1

China as an emerging politico-economic power

Mushtaq Ahmad

China at present is the fast emerging economy of the world which at present has
left behind Japan and many other European countries and has assumed the status of the 2 nd
largest economy of the world after the USA. With the unprecedented economic progress it has
made in the recent past China is being discussed as one of the potential superpowers in the years
to come.
Japan was the second-largest economy in the world until 2010 when it was surpassed by
China as it started experiencing slow economic growth since1980 onward. Growth in Japan
throughout the 1990s remained at the level of 1.5% which was slower than the other major
developed economies of the world, giving rise to the term ‘Lost Decade’.
In the past, it was predicted that Japan would eventually assume the status of superpower
status, due to its large population, huge GDP, and high economic growth, but now being the
third-largest economy of the world it is less likely to become a superpower due to its ongoing
weak economic growth since the onset of 21st century, and its suffering from an aging
population.
Russia at present is the sixth-largest economy in the world after the US, China, Japan,
India, and Brazil. Russia is rich in natural gas, oil, and coal. Russia has undergone significant
changes since the collapse of the Soviet Union in 1991. It has moved to a great extent from a
state-controlled economy to a market-based and globally integrated economy. In line with its
market reforms of the 1990s, it privatized most of the industry, except for energy and defense-
related sectors. Russia is also being considered by some analysts as a potential candidate for
resuming superpower status in the 21st century.
According to economist Steven Rose field of the University of North Carolina, the US,
Russia intends to "reemerge as a full-fledged superpower," and this goal is easily within Russia’s
 2

grasp because Russia has military-industrial complex supported by its mineral wealth intact to
reactivate its industrial research and military potential.
Military analyst Alexander Golts of The St. Petersburg Times argues that Putin's
confrontations with the U.S. on nuclear issues hint at its pursuit of regaining superpower status.
According to other energy analysts, Russia has always been a superpower that used its energy to
win friends and influence its Soviet Union, time associates. It was Russia’s economic downfall
during the 1980s which ceased to support its superpower infrastructure resulting in the crumbling
of the Soviet Union in 1991. Under President Putin’s leadership, it is regaining and reassembling
its superpower status after overhauling its economic engine more profoundly by the sale of
energy to the EU states. Its raised level of confidence first time reflected in 2014 when it stopped
the US not to use force to change the regime in Syria. The second show off was to annex Crimea
in March 2014 after holding a pro-Russia referendum there in the face of the strong protest of the
US and the EU. However, falling prices of petroleum all over the world have hit Russia badly
being an exporter of oil. Additionally, certain economic sanctions imposed by the USA and its
allies on account of Russia’s support of Russian speaking Ukrainians in Eastern Ukraine have
also affected its emerging economy.
Basic facts about China:

China, officially the People's Republic of China (PRC), with a population of around 1.4
billion is the world's most-populous country four times higher than that of the US at 327 million.
Area wise it is around 9.6 million square KM almost equivalent to that of the USA's 9.8. China
has the longest land border in the world, measuring 22,117 km bordering with 14 countries, more
than any other country except Russia, which also borders 14. It shares borders with Vietnam,
Laos, Myanmar, Pakistan, India, Bhutan, Nepal, Afghanistan, Tajikistan, Kyrgyzstan,
Kazakhstan, Russia, Mongolia, and North Korea. Its major language is Mandarin and the
currency is Yuan.
China is a single-party state governed by the Communist Party of China. Other than
mainland China it has two self-governing special administrative regions (SARs), Hong Kong,
and Macau. Its capital is Beijing. China also claims the island of Taiwan and considers it the
renegade province, which is controlled by the government of the Republic of China after the
Chinese civil war of 1946-49. The world’s highest Mt. Everest 8,848 m high, lies on the China–
Nepal border.
China through history:
China is the home of the world’s one of the ancient civilizations, the civilization which
flourished in the fertile basin of the Yellow River in North China. In the past China's political
system was based on hereditary monarchies, known as dynasties, beginning in approx. 2000 BC
and ending with the fall of the Qing Dynasty in 1912.
China became a republic in 1912 after the overthrow of the Qing dynasty. China went through
a civil war in 1946–1949 as a result of which Chinese Communists defeated the Chinese
Nationalists and established the modern People's Republic of China on 1 October 1949. The
nationalists under the leadership of Chiang kai sheik fled to Taiwan and established their
government in the name of the Republic of China (ROC) which was recognized by the USA and
its allies.
 3

