Abstract
The ‘rise of China’ discourse involves two critical issues: whether China is rising or has risen? If the answer is yes, will China be a status quo power or a revisionist power? The sustained rapid economic growth in the last three decades seemed to have confirmed the rising trend of China as a potential global power. There is definitely little suspicion about a rising China nowadays and attention is predominantly focused on whether China will be rising peacefully. I doubted the oversimplified assertion on the ‘China rising’ issue. The remarkable economic growth did provide the foundations of China’s rise, but the growth itself was problematic. I would argue from international political economy perspective that the way in which China was integrated into the global economic system enabled its economic ‘success’ in growth terms but blocked its industrialization which was the real foundation of the rise of any great power in modern world history. China’s rhetoric on ‘peaceful rise’ precisely revealed its deepening dependence on the international system dominated by the US, whereby its intentions to sustain current neo-liberalist economic development model for the purpose of legitimation of the authoritarian regime. The paradox is, though China has neither the intention nor the capability to challenge the order of existing international system and does hope to seek a peaceful rise within the international framework, the maintaining of an unprofitable economic growth model, or one of a ‘technologyless industrialization’, will inevitably exacerbate the constraints of market and resource bottlenecks and thus make China’s economic growth hard to sustain. This would heighten tensions and even increase the likelihood of conflicts between China and the developed world which would in turn be destabilizing to the international system within which the US intends to transform China into a responsible stakeholder that will play by the rules. Thus, the so-called ‘peaceful rise’ is nothing but a wishful illusion.
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Notes
That is, John J. Mearsheimer.
‘Wither China: From Membership to Responsibility?’ Robert Zoellick, Deputy Secretary of State Remarks to National Committee on US–China Relations, September 21, 2005.
On February 18, 2005, the Chinese Academy of Sciences issued the Report on China's Modernization 2005. After making numerous data analysis and scientific comparison, the research team under the Modernization Research Center of the Academy concluded that China ranked 69th among 108 countries in the world in terms of the comprehensive modernization index. In 2002, China was still an economically under-developed country. The gap between China’s economy and those advanced economies in the world is huge. In 2002, China was in the middle stage of industrialization; its economic modernization was lower than the world average level. The report also reveals that if the per capita GDP and economic structure are taken as chronicle difference in comparison with other countries, in 2002, China's level of economic modernization was equal to that of UK in 1858, the US in 1892, Japan in 1957 and South Korea in 1976. See media report, ‘How Far China is from being a Developed Country? Core Competitiveness Becomes Bottleneck’, http://www.chinanews.com.cn//news/2005/2005-10-13/8/637232.shtml.
US Deputy State Secretary Robert B. Zoellick said in his address to the National Committee on United States–China Relations on September 21, 2005, ‘Seven US presidents of both parties recognized this strategic shift and worked to integrate China as a full member of the international system’. Zoellick particularly explained the meaning of ‘a responsible stakeholder’, saying that ‘China has a responsibility to strengthen the international system that has enabled its success. In doing so, China could achieve the objective … “to transcend the traditional ways for great powers to emerge”’.
Han Xiaoping, ‘Oil, China's Rigid Demand’, http://www.china5e.com.
One point must be clarified. China should not be juxtaposed with the two vanquished powers, Germany and Japan whose peaceful rise after WWII were underwritten by the US through a set of complicated multilateral arrangements, open global trade system plus security guarantees. The US ally-containment strategy under the disguise of military protection ensured the peaceful inclinations of these two allies. China as a communist power, though vague ideologically nowadays, is being integrated into the international system economically and to certain extent politically. But militarily China was largely self-reliant and followed the realist logic against perceived threats. In a word, China is far from being fully integrated into the US-dominated international system. China is unlikely to become US strategic ally in the post-Cold War era.
From the early 1990s, the share of consumption in China's economy kept declining. At present, consumption accounted for around 50% of GDP according to China’s official estimation, while Morgan Stanley put the figure at only 41%. In contrast, the percentage in most countries is around 65–70%.
