The Chinese Imperialist System in the Asian Century

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Almost two decades into the 21st century we’re beginning to see a period of dramatic global political and economic uncertainty occurring concurrently with China’s steady and dramatic rise to superpower status. This will be an Asian century. In fact, it will be a Chinese century. China’s continued political and economic development and its domestic stability will shape the global order for at least the next 100 years, especially for the developing world, which seeks to emulate much of China’s success. China’s resurgence will cause a restructuring of global resource demand, the development of a Chinese imperialist system, growing dependence on Beijing, and the weakening of democratic traditions in countries of Africa and Asia.

In the history of humanity, no economic event has come close to the economic transformation achieved by China between 1980 and 2010. China experienced decades of turmoil after the start of Communist Party rule in 1949 that culminated between 1966 and 1976 with the Cultural Revolution, a period of unprecedented turmoil and destruction that ripped the fundamental fabric of China to pieces. Mao Zedong’s death in 1976 set off a period of reformation, including the 1979 Law of Joint Ventures which permitted foreign investment in China and China’s rejoining of the International Monetary Fund (IMF) and World Bank in 1980.[1] These reforms sparked a tsunami of economic development. China’s GDP rose from $172.3 billion in 1977 to $10.9 trillion by 2015.[2] Its poverty rate fell dramatically from 88.3 percent in 1981 to 1.8 percent in 2013.[3] Gross National Income per capita soared from $190 in 1977 to $7,280 by 2015, even while China’s population grew by almost 400 million.[4]

To date, Chinese foreign policy has been markedly different from that of other so-called “second power nations” throughout history. In sharp contrast to the United States and Soviet Union, which had very militaristic foreign policy positions when they trailed the global hegemon of the time, Chinese foreign policy since the establishment of Communist China has only twice resorted to offensive military action with its invasions of Vietnam and Tibet respectively. China also engaged in a brief but large scale border conflict with the Soviet Union in 1969 and a small border war with India in 1962, but in a purely defensive capacity in both engagements.[5] Chinese foreign policy has sought to restore China’s rightful place in the pantheon of great powers by leveraging economic, financial, and diplomatic tools rather than military might. This foreign policy has been based around identifying and actively promoting “shared interests” as the bedrock of foreign relationships. China and Pakistan’s shared geopolitical and economic interests, and the close corresponding relationship, are the best examples of this.

The second operative component of the Chinese imperial system will be Chinese economic and financial power. This will likely mimic the U.S.’s use of economic and financial power with some minor adjustments. China is striving to make “all roads lead to Beijing” in a literal and economic sense. The Yuan is slowly but surely progressing toward a globally traded currency and is already a recognized reserve currency.[6] The China-Pakistan Economic Corridor is part of the larger and hugely ambitious One Belt, One Road Initiative, which seeks to reestablish the land-based and maritime silk roads by connecting all of Asia and parts of Europe and Africa to China. This will bring huge benefits to all involved, but will most strongly facilitate trade with China. This will further strengthen China as the region’s economic and financial center of gravity. Chinese state-aid also provides a hugely valuable foreign policy tool for incentivizing shared interests and bringing countries into line with Chinese policy. By ignoring human rights and offering aid in exchange for other benefits, China has won many friends among authoritarian nations.[7]

Finally and most significantly, the Chinese imperial system will be underpinned by new transnational institutions. To be clear, China is not seeking to undermine all aspects of the existing global rules-based order. It has consented and will continue to consent to those institutions it sees to be in its interest. Those that aren’t, however, are targets for replacement. The launch of the New Development Bank is the first salvo in this battle. Set up with an initial capital infusion of $100 billion in July 2015, the bank includes the members of the Brazil-Russia-India-China-South Africa (BRICS) bloc and aims to offer an alternative pole of global financial power for countries tired of being under the IMF’s yoke. The bank is headquartered in Shanghai and through a contingent reserve arrangement, most of the $100 billion will be provided by China.[8] China also proposed the launch of the Asian Infrastructure Investment Bank in 2013. The bank is targeted at building infrastructure to connect the entire Asia-Pacific Region to China.[9] In addition, China has committed itself to investing $1.25 trillion worldwide by 2025. China is also leading the negotiations of the Regional Economic Economic Partnership (RCEP) involving up to 16 states. The RCEP is China’s answer to the Trans-Pacific Partnership (TPP) a free trade agreement of Pacific Rim nations spearheaded by the U.S. These two examples are but opening steps in what is likely to be a growing focus of Chinese transnational policy. Developing and securing privileged access to new transnational institutions or altering existing ones gives China’s imperial system a strong transnational underpinning. It will allow China in turn to build a global imperial system underpinned and protected by a series of interlocking institutions akin to the U.S. imperial system since the end of WWII.

