The rise of China, part I: the new realpolitik

We live in an interregnum, wherein the position of most-powerful single country is going from the US to China, with all major international players knowing this and no-one is seriously hindering its occurrence. The world has learned from the disastrous attempts in the last 2 centuries of existing superpowers trying to wreck emerging other super-powers, and is actively trying to co-opt China rather than wreck it. In this 3 part series I will look at what the rise of China will mean for world politics and economics. In this first part I look at the external realpolitik and will look in the next installments at the internal politics between the Party and capitalists within China.

The most important thing to say is that the power of China is likely to be more limited than the power of the US was in the last 25 years, or that the combined power of ‘the West’ was in the last century. There are relatively fewer Chinese, they are more dependent on trade with others, and they will be relatively less wealthy than the West was.

Fewer Chinese, you may wonder, aren’t there over a billion of them? Yes, but that is still only 1/5th of the world population and given their dropping fertility numbers, this number will drop to 1/6th soon. In comparison, the capitalist West in 1950 according to the Maddison numbers (Europe plus the US plus off-shoots) was also 1/6th of the world population but the whole population of mainly European descent, hence including the Soviet Union and Latin America, was closer to 35% in 1950, and currently makes up 25%. So yes, there are fewer Chinese now than there are Westerners, people with clear European ancestry.

When it comes to international relations, it is important to bear in mind that the cultural proximity between the West and the rest of the non-Chinese world is closer than that with China. India, with its considerable use of English and cultural and genetic similarities with the Europeans, is undoubtedly closer to the West than to China. The rest of Asia is more or less in equal blocks on this front, whilst Africa is much closer to the West than to China. Hence the population of `cultural allies’ is heavily skewed against China, both today and in the foreseeable future.

Furthermore, the Chinese are  far more dependent on trade than the West was in its heyday. The vast majority of US trade in 1950 was internal, and later on occurred mainly with other Western countries. In comparison, well over half of China’s manufacturing is export oriented with countries outside of its cultural proximity. The same goes for import, making China far more dependent on the goodwill of the rest of the world than the West was in the last century. Serious disruption to the international order would thus be even worse for China than it  was for the West during the Great Depression. On this self-interest count alone, one should expect the Chinese to be good world citizens.

Last, but not least, the Chinese will probably end up being less rich per person than the West. If the examples of Korea, Japan, Taiwan, and other such countries are something to go by, China will not overtake the GDP per capita of the West, but rather end up in the lower range. If you  look at the ranking lists of GDP per capita countries now, you effectively only see Germanic countries in addition to the odd small resource-rich countries and small trade-conduit countries (Singapore). Japan and Korea are some 20% poorer per person than the US, Germany, and the small Germanic countries. If we presume that China in 20 years time will stop growing when it reaches that same level, then its economy will only be 3 times that of the US, and about as big as the total of a narrow conception of the West. China will thus be lucky to end up with 20% of world GDP in 2040 (see again the Maddison projections). In comparison, the West in its heyday was far wealthier, with well over 50% of GDP in 1950.

Given that military might is a mere off-shoot of economic might and population, China won’t be all that powerful. Furthermore, as already discussed, China is more culturally different to the rest of the world than almost any other country – virtually no-one else speaks its language, uses its alphabet, shares its religion (Confucianism, Taoism, and atheism), or feels part of its history. In terms of natural allies China is somewhat lonely.

What China does have is a large diaspora of Chinese, around 50 million or so, that left China in the last 2 centuries (mainly the middle of the 19th century as a result of a famine and recently as a result of study-related migration), and that are now integral parts of Western countries. This diaspora is very important for China’s behaviour because it means it has a natural reason to remain friendly with the West and gives the West a natural reason to be friendly with China. Western countries do not want to make enemies with segments of their own population, and China will not want to alienate those who harbour part of its population. These diaspora are thus a natural lubricant between China and the rest of the world, making communication and friendly relations much more straightforward and likely.

What China also has, and will probably keep having for centuries to come, is a greater sense of internal cohesion than any other large block. Compared to India or the West, the Chinese population is far more homogenous, with a single language, history, genetic luggage, and self-identification. It has no fault lines within in it of the type you can even see in the US (with the Federates and the Unionists; the Catholics and the protestants, the East Coast and the West Coast, the Latinos and the Wasps, etc.).

