijing, Chinese protesters burned
Japanese flags and forced Japan's small contingent of fans to flee to safety in busses. BBC, “Chinese Riot After
Japan Victory,” (April 7, 2004).
69 Pan-German extremists were a recognized minority, though the largest membership ever claimed was
under 25,000. Nor did they have as much influence in Berlin’s foreign policy circles as the Pan-Slavs in
Russia. Still, in 1901 they managed to put 32 deputies in the Reichstag and the Kaiser and his ministers did
little to disassociate themselves from the group. Joachim Remak, The Origins of World War I, (Holt, Rinehart
67
68
29
yet match the “neurotic climate of suspicion and insecurity” 70 that characterized prewar
Europe. Unlike today, there existed in 1914 “a widespread belief that war was not only
inevitable but desirable.” 71 Echoing a common sentiment, the Prussian general and
military historian von Bernhardi claimed that…
“War is a biological necessity of the first importance, a regulative element in the life
of mankind which cannot be dispensed with…But it is not only a biological law but a
moral obligation, and, as such, an indispensable factor in civilization.” 72
Today the story is noticeably different. Modern nationalist Chinese websites like the Global
Times and anti-CNN.com focus on refuting “untrue reports” of Beijing’s heavy-handedness
by the Western media, 73 rather than exhorting sacrificial violence. This makes them
remarkably tame in comparison.
Although sharper teeth lie behind China’s ‘smile diplomacy’ 74 than Beijing would
openly admit, China’s central priority remains the assurance that international
entanglements do not interfere with economic development. 75 Without steady growth and
the domestic stability it brings the CCP cannot survive. This ensures that anti-Western or
Japanese or Taiwanese rhetoric—itself often fanned by the regime in an effort to boost its
own credibility—is tamped-down by the government whenever tempers flare too high.
Beijing knows that unleashing the whirlwind of war risks unsettling the steady economic
growth that forms the bedrock of their legitimacy.
But if that bedrock were to crumble there would be far less reason to restrain China’s
more aggressive nationalist impulses. War might even become a gamble worth taking. We
move next to a consideration of whether or not such a tectonic shift in domestic politics is
likely.
and Winston, 1967), p73. This despite the fact that, as Remak notes, “no responsible German statesman
before 1914 thought in terms of Napoleonic visions.” (p72).
70 John Keegan, The First World War, (Toronto: Vintage, 2000), p420.
71 James Joll, The Origins of the First World War, (London: Longman, 1984), p186; p171-96 provides a good
account of the mood of Europe in 1914.
72 Friedrich Bernhardi, Germany and the Next War, (Longmans, Green, 1912), chpt 1. Chapter 2 was entitled
“World Power or Decline.”
73 Jill Drew, “Protests May Only Harden Chinese Line,” Washington Post, (March 24, 2008).
74 Cited from Emmott 2009, p49. See also Information Office of the State Council of the People’s Republic of
China, China’s Peaceful Development, (September 2011).
75 Robert G Sutter, Chinese Foreign Relations: Power and Policy Since the Cold War, (Lanham, MD: Rowman and
Littlefield, 2012).
30
Domestic Politics
“Faced with the reality of poverty and dictatorship, we can endure it. But we cannot
allow our descendants to grow up in the stranglehold of lack of freedom, democracy,
and people’s rights.”
Chen Yün (Spring 1979) 76
China is a police state. Harsh repression maintains the authority of the Communist
Party, an organization that “does its best to silence most dissenting voices, strictly controls
the press, and lavishes resources on the best cyber-censorship money can buy.” 77 The
People’s Armed Police and the other national security organs are large in number, wellarmed, and granted sweeping powers. Internet chatrooms are monitored and foreign
websites frequently blocked by the infamous ‘Great Firewall of China.’ Offline behaviour is
tracked closely as well, with plainclothes and uniformed officers standing on permanent
watch in towns large and small. This includes Beijing’s Tiananmen Square, where airporttype scanners monitor entry to the plaza. Protests around the country are filmed for the
later identification and harassment of leaders and repeat ‘offenders’.
When tested, the regime can be brutal. The most egregious example in the reform
era is 1989’s massacre at Tiananmen. Here an escalating series of nation-wide strikes and
demonstrations culminated in a massive pro-democracy protest in downtown Beijing.
Frightened by the revolutionary potential of these young students and activists, the
government called in loyal troops from outside the capital and gave orders to open fire.
“Armoured personnel carriers formed the spearhead while soldiers on foot shot to
kill from both sides. Meanwhile, the first of the night’s armoured cars and tanks
smashed its way through the citizens’ barricades to the east….Several cyclists who
could not get out of the way in time were crushed or tossed aside.” 78
The Chinese government itself estimates 241 people were killed in the violence; NATO puts
the number at 7,000.
This was just the worst excess of a state unwilling to tolerate dissent. Ethnic rioting
by minority Uighurs in Xinjiang in 2009 saw heavy police and military units sent to subdue
the region. An unknown number of casualties followed. Better recorded are the clashes in
Tibet, where insurrections and mass demonstrations were met with brutal force in 1959,
1989, and 2008. Perhaps even more striking has been the government’s treatment of the
Falun Gong, a well-organized but primarily spiritual exercise and meditation regime similar
to t’ai chi. In 1999, the Falun Gong assembled 10,000 citizens to protest silently in
Tiananmen Square on the ten-year anniversary of the massacre. The government quickly
cracked down in reprisal, branding the group a ‘superstitious cult’ and arresting members.
Less brutal but similarly telling is how the Sichuan earthquake of May 2008 exposed the
shoddy construction of numerous public schools. When the parents of 129 children killed
in the disaster attempted to sue the authorities responsible, the government threw the case
Cited from Major and Cohen 2008, p899.
“Property Rights in China,” The Economist, (March 8, 2007).
78 John Gittings, China Through the Sliding Door, (Touchstone, 1999), p148.
76
77
31
out of court. Also that year was the ‘Charter 08 declaration’, which called for an end to oneparty rule. Signed by 300 intellectuals, many were arrested in the weeks following,
including the literary critic and human rights activist Liu Xiaobo. Liu received the 2010
Nobel Peace Prize while in jail, his fourth such prison term.
