China Comment

Energy, Environment, and Economy

The Other Challenges

Last week, I discussed John Pomfret’s Washington Post article that described challenges China faces to becoming a superpower.

What Is A Superpower?

In comments on my site, and on the China Law Blog, Here and Here, several readers indicated it would be useful to define “superpower” when discussing China’s future propensity for achieving “superpower” status.

The debate about what defines a “superpower”, whether it is a high ranking on the Human Development index, whether it is equivalent or not to “hegemon”, whether it is “force projection”, or merely “military” or “economic” force, is quite expansive.

For the purposes of my post, I’ll take a simplified position. From what I gather, when the hoi polloi (common people… the laobaixing 老百姓) discuss “superpower” or what makes a nation great, they mean an entity that can project its force overwhelmingly and has the ability to influence geopolitical events on a worldwide scale. Other countries need to plan around this country’s policies. In that sense, the United States and the USSR were “superpowers”; to some degree, the economic Japanese juggernaut was a superpower in the late 1980s and 1990s. Increasingly, China is becoming an economic superpower.

While I acknowledge this definition can be debated, I hope to keep the definition simple so I can move into the point of the post.

Another issue perhaps worthy of consideration is that my article and Pomfret’s did not set a timetable on when China might achieve said “superpower” status. I assume Pomfret was taking Keidel’s statement of China surpassing the US in total GDP around 2030 as the date most people assume for China’s arrival at superpower status.

In listing possible challenges facing China, I’ve tried to base statements on the time horizon of 2020-2025, shortly after the sixth generation of PRC leaders comes to power. One inspirational source was the roundtable discussion of Cheng Li, Pieter Bottelier, Fenggang Yang, and David Lampton in “China in the Year 2020.” 

China’s Challenges

To continue its rise to an economic and soft power status that can “shake the world” by 2025, China’s pressing challenges include a need to ensure energy supplies, tame inflation, confront environmental degredation, deal with dissent/protests/petitioning by instituting a rule of law and providing social services.

Below, I briefly cover these ideas. Eventually, I hope to deal with these challenges at length– a lot of good articles and books have been written on all of them and they are all large issues and deserve more treatment.

Energy Supply Maintenance

China will require 11.6 to 12.3 million barrels of oil a day, up from 6.9 million/day in 2005, and around 7.5 million/day in 2007, and allegedly 8 million/day in 2008 (according to IEA-2004 and DOE-2005 estimates, respectively (Kreft, 2) and more recent energy statistics.) Nearly 75% of this capacity will have to be imported since China can only produce around 3.7 million/day domestically.

China could also experience a deficit of 620-770Mt/a of coal in 2020 alone, according to He Youguo in a 2003 report by China Coal Industry Development Research and Consulting Co. Ltd. (7).

If current trends continue, Herculean efforts at ensuring an uninterrupted energy supply will need to be undergone to ensure that the lights stay on at China’s factories.

More on China Energy:  Nuclear Power, Wind Power, Natural Gas.

Taming Inflation

In 1989, part of the impetus for the protests was runaway inflation, rising unemployment and lowering standards of living. And as Pieter Botellier also argued; “the Communists’ defeat of the Nationalists in the Chinese civil war of 1945-1949 was greatly assisted by the run-away inflation of those years, which sharply reduced the popularity of Chiang Kai-shek’s Republic of China (ROC) government. “

China’s economic system today, however, is more sophisticated. Still, this is the highest inflation we’ve seen in China since the mid 1990s, with over 20% price hikes on food and double-digit growth in gas prices.

Currently, policy priorities appear to be toward promotion of economic growth rather than inflation containment. Arguably, maintaining growth could contribute more toward long-term stability. Still, if growth only goes to the middle and upper classes and the poor bear the brunt of inflationary increases, and their lives stop becoming noticably better- and their standard of living stagnates… there may be problems. Every year, China’s ranking on the GINI coefficient, which measures wealth distribution, becomes increasingly unequal. Currently, China’s GINI hovers between .37 and .46 (depending on measurement), either slightly more equal than the US’ GINI rating, or much less equal.  

Environmental Challenges

China faces severe environmental challenges. Pomfret, Economy, and other experts have discussed this in detail. For China to continue 10%+ yearly GDP growth, it will have to clean up its polluting industries. According to China’s Green GDP, in 2004, pollution cost China at least 3% potential growth. The Green GDP numbers for 2005 were never released, and arguably China’s pollution increases every year.