Since 1949, China and Taiwan have remained in dispute over the political status of Taiwan,
mutually claiming each other's territory and competing for international diplomatic recognition.
However, Taiwan was given the permanent membership of The Security Council for China. It
was only in 1971 that China was given admission to the United Nations and the Chinese seat of a
permanent member of the Security Council. China at present is a member of numerous
international organizations, including the WTO, Shanghai Cooperation Organization (SCO), and
the G-20.
Introduction of Market reforms:
With the introduction of market-based economic reforms by Deng Xiao Ping in 1978, China
became the world's fastest-growing major economy. Since then it has witnessed more than 9%
GDP growth rate unparalleled in the economic history of the world. It is now the world's largest
exporter and second-largest importer of goods. China is a recognized nuclear weapons state and
has the world's largest standing army, with the second-largest defense budget. In 2003, China
became the third nation in the world, after the former Soviet Union and the United States, to
independently launch a successful manned space mission. China has been characterized as a
potential superpower by several academics, military analysts, and public policy and economics
analysts on account of its spectacular GDP growth rate. Arguably, it is not yet as influential on
the international stage as the United States or the former Soviet Union but it has assumed the
status of an important economic player on the international scene.
From 1949 onward until late 1978, China was a state-controlled economy without
private businesses under the leadership of Mao Zedong. After the death of Mao Zedong in 1976,
the new premier Deng Xiaoping introduced free-market reforms on the eastern coast of China
under a one-party rule. Collectivization of agriculture was also dismantled and farmlands were
privatized which increased productivity.
 4

China surpasses Japan in 2010

Deng is being considered the second Mao of China. If Mao consolidated and gave birth to a
self-sufficient stable government, Deng took China to a highly exportable surplus stage. The
introduction of free-market reforms in china under the state-controlled economy was the
brainchild of Deng. After the death of Mao in 1976 when he came to power it was a point of high
consideration for him that these are Chinese in Singapore, Hong Kong, and Taiwan who are
leading these countries to the heights of economic glory but why the Chinese on the mainland of
China are not performing? It was not difficult for him to find the reason. It was a free-market
economic system in Singapore, Hong Kong, and Taiwan whereas it was a state-controlled
economy on the mainland. He then introduced and experimented free market economy on the
eastern shores of China and offered ideal conditions (like cheap land, utility services, cheap and
docile labor, ideal law and order situation, and a big market in the form of China itself and
around) for the foreign investors which appealed to the immediate neighbors i.e. Japan, South
Korea, Taiwan, Chinese Diaspora in North America and Europe. A wide variety of small-scale
private enterprises were encouraged, while the government relaxed price controls and promoted
foreign investment by creating special economic zones, one of which is Shenzhen. Inefficient
state-owned enterprises were restructured by introducing western-style management systems,
with unprofitable ones were closed outright. Subsequently in a very short period investors from
all over the world started investing in China. Resultantly by 2014, China had the world's second-
largest nominal GDP, totaling approximately US$10.36 trillion rising from 6 trillion in 2010, the
USA being the number one (Source - Focus economics). According to the IMF, China's annual
average GDP growth between 2001 and 2010 was 10.5%, and 9.5% onward. However, its GDP
 5