This internal cohesion means that China will be for the far foreseeable future the single most powerful country in the world. Even when India eventually catches up in terms of GDP per capita, and somewhat outstrips it in terms of population, it will simply not be as coordinated or unified in its opinions and responses to situations.

What about China’s natural enemies? Its natural enemies are those that compete for the same basic resources, or that are close neighbours with strong opposing identities. The whole of the rest of the world fits the description of the former, and countries like Japan and India somewhat fit the latter. The fact that everyone nowadays competes for resources means that the level of conflict arising from that should not be over-estimated since there is too much to lose for too many players. It is thus the regional rivalries that might drag China into conflicts – for instance over water, territory, fishing rights, and the treatment of diasporas. The good news for the West is that these problems are concentrated geographically around China, meaning it is less our problem and gives China even more reason to be nice to us, though the bad news is that the West will naturally be dragged in as counter-veiling powers. This of course is already the case for the last 20 years or so, with the West effectively being in the Japanese, Korean, and Indian military camp; a game that will continue to strengthen.

In terms of minor enemies, such as the fanatical Islamists, the things to know are that China is Christianising and has separatist Muslim minorities. Hence they are with the West if push comes to shove in this conflict too.

If one considers all these basic facts and trends, it should be clear that China for the foreseeable future will be a good world citizen constrained by the greater power of the combined West and its own relatively small stature. It will be the biggest single player in a game in which the rest will find it easy to combine against China, on any topic in which China would want to assert its will against the wishes of other big fish.

Its relative position will probably mean China will become a great advocate of international tribunals, international cooperation, and international conflict-resolving military organisations since it is the best chance for it to get things done. What kind of things? It will also want stable oil supplies and stable diaspora-holding countries, which it will only be able to help secure in cooperation with others.

So whilst it is true that at the moment, China’s influence on the world stage is mainly good news for anyone in conflict with the West because they can now turn to China for trade and other matters, its own long-run interests are not in undermining international cooperation but rather in nudging it more to its own emerging interests, which is entirely logical.

In short, the world with China as the single biggest country looks pretty good. The only real worry is external conflicts started because of internal strife within China. This internal strife surrounds the natural conflict between the Chinese bureaucracy, the Party, and the interests of the capitalists. This is a vast and complicated topic for another day.

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34 Responses to The rise of China, part I: the new realpolitik

  1. Q says:

    No the World doesn’t have to go back very far to see a relatively peaceful transition from one super-power to another.

    The ”debate between the UK and the USA over battleships showed that.

    Although entirely analogous now it seems both the USA and China have looked at that period of history.

  2. Interesting, Paul. I look forward to seeing the rest of what you say.
    I am pleased to see you say simply that power shifts from the US to China. Would that the next defence white paper would be as honest. I can’t really guess so far what Henry report will say.

    I have written some stuff on China this year, some but not all gathered here.

    Forgive me if some of this may anticipate things you plan to say next.

    I suggest that it would be helpful to shift from a ‘less wealthy prospect-homogeneity’ perspective to see China as something like another planet, seeing more of what is a complex network. In the 1980s I was making the point that China’s coast then had several Japans-at-1960 which would race ahead. That is now to say the least an understatement, there are many more and the comparisons might be with Japan in the 1970s and in some cases beyond. Also some far from the coast, with steps to build connection with central Asia and Siberia. So it might be useful (though not to carry it too far) to make comparisons of China with the US’s Monroe Doctrine domination of the western hemisphere at an earlier time, and with the British Empire.

    As regards the extent of development in the period since 1978, we can confidently say that it has been the most extraordinary revolution in human history, with huge shifts in the lives of half a billion (and counting) people, and with many steps towards a civil society and post-industrial efficiencies and innovation that leave us behind. In the popular press and in financial markets there remains, as has long been the case, a tendency not to look at the whole car but at a point on the circumference of a bouncing wheel as it races along. And while concerns for minorities do have importance, it is silly when people can’t see the whole picture (and not seeing the whole picture, act antagonistically, tending to have negative consequences generally, not enhancing the interests they espouse).

