When China Rules the World

How will the impact of China ’s economic rise be felt and perceived in ten years’ time? How will China behave twenty years hence when it has established itself as second only to the United States and effectively dominates East Asia? Will China continue to operate within the terms of the established international system, as it has done for the last decade or so, or become the key architect and protagonist of a new one? Will the rise of China plunge the world into a catastrophic environmental and climatic crisis as a fifth of humanity rapidly acquires the living standards previously associated with the West? China certainly does not know the answers, nor does the rest of the world, whose behaviour towards China will be a powerful determinant of how China itself responds. International relations experts are fond of citing the rise of Germany and Japan in the early twentieth century as examples of nations whose new-found power could not be contained within the existing international system and whose ambitions eventually culminated in war. The rise of China will not necessarily result in military conflict – and, for the sake of humanity, we must fervently hope that it does not – but it is a sobering thought that the ramifications of China ’s rise for the world will be incomparably greater than those of Germany and Japan, even accounting for the difference in historical times.

The beginning of the twenty-first century marked the moment when China arrived in the global mind. [1037]1 Until then, for most of humanity, it had largely been a story of a faraway country about which people knew little. Now, within the space of a handful of years, its influence has become real and tangible, no longer a set of statistics or the preserve of policy-makers, but dramatically impacting on popular consciousness around the world. Television programmes and newspaper articles on China have become commonplace. There were two main drivers of this global moment of China-awareness. First, as China established itself as the workshop of the world, ‘made in China’ goods began to flood global markets, from Wal-Mart in the United States to Jusco in Japan, almost overnight reducing the prices of a growing range of consumer goods, creating the phenomenon known as ‘China prices’. Not surprisingly this engendered a feel-good factor about China ’s rise, albeit tempered by the realization that many companies and jobs were migrating to China to take advantage of the much cheaper costs of manufacturing. Second, China ’s double-digit growth rate fuelled a growing appetite for the world’s commodities, which had the opposite effect – inflationary rather than deflationary – of big and persistent hikes in the prices of most commodities, of which oil was the most visible and dramatic. Unless you were a major commodity-producing nation, this induced a feel-concerned factor, a growing realization that there was a downside to China ’s rise. The impact was, thus, felt in different ways around the world: for commodity producers in Africa and Latin America, it primarily meant higher prices for their exports, thereby stimulating economic growth, combined with cheaper manufactured goods; for the West and Japan it meant a large fall in the prices of consumer products and clothing, then spiralling commodity prices; for East Asia it meant a vast new market for their products and low-priced ‘China goods’ at home. Whatever the precise effect, and for most of the world it has so far been beneficial, China ’s arrival on the world market ushered in a new kind of global awareness of China: it marked the foothills of China ’s emergence as a global power.