growth was 7.4% during 2015 but came down to 6.3% in 2019 as per IMF due to the trade
tensions with the USA. Its exports during 2017 were US$2343 billion and imports $1962 billion.
China's primary, secondary, and tertiary industries i.e. Agriculture, Industry, and Service sectors
contribute 9%, 45%, and 46% respectively to its total GDP. Since the introduction of the market
reforms in 1978, the Chinese economy has grown almost a hundredfold and has become the
fastest-growing economy in the world. China’s foreign exchange reserves were USD 4.0 trillion
in 2017.
A Free Trade Agreement (FTA) between China and the ASEAN nations came into effect in
2010, which created the world’s third-largest free trade area. China also created FTA with other
countries such as Chile, Costa Rica, Pakistan, Peru, New Zealand, Thailand, and Singapore.
China's overall trade surplus has increased dramatically in recent years creating an
imbalance in the world economy. For example, China keeps a trade surplus of US$400 billion
with the United States. The USA’s huge negative balance of payment with China has been very
much instrumental in the ongoing trade war between the two countries.
China's success has been primarily due to manufacturing as a low-cost producer. This is on
account of the availability of cheap labor, infrastructure, and favorable government policies.
Although a middle-income country by Western standards, China's rapid growth has
benefitted a lot of its people since 1978. Today, about 10% of the Chinese population lives below
the poverty line of US$1 per day (down from 64% in 1978), while life expectancy has increased
to 73 years. More than 93% of the population is literate, compared to only 20% in 1950. Urban
unemployment in China reportedly has declined to 3% where overall it may be as high as 10%.
China's growth has been uneven, with some geographic regions growing faster than
others, and a pronounced urban-rural income gap. The development has been mainly
concentrated in the heavily urbanized eastern coastal regions, while the remainder of the country
has lagged. To counter this, the government is replicating developmental projects in the western,
northeastern, and central regions of China as well.
The Chinese economy is highly energy-intensive. China is at present the world’s largest
energy consumer but still relies on coal to supply about 70% of its energy needs which has
resulted in massive water and air pollution. However, the government is planning to use more
renewable energy resources to constitute 30% of China's total energy production by 2050.
In 2010, China became the largest wind energy provider in the world. Russia at present caters to
China’s oil needs to a great extent through the Eastern Siberia-Pacific Ocean oil pipeline.
 6

Science and Technology:

The two mandatory arsenals to qualify for a superpower status are viz:
1. Formidable tax collection system coupled with its just distribution
2. Innovative technology with a competitive edge
When counted on these dimensions we see that China is sufficiently lagging viz the viz USA
at the moment though fast-moving on this trajectory.
With the introduction of Deng Xiaoping's market reforms, China got increasingly connected
to the global economy and information sphere. This all helped in the development of science and
technology in China.
China had detonated its first nuclear device in 1964 and launched the first satellite in 1970. It
also became the third country after the US and Soviet Union to send a human being into space in
2003. It plans to launch its space station and to send a manned mission to the moon by 2020. It is
now spending a lot on research and development. China is the second-largest after the USA's
spending on R&D. But its annual growth at the expense is 18% against the USA’s 4%. During
2017 China spent $254 billion against the USA’s $375. Its researchers are touching the figure of
one million which is second to the US only having 1.3 million. Many foreign companies are
setting up R&D centers in China on account of low cast Chinese talent and government support.
Political front:

At the present USA and its European allies are the major players in international politics
with NATO as their military arm. The Shanghai Cooperation Organization (SCO) is an inter-
governmental organization between China, Russia, and four Central Asian states, which by some
observers, is being considered as NATO of the east eventually.
With 2.25-million soldiers, China’s army, though less advanced militarily as compared to
the Western armies, is the largest in the world. Recognizing this fact, China is in the process of
modernizing its army. It is expanding its naval buildup specifically to look after its interests in
the South China Sea and the Indian Ocean.
Being one of the five permanent members of the United Nations Security Council and
having veto power, it possesses influence in world politics.
China is gradually increasing its influence in areas that were traditionally under the
influence of Western countries. This is in part due to china’s non-ideological approach in
international politics and partly it focuses on building competitive trade and economic ties.
China is Japan's, South Korea's, and Taiwan's largest trading partner. China has a
considerable influence on the military, economy, and politics of North Korea. With the growth of
the Chinese economy, its political influence and leverage are increasing at the international level.
Being the growth engine of the world its energy requirements are also enormous. China is
now the second-largest consumer of petroleum products in the world after the United States. It
secures its energy requirements from diverse resources around the world. The Middle Eastern
region, which contains the world's largest proven oil reserve, has been the focus of that policy.
Roughly half of China's imported oil comes from the Middle East. The Middle Eastern nations
are also keen to diversify their customer base away from overdependence on the Western market
 7