    It is useful to remember that the minority populations of China number almost five times Australia’s population. To the extent that these are at the periphery any Chinese government will continue to maintain carrot and stick policies, to keep territory secure. Hitherto, to 1970 or so, there was an element of project insecurities outwards. This element of Chinese international policy, its comprehensive support for revolutionary movements, evaporated in 1969 or so when the PFLP began hijacking and blowing up passenger planes. See these links to see how the border/minority situation is being managed in Xinjiang with wage support, doctrine, the struggle with multiculturalism, development zones and the class/ethnic struggles in a time of rapid change. Would that we in Australia had a fraction of the evident capacity to work on such stuff.

    I don’t think China knows exactly how it will handle its role as a major power yet (any more than the US has a clue about being lesser), but we do have some evidence in actions and it is important to see that the principles in place for a long time still apply.

    As regards Australia and China, Fraser and Keating get it but there is a profound lack of understanding of strategic issues in the present parliament. The silly way we are entangling all this with a bizarrely anachronistic view of the alliance with the United States is to say the least dangerous.

    I expect we will see Chinese ownership of ports and Chinese demonstration of very fast trains and more such involvement with infrastructure in cities as well as regions. Though from the abstract, remote and often vulgar ways China is discussed by so many you would not guess that over 300,000 residents of Australia were born in China. I am confident that there will be a tipping point in the involvement of persons with Chinese background in public life. I think it was in this book that David Suzuki made the observation that first generation people are preoccupied with accumulation, the next generation tends more towards contribution.

    The ‘Chinese diaspora’ does not really exclude the non-Chinese-background Australians, though we may fantasise. We are in this system as much as we were in another when Alcoa, General Motors, Exxon, Utah and the like dominated us. And we have as a great need [a] to take it as fact and [b] to work to sustain Australian advantage in it while building cooperative mature frameworks, such as we have not really done before. The role of government on the Chinese side can work to considerable advantage in securing such framework.

    Proposition/question: does the socio-economic agenda of the nation have a chance of progress without China. How with China?

  3. Paul Frijters says:

    Q, JB, JL,

    you really only browse the first paragraph and then come up with something, don’t you? I wouldn’t call the war of independence and the subsequent period of UK-US relations exactly peaceful. Thank god we are not repeating that mess.

  4. Paul Frijters says:

    Dennis,

    yes, most of your points I agree with, though I disagree that Australia will become more than simply cordial with China. I do think we are in the `Western Block’ during this century and as such will continue with such things as the expansion of the US military bases here when they ask for it (part of the regional alliance thing I talk about in the post). I don’t think we are going to switch allegiances.

    Your fundamental proposition that China is a whole different society and that it is very hard to get your head round is something i completely agree with. I think it is only normal that most Australian commentators and the general population have little clue as to how China works: it is really damned hard because it is so different from us. It takes a lot of time and most people have other things to do.

    When I started thinking about China about 6-7 years ago I found out many of my basic beliefs about the place and its people were wrong (perhaps I should have gone to Eton!). Now, having done 5 years on internal Chinese migration and teaching on China I am beginning to think I ‘get’ the place, at least in an intellectual sense, though my Chinese co-authors keep telling me how ignorant I am, but I think they mainly say that because they are disappointed that I only work on China because it is a big human puzzle, not out of innate affinity in the culture.

    Part of the reason for writing stuff like the above is hence to illuminate those with less time as to what is going on, which is quite explicitly part of my obligation to the Australian Research Council that funded my China projects.

  5. Q says:

    The USA took over from the UK in the early part of the 20th century.

    You really should understand the topic better and not make elementary mistakes such as this.

    Look up for example the barney between the UK and the USA of how many battleships each nations should have post dreadnought!

    War of independence?

    If I wanted to be snarky I could say you didn’t even read a sentence properly.

  6. conrad says:

    Paul — I don’t think China is as cohesive as you suggest. You have a fairly decent North/South division where you have genetic, linguistic, and cultural differences , and there are chunks of the West that are even more separate again. The fact that it looks more cohesive is simply thanks to government brute force (i.e., getting everyone to learn and use Putonghua, major projects etc.). It’s very hard to compare but I doubt it’s any more cohesive than the US is. I’m also not sure how useful the Chinese diaspora is — the Chinese governmenet has never really helped them even politically (e.g., Indonesia recently), and I doubt most Chinese that have been in other countries a few generations really feel any super strong sense of belonging to mainland China (especially with the government). They also tend to get diluted a lot due to inter-racial marriage, at least in Western countries (Canada, the US, here..).

