Aug 11
24
All political and social systems have a certain gravitational pull both from their achievements and the perceived morality of its leaders. Through all the years I’ve been in China, positive opinions about Western countries have waxed and waned. The NATO operation in Yugoslavia lowered the opinions of the US (and I’m not talking about the embassy bombing here), whereas the election of Obama caused many to express admiration. I tend to have quite a detached view of these things since ultimately, whatever systems prevail in other countries will have less to do with these likes and dislikes than socio-economic development, but they do have an impact.
If we accept that premise, it’s quite obvious that the actions of American and European politicians the last couple of years have done little to raise people’s faith in their systems. To outsiders and to many here, it looks like American politicians can not take reasonable measures even in times of crisis, but keep quibbling internally about ideology, whereas in the EU, bail-outs of irresponsible players and a lack of leadership have caused considerable concern about the sustainability of the Eurozone itself. If the Western countries are trying to “sell” democracy by the success of their policies, they are doing an awful job.
Under these circumstances, and some other recent developments (the London riots, for example), it’s not surprising that there’s been gloating about the failure of Western democracy to respond to its problems. Others, however, mean that China and the Western countries are in it together and that it’s in everyone’s interest to see a stable USA as much as a stable China.
I recently read two articles in the popular news magazine 生活周刊 (Life Weekly) that I found interesting. They are part of a series of descriptions of the recent debt crisis in the US and how they will affect it and China. The immediate concern for China, of course, is the large amount of US debt it owns, and what the effects will be if the crisis deepens. A slightly longer term concern is the internationalization of the RMB. As described in the first article,
For a long time during the previous years, internationalization of the RMB has always been seen as filled with risk, but the extreme caution taken to this task has caused many problems for the Chinese economy. As the international economic and financial situation goes through a historical and enormous change, the risks and benefits of internationalizing the RMB should once again be taken into consideration.
However, RMB will not become a world currency in the foreseeable future (that is, at least not the next 20 years), and not only because these policies are being reconsidered:
[The idea that] the renminbi will replace the dollar as world currency in 20 years is obviously is an unrealistic fantasy. On the one hand, this is because renminbi still has a very low presence abroad, and the change can not be done in the short time of 20 years. A more important reason is that, even if the US were to decline and China to rise, the world will not yet again see the rise of a single economic hegemony like the UK or the USA; with this in mind, the monetary policies of a single country will not be able to take up the responsibility of a world currency reserve.
In the second article, an interview with Zhang Yuyan, director of the Institute of World Economics and Economics, gives some interesting answers about the best ways for China to proceed during this perilous stage. He begins by allaying fears about a sudden collapse:
I’ve used a concept called peak plateau. America’s [national] power is at a peak plateau period, but the plateau is slowly pointing downwards. It’s still the strongest country in the world and won’t just go down with a ‘swoosh.’ How long this plateau is, or how steep, depends both on itself, and its competitors. It’s relative.
Then he goes on to talk about what it will mean for China:
In the middle and short term, American economic growth will be weak and directly affect the world. It exports liquidity and drive up prices; the change of prices in a lot of commodities will be even more bewildering than it used to be. There might also be changes in the ways international rules are stipulated and negotiated. Trade is still not balanced and exports are greatly exceeding imports. As for negotiations about stipulating these rules, the game between China and the US will get more complex and difficult.
For me, the most interesting point made in this article is the question asked in the title, “What kind of USA is in China’s best interest?” Here Zhang gives a long and comprehensive answer pointing out the future of China and what factors it needs to consider, but I’ll just quote the beginning:
China needs a fairly stable USA. From my perspective, upholding the global system is a product of working together, but since there’s no world government, we can only get this from great powers. You need to spend money to create this outcome, and when the main power contributes it needs to be compensated, it has to be favorable to it. From this point of view, the world order is often unfair. But if you want a fair order, who is to contribute it?
In order to take up responsibility, you need to pay and make contributions. During these times, a strong, China-friendly, open, responsible USA is in China’s interests. Actually, speaking frankly, it’s not easy being the leading power.
While the US and its Western allies may be slowly declining, China’s rise doesn’t necessarily herald a bipolar world order, but rather one in which there are several large players. Such an order might in some ways be harder to stabilize than one in that where a lone superpower sets the agenda, but this only strengthens the impression that all major players are all in it together. In today’s interconnected world, the weakness of one is not the strength of another.