(Europe and North America) as a demand source and so they have begun to look at other rapidly
growing markets such as China.
In addition to the deepening bilateral trade relationship, China is expanding strategic and
security relationships with Saudi Arabia, Pakistan, and Iran, which entail ballistic missile
cooperation capable of carrying nuclear warheads. Saudi Arabia, Iran, and Pakistan are pivotal
states in the region. They are somewhat likely to view China in the coming years as an alternate
source of security and as a counterbalance to American power.
To establish and maintain trade relations with India, China has decided to lay down its
claims to the Indian state of Sikkim. China has contributed a lot to the improvement of the
development sector of all South Asian economies apart from India notably in Sri Lanka. China's
investment in the said economies has gained a strategic foothold.
China is also in the effort of building strong economic relations with African countries. In
November 2006, China hosted 48 African heads of state in Beijing to strengthen economic and
political influence on the continent. African leaders now regularly cite China as the ideal
development model for their countries.
China has also developed substantial economic ties with South American countries along
with the Caribbean Sea islands. During a visit to Brazil, Argentina, Chile, and Cuba in
November 2004, the President of China announced $100 billion worth of investment over the
next decade. Cuba is now turning to Chinese companies rather than Western ones to modernize
its transportation system. Besides, The PRC is expanding its military-to-military contacts in the
region. China is also training numbers of Latin American military personnel.
China has also hosted the 2008 Summer Olympics. It will also host the Winter Olympics of
2022. The enrollment of foreign students in China has tripled to 110,000 from 36,000 over the
past decade, and the number of foreign tourists is also increasing rapidly.
Overseas Chinese and cultural spread:
There are more than 60 million overseas Chinese spread throughout the world especially in
Southeast Asian countries like Malaysia, Singapore, Indonesia, Thailand, and the United States
of America. The overseas Chinese have a GDP equivalent to about US$1.1 trillion, or one of the
top 10 world economies if combined, and are a large economic contributor to China's growing
economy. Some of these overseas Chinese preserve their cultural identity and form communities
in the host nations known as "Chinatowns", which help to raise awareness of Chinese culture in
those foreign countries. Resultantly many East Asian countries have adopted much of the
Chinese essence in philosophy, language, and culture. An example is Confucianism - a
philosophical thought originated from China - which holds a great influence on the Japanese,
Koreans, Vietnamese, and other East Asians.
Points against the rise of China as a superpower:
China’s military capabilities are still small compared to that of the United States and
NATO. China lacks vital components of a blue water navy and a long-range air force buildup.
For example, in terms of operational land-based ICBM systems, the USA possesses the second
most lethal strategic capability after Russia. In space technology, China is also lagging behind
the level of development of the United States and Russia.
 8

