China’s Rise to Global Economic Superpower
The International Monetary Fund (IMF), the most prestigious international financial institution in the world, has rated China’s ranking to number one economic superpower in the world — surpassing those of the United States based upon the purchasing power parity of GDP indicator (gross domestic product). IMF has asserted that China produced 17% of the world gross domestic product (GDP) in 2014 exceeding U.SA’s GDP of world’s 16% (1). China’s economic growth performance over the last 30 years has impressed development economists who took the position that China will remain in the low/middle income group of nations permanently due to its very large population — approximately 1.2+ billion in 2015. Moreover, China’s performance has inspired other low and middle income countries to emulate China’s approach and engage in growthmanship including many middle income countries of Latin America such as Brazil, Argentina, Columbia and India which also has a large population like China.
It is most likely that China will maintain its lead in economic ranking of GDP in the foreseeable future largely due to catch-up of its per capita income which is rising annually at 8%-10%. (2) Although China’s GDP has converged and surpassed Untired States GDP, its per capita GDP is still below the U.S. and first world. However, China’s rapid GDP growth coupled with low fertility rate (number of children per women) will boost China’s per capita income to high marginal annual growth paving the way for its convergence, in less than two decades, to the level of high income countries as estimated by USC researchers (3). It follows that the GDP gap between China and other countries will further widen in the future. Moreover, the U.S. carries a heavy military burden which does not feedback to economic growth while China has avoided heavy military burden. Instead in 2014, China inaugurated a major international economic development program by financing infrastructure projects in the historical silk route countries. It is engaged in financing economic infrastructure projects in the silk route countries with positive ROI for China and the recipient countries. (4)
The genesis of China’s remarkable upswing in a relatively short span of time goes back more than five decades to 1948 when China emerged an independent state after World War II upon the defeat of Japan by the United States. China’s leadership was bifurcated between Chairman Mao Zedong’s communist party and Chiang Kai-shek’s Kuomintang regime raising concern of a pending civil war. (5)
To China’s good fortune, the two leaders’ views coalesced and a coalition government was formed. The absence of a civil war and the peaceful political transition of leadership largely explains the remarkable ascent of China’s political and economic fortunes.
China’s political system is not monolithic, or colossal, it has worked under a seven-member Politburo Standing Committee of party congress. Political leadership is elected every five years.
The second major influence that explains China’s good fortune is its decision to open up to the free world and get out of the Soviet sphere of influence. It was prompted in the 1960s when President Richard M. Nixon sought reproachment with China and sent his Secretary of State Henry Kissinger to China who arranged a personal visit by President Nixon with China’s leadership. The approach turned out to be very successful. It got China out of the sphere of Soviet Union’s influence, paved the way for China to open up to the Western world, and the rest of the world, and eventually modify its system of political economy to a very unique system of private enterprise market economy and a one-party political system. This unique approach has turned out to be successful both politically and economically for China, and it has benefitted the rest of the world in trade, commerce and international peace. In 2014, President Barrack Obama initiated the exchange of 100,000 American students to study in China further cementing cultural and education relations between the two countries.
Following is a synopsis of China’s economic, political and social framework that augur well for its continued development and leadership, and provide a blueprint for other nations to emulate.
A. LEADERSHIP
The transition of leadership in China has been remarkably peaceful and smooth. As can be seen Deng Xiao Ping adopted market economy in December 1978. Deng Xiaoping (1978-1987) was instrumental and responsible for modernization and reform. Premier Zhu RongJi (1988-2003) paved the way for China’s entry into World Trade Organization (WTO). President Jiang Zemin (1993-2003), theory of promoting business and entrepreneurial class into the country’s one-party system, helped China’s economic expansion. Current president Xi Jinping launched the economic development of the silk route countries, clamped down on corruption by rooting out high party members and military brass, has launched a rural development program to close distributional and development gaps, and promote social equity.
The economic innovation in China started in the early eighties beginning with Deng Xiaoping through Hujintao implementing innovative economic policies which lifted China’s sluggish economy by introducing private ownership, market economy, and less governmental control contributing to robust economic performance. A succession of leadership in China including president Hu Jinping and follow-up by the current president Xi Jinping’s flexible and innovative economic policy took advantage of globalization and export orientation, attracting foreign investment, and maintaining a sound monetary and fiscal policy. China became a member of the World Trade Organization (WTO) and hosted a very successful International Olympic Games.