This heavy-handedness has done much to tarnish the CCP. Even more corrosive,
however, has been the regime’s pervasive corruption and unpunished ineptitude. Take
how in the early 1990s, local officials encouraged the selling of blood plasma to supplement
peasant incomes. Since many Chinese believe the loss of blood will weaken them, the
donated blood was re-infused into patients after the plasma was removed—but often only
after it was first mistakenly pooled with HIV-infected material. The UN estimates that by
the end of 2005 some 55,000 commercial donors had been infected. Tellingly, not a single
official has been punished, with the victims threatened to decline interviews unless, the
authorities warn, they are prepared to “bear the consequences.” 79
Other examples abound. The government’s initial response to the SARS outbreak
was one of secrecy and cack-handedness, facilitating the national and international spread
of the disease. 80 Similar complaints followed investigations into a fatal July 2011 train
crash, which exposed corruption and poor quality control during the rollout of China’s
massive new high speed railway. 81 More pedestrian—but ultimately more disruptive—is
the arbitrary caprice of party leaders and state officials. 82 This primarily takes the form of
the forcible expropriation of private homes. Often done to boost council revenues, local
authorities seize land and offer below-market compensation, then sell the property on the
open market at full price. District coffers have become flush through such sales, but they
have also created a caste of dispossessed, unable to replace their confiscated homes. 83
Perhaps most absurd is the manufactured joy discharged by the state’s propaganda arm.
These efforts include endless public floral displays and official media pablum chronicling
the happiness of Tibetan and Uighur peasants, all farcical depictions made painful in light
of the simmering ethnic tensions found throughout the interior.
The real tarnish on the CCP brand, however, is corruption. It is seemingly
ubiquitous, defying all attempts to extinguish it. This resilience is the product of a series of
factors, including the Confucian tradition of hierarchy and the cultural emphasis on guanxi
or networking. But what really lends itself is the economy’s incomplete marketization,
leaving many economic decisions in the hands of unelected state officials. Legislators are
not required to declare their assets and the media rarely report corruption cases without
prior approval by government officials. 84 In what is likely a conservative estimate, the
“Blood Debts,” The Economist, (January 18, 2007).
A Ahmad, R Krumkamp, and R Reintjes, “Controlling SARS,” Tropical Medicine & International Health 14, no.
1 (November 2009): 36–45.
81 Tania Branigan, “China Train Crash Inquiry Ordered as Public Outrage Continues,” The Guardian, (July 27,
2011); Tania Branigan, “Chinese Anger Over Alleged Cover-Up of High-Speed Rail Crash,” The Guardian, (July
25, 2011).
82 G Chan and C Wu, Zhongguo nongmin diaocha [A Survey of Chinese Peasants], People’s Literature Publishing
House, 2004. See also, E Friedman, P G Pickowicz, and Mark Selden, Revolution, Resistance, and Reform in
Village China, (New Haven: Yale University Press, 2005.
83 “Time for a Property Tax,” The Economist, (February 4, 2012).
84 “Corruption in China,” The Economist, (April 19, 2007).
79
80
32
National Audit Office concluded that $35 billion of government funds were misused in
2009. Other estimates suggest that 10% of the government's procurement and
administrative spending is funnelled as bribes or simply stolen. 85 Shockingly, the latest
report by Washington-based Global Financial Integrity (GFI) shows that cumulative illicit
financial flows from China—primarily by corrupt officials—totalled a massive $3.8 trillion
between 2000 and 2011.
A Crumbling Bargain?
The Chinese public tolerates this heavy-handedness, ineptitude, and corruption for
one basic reason: the CCP has delivered more economic growth at a faster rate than any
other regime in history. A rising tide salves the wounds of political incompetence. It for
good reason that ever since Deng, growth has been the foremost concern of the Chinese
government. Li and Zhou, for example, studied the turnover of top provincial leaders
between 1979 and 1995 and found that the likelihood of promotion depended primarily on
economic performance. 86 When growth stalls, however, the regime’s detractions become
much more difficult to bear. It is often forgotten that Tiananmen was just one site of an
estimated 342 cities that witnessed protests in 1989, as rampant inflation—the national
rate hit 18.5%—followed by recession cast doubt on the Party’s capacity to deliver further
growth. Yet when growth returned the unrest declined. For this reason steady economic
growth is sacrosanct for the CCP; it forms the basis of Beijing’s political survival.
Minxin Pei, “Corruption Threatens China’s Future,” Carnegie Endowment for International Peace (October
2007), p3.
86 H Li and L A Zhou, “Political Turnover and Economic Performance,” Journal of Public Economics 89, no. 9
(2005): 1743–1762.
85
33
It is possible, however, that the premise of this bargain has subtly shifted. Recent
events suggest that the public now demonstrates care and concern about more than just
wealth. This is certainly the case in the interior, where rising incomes have failed to stifle
ethnic conflict. Increased demand for rural remedies such as the famous ‘Caterpillar
fungus’ has boosted earnings of peasant farmers along the Tibetan plain, yet violent
demonstrations remain a relatively common occurrence. Ganzi prefecture was scene of
some of the year’s worst unrest, even though rural incomes there rose by 30% in 2011. 87
Wealth, it therefore seems, is insufficient to satisfy China’s most repressed minorities.
It has also generated new expectations, particularly regarding the environment.
This is problematic for the CCP, for its entire political machinery is geared towards the
generation of economic growth, despite the heavy cost. As Minxin Pei notes,
“the Communist Party’s survival is predicated on the neglect of fundamental aspects
of society’s welfare in favor of short-term economic growth….Because the party
relies on growth for legitimacy, Beijing invests in tangible signs of progress—
factories, industrial parks and the like. This emphasis on ‘visible’ gains has in turn
led to huge social deficits.” 88
The World Bank estimates that environmental damage as a percentage of China’s gross
national income is roughly 9%. 89 Put in more tangible terms, the death toll for premature
deaths in China from respiratory disease related to air pollution is an estimated 750,000
per year, 90 while 190 million Chinese are sick from drinking contaminated drinking
water. 91 According to one 2012 report, “up to 40 percent of China’s rivers were seriously
polluted” and “20 percent were so polluted their water quality was rated too toxic even to
come into contact with.” 92 Simply building more coal plants and car factories will not undo
such calamities.
“No Power to Pacify,” The Economist, (February 4, 2012).
Minxin Pei, “Looming Stagnation,” National Interest (March 3, 2009), p1-2.
89 World Bank, “World Development Indicators (WDI),” www.worldbank.org.
90 Richard McGregor, “750,000 a Year Killed by Chinese Pollution,” Financial Times, (July 2, 2007).
91 Elizabeth C Economy, “The Great Leap Backward,” Foreign Affairs (September/October 2007).
92 Yang Jian, “China's River Pollution 'a Threat to People’s Lives’,” English People's Daily, (February 17, 2012).
87
88
34
With good reason, then, many citizens are rethinking economic growth as the nation’s
most pressing priority. Citizen complaints about the environment, expressed on official
hotlines and in letters to local officials, are increasing at a rate of 30% per year; in 2007
they topped an estimated 450,000. Yet since few of these are resolved satisfactorily,
protesters have been taking increasingly to the streets. Figures released by China's top
environmental officials indicate 51,000 pollution-related protests took place in 2005, or
almost 1,000 each week. 93 These are remarkable numbers for a regime that prides itself on
order and stability.