Energy efficiency per unit of GDP improved 3.66% in 2007, and arguably should improve this year as energy-intensive factories are shuttered. But, partially due to rising car ownership, pollution expanded significantly in the 21st Century. China hopes to reduce energy consumption per unit of GDP 20% by 2010, but it is a little behind its goal of yearly reduction percentages. Small coal mines and plants have been shut to ensure compliance, but to avoid power disruptions, many mines have recently been reopened.

Stability and the Rule of Law

China could arrest dissidents en masse, growing more repressive, but this will increase tensions in its relations to the outside world, and might stifle ideas and innovation.

However, as China’s economic influence becomes felt around the world, it is possible that it might set up its own international framework in competition to the West’s APEC, WTO, and IMF. (See the last section of my article on Maslow’s Hierarchy and Rule of Law- Not Human Rights for more info.)

With sovereign wealth holdings of over $1.7 trillion, China has extensive ability to affect the world… Unless of course, that wealth becomes tied down in foreign non-performing assets, declining currencies, and a need to invest in overpriced resource markets.

China is a giant in terms of wealth, so it can take quite a beating in economic losses from its funds, but poorly performing assets can lead to public opinion backlashes.

Without strong development of a domestic consumer economy, China will have difficulty in existing isolated from international economic forces.

Providing Social Services

Pomfret identified China’s demographics, its aging, and its peak of a working age population around 2015 as being a large problem. I rebutted that. However, with China’s GINI coefficient rising (at increases of 6%, the fastest in the world for the past decade), and with a degrading environment, and 350 million smokers, perhaps 1/3 of the world’s total smokers, health care costs will rise and create public tensions if the government fails to aid sick people.

Fear of these tensions could be a reason the Party prevents cross-provincial NGOs from organizing, and is cracking down on Sichuan post-earthquake support organizations and people who threaten to challenge the Government’s handling of the incident.*

Crafting an efficient social safety net, or preventing unrest in response to lack of said net, will be an important challenge for future Chinese administrators.

* Note: I realize this particular person, Huang Qi, has a history of challenging the state which might lead it to be more repressive. However, the point still stands; the state has harassed and/or  paid off families not to complain about allegedly faulty construction that may have caused more schools to collapse than should have if codes were followed.

Conclusion

To solve its many challenges, China could turn inward and become repressive, or turn outward and allow development of civil society, or it could mix the practices. While some commentators might paint China’s future as that of a “negative” (closed-society) or a “positive” (democratic society), both I and the commentators in “China in the Year 2020” tend to see opportunities from many points along the choice continuum.

China could “succeed” in achieving superpower status even in spite of democratization. Or it could fail to achieve said status even despite democratization and liberalization. 

Once again, I welcome your comments regarding challenges China’s development could confront in the coming 20 years.

* On August 25, 2008, The Wall Street Journal presented its own ideas about which challenges China faces. (Inequality, Resources, Population/Aging).

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5 August, 2008 - Posted by | China Future, China Stability | , , , , , , , ,

5 Comments »

  1. Note: Sorry it took a little longer to get this up, but I fell victim to the syndrome of “not having enough time to write a short letter,” as the famous quotation would state.

    After editing, a 2,500 word behemoth of an article became this much more readable 1,300 word article, which is still a bit longer than a newspaper article, but it’s manageable- I hope.

    Thank you again for reading.
    -cc.

    Comment by chinacomment | 5 August, 2008

  2. First of all, isn’t the 6th generation of leaders coming into power around 2013 when Hu steps down?

    China may be a “closed” society politically, it’s certainly more “open” economically than say South Korea or Japan, both Asian democracies but much less exposed to foreign investment. And I think Lee Kwan-Yew’s claim of Asian government’s predilection toward authoritarianism still finds a rapt audience in Zhongnanhai.

    I’m also wary of treating “democratization” as an end in itself as it is suggested in the post. Does democracy here simply mean voter enfranchisement and freedom of assembly/speech? What good is democracy if it doesn’t beget more equitable distribution of goods and wealth, relative political stability, and government accountability, among others? Isn’t democracy really a means to deliver what’s commonly agreed upon as social goods? And what if China’s able to achieve all of the above without democratization in the sense that the average Joe in the West would understand? (not talking specifically about superpower status here since by virtue of meeting the above ends does not necessarily confer such a status upon China) Isn’t that sort of the goal of the CCP right now? To eschew the institutionalized system created and commandeered by the US and the “Western bloc,” while achieving more or less all the ends that were supposed to be wrought by some form of a democratic political system.