The Chinese imperial system will be enforced and supported by continuing improvement in Chinese tools of soft and hard power. In recent years, China has increasingly focused on developing tools of soft power, the ability to influence the behavior of others by attraction, not coercion. In many ways, the success of China’s growth miracle and political model has turned into a form of soft power with developing countries that seek to emulate its advances. One facet of soft power involves influencing cultural, political, and foreign values over time; China has mastered this through a concerted media offensive since the dawn of the century. Xinhua, Chinese Central Television (CCTV), and China Radio International have been expanding rapidly internationally, focused especially on the developing world.[10] Similarly, about 300,000 foreign students are now studying in Chinese universities along with numerous government and military officials from developing nations who come to China for additional training.[11] Finally, China now has 500 Confucius institutes worldwide operating in over 120 countries.[12] These institutes are the main avenue by which China exports its cultural and historical values to the world.

As for the projection of hard power, China is focusing on the creation of a “blue-water” navy (a maritime force capable of operating globally), the modernization of the People’s Liberation Army (PLA), and the closing of the capacity gap with other major military powers. China’s naval modernization program has been underway since the early 1990s, and by 2020 its navy will have grown to a fleet size of 270 ships.[13] This includes China’s first aircraft carrier the Liaoning, a series of attack submarines acquired in recent years, and new classes of destroyers and frigates. To put it in numbers, China had two modern attack submarines in 1995. By the end of 2015 this number was 41, which is an almost 20-fold increase in 20 years. China also launched the Hefei in 2015– the most advanced surface combat ship ever operated by the People’s Liberation Army Navy (PLAN).[14][15] By 2020 China will have increased its naval capacity substantially and come many miles down the road to a fully-fledged navy able to challenge U.S. dominance in the Western Pacific. This naval development, which seems to be focused on the South Sea Fleet, will be tasked with securing the Malacca Strait and the South China Sea, major avenues and potential chokepoints of Chinese trade.[16] In tandem with its naval modernization, China has continued to modernize the PLA with an influx of state-of-the art, locally manufactured weaponry and equipment. Troop numbers have fallen from their peak in 1987 of 3 million to 2.3 million today and will shrink to two million in the next few years. Military training has been revolutionized since the 1990s with courses on international relations, management, and military theory included as part of the training.[17] Furthermore, schools focused on amphibious operations have been setup to provide training as part of the PLAN’s modernization as well. Finally, living standards have continued to rise for Chinese soldiers through pay raises to increase morale.

What are the likely global economic and political implications of the imperial system outlined thus far? The Chinese love for infrastructure seems to be a deep-rooted part of Chinese economic psyche (and a well-worthy one), and through Chinese aid and the imperial projects – such as the One Belt, One Road Initiative – it will massively develop the infrastructure of the Afro-Asian landmass.

It is also likely that Chinese hegemony, even if only regional and partial, will roll back and weaken democratic traditions in nations under its influence. Democracy is already on the retreat. Francis Fukuyama’s famous declaration in 1992 of the triumph of liberalism and democracy sounds like a hollow and short-sighted declaration today. In 2000, 44% of countries were classified as free and 25% as unfree according to Freedom House, a democracy-monitoring group.[18] By 2016, 40% of countries were classified as free while a whopping 36% were classified as unfree.[19] This is a rapid and shocking reversal. Such a reversal is likely to continue unless China experiences serious political tumult. The Chinese party-state model is being replicated rapidly in nations such as Turkey, Russia, and Rwanda. The spread of Chinese values and the application of Chinese soft power through money and media pressure will only increase the likelihood of the development of single-party states.

Finally, a Chinese imperial system as described will result in China as the center of the economic and financial gravity of much of the world powered by the rebirth of Chinese global mercantilism. China’s share of global exports hit a 50-year high of roughly 14 percent  this year.[20] Similarly, China’s steel industry dominates the world, producing around 800 million metric tons annually or about 50 percent of annual output.[21] Between 1981 and 2010 China lifted an incredible 680 million people out of poverty – about 70 percent of all the people lifted out of poverty in that period.[22] China’s share of world GDP at Purchasing Power Parity (PPP) in 2016 of 17.86 percent already surpasses the US share of 15.59 percent.[23] China will also invest $50 billion in the Asian Infrastructure Bank, $40 billion for the Silk Road Economic Belt, and $25 billion in the Maritime Silk Road.[24] These are but a few statistics to show the scale, the pace, and the impact on neighbors that China’s continued growth will have. One likely effect of Chinese global mercantilism is the concentration of high-value added activities in China and the eventual outsourcing of many low-skill manufacturing jobs to Southeast Asia, South Asia, and Africa as Chinese wages rise. A second likely effect is global corporate consolidation. Chinese megafirms may embark on buying sprees in developing economies, purchasing retail firms, telecommunications firms, mining firms, and many more as part of the drive to expand and grow profits. This is a continuation of the Chinese government’s “Go Global” policy kicked off in 2000, which aimed to promote the international operations of Chinese firms through outbound foreign direct investment.[25]

Overall, China’s global economic resurgence will fundamentally shift the global geopolitical order. Since 2013, many commentators have observed a new security era with the end of the unipolar, U.S.-dominated world order. An arc of crisis stretches through Eastern Europe, the Middle East, and parts of Africa and Asia. China’s continued development of tools of soft and hard power will underpin its construction of a new global imperialist system and new transnational institutions in this period of global security and climatic and economic crises. For many of the countries of Asia and Africa, China may be their best hope for continued development. If things play out as expected, all roads will lead to Beijing by 2050 (at least in Asia and Africa) and China will dominate the avenues of trade. The Chinese dragon is clearly rising. How the existing global powers deal with growing Chinese assertiveness will determine how peaceful and universally beneficial that rise is.