Add these environmental protests to the growing anger over defective trains and
wanton property confiscation and the CCP has a real problem on its hands. The
government’s own figures suggest political disenchantment is on the rise. In 2004 there
were an estimated 74,000 protests in China; in 2005, the number reached 80,000. 94 Less
than a decade later, the latest official data reveals a stunning 180,000 mass protests, or
about 500 incidents per day. State media reports these protests have become increasingly
violent, especially in regions populated by ethnic minorities. They have also become more
sophisticated, often the product of growing participation by the urban middle class. Techsavvy activists now come armed with blogs and cell phones, making it difficult for the state
to keep pace. According to the Chinese Academy of Sciences, protests organized in 2011
were better organized and more confrontational than previous events. It also appears
these were more likely to trigger copycat demonstrations, 95 suggesting the number of
Economy 2007.
Sutter 2012, p28.
95 Cited from The Economist, “A Dangerous Year,” (January 28, 2012).
93
94
35
protests could grow further. This combative state of affairs has led many to conclude that
China’s rulers are “sitting on a ticking time bomb.” 96
The CCP Soldiers On
Yet perhaps things are not as precarious as they appear. After all, China’s leaders are
well aware of the potential threats to their regime. The CCP has been quick to follow
government scandals with very public sackings and the occasional execution. It also
appears willing to address these issues openly. In October 2012, then-President Hu
addressed the People’s Congress with the ominous warning that a failure to tackle
corruption could prove fatal to the party". 97 Premier Wen has similarly stressed the need
to incorporate environmental concerns in economic planning. 98 The 2013 National
People’s Congress was coloured by identical talk, with the subsequent installation of
widely-lauded reformers and technocrats into key government positions widely taken as
indication of both self-awareness and the new government’s commitment to pre-empt the
growing threats to the regime. 99
The CCP does have several aces up its sleeve. The first is that for all the criticisms of
the government’s heavy-handedness, Asian experience indicates personal freedom is no
guarantor of stability and growth. The development of vibrant capitalism, the embrace of
globalization, and the delivery of relatively good governance have come independently of
whether elections are competitive or not. The Philippines, Bangladesh, and Pakistan, for
example, all flirted with varying degrees of democracy yet place well behind the continent’s
autocrats in terms of welfare gains. “Clearly, the lack of contested elections was not a
hindrance to growth in Asia; indeed, it was one of the best predictors of success.” 100 So
long as “governments delivered the goods in terms of growth, the citizenry would hold off
on democratic aspirations until the economy reached a stable, middle-class income
plateau.” Given the sheer number of Chinese who remain poor, there is still a long ways
before the bargain should be expected to break down. 101
It is also possible that both China’s environmental and corruption problems have
been overblown. When Chinese corruption over the past 15 years is compared with that
found in the United States during the decades leading up to the Great Depression—two
periods with roughly similar income levels—the results are actually quite favourable.
Evidence gleaned from tracking prominent American newspapers suggests US corruption…
“in the early 1870s — when its real income per capita was about $2,800 (in 2005
dollars) — was 7 to 9 times higher than China’s corruption level in 1996, the
corresponding year in terms of income per capita. By the time the U.S. reached
Pei 2009, p16.
BBC News, “China's Hu Jintao in Corruption Warning at Leadership Summit,” (November 8, 2012).
98 Joseph Kahn and Jim Yardley, “As China Roars, Pollution Reaches Deadly Extremes,” New York Times,
(August 25, 2007).
99 Nick Edwards, “Analysis: China Heads Back to the '90s in Economic Reform Drive,” Reuters, (January 19,
2013).
100 Jonathan Anderson, “The Color of China: Beijing's Exceptionalism,” National Interest, (March 3, 2009), p12.
101 The Arab Spring, for example, found remarkably little resonance in China.
96
97
36
$7,500 in 1928 — approximately equivalent to China’s real income per capita in
2009 — corruption was similar in both countries. The findings imply that, while
corruption in China is an issue that merits attention, it is not at alarmingly high
levels, compared to the U.S. historical experience.” 102
These findings are consistent with a “life-cycle” theory of corruption and give reason to
conclude that steady modernization will lead to further declines. The government has
already established a Corruption Prevention Bureau and made it independent of the Party.
It has also begun to tolerate some criticism levied at it in the blogosphere, so long as these
‘microblogs’ focus their attention on specific misdeeds by government officials rather than
broader misgivings about the regime itself. 103 This provides at least a modicum of public
accountability for officials and helps ensure the most outrageous Party and government
transgressions are punished.
China’s environmental problems appear somewhat less worrisome when judged in
comparative perspective as well. The cost imposed by dirty water and air is indeed great,
but these problems are generally ameliorated with wealth and time. 104 A 1977 report by
the OECD called Japan in the late 1960s, for example, “one of the most polluted countries in
the world.” 105 Today, however, it ranks as one of the top countries on the authoritative
Environmental Performance Index. 106 We can therefore expect that as China becomes
richer it will better afford the cleaner and more efficient technologies that reduce the
environmental impact of economic activity. A shift from coal to gas, renewable, or nuclear
energy, for example, would do much to protect Chinese lungs. 107 Just as importantly,
growing affluence leads to a transformation to more ‘post-material values,’ where things
like environmental goods take on a political imperative all their own. 108
This process has already started, for the country is actually greener today than under
Mao. In the decades following the Great Helmsman’s death, private woodlots sparked
reforestation, major cities now have at least primary wastewater treatment, and air
pollution has been curtailed by electrostatic precipitators. 109 In 2008, the China
Environmental Protection Agency—founded only in 1998—was given ministerial status, 110
further evidence of growing environmental consciousness. Further wealth is likely to drive
even more progress. Already, progressive taxation on fuel-guzzling car engines means
Carlos D Ramirez, “Is Corruption in China 'Out of Control'?,” GMU Working Paper in Economics No. 12-60
(December 5, 2012); Kate Mackenzie, “Questioning China's Governance,” Financial Times Alphaville, (October
29, 2012)
103 Bill Emmott, Rivals: How the Power Struggle Between China, India and Japan Will Shape Our Next Decade,
(London: Penguin, 2009), p85.
104 Simon Kuznets, Population, Capital and Growth: Selected Essays, (New York: Norton, 1973).
105 Cited in Albert Keidel, “China’s Economic Rise—Fact and Fiction”, Carnegie Endowment for International
Peace, Policy Brief 61, (July 2008), p11.