    Also, whilst it seems rather likely the average Chinese citizen won’t be as rich as the average Northern European one, I’m not really sure that using just Japan, Korea, and Taiwan are great examples to compare with — Taiwan is at a similar level as Germany, Korea seems to be on the up and up and Euroland seems to be in reverse. I also think much of Euroland will have the same problem as Japan in terms of demographics, and this is bound to stifle them also in the long term.

  7. Paul Frijters says:

    Conrad,

    let me address your main question as to the cohesive of China, in which I completely disagree with you. The Han-Chinese completely dominate the ethnic composition of China with some 91.5%. All the rich areas are Han. They all use the same script and differences within the Han-languages are small (though they do exist).
    There is no other country in the world that ethnically homogenous. The US doesn’t come close. It really is quite stunning just how unitary China is. A sense of ‘one China’ permeates the whole bureaucracy and the intellectuals. The historical reasons why it is so unitary are not pretty and involve the whole-scale destruction of all other forms of writing, ethnicities, religions etc.

    GDP projections are a tricky business, I agree, but taking the experiences of the other Asian economies and overlaying those on China is the best I can offer you (and together with PhDs we have run many projections, trust me). Are you willing to say that China will end up richer or poorer than 70% of the per capita GDP of the Germanic countries?
    For the main line of thought in my post, it of course doesn’t matter much if these projections are out by 40% either way. Now, if China ended up with double the GDP per capita of Germanic countries, then it would be a different ball game.

  8. Doug says:

    One cultural/religious issue that is not yet significant but worth noting in thinking about the future is the emergence of a significant minority around 8% and apparently growing of affiliation with various forms of Christianity – concentrated in two distinct sectors – western exposed entrepreneurial middle class with significant links to the diaspora and among peasantry in some rural areas where church movements are providing an alternative expression of social capital in a situation of increasing socio-economic change

  9. Paul Frijters says:

    Doug,

    yes, emerging religion is definitely an issue, briefly touched upon the post (it is actually very hard to study this properly: the authorities are very sensitive about this issue). In the diaspora religion is unchecked and growing, but within China it would be naive to expect the bureaucracy to allow organised religion to become too prominent, whether in the cities or elsewhere. But I do agree that it will be a factor eventually.

  10. Fyodor says:

    The substance of this post tells us that China will NOT overtake the USA.

    The only point that you claim decisively in China’s favour is “internal cohesion”, which as Conrad points out is far more fragile than you insist. China is a country with a very limited history of political stability and, contra your argument, that history tells us that China has proved incapable of sustaining – let alone enforcing – a unified foreign policy for longer than a period of couple of decades. The Communist Party is a kleptocracy with a very limited shelf life, contingent on a very shaky economic model, and its replacement will test your thesis aggressively.

    “Han” ethnicity is largely a tool of nationalist propaganda, as you would appreciate if you ever put together in one room representatives from Beijing, Shanghai, Chongqing and Guangzhou.

    Of course China is a budding superpower, but to say that it will overtake the US any time soon – implied by interregnum – is farcical.

  11. conrad says:

    “The Han-Chinese completely dominate the ethnic composition of China with some 91.5%. All the rich areas are Han. They all use the same script and differences within the Han-languages are small (though they do exist).
    There is no other country in the world that ethnically homogenous. ”

    Paul — I’m with Fyodor this point. A similar example most people would know about about are that most people that live in Italy are ethnically Italians, but that doesn’t mean the Northern vs. Southern ones think very highly of each other. In addition, I don’t think the number of ethnic groups really makes much difference in modern democracies. Does it really matter that there is a different ratio of caucasions to afro-Americans in different Americans states? I don’t think so. It’s the attitudes that make the difference and what happens when things fall apart. I doubt, for example, any of the rich US states would desert the poor ones if they could, but I wouldn’t say that of the Chinese ones.