Data show that China's manufacturing industries account for some 40% of GDP. The processed goods account for more than 90% of China’s total exports. And, the manufacturing sectors provide 50% of national revenue and absorb nearly half of urban employments.
For developing economies, deindustrialization is defined as a declining trend of domestic manufacturing industries relative to the foreign counterparts in national economy. Industrialization proceeded very slowly or even stagnated and the economy was increasingly dependent on foreign market and technology, which led to worsening social unemployment despite rapid economic growth. Whereas for developed economies, this concept refers to a ‘hollow-out’ of domestic manufacturing industries of which a large part have been relocated to low-wage and/or resource-rich developing countries (Cheng, 2003).
Take 2003 as an example, the investment by indigenous manufacturing industries was 363.9 billion yuan; manufacturing investment from FDI was US$36.9 billion (305 billion yuan), about 70% of total FDI in China.
Since the late 1990s, foreign investors had realized that Chinese market was not as big as they imagined before. ‘China: What’s Going Wrong?’, Business Weekly, February 22, 1999, http://www.businessweek.com/1999/99_08/b3617015.htm.
‘How China's Manufacturing Industries Break Besiege of Foreign Capital’, http://www.ca800.com//05/4-5/n21679.asp.
Xu Kuangdi (president of the Chinese Academy of Engineering), ‘The Current Situation and Challenges of China's Manufacturing Industries’, China Development Observation webpage, the Development and Research Center of the State Council, April 26, 2005.
The FDI in the manufacturing sector predominantly takes up the procedure of labor-intensive processing and assembling, thus having limited demand for China's engineers and technicians. For a long time, China’s technologically backward manufacturing plants are no match with their foreign counterparts in offering attractive salaries or other benefit packages as well as sound working conditions to the technical staff. So, lots of Chinese college graduates with engineering and polytechnic backgrounds were forced to reorient their career development and flocked to business and finance sectors where salaries are much higher. The decline of China’s manufacturing reduced demand for technicians and drove large numbers of college graduates to the tertiary industry. This is to the detriment of the technological accumulation and enhancement of innovation of China’s manufacturing industries. What is more, as modern manufacturing provides the basis for a modern service industry, the declining Chinese manufacturing set limits on the expansion of the service industry, disenabling it to create more jobs. Therefore, the decline of China's manufacturing industries has led to deterioration of the overall situation of social employment.
In the last two decades, China had intended to repeat Japan’s success story by pursuing the interventionist (developmental state) economic policies. Unfortunately, China failed to develop a consistent and well-implemented industrial policy because of corruption, myopia and lack of commitments of the bureaucratic elites to building up national champions to withstand fierce global competition, and other deeper political and economic reasons.
For instance, urbanization can increase GDP in a short period of time. But the particular kind of urbanization detached from the industrialization has produced investment bubbles in other fields (such as an excess speculation in real estate), in addition to an increase of new farmers-transformed urban poor. This had led to an even more unbalanced redistribution of wealth and a greater risk exposure for the macro-economy as a whole.
For example, the US has long refused to give China the Generalized System of Preferences (GSP) treatment and only accorded conditional most-favored-nation (MFN) to China's exports. And the US-led Coordinating Committee for Export Control (COCOM) had imposed strict restrictions on high-tech exports to socialist countries including China during the Cold War.
See note 2. Zoellick also pointed out, ‘For fifty years, our policy was to fence in the Soviet Union while its own internal contradictions undermined it. For thirty years, our policy has been todraw out the People's Republic of China. As a result, the China of today is simply not the Soviet Union of the late 1940s……Chinese leaders have decided that their success depends on being networked with the modern world’.
Quite some of the so-called high-tech industries in China are de facto labor-intensive industries engaging in simple processing and assembling, whose core components must be imported from abroad. According to my interview findings in Guangdong Province in late 2005.
According to Hu Chunli, deputy director of the Research Institute of Industry Economy and Technology Economy under the National Development and Reform Commission, the profitability of China's manufacturing industries as a whole is 5–6%, while profitability of high-tech industries is only 2–3%. See note 12.