106 Japan scored 23rd of 132 countries, while China ranked just 116. See Yale Center for Environmental Law
& Policy, Environmental Performance Index, http://www.epi.yale.edu/epi2012/rankings.
107 Resul Cesur, Erdal Tekin, and Ayodogan Ulker, “Air Pollution and Infant Mortality,” Andrew Young School of
Policy Studies Research Paper Series 13 (January 1, 2013).
108 Ronald Ingelhart, Culture Shift in Advanced Industrial Society, (Princeton: Princeton University Press,
1990).
109 Vaclav Smil, Global Catastrophes and Trends: the Next Fifty Years, (Cambridge, MA: MIT Press, 2008), p136.
110 Keidel 2008, p11.
102
37
sales tax ranges from just 1% on the most efficient to 40% on the sports cars and sports
utility vehicles with the largest engines. China now boasts stricter emission standards than
the United States. 111 Illegal coal mines have been closed and some heavily polluting
factories shuttered. 112 The Finance Ministry has begun openly musing about imposing a
carbon tax. 113 Most impressive is that despite the risk of being seen as political agitators,
China remains full of environmentalists who expose pollution and press local government
officials to enforce environmental laws. 114
Through all of this the Party has proven to be remarkably resilient and adaptable. It
has morphed from a peasant-based guerrilla movement into a clique of ‘red hat’ capitalists.
Recent years have seen it take steps to shift state resources to the interior in an effort to
help balance the country’s massive east-west disparity. The State Council recently released
a 35-point plan, which included calls to increase the minimum wage to at least 40% of
average salaries and to force state-owned enterprises to hand over more of their profits for
government redistribution. 115 It has tackled environmental problems with increasing
tenacity and makes a grand spectacle of punishing those corrupt officials both unlucky
enough to be caught and to have fallen out of favour. The new party boss, Xi Jinping, has
loudly announced his attention to crack down on corruption and official extravagance,
committing himself to rooting out “tigers and flies” (big and small-time crooks) and
banning such items as shark-fin soup and expensive liquor at official banquets. Tellingly,
one of the most popular books in elite circles today is the Chinese translation of Alexis de
Keith Bradsher, “China Is Said to Plan Strict Gas Mileage Rules,” New York Times, (May 27, 2009).
Kahn and Yardley 2007.
113 “China a Levy Carbon Tax Before 2015—Report,” Reuters, (January 5, 2012).
114 See, for example, the Beijing-based Global Environmental Institute, at http://www.geichina.org/.
115 Simon Rabinovitch, “Beijing Vows to Raise Minimum Wages,” Financial Times, (February 5, 2013).
111
112
38
Tocqueville’s 1856 classic The Old Regime and the Revolution. The current generation of
CCP leaders clearly has the question of survival on the forefront of their minds.
The CCP: Holding Strong
When the communists won power in 1949 the officer who ‘liberated’ a district
stayed on to rule it. The CCP’s political monopoly has been maintained by force ever since,
keeping the party in control through thick and thin. Early growth and the end to the
chronic largess and political instability of the Kai-shek era earned the communists many
plaudits and new converts. Yet this reservoir of goodwill was almost entirely undone by
the deadly famine unleashed during the Great Leap Forward and the anarchy and social
trauma inflicted by the Cultural Revolution. Only the enduring loyalty of the army and the
unfathomable success of Deng’s grand economic experiment kept the CCP power base from
crumbling. Without these foundations the communists would likely have been consigned
to the dustbin of history. In many ways the CCP’s recovery and endurance seem
miraculous.
Today the party is once again under assault. Factional politics and decentralized,
unaccountable provincial fiefdoms stymy even those officials who do not abuse their
positions for personal gain. Absent electoral contests and a relatively open media, China
offers precious few means to protect property rights and maintain the rule of law.
Corruption has flourished no matter how vocal—and apparently, sincere—the central
government’s efforts to curb it. Even more, the CCP’s need for constant economic growth
provides ample incentive to give social and environmental concerns short shrift. All of this
is noted by a public who, while appreciative of the massive gains in material standing the
Party has delivered over the last thirty years, have no love for the rulers who run their
country in such an oppressive manner.
Yet there is no evidence to suggest the CCP’s rule has run its course. For autocrats,
China’s leaders hand over power with remarkable regularity and retire gracefully from the
public spotlight. The country also enjoys considerable fiscal leeway to address social issues
and stalled domestic consumption. The 2012 budget deficit, for example, was just 2.3% of
GDP; in the United States the figure was 7.6%. Nor is there reason that China’s
authoritarian nature need impede the CCP’s goals of reducing inequality, stopping land
seizures, containing environmental damage, and preventing the frequent food and
consumer product regulatory scandals. Singapore, for example, is hardly pluralistic, yet
boasts one of the most capable governments on the planet. In the meantime, China’s trains
run on time, its environmental remediation efforts tower above any historical comparison
on a per capital basis, and the economy—seemingly no matter what curveball the global
financial crisis throws at it—keeps chugging forward at roughly 8% per annum. Thus
while confidence in the Chinese government fell by some 10% over 2010-11, 116 it remains
in healthy territory. With growth having returned in late 2012 it is possible that even this
decline has been arrested.
People's Republic of China: Staff Report for the 2012 Article IV Consultation, (International Monetary Fund,
July 2012), p24.
116
39
This matters for international relations because a Beijing elite that concludes its
domestic power base poses no threat of upheaval has less reason to ramp up the hypernationalism and sabre-rattling that so poisons foreign relations. Proponents of a
democratic China would be wise to advocate for gradual reforms, a shifting set of goalposts
that neither threatens the current leadership too greatly nor creates the instability that
causes output to plunge and makes ‘rally-around-the-flag’ xenophobic enterprises
palatable. A model of democratic transition along the lines of South Korea or Taiwan
would be much more amenable to international peace and stability than, say, Iraq. In any
case, continued economic growth is the key. China’s capacity to reduce inequality, combat
pollution, and even jumpstart an industrial sector plagued by flagging global demand relies
on a steady stream of healthy growth and rising government revenues. The CCP has shown
it can maintain stability so long as such growth is achieved. If the economy falters,
however, all bets are off. We next consider the role the international system will play in
regards to this crucial variable.
40
Wealth
“Communist society will not flourish in a courtyard behind locked doors. Opening
the country to the outside world is not an expedient measure but a fundamental
principle for building a socialist society, as well as the only road to a communist
society.”
