I have wanted to write this series since I went back to the US this February and noticed a palpable change. It seemed like people were no longer talking about China as a kind of economic miracle, those thoughts had been replaced by a growing anxiety over what it might mean for China to be a superpower.
This week we are going to be taking a look at what it means to be a superpower, and try to gauge how close China is to meeting the criteria. For this series we’ll be looking at four areas of power and China’s ability to project them. These four areas are: economic, political, military and cultural power.
Economic Power
Today I thought I would begin with the most obvious indicator of China’s new position on the global stage, its massive economic power. (I would also recommend reading my posts: China’s GDP doesn’t mean what you think it does, and Does China’s growth mean Communism works?)
2010 Nominal GDP
China celebrated becoming the world’s second largest economy this year after passing Japan. China’s GDP seems to have transfixed the world on numbers as we have begun to countdown the years until China overtakes the US in economic power, which would be around 2028 given current levels of growth. This projection though is highly questionable as it only looks at current levels of growth, as many China watchers believe China might be headed for an economic slowdown (articles here and here are important counterpoints to the 2028 estimate).
Now this is not to say that I am wishing an economic slowdown upon China, simply stating that there are some things to be worried about. China’s high levels of inflation have been a hot topic this week on many China blogs, as well as high levels of debt in local gov’ts and soaring housing prices that many believe (myself included) could be a bubble.
However as I mentioned in my definition of a superpower, this status means more than simply having a large GDP, it also means being able to project this kind of power. On that front China seems to unquestionably fulfill the criteria.
It seems now to be almost common knowledge that China is the World’s banker. Not only have they bought up staggering amounts of US debt, but they’ve also done the same in Ireland and Spain as the Euro zone continues to fight its way out of the Global recession.
On top of that China currently has massive investments throughout Africa (read my series on that topic here), South America, and most recently the South Pacific. These foreign investment projects put China on par with many of the former colonial powers in terms of global reach.
Finally I think we need to stop and ask how important GDP is for measuring a country’s strength as a superpower.
While it is definitely an important aspect of being a superpower, GDP alone is not enough for a country to earn the label of superpower. Have another look at that list of countries by GDP and ask did Japan’s #2 ranking make it a superpower? How is it that the UK still projects so much power throughout the globe even though it is #6, while Italy seems far less powerful just a few hundred billion dollars behind?
Perhaps GDP is actually only a small, but necessary, part of what it means to be a superpower. So tomorrow we’ll be looking at China’s political strength and how China is using it to shape the future of our world.
I think there is an estate bubble growing, which would cause serious problems in future.
If your read the articles I linked there, it seems like it is far beyond a real estate bubble. One person made the point that China’s High-speed rails are loosing money, and still the gov’t is building 45 new airports, which the high-speed rail was supposed to eliminate the need for.
At the moment though, China has the money to finance the other aspects of being a super power, if it can get it’s act together.
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A real estate bubble is but one aspect of potential problems in the future. Do these figures take into account the same amount of growth in the future as China has experienced over the last 10-20 years? If so, that also seems unreasonable as it seems highly unlikely such a growth rate can continue to be maintained indefinitely. And how much of the GDP is being plunged back into unproductive SOE’s (state-owned enterprises) which will likely never be able to repay what they are being lent (if they are even able to remain solvent once government support stops)? Just a few random thoughts, anyway…
The two articles I linked point out that idea in much greater detail. There is also China’s massive investment in infrastructure, which is only a sound investment when the infrastructure is actually of use. I think part of why these big scale projects are so popular is that they offer great opportunities to skim a few million RMB out of the budget.
I think it could be loans to local gov’ts that could be the bigger problem than the real estate.
The two articles I linked point out that idea in much greater detail. There is also China’s massive investment in infrastructure, which is only a sound investment when the infrastructure is actually of use. I think part of why these big scale projects are so popular is that they offer great opportunities to skim a few million RMB out of the budget.
I think it could be loans to local gov’ts that could be the bigger problem than the real estate.
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