The relationship between the two most powerful economies USA and China have been complex, and have fluctuated varying from positive to highly negative. USA and China did not establish relations for 25 years after Korean war and only in 1972, US President Richard Nixon visited China. As China began opening its economy in 1980s, and was still had differences with the then mighty Soviet Union, America became close to China, and the economic ties grew rapidly. Since Nixon’s visit, every US President, with the exception of Jimmy Carter, has visited China. Relations with China started straining again under President Barack Obama when he announced the Asia pivot strategy and his support for Japan in the Senkaku Islands dispute. The relationship today is of hegemonic rivalry in the Pacific, and mutual suspicion over each other’s intentions. Both now consider each other as potential adversary for world dominance. Yet it has been described by world leaders and academics as the world’s most important bilateral relationship of the 21st century.
United States remains the world’s largest economy and China is the second largest, although China has a larger Gross Domestic Product (GDP) when measured by Purchasing Power Parity (PPP). The two have had open conflict, during the Korean and Vietnam war. The United States now continues to be concerned with China’s lack of democracy, human rights, position on status of Taiwan, and China’s territorial claims in South China Sea. USA has also been concerned about the intellectual property theft by China through cyber attacks and use of Chinese Diaspora. Yet, China is the second largest foreign creditor of the United States, after Japan.
The relations deteriorated sharply under President Donald Trump whose administration labeled China a “strategic competitor” starting with release of the 2017 National Security Strategy. USA subsequently launched a trade war against China, banned US companies from selling equipment to Huawei and many other Chinese companies. USA highlighted the human rights abuses in Xinjiang; put increased visa restrictions on Chinese students and scholars, and designated China as a currency manipulator. Clearly a new Cold War is emerging. The positive and optimistic forces, interests, and beliefs are giving way to pessimism, hostility, and a zero-sum mindset. By May 2020 relations have reached a new low as both sides were recruiting allies to attack the other regarding guilt for the worldwide Covid-19 pandemic. China is now the principle focus of US economic, foreign and security policies.
The Public Psychology and Confidence
China is centuries old civilisation, that most part of its being was among the leading economic power. Its people, both students and employees are on the move and have much higher aspirations, and willing to do much more hard work. China’s economy is growing much faster than America’s. Chinese has relatively cheaper labour force and its labour unions are more aligned to national goals and have been made to understand that businesses must make money to pay their salaries. Public in most countries look up to “Rulers” who lead them to higher prosperity and better lifestyle, and also keep their nation secure from internal and external threat. This is true of the current generation Chinese leadership.
Chinese People Under Tight Leash
Strong, centrally controlled China also has low crime, no religious pulls, pressures, and protests, and Islamic violence or terrorism. China has lesser violence and robberies. That makes better business environment for companies to operate. China has a single party rule, and therefore lesser factional fights when it comes to national policies. China’s government is forward-looking, efficient and thrifty. Most members of the State Council are reportedly promoted on their ability to work cooperatively. Most have a PhD and an IQ over 140. Chinese people have greater trust in their government.
IQ and Skill Development
Martin Wolf, the Financial Times columnist writes that Chinese high school students graduate three years ahead of America’s. One-fourth of the world’s STEM workers are Chinese. Chinese intellectual workforce is eight times larger and growing six times faster than America’s. By 2025, China will have more technologically skilled workers than the entire OECD (USA, EU, Canada, Mexico, Australia, Israel, Japan, Korea, New Zealand, and Turkey) combined. Nearly 28 million Chinese have an IQ of 140 (‘gifted’), sufficient for membership in Mensa, the high IQ forum for intellectuals. The Chinese have an overall five point IQ advantage over Americans. No country has so many smart, fast thinking people as China. The Chinese worker quality today is certainly much higher.