Li Honglin, People’s Daily (October 15, 1984) 117
The last ingredient of great power satiation is wealth. If a growing power can
maintain its pace of rapid economic development there is little reason to upset the
proverbial applecart. Growing rich, in other words, can make the existing international
order seem tolerable. But to get rich generally requires international mobility in goods,
capital, and technology. As China under Mao demonstrated, even large countries will
languish if cut off from the global economy. China’s postwar penury was tragic evidence of
Adam Smith’s observation that autarky is a sure path to ruin. 118
The need for transnational commerce is particularly crucial if certain vital goods
cannot be domestically procured. In China’s case this includes the vast quantities of
imported raw materials, ranging from aluminum to zinc, needed to keep its coastal
factories humming. Imports of capital and technology are similarly crucial, with rising
powers relying on these to improve the productivity and sophistication of their industrial
base. 119 New factories require new buildings, machines, and the knowledge to run them.
Even when domestic savings rates are extraordinarily high, much of this must come from
abroad. A good deal of software, for example, is unavailable in China through domestic
manufacture. In this way open markets facilitate the transformation from an agriculturalbased economy to one based on industry and then services, steadily raising incomes as it
does.
What really holds the eye of policymakers and publics, however, is the export of
these commodities. Although economists have long observed that the primary gains of
trade are imports, great attention is perpetually fixed toward the current account. This is
because unlike the diffused gains of imports, profits from exports tend to be concentrated
among specific—and generally large—firms. The gains from importing Pakistani textiles,
for example, are spread over the millions of Americans who can now purchase cheaper tshirts and underwear. The returns to US aircraft exports, by contrast, are largely confined
to the shareholders and employees of giants like Boeing and Lockheed Martin. This
provides exporters with much greater incentive to keep their interests to the political front
and centre than importers. Exports play into a nationalistic component as well. Buying up
foreign firms and building factories overseas generates a measure of national pride, adding
to the importance ascribed to exports further still. Last is the economic argument in favour
of trade more generally. A healthy trading sector permits the development of comparative
Cited in Cohen and Major 2008, p899.
Adam Smith, The Wealth of Nations, (London: J.M. Dent & Sons, 1964); Douglas A Irwin, Peddling
Protectionism: Smoot-Hawley and the Great Depression, (Princeton: Princeton University Press, 2011).
119 For a discussion of technological imitation, see Donald S Cardwell, Wheels, Clocks and Rockets: A History of
Technology, (New York: W.W. Norton, 2001), p460.
117
118
41
advantages that raise aggregate incomes. Bigger markets mean more specialization and
thus higher productivity, which is the true foundation of wealth.
The Growth This Far
Trade offers rising powers the means to accumulate great wealth. Mid-19th century
Germany, for example, rode a wave of industrial innovation to global commercial success.
The discovery of synthetic fertilizers and innovations in the production of manufactured
dyes laid the foundation for Germany’s highly acclaimed chemical industries. Similar
development was witnessed in the metals, shipping, machine tools, electrical, optical,
banking, and insurance sectors. By 1870, large firms like Hoechst, Hapag, Siemens, Bayer,
Man, Henschel, and Krupp loomed large in the international marketplace. 120 Once there,
they continued to erode the market share of foreign competitors. Take how Germany
produced 169,000 tonnes of steel in 1870 against England’s 286,000 tonnes. By 1910,
however, it was dramatically out-producing England by 13.7 million to just 6.4 million
tonnes. 121 Other great powers who achieved great affluence in this manner include Athens,
Venice, Holland, England, and Japan.
Incredibly, China has put all these great feats to shame. In 1978 Deng Xiaoping
launched a series of reforms known as kaifang or ‘opening up.’ Although these began as
modest experiments with the liberalization of surplus agricultural production, they led in
the 1980s to market-based industrial reforms and the creation of special, foreign
investment-friendly economic zones. In foreign managers, technology, and capital came,
particularly from Taiwan and Hong Kong, building the factories needed to meet the
country’s bourgeoning merchandise trade. 122
More recently, China’s overseas
expatriates—known domestically as ‘sea turtles’—have begun to return, carrying with
them cash to invest and, more importantly, the knowledge and skills of the world’s most
competitive universities and firms. 123 The Chinese government also offers market access in
return for foreign companies sharing advanced industrial processes. Firms such as GE,
Motorola, Siemens, and Microsoft have all willingly complied, building factories and
training workers in return for admission into China’s billion-plus person market. 124
120 Hermann Kinder and Werner Hilgemann, Atlas of World History, 2 vols (London: Penguin, 1978), p60-1.
See also Alan Milward and S B Saul, The Economic Development of Continental Europe, (London: George Allen
& Unwin, 1973), chpt 6.
121 Remak 1967, p77.
122 Pranab Bardhan, Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India, (Princeton:
Princeton University Press, 2010).
123 In these ways the 1980s and 1990s saw overseas Chinese bring $190 billion in FDI, or more than 50% of
the total. Amy Chua, Day of Empire: How Hyperpowers Rise to Global Dominance--and Why They Fall, (New
York: Doubleday, 2007), p297.
124 Kathryn Kranhold, “China's Price for Market Entry: Give Us Your Technology, Too,” Wall Street Journal,
(February 26, 2004).
42
Combined with local savings, foreign investment and technology built the Chinese
infrastructure needed to flood the world with cheap goods. Finding a receptive global
market, trade exploded: growing from 21% of China’s GDP in 1982 to a peak of more than
65% just prior to the Great Recession. In absolute terms, trade has grown from $20.3
billion in 1978 to $2.73 trillion in 2011 (current USD). 125 More importantly, growing trade
volumes have been good to the Chinese economy, fuelling growth in personal incomes and
raising China from agrarian backwater to upper middle income status in a remarkably
short period of time. GDP growth in the thirty years that followed Deng’s cautious reforms
averaged 9.9% per year. Some 440 million Chinese—again, almost half a billion people—
have been lifted out of deep poverty. By any metric, China’s embrace of the current
international order has enabled the most dramatic economic catch-up of all time.
125
World Bank, WDI.
43
Same System, Same Growth?
Despite China’s incredible economic performance over the past thirty years, it
remains well behind the developed world. At just under $8,000 PPP, average annual
incomes are still less than one-sixth that of the United States. The China Modernization
Report, published in 2007, noted that in 2015 China will only have modernized to the level
the developing world achieved in 1960. 126 The Chinese economic miracle can therefore not
be let falter. Completing convergence will require two things. First is continued access to
the global market. The exporting firms that dominate China’s seaboard in particular
require continued outlets for their wares. As the 2008 global slowdown demonstrated,
sudden declines in global aggregate demand inflict serious trauma on China’s export-driven
economy. World trade tumbled by a record 10.5% in 2009, and as American and European
spending dried up so too did China’s factories grind to a halt. Annual GDP growth in China
decelerated sharply from its 14.8% peak in the second quarter of 2007 to just 6.6% in the
first quarter of 2009. These idled assembly lines generated mass unemployment; more
than 20 million jobs were shed in Guangdong province alone. 127 Interruption of steady
foreign sales would therefore pose a serious obstacle to China’s continued prosperity.
