Friday, December 28, 2007

China Ascendance

Farid Zakeria has declared that 2008 will be the year of firmly establishing China’s ascendance on the global stage with the successful completion of Beijing Olympics. John Ikenberry argues in Foreign Affairs that as long as America makes efforts to preserve and improve ‘open’ global governance systems (UN, WTOs of the world), China will find that it is easy to prosper and grow ‘with in the existing international system’ instead of working for any violent transformation. But his assumption is that China’s rise to the peak of global power system is inevitable.

The real question here is not to ‘marvel’ or get impressed by China ascendance. Those days are gone. The question is here is how this rise would ‘sustain’ in days to come, in the 21st century. Clearly there are 3 challenges China needs to address if it intends to complete its transition towards the ultimate global leadership position:

- One can only go so far with sever curtailment of ‘freedom and basic rights’ of your own people. Unless China brings in Democracy, it is hard to accept its leadership for rest of the world in any non-violent ways. Further, how long any society be a peaceful and stable society when basic ‘human rights’ are not respected? China has not addressed this question so far nor does seem to be on a path to address it in any meaningful way.

- The second aspect is a consequence of the first one. There will be a day when all the prosperity what China can get out of being ‘world’s factory’ is fully exploited. At that point, the ‘manufacturing miracle’ of China will only start to bring in diminishing returns. Besides many other countries will start climbing the ladder of low wage manufacturing industries for global markets. So the key is at that point will China be able to make the transition to Knowledge based Economy? S. Korea, Taiwan, Japan and Singapore have made that transition to a certain extent (and that did bring in the much needed political reforms). Smaller size helped these countries in certain ways. For China, it will have to find how the bigger size would be an advantage in a different sense. Without an open society, which nation can build the sustainable Knowledge Economy? Only David Brooks in New York Times rightly judged how weak real Chinese social structure is when it comes to prosperity. With the current Chinese social setup, it is unlikely in the first place Knowledge base Economy would ignite and even if it ignites it is unlikely to thrive without resulting in deeper class based social structure which would be detrimental.

- Finally, it matters how China deals with its environmental problems, created as collateral damage in its growth path adopted so far. Though there are attempts by the Chinese government to tackle this issue, the very power structure of Chinese growth pattern – local and state governments get to set up their ‘growth goals’ and those goals are pursued and awarded at the cost of everything else – makes it harder to deal with this issue in any systematic manner. Stated simply, Chinese growth and protection of their environment appear to be in a contradictory dead lock – both can not be attained without the core reforms of how ‘growth incentives’ are played out. Again it goes back to unique ‘corpocracy’ which David Brooks talk about.

So when all these erudite articles about China rise do not talk about these challenges and sing all paeans only; they really miss on some critical points leading to one sided analysis and faulty prognosis.

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