B. INTERNATIONAL TRADE ORIENTATION.
Beginning in early 1980s, China shifted its economic strategy from self-sufficiency to export orientation. The shift was pivotal to the growth rate of China’s GNP. Concurrently, China is building its domestic consumer sector so that in the future it will have a strong and well-developed domestic market. The multi-billion dollar natural gas contract with Russia in May of 2014 will be a major plus for China’s energy demand. China’s drive for the development of non-fossil fuel under its twelfth five-year plan could make it a world leader in energy exports and offer unmatchable prices on alternative energy in the world market contributing to convergence of per capita income of the silk rout countries.
C. GROWTH RATE PERFORMANCE.
The process of China’s remaining catch-up time of per capita income to that of the first world is estimated to take place in approximately two decades. It follows that China’s catch-up time with the first world would take place in five decades, starting in 1980 while it took the first world nearly 50 decades to reach its current level of per capita income. Part of the explanation is the diminishing return to capital in the first world since it is saturated with capital and return to capital has dropped. And the law of accumulation of capital due to growth rates differential between the first world’s average of 2% annual growth and those of China with an annual growth range of 7%-10%. The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. (x) And its growth rate for the next couple decades may be somewhat lower than 2%. This means that there may exist 4%-6% percentage point differential in growth rates that has contributed to the rising trend of annual growth rate of China. This phenomena will continue until China’s per capita income reaches within 70% level of the first world. Then its annual growth rate will conform to the first world’s annual growth rate of approximately 2% per year.
D. MACROECONOMIC MANAGEMENT.
China’s sound macroeconomic management was demonstrated during the Great Recession (2007-2009) when its export dropped 15% - 18% causing 23 million to become unemployed, but 98% found jobs as the economy readily bounced back and the unemployment rate dropped to 4%. This performance is in sharp contrast to a number of countries where the recession is still lingering in 2014. It is most notable that China escaped three global financial meltdowns since 1990, including the Japanese severe credit implosion, the Asian economies foreign reserve meltdown caused by capital flight due to rigidity of fixed exchange rate. The Great Recession (2007-2009) which engulfed the world economy was contagious, and China was subject to the turbulence and transmittable global meltdown — but ironically China escaped. China’s experience has drawn re-examination of the Western neoclassical paradigm concerning macroeconomic stability, and efficacy, of countercyclical measures via mini manipulation of the supply of money by the Federal Reserve Board. A better alternative for all nation states is to establish social indicator targets.
E. RENEWABLE ENEGY
China’s 12th five-year plan has placed specific emphasis upon the targeted development of renewable energy to satisfy 15% of China’s energy needs by the year 2025. This policy will contribute to clean air in China and prevent environmental degradation as the use of fossil fuel is substituted by renewable energy.
F. China is already the world’s biggest merchant marine operator according to U.N. data. Container port data compiled by the United Nations shows. Customs administration figures show around 40,000 ships entered and left Chinese ports in the first half of 2014.
G. POPULATION POLICY.
China’s one-child policy and its recent modification has been optimal given the absolute number and the possibility of population trap. Successful control of fertility rate (number of children per women) is the hallmark of optimal population and determinant of China’s long-term growth potential and carrying capacity. China’s prosperity is closely connected to its population policy although the age distribution of the population may pose some problems concerning productivity in the future. Its population is expected to peak to 1.5 billion by 2040 reaching zero growth rate and avoiding the population trap dilemma. No doubt, it is known that population policy in Europe in the 14th century led to the Industrial Revolution in the 18th century. Technology of industrialization from 18th century to the present created the high level of per capita income in the first world. Clearly, demographic policy affects economic development in all low- and middle-income countries.
H. POVERTY REDUCTION.
Since 1978, China has uplifted millions of peasants out of poverty and it has been the most successful country in the world in poverty reduction. China will deserve very high marks for its social indictor and distributional objectives.