But China needs more than foreigners to buy its goods. It also requires safe places
to sock its excess savings. The last decade witnessed not only a massive outflow of Chinese
merchandise goods, but also of capital. America and Europe’s yawning trade deficit with
the ‘workshop of the world’ leaves China awash in funds. Because the domestic financial
“Report: China to Complete First Stage of Modernization by 2015,” English People's Daily, (January 29,
2007).
127 Stephen S Roach, “China Is Okay,” Project Syndicate (August 29, 2012).
126
44
system is so poorly developed and the superabundance of savings so great, much of this
capital is re-exported overseas through the Chinese national bank. In addition, the Central
Bank ‘sterilizes’ dollar profits to keep the Yuan artificially low. This adds further to the
massive sums funnelled into US Treasury Bills and similar securities each year. 128
Imports matter to China, too. Given the mountain of under-utilized local capital,
incoming FDI no longer plays such a central role in the Chinese economy. 129 Borrowing
needs can now be almost entirely met with China’s artificially high domestic savings. Much
more important is the continued importation of leading-edge technology. Despite China’s
advance along the production frontier, most sectors remain several generations behind the
leading global technology. It will take many more years of accessing the West’s cuttingedge equipment and software before anything close to technological parity is achieved.
Even then, the nature of economic specialization and the growing complexity of technology
suggests no country will be able to meet all its technological needs solely through domestic
means.
Similarly important is an open international market in natural resources. Although
China is a massive country with a well-endowed resource base, the input-intensity of the
light- and heavy-industries in which Chinese firms dominate require additional resources
from overseas. In 2011, for example, 8% of China’s $1.7 trillion USD in merchandise
imports were agricultural goods, with another 30% comprising fuels and minerals. 130
Much of these goods were destined for re-export after final assembly in the massive factory
towns along the Chinese coast. Their appetite for resources appears insatiable: between
1999 and the 2007 commodity boom peak, the value of copper ore and concentrate
imported into China rose 250-fold; for soybean and oil imports the increase was 350-fold.
Ships laden with natural resources from around the world descend on China’s ports, plying
their cargoes from far-flung locales in massive numbers. 131 Incredibly, the loading queue at
the coal port in Newcastle, Australia, was 79 ships long in 2008, almost all of whose
destination was China.
Open for Business
There is good reason to anticipate that world markets will remain open for the
foreseeable future. China has demonstrated little problem convincing other nations to part
with their wares. Sometimes this is because China is willing to look the other way when it
comes to unseemly trading partners. Burma, North Korea, Syria, and Sudan are just some
of the dictatorships who have benefited from China’s ‘hands-off’ policy. But the main
reason the goods keep flowing is that China offers such generous terms. It has aggressively
courted vast swaths of the developing world, chequebook in hand. The past decade is
littered with agreements that exchange Chinese capital for access to mineral resources.
Foreign Direct Investment (FDI) flows, on the other hand, are remarkably modest in comparison. At just
over $300 billion, China’s total stock is smaller than that of Sweden and Russia. FDI as a percentage of net
outflows was just 0.7% in 2011. World Bank, WDI.
129 In fact, FDI inflows as a percentage of GDP were just 3.0% in 2011, well down from the four-and-a-half
percent rate in the mid-2000s and five and six percent rates of the early and mid-1990s. Ibid.
130 WTO, “Trade Profiles.” Another 59% were manufactures.
131 “A Ravenous Dragon,” The Economist, (March 13, 2008).
128
45
Loans are provided to governments on generous terms, as are promises to build important
national infrastructure. In the spring of 2009, for example, China announced deals to
double its development fund in Venezuela to $12 billion, lend Ecuador at least $1 billion to
build a hydroelectric plant, provide Argentina with access to more than $10 billion in
credit, and lend Brazil’s national oil company another $10 billion. Not wanting to privilege
one region over another, the following November Premier Wen pledged $10 billion in new
low-cost loans to Africa over the next three years, doubling the previous commitment made
in 2006. 132 Central Asia, too, has benefited from Chinese munificence. Burdened by a
banking sector struggling with foreign debts, Kazakhstan was eager to accept China’s
economic lifeline—a loan yet again of $10 billion. All of this comes on top of another $25
billion loan to Russia in exchange for future oil supplies, plus another $3 billion copper
investment in unstable Afghanistan. 133 Such vast sums of hard cash prove an almost
irresistible commodity.
There have been, however, a few suggestions that perhaps there are some limits to
how much Chinese money a country is willing to take. Much of the compensation, after all,
comes in the form of infrastructure built by Chinese firms. This construction work can be
slapdash, with the occasional building opening to much fanfare and then falling apart soon
after. Similarly, lax oversight in safety and environmental regulations are ruthlessly
exploited by Chinese companies who come to harvest natural resources. At Chinese-run
mines in the Zambian copper-belt, for example, workers must work for two years before
earning a safety helmet. 134 Some observers worry too much dependence on Chinese
investment gives China ‘colonial-like’ power. Others simply find the repressive CCP regime
too distasteful to do business with. The much-delayed $15.1 billion takeover of Canada’s
Nexen by the state-owned CNOOC oil company brought all of these different fears to boil.
This occurred despite booming trade between Canada and China, and the fact that
voracious Chinese consumption of Canadian raw materials did much to propel the
Canadian economy forward in the 2000s, even as its traditional partner, the United States,
stumbled under the weight of bad debt and poor fiscal management. A poll done by
AngusReid found 58% of respondents wanted the Canadian government to block the
deal. 135 Echoing Africa’s newfound unease, some Canadians went so far as to express fears
of Canada becoming a mere ‘resource colony’ of Beijing.
Yet it is important to remember that despite all the sound and fury, the Nexen deal
eventually went ahead. 136 More importantly, even if the Canadian government had nixed
the offer the flow of commodities from Canada’s west would not have suffered much; China
would have simply purchased the bitumen from others in the Alberta oil patch. In Africa
too, the emergence of mixed feelings has not dethroned China as the continent’s largest
trading partner. Local grousing appears only to slow the trading relationship at best, and is
clearly unable to thwart it substantially. At the same time, growth in China’s commodity
appetite has been steadily slowing since the 2008 Great Recession. What is remarkable
Barney Jopsen and Jamil Anderlini, “China Pledges $10 Billion in Low-Cost Loans to Africa,” Washington
Post, (November 9, 2009). Trade between the two has jumped tenfold since 2000.