The Taiwan Strait is a potential threat to regional peace since the last days of the Chinese
Civil War in 1949 when forces led by Chiang Kai-shek retreated across the Strait and established
its government in Taiwan. China believes Taiwan as its an integral part. Most countries in the
world maintaining diplomatic relations with China and are obligated to follow its one-China
policy, but the United States is obliged by the Taiwan Relations Act to help defend Taiwan
should there be any invasion from mainland China. Therefore, a military conflict in the Taiwan
Strait could lead to a confrontation between China and the United States.
Additionally, the United States is still suspicious of China's international ambition. China’s
relations with India (its southern neighbor) are far from friendly. Apart from border disputes, the
spiritual leader of Tibet (Dalai Lama) was granted asylum in India in the past which heightened
tensions between the two countries in the 1960s that led to the 1962 war over the disputed land
of Sikkim.
Access to information is believed by some to be the key to the development of science and
technology. China’s control over information is therefore considered to hamper growth in these
areas. But with time China is relaxing control over the media- most of the credit, however,
should go to the Internet and the spread of increasingly commercially-driven media.
It is believed that China's court system is less independent as compared to the western world,
as in mainland China, the government, not a court, is the final arbiter of the law. But the same is
expected to catch the western values as it interacts and gets more exposed to the outer world.
There has been a national debate about judicial independence in mainland China's closed
political system.
Other views:
According to Charles A. Kupchan as he maintains in his book “No One’s world”, “the
West's preeminence is slipping away as China, India, Brazil, and other emerging powers rise.
Although most strategists recognize that the dominance of the West is on the wane, they are
confident that its founding ideas--democracy, capitalism, and secular nationalism--will continue
to spread, ensuring that the Western order will outlast its primacy. Kupchan contends that the
“Western order will not be displaced by a new great power or dominant political model. The
twenty-first century will not belong to America, China, Asia, or anyone else. It will be no one's
world. For the first time in history, the world will be interdependent--but without a center of
gravity or global guardian”.

In the words of Samuel P Huntington as hinted by him in his famous book “Clash of
civilizations and the remaking of the world order”, China is the major future challenge/ threat to
western and American supremacy in the world. According to him, western civilization is in
decline in relative terms. Its share of world political, economic, and military power going down
relative to that of other civilizations on account of slow economic growth, stagnating population,
unemployment, huge government deficits, low saving rate, social disintegration, drugs, and
crime. He further says, “Willingness of other societies to accept the west’s dictates is also rapidly
evaporating—and so is the West’s confidence and will to dominate”. According to him, USA
power will decline at an accelerated pace in the economy in the hands of China and Japan.
Though the West will remain dominant through the 21st century but relatively decline vis-à-vis
other civilizations notably China leading to non-Western societies.
 9

To substantiate his point of view he says that the West reached its zenith in 1900 (Hedley
Bull- British scholar) - In 1920 it directly ruled half of the world, but by 1993, it was cut to half.
As regards GDP he says that China’s GDP was the world’s 3.3% in 1950, which rose to 10%
in 1992. On the other hand share of western countries (US, Canada, Europe, and Australia) was
64.1% in 1950, which declined to 48.9% in 1992. Going back into history he says that the share
of China in the world’s gross manufacturing output was 33.3% in the year 1800 and that of the
western countries it was 23.3%. Thus he concludes that by 2050 the world economy would be
like that of 1800.

Both the IMF and the World Bank now rate China as the world’s largest economy based on
Purchasing Power Parity (PPP), a measure that adjusts countries’ GDPs for differences in prices.
Even by other means, it is predicted that China’s economy will surpass the US’s in 2029. The
Centre for Economics and Business Research (Cebr).

Global Economic expansion:

China’s One Belt One Road (OBOR) generally called the Belt and Road Initiative (BRI)
announced in 2013 is being implemented under China’s 13th Five-year plan (2016-20). It
encompasses three areas namely 1. International trade 2. Infrastructure development 3. Chinese
financial investment:
 10

It has two components:

One; Silk Road Economic Belt originating from China’s Eastern coasts stretching towards
Northwest China, and from there through Central Asia into Europe,
Two; The Maritime Silk Road from Eastern casts to Southeast Asia through the South China Sea,
Strait of Malacca to North Africa.
There is North Pole Maritime route as well which has been experimented first time without the
use of Ice breaker in the summer.
The BRI initiative aims at encouraging and utilizing Chinese firms' enhanced capacity to invest
internationally particularly in the emerging economies.
In April 2015, China signed a CPEC project worth $46 billion connecting China's northwestern
region of Xinjiang and Pakistan's Gwadar Port.
This port will allow Chinese oil tankers from the Persian Gulf to port and ship oil and gas to
China's Xinjiang-Shanghai oil pipeline directly.
Chinese products would also be shipped via land to Gwadar and then re-shipped to the Middle
East
Chinese, Pakistani, and other international companies will be involved in communications
infrastructure and power generation projects.
BRI is going to span more than 68 countries, ranging from highways in Pakistan to railway lines
in Thailand.
Western TNCs are selling billions of dollars of equipment, technology, and services to Chinese
firms building along BRI.
However, there is an apprehension in the developed world that BRI, in the long run, will open up
new markets for Chinese companies in areas that are currently dominated by Western companies.