Other favorable political economy policies that have made poverty reduction feasible include annexation of Hong Kong. Three-fifths of China’s foreign direct investment are financed through Hong Kong, and billions of dollars of China’s assets are in Hong Kong’s financial institutions. Development of Growth Zones — such as Shanghai to attract foreign investment — and investment in human capital including all levels of education through college are among the hallmarks of growth policies in China. The above factors have given a major impetus of high growth to China since 1980, ranging in an annual growth rate of 7 to 10%. This is an unprecedented growth rate in the experience of world economy with the exception of Germany in the ‘20s, largely due to military buildup.
I. ANTI-CORRUPTION CAMPAIGN
Unfortunately corruption is a universal problem and once it takes roots it becomes institutionalized and penetrates the culture. Thus it becomes difficult to undo corruption. It is keenly prevalent in low- and middle-income countries. China is no exception in this regard, however, a concerted effort has been launched to bring corruption under control beginning with the effort of former president Hu Jinping and follow-up by the current president Xi Jinping. Beginning in 2012, reportedly imposing punishment occurred upon 182,000 government officials at all ranks through 2014. Several high level party members have been removed; legal cases of anti-corruption of high officials in China have been reported in the Western press with due process. Perhaps China will succeed to clean up corruption completely. The anti-corruption drive in China is serious and admirable. It is certainly instructive for other countries to adopt a policy of transparency and uproot such criminal activities.
J. UNIQUE FEATURES OF CHINA’S SOCIETY AND POLITY
Altruism, social cognition, equity, equality, egalitarian motives, public service and economic growth are the hallmark of China’s leadership pronouncements. The duel system of one political party and free competitive market economy characterize China’s unique socio-economic-political system. The political system is not monolithic, or colossal, it has worked under a seven-member Politburo Standing Committee of party congress. Political leadership is elected every five years. Last year 10,000 small protests were tolerated. Currently over half of China’s GDP is produced by private enterprises. China’s government has not been shut down due to internal political dissent of multi-party feuds. More than 250 million people have been lifted out of poverty, this is approximately 20% of the total population.
In June of 2014, China’s 2,400-year-old Grand Canal, which historically linked sections of the Silk Road, was awarded Enesco heritage status, as were large portions of the ancient overland Silk Road. The 11,179 kilometer Yunxinou International Railway linking Chongqing and Xinjiang with Europe and, commonly referred to as the “New Silk Road”, runs alongside many of these ancient caravan tracts.
The foregoing are indicative that China is embarking in a distinctly alternative approach of inter-governmental collaboration and connectivity to promote economic catch-up of low and middle income countries that are located in the path of silk road.
NAKE M. KAMRANY IS PROFESSOR OF ECONOMICS AT THE UNIVERSITY OF SOUTHERN CLIFORNIA, FRANK JIANG IS PRESIDENT OF A STUDENT RESEARCH ORGANIZATION - THE USC GLOBAL INCOME CONVERGENCE GROUP AND A SENIOR IN ECONOMICS AT THE UNIVERSITY OF SOUTHERN CLAIFORNIA.
References/Sources:
1. International Monetary Fund, www.imf.org. Data Base, world economic outlook, GDP, 2014.
2. Kamrany, Nake M. and George Milanovic, “China’s growing economic strength in the 21st century,” Huffington Post, 11/17/2011, also see: NAKE M. KAMRANY and FRANK JIANG, CHINA’S INNOVATIVE PARADIGM - SHARING GLOBAL PROSPERITY - THROUGH CONNECTIVITY OF THE SILK ROUTE COUNTRIES , Huffington Post, September 4, 2014 2014
3. Ibid. Also, see: Kamrany, Nake M, ‘China’s Rapid Recovery in the Great Recession of 20o7-2009,’ Huffington Post, 2/11/2011.