133 Isabel Gorst, “China Throws Kazakhstan Economic Lifeline,” Financial Times, (April 17, 2009).
134 The Chinese in Africa,” The Economist, (April 20, 2013).
135 AngusReid, Most Canadians Would Block Proposed Takeover of Nexen, (October 16, 2012).
136 Joseph Boris, “Canada OKs CNOOC's $15b Purchase of Nexen,” China Daily, (December 8, 2012).
132
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about this trend is that it has occurred even as total trade has begun to rebound. The
implication is that even a moderate decline in the world’s willingness to part with its
natural resources will be likely more than offset by slowing Chinese demand for
commodities in the first place.
Export markets pose a more formidable test. It is one thing to pay for and remove
another country’s natural resources. It is something quite another to enter a foreign
market and muscle aside domestic firms. Laid-off workers from these uncompetitive
enterprises take to the streets while their former employers utilize back-room channels to
petition political leaders. Both search for protection from low-cost foreign goods, creating
an altogether greater furor than the struggles over the parting of natural resources. The
expectation is thus to see greater ‘pushback’ against any county that demonstrates an
impressive run of export success.
Surprisingly, little of this has been witnessed. It is true that China has been subject to
the occasional bromide and counter-vailing duty, such as those for exports of tire and steel
levied by the United States. But the world has generally been sanguine about China’s
growing market share. This is best evidenced by average tariff rates and the number of
China-related WTO disputes, both of which have remained remarkably steady. Tellingly,
the world went through greatest global recession since the 1930s and yet the international
aversion to tariffs on manufactured goods held strong. Low aggregate demand is the
reason why Chinese exports slowed down in the latter 2000s, rather than a rising tide of
protectionism. In fact, tariffs have continued their downward tumble. Tracking WTO
antidumping initiations tells a similar story: most nations have been more than willing to
concede China’s export success, lining up instead to buy these cheaper goods as they arrive
47
in port. The implication is clear: there is no sense that a severing of China from its export
markets is anytime in the offing.
48
Growing Ambivalence
Not only is it likely that international markets will remain open for business, there is
also good reason to conclude that China’s reliance on them is set to diminish. This is so for
two reasons, the first being the likelihood that China will follow its predecessors and slowly
reduce the raw materials intensity of its products as it continues to shift into higher-value
goods. 137 Computers, for example, rely on fewer physical inputs per dollar than textiles,
toys, and raw steel. The trend will only be enhanced as the service sector continues to
grow, for in industries like IT support and health care the demand for natural resources is
even less. Previous experience suggests that manufacturing’s decline begins at roughly
$8,000 PPP GDP per capita (1990 GK$). 138 Manufacturing in China should therefore soon
be trending downward. In fact, employment growth in manufacturing has already begun to
stagnate. At the same time, the exploitation of modern shale oil and gas fracking
technologies, alongside China’s aggressive shift to nuclear 139 and clean energies such as
solar and wind, offer the hope of at least tempering growth in the need for foreign energy
supplies. Together these trends suggest China’s demand for commodities will soon hit its
peak.
The demand for capital and technology, on the other hand, is likely to only increase.
In fact, the shift into higher value manufactures and services will in fact require massive
amounts of both, yet much of this will increasingly be produced at home. Growing rates of
Martin Sommer, Christopher Gilbert, and Angela Espiritu, “The Boom in Nonfuel Commodity Prices: Can It
Last?,” IMF World Economic Outlook (September 2006): Chapter 5.
138 James Manyika et al., Manufacturing the Future, (McKinsey Global Institute, November 2012).
139 China already has nine nuclear reactors under construction, 24 ‘on order or planned,’ and 76 further
‘proposed’.
137
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domestic innovation, for example, will greatly supplement foreign technology. Companies
in the Fortune 500 list already have 98 research and development (R&D) facilities in
China. 140 China now boasts more researchers than Japan, the third largest R&D budget in
the world, and more post-secondary students that the US and Japan combined. In 2010, 22
Chinese universities made the Shanghai Jiao Tong University’s top 500 rankings of the top
500, compared with 154 America, 25 Japanese, and just two Indian. The amount of top
quality Chinese research has increased dramatically as a result and the expectation is that
its production of high value goods should grow as well. As for capital, China’s reliance on
FDI inflows have already dramatically diminished. If anything, the country faces excess
pools of domestic savings looking for profitable investment. It will take some time before
this reservoir is exhausted and foreign capital is once again required.
The second reason why trade will decline in relative salience is that the Chinese
economy is likely to begin to shift away from export-led growth and towards domestic
consumption.
Already wages throughout the economy are growing, bringing a
commensurate increase in buying power. According to HSBC, real wages measured in 2005
dollars have risen 350% in the past 11 years, significantly faster than any Asian country. 141
Wages in China’s southern cities, for example, are approaching $6 an hour, roughly equal to
those paid in Mexico. 142 This growing spending power has dramatically increased levels of
domestic consumption. An Economist Intelligence Unit survey of executives from 328
companies found that 46% of respondents expected China to be their biggest market
within ten years. 143 Growing imports will in turn reduce China’s persistent current account
surpluses, calming the foreign accusations of dumping and other unfair trading practices.
Open Markets, Healthy Fortunes
For China to remain satisfied with the current international order it must have
access to world markets. There is little reason to suggest any substantial effort has been
made by foreign competitors to deny China this, and this situation is unlikely to change
soon. China’s rise to position as exporting powerhouse has been accompanied by
remarkably little resistance. Meanwhile, China’s seemingly insatiable thirst for foreign
supplies of raw materials of all types is set to slow, as materials-intensive production shifts
to more competitive, lower-cost countries. Most important of all is that consumption has
already begun to shift inwards, making the country less dependent on the international
trading system. Rising domestic consumption will help safeguard China’s long run growth
prospects and keep tempers from flaring over tariff squabbles or exporter-induced job
losses. As it does the expectation is that the world economy will become less of an irritant
to China and its neighbours, not more so.
This is to our good fortune. The last time a rising Asian hegemon displayed deep
disgruntlement with the economic order was Japan in 1941. There rising tensions led to an
oil embargo by America, Britain, and the Netherlands, a move that left the Japanese
Adrian Wooldridge, “The World Turned Upside Down,” The Economist, (March 17, 2010).
David Pilling, “Foxconn Union Heralds End of Cheap Era,” Financial Times, (February 6, 2013).
142 Chris Anderson, “Mexico: the New China,” New York Times, (January 26, 2013).
143 Economist Intelligence Unit, Multinational Companies and China: What Future? (November 2011).
140
141
50
economy with just six months of reserves and looming economic collapse. 144 With the
current system, however, no such ultimatum is likely. This means there is no reason for
China to conclude that the most profitable way forward is to make a run at continental
domination through military conquest, as did Japan in the early 1940s. Instead, China’s
importers and exporters have found the current order a highly profitable and welcoming
place. If China’s economic miracle breaks down, it will not be because of closed
international markets. What remains is thus a story of domestic economic management
and reform, an issue we touch upon briefly in the concluding remarks that follow.