Peter Nolan noted that China lagged further behind Western countries, in particular the US that took the lead in the global IT and business revolution in the last two decades (Nolan, 2001).
The negotiations between China and the EU and the US on textiles export quota all ended up with the eventual compromise on the Chinese side. This clearly demonstrates that China is still running short of bargaining power against the developed countries.
The part of manufacturing (including some so-called high-tech manufacturing) that has been relocated by the multinationals into China is predominantly the low value-added segment in the value chain suitable for large-scale assembly.
The sharp increase of resource imports in recent years drastically pushed up China’s economic cost, while at the same time, the vicious competition between indigenous enterprises pushed down export prices.
China has surpassed Japan and become the second largest oil importer in the world after the US. According to an estimate by China's energy experts, by 2020, China's oil consumption will reach 500 million tons, of which 300 million tons will be imported. China’s foreign dependence on oil will reach 60%, higher than the current 50% of the US (50% is a widely recognized alert line). See report, ‘Energy expert: China's Foreign Dependence on Oil Exceeds US in 2020’, October 12, 2005, Xinhua Urumqi, http://finance.people.com.cn/GB/1038/3763890.html. China’s oil dependence reached 47% in 2006, up by 4.1 percentage point than 2005. Nanfang Daily, February 14, 2007, http://www.southcn.com/finance/nfcm/nanfangrb/200702140286.htm.
Since the reform and opening up in the late 1970s, the fundamental principle of China's foreign policy had been ‘opposing hegemonism and maintaining world peace’. The political report of the Sixteenth CCP Congress revised the wording into one of ‘maintaining world peace and promoting common development’; ‘opposing hegemonism’ has no longer been mentioned ever since. Please see the report of the Sixteenth CCP Congress at webpage: http://news.xinhuanet.com/newscenter/2002-11/17/content_632296.htm.
It seems that a tacit consensus exists between China and US policy-makers that challenging the ‘fundamental order of the international system’ is not in China’s national interests. Although China has developed close relations with some oil-rich US-labeled ‘rogue’ states in West Africa, Middle East and Latin America which is obviously to US displeasure, it is not so much an intentional challenge to US hegemony, as I would argue, as an intuitive reaction to the acute shortages of energy resources, precisely because these states are, borrowing Lenin’s concept, ‘the weakest links’ of global capitalism. Thus, China’s assertiveness is alerted but not viewed as a fundamental challenge to US strategic interests. In fact, China has repeatedly stated that maintaining good relations with the United States is the top priority of China’s foreign policy.
This has nothing to do with whether the world should thank China for providing cheap products, a harsh reality for which quite many people in China have naive illusions.
Ebel, ‘The Geopolitics of Energy into the 21st Century’, Vol. 1, p. 7. Cited from Michael Klare, (2005) Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency, London: Penguin.
For instance, China has imported large quantities of tar sand from Canada in recent years. Such huge imports aroused US concern, which ‘emphasized the importance of Canada’s tar sands to its energy security’. In addition, Japan's Defense Agency had revised its security strategy in 2004 partly on the assumption that ‘conflicts over resources between China and Japan could escalate into war’ (Zweig and Bi, 2005).
Even in areas beyond US control, there is no guarantee for China’s access to resources or their long-term safe supply through such peaceful means like trade and investment. The major reason is that China’s shortness of industrialization has crippled its ability to export capital and technology, thus unable to exert far-fetched political and economic influence over these resource-rich countries that do not really care ‘whoever buys’. If encountering real competition from the developed countries, China can hardly get the upper hand. Besides, China’s inability to protect its sea lane and the complicated geopolitical calculations of some energy powers like Russia (evidenced by its opportunism in the Sino-Japanese race for the Siberian oil pipeline deal) will discount China’s access and long-term stable supply of energy.
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Yue, J. Peaceful Rise of China: Myth or Reality?. Int Polit 45, 439–456 (2008). https://doi.org/10.1057/ip.2008.13
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DOI: https://doi.org/10.1057/ip.2008.13