Sun, Sep 09, 2018 - Page 7 News List

What a Chinese superpower would look like

China aims to expand its influence from one polar cap to the other, but debt, demographics and a middle-income trap stand in the way

By Marc Champion  /  Bloomberg

Either figure would see China risk criticism from the US for underspending, if it were part of the NATO alliance.

Even so, a scorecard run since 1996 by the Rand Corporation, a US research institute, found that last year, for the first time, China would have air power parity with the US in any conflict over Taiwan.

The latest budget increases spending on the diplomatic service at twice the rate of the military. More than 500 Confucius Institutes now teach Chinese language and culture across the globe.

For all that, China still has few real allies, Shambaugh said.

Its soft power is undercut by its militarization of the South China Sea and concerns its offshore infrastructure loans are just debt traps that will bind smaller nations to its will.

Its culture, while rich and deep, has little equivalent to Hollywood, or the ideals of individual freedom.

“Their military is still regional, they have almost no power projection capability,” said Shambaugh, adding that the same is true of diplomacy, where China has yet to take the lead on a major international agreement.

“They are really a very self-interested power,” he said. “They’re not interested in shaping the global order.”

That is not quite right, said Henry Wang (王輝耀), founder and president of the Center for China and Globalization in Beijing.

True, China does not want to destroy the world order that the US shaped, as it has benefited from it. However, it does want to create what he calls globalization 2.0, by adding new international structures including the Asian Infrastructure Investment Bank.

“People get scared” by China’s size, Wang said, adding that China just wants globalization that is more inclusive.

“There’s not a magnanimous bone in the Chinese body politic. It’s all about China,” said Jim McGregor, chairman for greater China at consulting firm APCO Worldwide. “Name a country that’s a true friend of China.”

More worrying for China’s global ambitions are signs its economic engine could stall. China would, for example, be the first superpower to start getting old before it got rich.

UN projections show that its 1.4 billion-strong population is likely to decline and age sharply from as soon as 2023.

The number of working age Chinese has already begun to shrink.

“I can’t find a single example of a superpower growing when its population was falling,” Peking University School of Government associate professor Zhang Jian (張健) said.

The British Empire and the US rose to prominence when their populations were exploding.

Xi “needs to take care about the domestic situation and worry less about being a great power,” Zhang said.

Nor is China as flush as commonly assumed. Adjusted for purchasing power parity, which accounts for the greater buying power of a dollar spent domestically, China has a larger GDP than the US.

However, that is a poor measure of international buying power, where dollars are just dollars, Bloomberg Economics chief economist Tom Orlik said.

“One way to measure the additional money China has to spend around the world is to look at nominal GDP in US dollar terms. In the five years before the financial crisis, that averaged close to 23 percent annual growth,” Orlik said. “In the last five years, it’s averaged 7 percent, including a year of zero growth in 2016.”

China’s GDP per capita is about US$9,000 compared with US$60,000 for the US. That could mean more room for catchup growth, but to get there China would have to avoid the middle-income trap that keeps many emerging economies stuck below a GDP per capita of about US$15,000.

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