Magazine article The Spectator

Why China Isn't Going to Be a Superpower

Magazine article The Spectator

Why China Isn't Going to Be a Superpower

Article excerpt

Mr Zhang Yuchen, a Communist party member and former official of Beijing's municipal construction bureau, has just built himself a new house in the suburbs of the Chinese capital: it is a replica of the 17th-century Château Maisons-Lafitte on the Seine, enhanced with wings copied from Fontainebleau and gardens based on Versailles. It cost him $50 million, and he displaced 800 peasant farmers to clear the site.

Meanwhile, Mr Liu Chuanzhi - a graduate of Xian military college, a former nominee for Time magazine's '25 Most Influential Global Executives', and the founder of Lenovo, China's biggest computer business - has just acquired for $1.25 billion the division of IBM which makes PCs, an iconic product of the technology age. Closer to home, my Christmas shopping this year consisted largely of bargain-priced but beautiful silk scarves from Shanghai; if I had bought anyone a digital camera it would probably have come from there too, and if I had fulfilled my secret urge and bought myself a Hornby 'Hogwarts Express' train set, it would have come from a factory in Guangdong.

The Chinese, their money and their manufactured goods are everywhere, and pundits in search of New Year themes have been full of predictions about China as the coming global power. The great William Rees-Mogg, never one to hold back from a bold forecast, says this 'is beginning to look like the Chinese century'. The former diplomat Sir Jeremy Greenstock, on the Today programme, spoke of China as 'an increasingly large presence on our horizon', conjuring the image of those huge alien spaceships that loomed over the world in the film Independence Day.

The People's Republic, we are repeatedly reminded, is sustaining growth of 9 per cent a year, on the strength of massive inflows of foreign investment. It is now the second largest national economy after the US, measured in terms of 'purchasing power parity' (PPP), and will soon be bigger than the whole of the EU. It has a prosperous middle class of 100 million people, most of them connected to the Internet and among them at least 10,000 whizz-kids like Mr Zhang and Mr Liu, with net assets of more than $10 million each. Every factory enterprise that makes another Chinese fortune destroys jobs in the US and Europe, while a large portion of the dollars China earns is reinvested in US Treasury bills to finance America's notorious deficit - giving China, one way and the other, a hard-to-beat hand of cards in global economic affairs. Hence superpowerdom is Beijing's for the taking, in this decade or the next.

Or is it? The time is surely ripe to rehearse the counter-arguments on this one, and let me start by declaring a bias: the last day I stood in Beijing's Tiananmen Square was 4 May 1989, which was the first day the students marched in with their banners, and were there to stay until the tanks crushed them a month later. Before and after that traumatic moment, I made many visits to Taiwan, a country which achieved prosperity and democratic progress by refusing to be part of China. In the same era I was often in Tokyo, where hotel bookstalls were full of tomes by American gurus predicting the rise of Japan as the global giant of the 21st century on the strength of its fabulous industrial and financial supremacy; after the Tokyo stock market collapsed - never to recover - at the end of 1989, the books were pulped and the arguments never heard again.

So it is worth reminding ourselves why China is not necessarily destined for greatness, and certainly does not deserve our unmixed admiration. First, its present growth rate is very far from sustainable, dependent as it is on slave wage rates, corrupt bureaucracy, near total absence of environmental controls and a financial system which is at best rickety and at worst, by Western standards, insolvent. Second, as Bill Emmott wrote in 2003 in 20:21 Vision, China today is in fact only 'a modest country at best', whose gross domestic product per capita, even on a PPP basis, is still only a fraction of that of neighbours such as South Korea, and on a par with Ukraine. …

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