 

Sources

[1] Databank | The World Bank. Advertisement. The World Bank. Accessed November 02, 2016. http://databank.worldbank.org/data/home.aspx.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Manuel, Anja. “What to read into a growing alliance between China and Pakistan.” Reuters. April 27, 2016. Accessed November 02, 2016. http://blogs.reuters.com/great-debate/2016/04/26/what-to-read-into-a-growing-alliance-between-china-and-pakistan/
[6] “Chinese Yuan’s Ascent to Global Reserve Status: A Timeline.” Bloomberg.com. September 29, 2016. Accessed November 02, 2016. https://www.bloomberg.com/news/articles/2016-09-29/the-chinese-yuan-s-march-to-global-reserve-status-a-timeline.
[7] Dreher, Axel, Andreas Fuchs, Bradley Parks, Austin M. Strange, and Michael J. Tierney. Hina and the Western Donors: More Similar than Different? Report. AidData.
[4] Keithley, Steven. “China’s New Global Institutions.” The Diplomat. July 25, 2014. Accessed November 02, 2016. http://thediplomat.com/2014/07/chinas-new-global-institutions/.
[8] Wong, Sue-Lin. “China launches new AIIB development bank as power balance shifts.” Reuters. January 17, 2016. Accessed November 02, 2016. http://www.reuters.com/article/us-asia-aiib-investment-idUSKCN0UU03Y.
[9] Hsieh, Alice Langley. Communist China’s Military Doctrine and Strategy. Report no. 429978. Accessed November 02, 2016. http://www.dtic.mil/dtic/tr/fulltext/u2/429978.pdf.
[10] Shambaugh, David. “China’s Soft-Power Push.” Foreign Affairs. September 03, 2015. Accessed November 02, 2016.
[11] Shambaugh, David. “China’s Soft-Power Push.” Foreign Affairs. September 03, 2015. Accessed November 02, 2016.https://www.foreignaffairs.com/articles/china/2015-06-16/china-s-soft-power-push.
[12] HanBan-Confucius Institute/ClassRoom-About Confucius Institute/ClassRoom. Accessed November 02, 2016. http://english.hanban.org/node_10971.htm.
[13] McDevitt, Michael. Becoming a Great ‘Maritime Power’: A Chinese Dream. Report. June 2016. Accessed
November 02, 2016. https://www.cna.org/cna_files/pdf/IRM-2016-U-013646.pdf.
[14] O’Rourke, Ronald. “China Naval Modernization: Implications for U.S. Navy Capabilities.” CRS Report No. RL332153 Washington, DC: Congressional Research Service. Accessed November 02, 2016. https://fas.org/sgp/crs/row/RL33153.pdf
[15] Lei, Zhao. “Advanced destroyers boost combat capability of PLA.” Advanced destroyers boost combat capability of PLA – China – Chinadaily.com.cn. December 15, 2015. Accessed November 02, 2016. http://www.chinadaily.com.cn/china/2015-12/15/content_22714073.htm.
[16] O’Rourke, Ronald. “China Naval Modernization: Implications for U.S. Navy Capabilities.” CRS Report No. RL332153 Washington, DC: Congressional Research Service. Accessed November 02, 2016. https://fas.org/sgp/crs/row/RL33153.pdf
[17] Zissis, Carin. “Modernizing the People’s Liberation Army of China.” Council on Foreign Relations. December 05, 2006. Accessed November 02, 2016. http://www.cfr.org/china/modernizing-peoples-liberation-army-china/p12174.
[18] “Freedom in the World in 2016.” Accessed November 02, 2016. https://freedomhouse.org/report/freedom-world/freedom-world-2016.
[19] Ibid.
[20] Glenn, Elias, and Pete Sweeney. “China seizes biggest share of global exports in almost 50 years.” Reuters. April 22, 2016. Accessed November 02, 2016. http://www.reuters.com/article/us-china-exports-idUSKCN0XJ097.
[21] Seth, Shobhit. “How China Impacts the Global Steel Industry.” Investopedia. February 17, 2016. Accessed November 02, 2016. http://www.investopedia.com/articles/investing/021716/how-china-impacts-global-steel-industry.asp.
[22] “Towards the end of poverty.” The Economist. June 01, 2013. Accessed November 02, 2016. http://www.economist.com/news/leaders/21578665-nearly-1-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim.
[23] “World Economic Outlook.” International Monetary Fund. Accessed November 02, 2016.
[24] Shambaugh, David. “China’s Soft-Power Push.” Foreign Affairs. September 03, 2015. Accessed November 02, 2016.
[25] Du, Ming. “When China’s National Champions Go Global: Nothing to Fear but Fear Itself?” September 04, 2014. Accessed November 02, 2016. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2490944.

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