Job, Economic Parity and Life Security
China follows the eastern view of ‘bear the hardships first and enjoy its fruits later’. Most Chinese have a home, a job, plenty of food, get education, live in safe streets, have health and old age cover. Nearly 40 percent of Chinese have more net worth and disposable income than the average American. Chinese children are healthier and less likely to be drug addicts, or commit suicides. China’s GINI coefficient (inequality) gap is structural with their inland, rural populations always having been poorer than the urban and coastal populations. But this gets neutralised because the cost of living being higher in wealthier towns like Beijing and Shanghai. In 2018 President Xi announced that the country will spend 2021-2035 bringing both income and wealth levels closer to Finland’s, the world’s most equitable country.
Civilization Growth Criteria
A civilization is any complex society characterized by urban development, social stratification, a form of government and various forms of symbolic systems of communication. Civilization growth is measured be rate of growth of military, religious, political, or economic strength. That means growth indicators like GDP etc continue to have a healthy growth rate. The production has to be efficient and more than consumption. Civilizations don’t grow on non-productive, ego satisfying things like wars. Also it means evenly distributed wealth and low rich-poor divide.
Investments in Research and China Pulling Ahead in Select Technologies.
Since World War II, America has been busy spending money in ideological and regional wars and spending hard earned American people’s money, instead of investing in quality of life of its people. China has fought no major wars and actually spend money to become a global factory and economic power house. USA also has failed to invest its surplus in productive innovations while China has systematically done. That’s why China is today a world leader in many hot technologies like the 5G and also taking a lead in cyberspace and hypersonic weapons. China leads the world in basic research. China has also overtaken the US and produces the world’s largest number of scientific research papers. China dominates a global ranking of the most-cited research papers published in the 30 hottest technology fields. According to the Japan Science and Technology Agency, China now ranks as the most influential country in four of eight core scientific fields and will soon overtake America in the other four. China is already ahead in the number of AI patents filed and AI venture capital invested. Chinese students studying AI and graduating from universities worldwide exceed the total number of other countries’ AI students combined. China has also overtaken the US to become the world’s largest producer of scientific research papers, making up a fifth of the total global output. The World Intellectual Property Organization, WIPO, ranked 167 universities and public research universities for the top 500 patent applications. 110 of the patents were from China, 20 from the United States and 19 from South Korea.
Although no more in double digits, Chinese economy continues to grow at a rapid rate. Chinese’s debt is mostly domestic, and nearly one-third that of USA. USA is getting deeper into debt, and mostly global borrowings. China will have clear edge in terms of future investments in economy or weapons. China is pumping large sums in automated highways, railways, airports, subways and ports, weapon systems development and will have the world’s fastest internet from next year. Domestic consumption of China is growing 7% annually. Chinese companies and families have three trillion dollars in their savings accounts and 80% of homes have no mortgages. The country has no external debt and investment money is easy to find. China remains self-sufficient in food. China has twice America’s industrial capacity and its factories are half the age of American factories.
Global Economic Leadership
Gallup poll says that, despite America’s domination of world media, 34% of the world approves of China’s leadership compared to America’s 31%, adding, “As the global balance of soft power continues to shift, it may prove even more difficult for the US to counter this influence”. China is becoming less exposed to the rest of the world, which, in turn, is becoming more exposed to China. China’s imports and exports are in balance. Its trading relationships are working well. Its currency is fairly valued, and its economy growing three times faster than USA. USA is actually much more dispensable than it thinks. China is concentrating more for trade relationships first with other Asians, followed by Europe, and making the same with USA the third most important. “America first” sounds like a great idea, except when it actually may end up meaning, “America alone.”
China leads the world in quantum encrypted communications, 5G telecommunications, CCTV and face recognition. China launched more space missions in 2018 than others. China is the world’s leading provider of small UAVs. China is the go-to builder for ships like LNG transporters and naval vessels. China leads in all aspects of railway engineering and wins the bulk of global rail contracts. China has the largest network of high speed trains. The first of five low speed maglev lines has completed testing and two more will open soon. China leads the world in batteries and electric cars. China leads the world in basic research and manufacturing of all renewable energy sources and it installed more renewable and nuclear power in 2019 than the rest of the world combined. Most of the world’s nano-material graphene is manufactured in China.