4. THE SILK ROAD Economic Belt Construction and Future: 12 countries Think Tank Forum, Proceedings of Conference, Renmin University of China (RUC), Beijing, China, June 27 - 28, 2014- http”//RDCY2013-SF.RUC.EDU.CN
5. Richard Bernstein, China 1945 Mao’s Revolution and American’s Fateful Choice. N.Y.: Alfred A. Knopf, 2014.
6. Fan, S, ET. Al, “The Economics of China: Successes and Challenges, “NBER, Working Paper No. w19648 for link go to orders@nber.org National Bureau of Economic Research (NBER)
7. Waggle, S. at al, “Integrating Border Regions and Connectivity and Competition in South Asia,” World Bank Paper No. 6907, Economics Research Network
Executive Summary:
- A country which was run by emotions. First by our uncle: Mr. Nehru was called Chacha, which means “ UNCLE” (Please watch our glorious Chacha, in the following videos)(His blunders, Indians can never get out)
- Then by “Beti” daughter, Mrs. Indra Gandhi. ( Beti, also did her damage, which I do not believe, wounds in the community will ever heal)
- Then by “ Beta” son, Mr. Rajiv Gandhi, who was a petty airline pilot, who did not know Jack about politics, made PM, of 1.2 billion people. ( Well, his most stupid statement at the time murder of his mother and aftermath of Sikh suffering. No one will ever forget)
- Then by “ Bhu jee” daughter in law, Mrs, Sonia Gandhi. No comment.
- Then by “ Pota” grand son Mr. Rahul Gandhi, and his performance we have seen on the TV.
My understanding is/was how illiterate, semi educated or rural population voted for these family, based on emotions not on qualifications.
First a small story: I was born after a few years of India getting independence or should I say India broke its chains of slavery. I was born in a small town in Punjab region of India but grew up in a large and extraordinarily beautiful city of Punjab.
My primary school teacher used to tell us stories about China that it is beautiful, cultured and peace-loving country. People over there respect Lord Buddha; I vowed that one day I would visit that country.
As an Indian,how do we stop China from becoming a superpower?
Short answer: Just be their true and loyal friend, I assure you they will make you even bigger star, they are very simple people.
Here one viewer and Chinese friend offered me:
Sam, write a book about contemporary China. With your first hand experience and insights about China, your book will be very successful. You could as well be an ambassador of China.
I know my Chinese friend was joking.
You can do a lot: Not by stopping China to become a super power, that train has left station long time, ago. However you could get on the next train by riding with them.
- Efforts where there is no money needed.
- Efforts where leadership has to play a role.
- Efforts where money is involved.
Let us talk where there is no money needed just your efforts:
First get rid of Trolls:
FYI, in private talks among writers, and everyday talk among other people, India is losing a lot of reputation on the international scene. Some of the exchange is converts to profanity, racialism, dirty language and out of control. Since in India 13, 14 years old has enough English knowledge to write vulgarities and sabotage an excellent article/discussion.
The sad part is some of these trolls do not have even one word in their profile. Also, there are people with fake/and multiple accounts. Such people were apprehended one was claiming he had traveled several dozen countries and he was a legend in his mind.
Some very close Chinese and Pakistani friends expressed their real remarks to me about my ex-countrymen.
One very respected writer wrote me the behavior of our trolls. I am not an astrologer, but in my view, next war will be started by Trolls. The law of the land did not change:
- Do respect and have respect, that law did not change over the thousand years.
- I know it may trigger storm, the same writer also confined and I agree, there is no difference between females and males Trolls, some females can write very nasty vulgar profanities.
- Learn to say Thank you more often, I had written answers on request on my technical background and work experience in dairy/food/flavor sciences, most of the time people do not even send thank you/or acknowledge.
- Writers are not paid anything, all they some great exchange, however, these trolls derail everything.
- The reality is the world has moved on, and going on at breakneck speed up, accept it. China has left Ind...
You asked - "As an Indian, how do we stop China from becoming a superpower?"
The answer is certainly not found by containing China, for example by the recent quadrilateral strategic arrangement with U.S., Japan and Australia. There is in fact nothing 'strategic' in military terms here. India must be truly deludedly blind, if it thinks that the U.S. or Japan or Australia will fight to save India in war. They are merely using India as a 'lackey boy', just all 'talk' but they will never ever 'walk the talk'.
Why?
Let us start with the white supremacist and world hegemonist, the U.S and its lap dog Australia, both of whom are Sinophobic. They have an innate dread and fear of the Chinese. Note this has nothing to do with 'racism' as in looking down upon and being condescending and feeling superior, the way they treat the blacks as inferior and unworthy. No! They fear the Chinese for their nonchalance, resilience and assiduousness and particularly for their apathy and indifference to their 'World Sheriff' trumpeting and grandstanding.