    If China reaches that point, what’s stopping it from flouting the current system at will? China doesn’t need to reach “superpower” status to do that. So again, I think we may be asking the wrong fundamental questions.

    What we’ve all been talking about is really the “perception” of superpower status rather than anything grounded in reality, even if it is 2025. This is not to say that China won’t actually reach some sort of layman’s conception of “superpower” (and in fact, it probably already is a superpower as far as some quarters in America are concerned).

    More of an interesting question then is how does the world manage the rise of China, whatever configuration that may take. Depending on your view, human history in the last couple of hundred years can be seen as horrendously mismanaging the rise of powers, causing two global-scale bloodbaths. Thereafter, a bipolar world injected some sense of stability. But with the EU now a formidable bloc in addition to the US, China’s rise will likely create a triploar world–inherently less stable than the system that collapsed in 1991.

    Comment by Damien | 5 August, 2008

  3. Xi Jinping is in the 5th generation. He and Li Keqiang should lead from: 2012-2017, 2017-2022.

    Of course, at the lower provincial levels, the 6th generation will start emerging in high offices around 2013, but at the highest echelons the fifth generation will lead. Were you referring to that?

    ****

    Your comment about open and closed economies is a good point. All societies are open and closed to certain extents. For example, the “free trade” US imposed highly punitive steel tariffs that got it into trouble with international trade bodies as recently as this decade. And the US still has tariffs on certain goods, and it subsidises its farmers.

    And I argued China can succeed with an open society (politically and economic) or it could succeed with a closed society (politically, and perhaps economically [though I don’t think any economically closed society has succeeded in the long run- trade appears to be necessary]).

    My words were: “China could ”succeed” in achieving superpower status even in spite of democratization. Or it could fail to achieve said status even despite democratization and liberalization.” Do you believe I should have been clearer?

    ******
    >>I’m also wary of treating “democratization” as an end in itself as it is suggested in the post.

    Sorry, where did you get the idea I was treating democratization as an end in of itself? I did say;

    “China could ”succeed” in achieving superpower status even in spite of democratization. Or it could fail to achieve said status even despite democratization and liberalization.” and I also said ““positive” (democratic society),” (note quotation marks).

    But I don’t see how that treats “democratization” as an end in and of itself. I put “positive” in quotation marks to imply “so-called positive” and to attempt to maintain a neutral tone. It is difficult in the West to hear democratization linked with anything except positive associations, so I believe it was fair to demonstrate the dichotomy.

    I welcome your criticisms of people referring to a nebulous concept of “democratization” as an unequivocal positive trend and I actually agree with your comments; I just fail to see how I transgressed in a similar manner? Was it through my discussion of NGOs? I was attempting to be broadly neutral on that issue, excepting comments regarding NGOs and Rule of Law. (And Chinese often argue and agree Rule of Law needs to be improved.)

    *******

    >>If China reaches that point, what’s stopping it from flouting the current system at will? China doesn’t need to reach “superpower” status to do that. So again, I think we may be asking the wrong fundamental questions.

    I’ll disagree. Countries can successfully flout the system, but ultimately, they fail to succeed.

    * North Korea’s leadership might be successfully flouting/playing the system, but I don’t think anyone could argue that their people or their country is successfully flouting it.

    * For a long time, Iraq flouted the system, but that eventually ended.

    * Iran might be considered as successfully flouting the system, but they have economic troubles imposed by the outside world that have created political problems.

    * I can think of no country which has succeeded as an “economic” success or miracle that did not play into the current system. Countries are able to flout it, but ultimately, they get left behind (Cuba, China-pre 1979.)

    Perhaps if China becomes the overwhelming superpower, it can Remake the system, like the US did after WWII, but to succeed- it appears that countries must be within the system, not outside of it.

    ****

    >More of an interesting question then is how does the world manage the rise of China, whatever configuration that may take.

    I’ll agree, that would be an interesting analysis, but one that I’m not yet prepared to make. I haven’t seen too much in-depth material written on the subject. Perhaps we can debate it at some future point. Maybe someone has suggested reading on IR Theory?

    I’ve read some things by Joseph Nye “The Paradox of American Power”, Chalmers Johnson, and Paul Kennedy “The Pivotal States” but although they discuss the future of countries and International Relations, the whole paradigm of IR Theory seems to change every few years, which threatens to render their theories, and those of other theorists like Fukuyama, and Kagan, slightly outdated or too limited in scope.

    Thank you again,
    ~cc.