    Also, I’m not sure what you mean by “small” when you are talking about Han languages. Some differ quite significantly depending on how you want to measure it (you could look at lexical, syntactic, and phonological overlap). Even if you look at the languages of the rich areas down the coast, they are far enough away to cause problems in learning. For example, Cantonese and Mandarin, which are pretty close by Chinese language standards (Southern/Northern Min are further away), are mutually unintelligeble (the Chinese idiom is “like a duck talking to a chicken”), although the syntax is highly overlapped. Perhaps the difference between French vs. Spanish would be similar (and how many Spanish speakers ever speak French and vice-versa? Rather few based on my travels). If you’re comparing Min dialects to Mandarin, perhaps the difference would be about English-German, but the phonology of them is exceptionally hard to learn (Min tone sandhi is a nightmare), and makes Cantonese tones seem easy.

    To accomodate this difference, you basically end up with multiple forms of writing. At one end (“formal Chinese”) you end with things written in what would read like Shakespearean English to English speakers, or as happens in Cantonese speaking places, you just end up with “colloquial” writing, which basically maps to the speech much better (a number of extra characters are added). There is a fascinating book (to me :) by Don Snow on this (Cantonese as Written Language).

    So the fact that everyone speaks Mandarin is not because of linguistic differences and similarities, it’s the same reason as everyone speaks English in the US — because they have to.

    “A sense of ‘one China’ permeates the whole bureaucracy and the intellectuals.”

    I agree with this, but a “one American” idea isn’t even questioned in the US. Does anyone say “two Americas” even with the Blue/Red distinction apart from a bit of political corruption? It’s also worth noting that lots of Chinese particularly dislike the government, so in case it falls, then it’s a whole different scenario to the US.

    To me, if I stuck Euroland, the US, and China together, it’s Euroland which is the most different in terms of cohesiveness. The US, as far as I can tell, is pretty cohesive.

    “Are you willing to say that China will end up richer or poorer than 70% of the per capita GDP of the Germanic countries?”

    Poorer of course — the governments/bureaucracy of China are of course pretty awful and it will take decades to get rid of the culture of corruption etc. (but it can be done, as seen in the small Chinese states).

  12. Paul Frijters says:

    fyodor,

    To think that China will not overtake the US when it economy is double the size of that of the US by 2030 is farcical. Not even the most optimistic of thinking US patriot are that naive.
    What I am saying is that China will be the single most powerful country but that the West ‘as a block’ will still be at least as powerful. The US will only be about a third of that block and not at all as powerful as China. Much like Germany is not the EU, the US will not be the West.

    As to internal China cohesion, I recommend the Jared Diamond chapter on this, though i will also touch upon it in future installments.

    • JC says:

      Paul

      What do you actually mean by overtake. GDP? Influence?

      I think we should define the terms first.

      GDP perhaps, but look at the population differential.

      Soft power? The US has influence over 100 countries in the world through soft power. China has North Korea. China has 14 borders and since WW2 I think it has had a fight or skirmish with nearly every single one. It’s ability to project power is limited because the moment it starts a skirmish with one of them there will be 14 nations matched up against it… leaving aside others in the region like us.

      Lastly superpower status also means the ability to hold and be trusted with currency reserves. Unless you’re Iran, would you hold reserves in the US or China even projecting out to 2030?

      • Paul Frijters says:

        overtake by any usual definition you want. GDP, soft power, military power, etc. When you have more resources than other countries, it is amazing how quickly you can bribe your way into soft power.
        Having had conflicts in the past matters for little. I am trying to think of a country the US has not had a conflict with at some point in time. Its hard to come up with one. France perhaps, though I believe they had a scuffle with them them near the Canadian border at some point. Maybe Mongolia?

        • JC says:

          overtake by any usual definition you want. GDP, soft power, military power, etc.

          Paul, according to the CIA’s estimates China’s GDP is about $8.5 trillion while the US’s is around $15.9 billion.

          I don’t quite see how China will overtake the US. Even if you allowed a 5% growth rate for the next 18 years it gets you to around $20 trillion while the US would be 25 trillion with a 2.5% growth rate.
          You sound really optimistic on China, but who knows perhaps they actually will maintain that sort of growth rate. Having said that, why is that important when per capita consumption rates is what we should really care about… That and per capita income. There’s no way China will surpass the US in those metrics in 18 years.