China has created the Shanghai Cooperation Organisation (SCO), one of the largest alliances on earth; the Asian Infrastructure Investment Bank (AIIB), the largest international finance agency; the Belt and Road Initiative (BRI), an ambitious trading program with 130 member nations; and the upcoming Regional Comprehensive Economic Partnership (RCEP) which will dwarf all trading alliances. China has been able to convince Europe to retain Huawei.
Despite USA’s over three time larger defence budget, today Chinese missiles are outranging American missiles in most categories. America is looking at ways to exit Middle East. NATO’s influence is reducing. Russia is muscle flexing its way into Middle East and has already annexed Crimea with little resistance. The Chinese People’s Liberation Army ( PLA) is quickly reforming and gradually inducting latest weapons. China has two stealth fighters under development. By 2025, the Chinese People’s Liberation Army Navy (PLAN) will have 4 aircraft carriers, and the largest naval fleet. Though China has a long way to militarily catch-up with USA, the plan is systematically unfolding.
As of 25 May 2020, USA has 1.7 million of the total 5.5 million global cases, and 99,462 deaths. Numbers are still rising. China has had total 82,992 cases and 4,634 deaths. Numbers have stabilized. China as a nation is getting back to work and economy is opening in most spheres. China is predicted to have a 9.2 percent growth for the FY 2021. Clearly Covid will impact USA much worse.
Prosperity Without Democracy?
World has often debated that can China continue to grow without democracy. Soviet Union collapsed after years of authoritarian rule. Will economic prosperity force the Maslow’s theory of “hierarchy of needs” to kick in. “Self actualization” needs individual freedom for fulfillment of higher needs. Modern Chinese leaders state that they run a “socialist democracy” where the Communist Party of China is a central authority that acts in the interest of the people. The Communist Party approves what political parties can run. Around the world China is often described such as totalitarian, authoritarian, or even as dictatorship. The Democracy Index, produced by the Economist Intelligence Unit, gives China a 3.1 out of 10 and classifies its government as authoritarian. Zhengxu Wang of Fudan University in Shanghai says, “It is clear that public support for democracy is high in China. Public opinion surveys show that more than 90% of Chinese citizens believe that having a democracy is good. But the majority is not yet ready for a major effort towards democratization because they still see economic growth and social stability as more important than freedom of speech, political participation and other democratic rights. Presidnet Xi Jinping said that a multi-party system would not work for China. He said China had experimented in the past with various political systems, including multi-party democracy, warning that copying foreign political or development models could be catastrophic because of its unique historical and social conditions.
The Chinese have a clear plan for their future. They want to regain their global leadership position. By 2025, some Chinese provinces will enjoy higher average incomes than average Americans. By 2035 China aims to become world manufacturing power of mid-to-high end technology items. By 2049 China expects to be the worlds’ leading manufacturing power, with innovation driven advanced technology and industrial systems. The quantum of Chinese push is such that the world will have to evolve a new balance. China is not just another player. All will have to engage with China by factoring this new reality. There could be new alliances. With such a dominating neighbour, even Russia is a little uncomfortable and may one day wish to rework its relations with Europe and America. But for the moment Russia needs China’s large defence and natural resources needy market.
Matthew Kroenig wrote in ‘The Atlantic’ “Open societies have many other advantages as well. They facilitate innovation, trust in financial markets, and economic growth. Because democracies tend to be more reliable partners, they are typically skillful alliance builders, and they can accumulate resources without frightening their neighbors. They tend to make thoughtful, informed decisions on matters of war and peace, and to focus their security forces on external enemies, not their own populations. Autocratic systems simply cannot match this impressive array of economic, diplomatic, and military attributes“.
China needs two things to solidify its great power status. First, it needs a decade or more to consolidate and strengthen its position. It has to first master the Asia-Pacific region. The US remains the world’s strongest military power. And even with complex economic problems, it is still the world’s largest economy and China’s major export market. Without corresponding political reforms, with wider popular representation and accountability, China’s economic edifice will remain on very weak foundations subject to social and political eruptions. As China unfolds into a super power, world needs to watch carefully and take their own calls.
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