    Comment by chinacomment | 5 August, 2008

  4. I think I just don’t believe that any mention of democratization is necessary or even that relevant in the superpower discussion. And by concluding with a dichotomy between deomcracy or non-democracy leaves room for interpretattion that democracy is the end game, because China must function within the current “system” to succeed–a system that carries the fundamental assumption that economic liberalization goes hand in hand with some form of democratic political institutions. Or that one would spawn the other.

    And so I think we’re departing from different frameworks (caveat: I’m also very much guilty of being informed by the very framework I’m trying to abandon for the time being since I was raised on the Western canon, but I digress). I think China has thus far undermined the linear trajectory of developmentalism, which has already allowed it to be simultaneously disengaged from the current system while succeeding to a large extent within it. And the basic point that’s been argued around the blogs is that China needs to essentially move away from its current practices to participate in the league of leading nations (i.e. the current system). I just don’t see much evidence that China will move away from its current practices if it’s benefiting enormously. There’s no sustained opposition to the party, after 60 years in power, so is there any evidence that by 2020 or whatever that that will change significantly? Sure, there’s always the possibility that another near-death experience like 1989 could cripple the party. But where’s the opposition to fill that void? China does not need to remake the system, it simply needs to refuse full participation while simultaneously carve out its own path (the breakdown of Doha case in point). Russia is somewhat similar. I’m not sure N. Korea and Iran are the best examples because they just don’t have the clout that a Russia or China does (no security council seat, etc.). Inherent physical endowments like size, population, and resources matter in a country’s power configuration at the outset. I’m a strong believer that we’re moving into a diverse, multipolar world in which fundamental Western assumptions about governance and the international system need to be seriously reexamined. And China appears poised to seize on this period of introspection to make serious headway toward its own path of development.

    And it’s still unclear to me whether people are arguing if China overcomes these challenges, then it WILL become a superpower. There’s a sense of inevitability to this line of argument, no?

    Comment by Damien | 5 August, 2008

  5. Okay. That’s a fair enough opinion. I was using “democracy” as a frame to the question of “Superpower”. I should have realized how “loaded” the word is. I attempted to frame my piece in a neutral tone about “democratization” in the conclusion, but realize how it wasn’t essential to my main point about “superpower” status.

    The comments pages of Economist articles and BBC blog articles definitely reflect the difficulty of broadly and sometimes blindly referencing “democratization.”

    http://www.economist.com/printedition/displayStory.cfm?Story_ID=11841531&mode=comment&intent=readBottom

    http://www.bbc.co.uk/blogs/thereporters/jamesreynolds/2008/08/freedom_in_china.html

    >>I just don’t see much evidence that China will move away from its current practices if it’s benefiting enormously.

    That’s an interesting point, worthy of a future article. I don’t know if China can necessarily maintain benefits from its current policies.

    In countries, civil society has developed to address problems that the government can’t efficiently deal with. In the Sichuan earthquake, informal groups of civilians helped the recovery, indicating civic involvement and rising awareness of political efficacy and the “gaps” in public service provision that the government and the Party fail to fulfill. I think in some senses, as the plurality of opinions in China grows, there will be increasing discontent with the government (as levels of trust often decline in more “mature” states). Less people will “trust” the government, and they will have greater power to interact and communicate with each other and nurture that distrust.

    It seems to me, that one of the best tools for increasing “freedom” is the automobile and the end of agriculturism- when more people can move freely, they have more power to choose where to live and to escape from punishing situations.

    The government will need to do something to address these problems. I think China can find a “chinese” solution to the problems, but the “Western” model appears to be to allow people to organize themselves and work with the state, rather than to agitate and protest against it- which could allow China a much-needed release valve for peasant stresses against sometimes miswielded power.

    While this goal of working with the state doesn’t always succeed in the West (see NGOs staging protests, etc.) it might work in a Chinese-form of NGO establishment. (I could go more into detail, but I think I’ll stop this digression here until I can do sufficient research on the situation.)

    >>There’s no sustained opposition to the party, after 60 years in power, so is there any evidence that by 2020 or whatever that that will change significantly?

    I dunno. I see the China experience a bit similar to Mexico with the PRI, PAN and assorted parties, just more extreme. As economic modernization and integration with an outside world increases, more “ideas” will be spread across Chinese society and gradually, the Party’s power will become dispersed.

    When I talk about “democratization”, I’m referring to intra-party democratization like that practiced in Vietnam, and about rule of law, establishment of cross-border NGOs, and greater independence of the NPCC.

    We’ll see what happens. Thanks again.

    Comment by chinacomment | 8 August, 2008


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