Think! Do you think the U.S. fought the Korean War to save the South Koreans? Do you think the U.S. fought in Vietnam to save the South Vietnamese? No! They did not!
The imperious imperialistic United States has been at war for most of its 250 years. Yes, it is an upstart of a 'young Turk', as the expression goes, compared with the living 5000+years antiquities that are India and China! It has the most incorrigible devious warring record ever - 222 out of 239 years (93%). Refer America Has Been At War 93% of the Time
Think! Why do think that the Chinese can never forget the humiliation by the Western Colonial Powers who tried to colonise China, forced China to trade by way of accepting payment from the West by way of 'opium' - thus the 'Opium Wars' (Opium Wars - Wikipedia) against the West which the Chinese unfortunately lost! But now in its rejuvenated ascendancy China is taking vengeance for past 'unequal treaties' (which also includes the MacMahon Line unilaterally drawn by the British without consultation as the border between China and British India - before that it was just accepted for aeons that broadly the Himalayas as a topological feature and landmark and barrier represents the border!).
Why shouldn't India also seek vengeance and retribution too for the British colonial exploitation and oppression? Refer to this extract of the egregious malignant and emasculating nature of British colonialism in - The Great British Empire Debate - "Consider India. At the beginning of eighteenth century, India’s share of the world economy was 23 percent, as large as all of Europe put together. By the time Britain left India, it had dropped to less than 4 percent. “The reason was simple,” argues Shashi Tharoor in his book Inglorious Empire. “India was governed for the benefit of Britain. Britain’s rise for two hundred years was financed by its depredations in India.” Britain, Tharoor argues, deliberately deindustrialized India, both through the physical destruction of workshops and machinery and the use of tariffs to promote British manufacture and strangle Indian industries."
Do not be brainwashed! Do not be an anglophile like Jawaharlal Nehru (The last Englishman. Nehru failed in his dream of creating a new India, uniting the values of east and west. But he remains one of the most important figures of the 20th century, writes Katherine Frank). Be a true Indian like Mahatma Gandhi (Gandhi, Unseen). Read about Winston Churchill and the 'Bengal Famine' (http://cecaust.com.au/pubs/pdfs/...), Margaret Thatcher and her dislike of Neilson Mandela (Thatcher's government tried to stop Nelson Mandela getting honorary degree) and find out for yourself how racist they were.
Read your history books about how the U.S., Canada and Australia barred Chinese and Orientals from living and working in their countries through their 'Whi...
Hey, dear Indian friend, don’t you think it would be better if the question is: as an Indian, how do we catch up China in near future?
Think about, if two neighbors A and B living side by side, man years ago both A and B were colonized by western imperialists, recently B is much wealthy since B makes friends and trades with all, if A said “how can we prevent B from being wealthy”, then will A became wealthy automatically?
The answer is hardly yes.
Despite India has comparable population to China, population is a double-edges sword, which could turn into productivity or become burdens very likely, if a country can’t feed her population.
Personally, I have faith on India, perhaps one day, India will return back to her position in history.
GDP comparison.
China owns rather complete industrial chains.
As an Indian first we should think of how to uplift our own country to be a superpower instead of thinking about how to stop any other country to become one.
Remember when Pakistan blocked the road going through its territory, and created disturbances in Indian reach to Middle East. What did Indian government do?
It connected it's path through maritime inaugurated “Chabahar Port”. :-)
That is called strategy of doing business and moving forward towards development.
My point here is -
China is a country which focuses on manufacture and development applying strict rules on citizens. It is easier to implement rules there than India. Because in India one transformation would drag even more than a decade to be ratified(including strikes, protests, demands etc).
That is a part of democracy. But at the same time we must remember just because some people are protesting it doesn't mean it has valid reason. Anyway Indian government as well as citizen should focus on implementing and following certain strict transformation in order to keep up with development.
As an Indian we should know that our country is one diversified country , so we still need to work on integrity.
As an Indian we must utilize our knowledge or resources to establish ease of doing business and more manufacturing products in India.
As an Indian we should focus on our safety, trading, exports, development, education and most importantly population control to become a superpower.
China never compromises with anyone when it comes to his countries policy. India should learn that from China.
“Think of your own development instead of blocking other's.”
Dear Sam,
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