What are the impacts of a rising China on the rest of the world? To answer this question, we must bear in mind the following important facts: fast growing and modernizing economy; population 1.3 billion of which 9% comprising 55 ethnic minorities; the biggest trading nation with by far the largest foreign exchange reserve of over $3 trillion; and paradoxically a capitalistic country ruled by the powerful Chinese Communist Party.
This sounds complicated and uniquely Chinese. Does that mean war or peace for the world? It’s hard to say but it depends on the level of fear or lack of understanding you have about China. I think the economic aspect far outweighs the military.
First of all, let us dispel the fear that a giant modernizing country will expand outward to grab foreign lands. Does China really need more land given that it has a vast hinterland waiting to be developed? By contrast, smaller but powerful countries tend to venture out and grab foreign lands, as demonstrated by Great Britain, Spain, France, Germany, and Japan during the heydays of colonialism.
After the communists took over in 1949, China closed itself to the outside world until it had the confidence to reopen its doors in the early 1980s. Why? China always had tons of internal problems to tackle, besides having been invaded and occupied by foreigners during the last two centuries. Due to its size, China’s domestic problems are inherently gigantic that will necessarily direct all its energies inward rather than outward.
China’s biggest domestic challenge is growing enough food to feed its people. The present generation still remembers the famine of the 1960’s at the height of the Cultural Revolution. The fear of food shortage still lingers due to the unpredictability of climate conditions. This fear seems to be receding nowadays because the country can finally afford to import wheat and other basic staples from abroad.
After more than three decades of fast growth, an entirely new set of problems have emerged for the communist government: How to satisfy the consumption and other aspirations of the thriving middle class now numbering 500 millions? How to achieve a more equitable income distribution among the people? How to cope with the unprecedented urbanization when millions of peasants are moving into the cities to find work? How to handle environmental pollution that is worsening day after day? How to provide health care for the rising older population? How to secure sufficient natural resources to sustain the expanding economy without causing high inflation? How to foster ethnic harmony especially with the Tibetans? And finally but perhaps most crucial, how to deal with the government’s internal corruption?
This is a tall order for any government to cope, regardless communist or capitalist. In a democratic country such as the US, the politicians like to delay or obstruct tough actions until the next election cycle, and meanwhile blame the opposing political party for impotence. In China, the communist party must bear the sole responsibility for it’s the only party in charge. The lack of action will infuriate the people to the extent that they will rise up in a bloody rebellion because they cannot vote the communists out of power. The Chinese politicians must perform or die, whereas its US counterparts can get away with inaction and gridlock by blaming the other political party. That does not necessarily mean the communist system is better as shown by the Soviet government that did not perform and died. It all depends on whether the Chinese government is able to deliver good results.
Can a communist regime continue to suppress its people to get its way? It can in North Korea or Cuba because a private business sector does not exist there. If the Chinese government suppresses too far, it will damage the existing conditions of the large business sector that has taken decades to build and nurture. This sector now comprises millions of private local enterprises alongside big international companies. When business deteriorates, up goes unemployment that will make people desperate and angry, which is precisely what the government wants to avoid.
So the large business sector acts as a restraint on extreme communist policies. In addition, all the friends and relatives of high communist officials (including the military) have large ownership stakes in the business sector. Although this makes fertile ground for corrupt collusion between government and business, it is easy to see whether the communist regime wants to make money or war. The Chinese people, like the rest of the world, want improving living standards. The communist government has to deliver economic progress for fear of being toppled. In the process, the government has transformed itself into a capitalistic regime while it still retains some of the old communist suppression tactics.
Despite the great contradictions in the Chinese system, the biggest impact on the rest of the world is the consumption level of the 500-million Chinese middle class. This size is approaching the total populations of the US and European Union combined. The world has never seen such phenomenon before as all the countries with large populations had been captivated by poverty for a long time. While the businessmen salivate at this huge market in China, I cannot help wonder the impacts on world resources especially food, fresh water, energy, raw materials, and the environment. Will the consumption behavior of the Chinese middle class leave enough natural resources for other developing countries without causing high inflation and environmental breakdown? This is a potential global nightmare. I think the problem can be solved if the world can come together and find a way to develop new resources, consume efficiently, and produce less waste.