New data released on Tuesday shows further signs of weakness in the Chinese economy, with two barometers of factory activity at multi-year lows. China’s official manufacturing index, based on a survey of factory purchasing managers, fell last month to the lowest level since 2012, while the Caixin (財新傳媒) purchasing managers index fell to a six-year low.
The data underline growing fears of a substantial slowdown in the Chinese economy, now the second largest in the world. And they might also set the scene for further stock market gyrations across the world.
However, the consequences of these concerns about China could be more than financial. In terms of perceptions, recent developments are also driving at least a temporary change in international public opinion about the global economic balance of power. In the wake of the 2008-2009 financial crisis, it was widely reported that the long period of US and wider Western preponderance of the global economy had ended, with many countries seeing China as the world’s leading economic power.
The fact that China was increasingly seen as leading the world, economically, was borne out by Pew Global’s research. Of the countries surveyed in both 2008 and last year, the median percentage asserting China as the world’s leading economic power, vis-a-vis the US, EU and Japan, increased from 20 percent to 29 percent (the figure was even higher, 34 percent, in 2013).
It was generally economically developed countries that perceived China on top. As of 2013, a majority of countries saw China as the world’s leading economic power in France (51 percent compared to 31 percent in 2008), the UK (49 percent compared to 29 percent in 2008) and Germany (49 percent compared to 30 percent in 2008).
Interestingly, more Americans also perceived China (41 percent) as the world’s leading economic power rather than their own country (40 percent). A majority in Australia and Canada also supported that view (61 percent and 56 percent respectively) when those countries were last surveyed in 2013.
Given the US’ economic recovery in recent years, fragile as it might prove to be, allied with recent concerns about the Chinese economy, there could now be a significant reversal in this sentiment about the global economic balance of power.
A potential leading indicator of this was found in Pew’s latest survey (released in June before this month’s global stock market angst) which showed a significant increase in international sentiment that the US is, once again, the world’s leading economic power.
Of the countries surveyed in spring this year, a median of 51 percent (a rise from 44 percent in 2013) cited the US as the leading world economy. By contrast, 27 percent now believe China is the world’s leading economic power (a fall of 7 percentage points since 2013). If the question was asked today, following the latest international concerns about China, that percentage would very likely decrease further.
While international sentiment about China’s short to medium-term economic future is now more negative, there is generally confidence about the country’s long-term prospects. Thus, this year’s Pew survey also found that many countries believe that China either has, or might eventually, surpass the US as the world’s leading superpower.
This continues a trend seen in the survey since 2008-2009 which, in the wake of the global financial crisis, is commonly perceived to have accelerated the economic rise of China and other emerging markets, especially in the Asia-Pacific region.
However, there are also political factors driving this sentiment too, including the perceived failure of the US-led intervention in Iraq which underlined that the country is not an all-powerful hegemonic state.
This year’s Pew Survey found that majorities or pluralities in 27 of 40 countries surveyed (up from 26 last year) believe China has or might eventually replace the US as the world’s leading power. Even in the US, almost equal amounts of people (46 percent) believe this to be true, versus 48 percent who think China might never replace the US as the world’s leading superpower.
At least two qualifications are necessary to this picture. First, the numbers would probably be softer, in light of recent concerns about China, if the polling was conducted today.
Moreover, no more than a quarter of the population in any of the countries surveyed believe China has already overtaken the US as the leading superpower. Thus, there is an element of future expectations in play.
In light of recent concerns about China, it is unclear which direction international public opinion might travel on this issue. If the Chinese economy is perceived to stage a strong economic recovery in coming months and the country’s rise is viewed to continue more or less unabated, the broad pattern of public opinion since 2008-2009 about the changing global balance of power from west to east might continue.
However, if news about the health of the Chinese economy worsens, international sentiment about the US could strengthen further, especially if the US’ fragile economic recovery is not also derailed in coming months.
In this sense, there could be a wider resurgence in public confidence about US fortunes, as occurred following the recessions in the early 1980s and early 1990s, when there was significant international debate about the country’s perceived decline.
Taken overall, the growing fears of a substantial slowdown in the Chinese economy could drive at least a temporary change in international public opinion about the country. If the news about China continues to worsen, this could reshape longer-term public perceptions of the global balance of power that have crystallized since the 2008-2009 financial crisis.
Andrew Hammond is an associate at LSE IDEAS at the London School of Economics and a former UK government special adviser.
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