BRI is connecting the Eurasia via the following 6 economic corridors.

1. China- Mongolia- Russia
2. China- Central Asia- West Asia
3. Eurasia land bridge- Leading to Rotterdam
4. Bangladesh-India – Myanmar
5. CPEC
6. China-Indochina
 11

Hence, Chinese economic expansion and political influence associated with it has become an
inescapable reality.
The protectionist strategy adopted by the Trump regime in the form of a Trade war with
China by putting a lot of tariffs on imports from China will not be able to check Chinese
economic expansion and boosting up of an era of inclusive globalization.
Asian Infrastructure Investment Bank (AIIB)
It is a multilateral development bank that aims to support the building of infrastructure in
the Asia-Pacific region. The bank currently has 82 members as well as 20 prospective members
from around the world. The bank started operation after the agreement entered into force on 25
December 2015. The starting capital of the bank was $100 billion, equivalent to 2/3rd of the
capital of the Asian Development Bank and about half that of the World Bank.
The bank was proposed by China in 2013 and is seen as a potential rival to the World
Bank and IMF.
China in the ADB has only 5.47 percent voting right, while Japan and the US have a
combined 26 percent voting right (13 percent each). Dominance by both countries compelled
China to establish the AIIB, while both countries worry about China's increasing influence at the
world level.
China’s shares in the Bank are $29780 million with a voting power of 300.2
India’s shares in the Bank are $8367 million with a voting power of 86.0
Russia’s shares in the Bank are $6536 million with a voting power of 67.7
Pakistan’s shares in the Bank are $1034 million with a voting power of 12.7
The U.S. did not join the Bank but allegedly tried to keep Australia and South Korea from
becoming members. But both Australia and South Korea joined.
 12

Criticism by USA: The White House National Security Council in a statement to The
Guardian, declared:
“Our position on the AIIB remains clear and consistent. The United States and many major
global economies all agree there is a pressing need to enhance infrastructure investment around
the world. We believe any new multilateral institution should incorporate the high standards of
the World Bank and the regional development banks. Based on many discussions, we have
concerns about whether the AIIB will meet these high standards, particularly related to
governance, and environmental and social safeguards.”
Chinese leader Xi Jinping said:
The Chinese economy is deeply integrated with the global economy and forms an
important driving force of the economy of Asia and even the world at large. China's investment
opportunities are expanding.
Investment opportunities in infrastructure connectivity as well as in new technologies, new
products, new business patterns, and new business models are constantly springing up.
We support the multilateral trading system, devote ourselves to the Doha Round negotiations,
advocate the Asia-Pacific free trade zone, advocate the construction of the Asian Infrastructure
Investment Bank (AIIB), boost economic and financial cooperation in an all-round manner, and
work as an active promoter of economic globalization and regional integration.
As per the World Economic Forum analysis, China would overtake America as the world’s
biggest economy by 2028. That would be 5 years sooner than previously expected. That is due to
China’s affective response to COVID- 19. China’s economy grew by 1.9 % in 2020. The US
economy, meanwhile, shrunk by 4.3%. China is the only major economy to have avoided
recession in 2020 despite the first country to be hit by the virus. China’s rapid strict response
meant it avoided repeated lockdowns and the economic damage that results. Economists expect
China’s economy to grow by 5.7% a year until 2025. While the US is poised to grow by just 2%
annually over the same period. This disparity would wipe out America’s lead within 7 years.
However, the average Chinese person is likely to remain far poorer than their American
counterpart, given the Chinese larger population, and COVID’s effect on slowing poverty
reduction.
Last word:
In the wake of the aforementioned, it can be said with some certainty that China could be
the largest economy of the world by 2028, and if not a superpower but a major player in
international politics in the years to come.