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Superpower No More: China’s Endless Rise

With patience, time, and a good strategy, China will be able to achieve dominance without military force.

China’s successful navigation of the Great Recession, which started in 2007, was a surprise to many, especially those who find it hard to believe that an authoritarian government with the largest population in the world could be accommodated and prosper in a global economic system under such strain.

In 2008, the pessimists said China would not be able to withstand a collapse of American spending and its impact on imports from China. But China simply decoupled from the United States and became more dependent on its own huge market and other international markets it had been developing. Chinese car sales increased by fifty-three percent in 2009, while industrial profits rose by a staggering seventy percent in the first ten months of the year. Exports were not cut but rose eighteen percent while imports rose fifty-six percent. Of course, these figures run counter to China’s long-standing argument that it must hold the value of the Yuan down to support its suffering industries.

In his book, China Road: a Journey into the Future of a Rising Power, Robb Gifford states that everything in China is big, including its government cycles, which are measured in centuries, not years or even decades. China’s history has been one of a succession of dynasties. As Gifford contends, “In some ways, China is the same as it has always been. It is still the same kind of imperial, one-party government that states the First Emperor from two thousand years ago would recognize. And that means there are no effective checks and balances, and there is terrible corruption, as there always has been.”

Still a one-party system of government, China’s political leaders may be attempting to be more responsive to the people, but this effort is lagging behind their economic and social advances. The argument is often made that the one-party system has allowed Beijing to control and direct economic growth in a manner in which democratic societies cannot. At present, as long as growth and prosperity continues, most Chinese are willing to accept the status quo. And those that disagree are really not tolerated.

Nonetheless, the Chinese people see the economic miracle that is unfolding and they see opportunities they would never have imagined twenty years ago. The Communist Party’s strength and acceptance by the people is now coming from this economic growth which brings hope for the future.

China is a nation torn between capitalism and socialism. To believe that China is a nation of 1.3 billion hard driving, aspiring capitalists is as absurd as believing that it will slip back into Maoism. It is just as ridiculous to believe that China will become a democracy in the foreseeable future. China is in the midst of a new “cultural revolution” of the capitalist variety, not the Maoist variety. Yes, when we look at the face of China we see many blemishes, but if we look past these we will see a depth of strength and determination that cannot be denied and will carry the nation over many hurdles – a force to be reckoned with.

American defense planners also view China’s rise with great concern. They see a Leninist government system with a rapidly modernizing army larger than China’s defensive needs require. An annual Pentagon review noted that “China does not now face a direct threat from another nation. Yet it continues to invest heavily in its military, particularly in programs designed to improve power projection.”

The review added that current trends in military modernization could pose “a credible threat to other modern militaries operating in the region.” PLA (Peoples Liberation Army) preparations include an expanded force of ballistic missiles (long-range and short-range), cruise missiles, submarines, advanced aircraft, and other modern systems, against the background of a policy toward Taiwan that espouses “peaceful reunification.”

Chinese authorities become quite upset if anyone even suggests that its build-up could be interpreted as threatening. When the Obama Administration issued a National Intelligence Strategy that briefly mentioned China’s “increasing natural-resource-focused diplomacy and military modernization among the factors making it a complex global challenge,” the Chinese boldly protested calling on America to abandon its “cold-war mentality and prejudices.”

The term “soft power” was used by a Chinese leader for the first time in 2007. China is working very hard to convince the rest of the world that its rise should not be feared, but embraced. China may not have the military power at this time to threaten America, but it does have the economic power to wreak havoc on our economy. Most troubling is the fact that the United States has indirectly been a principle financier of China’s military buildup through our outsourcing, offshoring of jobs, and trade policies.

In 2005, the congressionally mandated report, United States Congressional-China Economic and Security Review Commission Annual Report to Congress, concluded that, “on balance, the trends in the United States-China relationship have negative implications for the long-term economic and security interests of the United States. To prevent or reduce the negative impact of these trends, the United States needs to establish and implement policies and provide course correction.”

Some of the key findings of the Commission were relative to trade and included the following: 1) a rapidly rising United States trade deficit with China; 2) undervalued Chinese currency; 3) Chinese government subsidies to companies (particularly to companies favoring export-oriented production); 4) weak intellectual property rights protection; 5) repressive labor practices; and 6) violation of critical commitments it made in order to enter the World Trade Organization.

The Commission also states, “China’s continued recalcitrance is causing material injury to United States companies, workers, and communities. It is also contributing to a highly skewed bilateral economic relationship marked by a soaring United States trade deficit and a weakening competitive position for many United States firms.” As of today, Congress appeared to have either ignored its mandated report or has been totally ineffectual in any attempt to make course corrections.

The Cold War lasted from the mid 1940s to 1991. While there was a great deal of posturing and the advent of wars such as Korea and Vietnam, the United States and the Soviet Union never came to direct blows. Eventually, the Soviets were defeated, not by military, but rather by American economic power.

We need not fear a war with China. In time, if current trends continue, China will dominate the United States, not militarily, but economically. Some might say China is already in a position in which it can make considerable demands on the United States, and it has more influence on our trade policy than is healthy for the United States.

By mid twenty-first century, will the United States be like the Soviet Union was in the latter quarter of the twentieth century, unable to sustain its superpower status financially?

With patience, time, and a good strategy, China will be able to achieve dominance without military force. This is exactly what we did to the Soviets. In the twenty-first century, superpower status will come from economic, not military power. Without economic strength, we will be unable to sustain our military strength, much as the Soviets found they could no longer do by 1991.

We saw what economic power could do in the twentieth century, why don’t we see it now?

Geoeconomist Ronald R. Pollina, Ph.D., is the author of the nationally recognized Pollina Corporate Top 10 Pro-Business States Study, which is published annually. He is the president and founder of Chicago-based Pollina Corporate Real Estate. This article is excerpted from Selling Out a Superpower: Where the U.S. Economy Went Wrong and How We Can Turn It Around with permission of Prometheus Books.

About ronald r. pollina

Geoeconomist Ronald R. Pollina, president and founder of Chicago-based Pollina Corporate Real Estate, is the author of Pollina Corporate Top 10 Pro-Business States Study, which is published annually, and Selling Out a Superpower: Where the U.S. Economy Went Wrong and How We Can Turn It Around (Prometheus Books).