Saburo Ienaga, The Pacific War: World War II and the Japanese, 1931-1945, (New York: Random House,
1978); Ronald H Worth, No Choice but War: the United States Embargo Against Japan and the Eruption of War
in the Pacific, (Jefferson, NC: McFarland & Co., 1995); Jonathan Marshall, To Have and to Have Not: Southeast
Asian Raw Materials and the Origins of the Pacific War, (Berkeley: University of California Press, 1995).
144
51
Conclusion
For all the fear and concern that usually accompanies discussion of China’s
spectacular reemergence, this paper has been considerably sanguine. There is of course no
shortage of challenges that confront China and its neighbours, shared difficulties that will
inevitably deliver bouts of frustration, harsh words, and bluster. But the evidence suggests
real reason to be upbeat when considering the prospects for China and the global order.
Shared interests, after all, dominate the relationship. More importantly, there is nothing
inherent in this collection of post-war political and economic structures that precludes the
peaceful integration of China’s newfound might and its very real ambitions. We do not live
in the neurotic and uncompromising Europe of 1914, and China is certainly not Wilhelmite
Germany.
This conclusion has not been borne of idle speculation. Current behaviours and
contemporary trends have been systematically evaluated through the use of a simple
deductive model, one that assumes there are four central aspects to a nation’s satisfaction
with the contemporary world order. In each there appears great incentive for China to
adhere to the status quo. This is welcome news, for the alternative to acceptance and
collaboration is to strike out as a revisionist power, seeking to remake international affairs
using military force. Even when this latter strategy brings the rising power success, there
are always some condemned to fiery ruin. Cooperation is therefore a far more palatable
outcome, being very much to the net global benefit.
Security is China’s paramount concern, but also its least pressing. Her neighbours
are too weak individually to pose much of a threat, yet at the same time powerful enough in
tandem to make military expansionism too risky a prospect for Beijing to seriously
consider. This is not to suggest that China lacks those who yearn for the return of lost
territory, such as ‘rebel’ Taiwan or the ‘nine-dash line’ in the South China Sea. China fared
poorly at the hands of foreigners during the opening half of last century and it still holds
dear many national grievances. But China’s leaders are at heart eminently pragmatic. They
understand the central pillar of the CCP’s rule is a high rate of sustained economic growth.
Given the threat unbridled antipathy towards Japan or Taiwan poses to the acquisition of
further riches, there is little reason to think the revanchists would be given freedom to
carry the day.
The CCP has, after all, mastered the art of the police state. Critics are silenced with
spiteful efficiency. Dissidents spend years locked away in work camps, often for voicing the
most innocuous of complaints. Yet this heavy-handedness, alongside the corruption such
immunity from public scrutiny invariably breeds, is deemed tolerable by the Chinese
people. The reason is that, for all its flaws, the CCP has overseen the most impressive
economic catch-up of all time. With livings standards having risen for far and so fast, the
conclusion seems to be that continued communist rule is a laurel worth bestowing. If the
current international system can deliver such astounding growth, what value would there
be in trying to change it?
Indeed, the world economy certainly has been welcoming. China has both profited
immensely from the current arrangement and become one of its leading members. Chinese
52
officials now play at IMF and WTO meetings an increasingly central role. More importantly,
the rise of China as an export powerhouse has generated surprisingly little ill will. Tariffs
have maintained their downward trend. Accusations of unfair trading practices have
stayed remarkably mute. Here again there is nothing to suggest that China will find the
international system discomfiting. Even more, what little tension does exist can be
expected to diminish as the Chinese economy continues its trend of rebalancing away from
exports and towards domestic consumption, shrinking current account surpluses all the
while.
The great test, then, will not be with the international system at all. The future of
China’s economic growth will instead rely primarily on the vigour of the domestic reforms
that must now be undertaken. Government budgets will have to be restructured to support
more social expenditures. As is, China spends far less in these areas than other developing
countries and too many Chinese rely for their income security on the generosity of family,
charity, or the street. Taxes will have to be raised in response—a prickly issue in any
jurisdiction. But this is a fight well worth having, for the happy by-product would be a
reduction in the national savings rate and a commensurate boost to private consumption,
to say nothing of reduced in social tensions. 145
Beijing must also step back from its micromanagement of the economy. Most urgent
is an end to the setting of interest rates by fiat and the need to free up labour
mobility. Liberalizing residency requirements in major cities would boost consumption
and accelerate the urbanization process, which in turn would hasten the profitable
transition to a more service-based economy. Ending the preferred borrower status of
state-owned enterprises (SOE), which starve the private sector of capital and choke
innovation with their anti-competitive tendencies, must also be ended, alongside the
routine land expropriation that creates such inequality and discontent. 146 None of this will
be easy. Reform will need to take place in stages, in order to cushion the blow to the
economy, yet still at speed sufficient to prevent the reforms from becoming bogged down
in China’s convoluted party system and unyielding provincial fiefdoms.
There is good reason, however, to be optimistic these tasks can be
completed. China’s new premier has placed in key positions disciples of China’s underappreciated 1990s reformer, Zhu Rongji. Vice Premier Ma Kai, Finance Minister Lou Jiwei,
and central bank governor Zhou Xiaochuan were all top Zhu lieutenants at the State
Commission for Restructuring the Economy, the body that drew up the blueprint for
China’s 1990s ascension into the World Trade Organization and the corresponding
liberalization of China’s myriad army- and state-owned enterprises. 147 The success of
these reformers is of course far from preordained, but it bodes well that such a clutch of
talented technocrats has been installed at the very heights of the economy. Perhaps these
much-needed reforms will see some light.
The fundamental lesson is that Chinese prosperity serves as a boon to international
Yukon Huang, “Demystifying China's Slowdown,” CNN, (July 23, 2012).
World Bank and the Development Research Center of the State Council, the People's Republic of China,
China 2030, (Washington, DC: World Bank, 2012).
147 Edwards 2013.
145
146
53
tranquility. Anything that can be done to add to it should therefore be encouraged. In
many ways, China is like the United States in the 1890s: boisterous and occasionally
belligerent, but nonetheless able and willing to keep the peace with its great power rivals.
This proved fortunate, for in return the established powers sought no quarrel of their own.
If anything, they gained from America’s newfound wealth and power. Britain and France
found the US a valuable ally during the First and Second World Wars. Germany and Japan
have found a good partner to conduct commerce with. Others, too, shared in the gifts of
Harvard, General Electric, and America’s multitude of Nobel Prizes. How fortunate we
would be if a century from now similar words were written about China’s rise to power.
54