          As for military.. well we’ll see. I have my doubts. It’s easier owning an aircraft carrier than knowing how to use one effectively.

          In any event it won’t be much past 2030 when China’s population literally falls of a cliff, becoming a nation of lonely old geezers. It don’t much go for the population is destiny argument as one also needs to make assumptions on longevity for those periods too. However China’s rate of population decline is potentially going to be jaw dropping from 2040 onward.

  13. Paul Frijters says:

    Conrad,

    Italy is a great case in point. The northern Italians descend from invading Germanic tribes, the Southern Italians do not. In Northern Italy you will find Southern Tirolers talking German; remnants of the Venetian republic that was around for 500 years; hell, in Roman days Northern Italy was called ‘Gallia cis-alpina’ (Gaul on this side of the Alps!) etc. Italy is thus a great example of a country that is much less unitary than China for quite obvious reasons, and this diversity is strongly reflected in its politics (think Lega Nort, the semi-independence of Southern Tirol, etc.).
    None of these things apply to China. This is not to say that there is no political in-fighting there on the basis of regional factions, but when it comes to foreign policy in China we are more talking about fighting for control over where the oil tanker is going to move next, rather than having to deal with a flotilla of 100 little vessels all going in different directions, like Italy.

  14. Fyodor says:

    To think that China will not overtake the US when it economy is double the size of that of the US by 2030 is farcical. Not even the most optimistic of thinking US patriot are that naive.

    18 years is an “interregnum”, is it? Your response is facile and reductionist: the USA overtook the UK in GDP some time by 1880-1890, yet did not supplant it as even potential hegemon until, at the earliest, 1918.

    Italy is a great case in point. The northern Italians descend from invading Germanic tribes, the Southern Italians do not. In Northern Italy you will find Southern Tirolers talking German; remnants of the Venetian republic that was around for 500 years; hell, in Roman days Northern Italy was called ‘Gallia cis-alpina’ (Gaul on this side of the Alps!) etc. Italy is thus a great example of a country that is much less unitary than China for quite obvious reasons, and this diversity is strongly reflected in its politics (think Lega Nort, the semi-independence of Southern Tirol, etc.). None of these things apply to China.

    Oh, rubbish. The Yue, Zhuang, Hakka, Mongols, Hokkien/Min Nan, Manchu, Tibetans, Uighurs yada yada are all just the bleedin’ same, are they? China has a spectacularly rich history of ethnic mixing. Again, you are massively over-simplifying.

    The Northern Italians don’t “descend” from “Germanic” people, either. How you disentangled that particular melange to arrive at “Germanic” beats me, but it seems no ethnic group is safe from your stereotyping.

    • murph the surf. says:

      Careful Conrad and Fyodor, Paul may just need a little face!
      The simplicity of some of Paul’s statements is certain to trigger disagreement as the other two commentors have noted but still his intransigence wins through.
      Analysis without an appreciation and understanding of or long years of learning the languages involved must make it doubly difficult to make sense of these matters.
      Sure europeans are all the same, like the han chinese are.

  15. Richard Tsukamasa Green says:

    Forget the cohesiveness of China, the cohesiveness of the CCP is worrying enough. Remember that the Cultural Revolution was, to a very large extent, an internal power squabble with several million people as collatoral damage. The same (albeit less so and with more damage) with The Great Leap Forward and (very much so, but with less damage) Tiananmen Square. It might be an improvement on past Chinese squabbles, but they’re terrible, and still in living memory. The Party’s behaviour around Bo Xilai reeked of paranoia about these prospects.
    I’m an optimist, but if there was a geopolitical event I’d want insurance against, it’d be CCP infighting. All the more reason for another legitimisation system.

  16. Paul Frijters says:

    fyodor, smurf, JC,

    to take the main point head on: in purchasing power GDP terms China should overtake the US within this decade. The underevaluation of the RMB simply hides the true size of the Chinese economy. In terms of exports, China has already been biggest since 2009.
    So the question of size is easy, and not controversial within economics either. At ythe end of last year, the Economist put the date of overtaking at 2018: http://www.economist.com/blogs/dailychart/2010/12/save_date
    I challenge you to find a serious projection that does not have China overtake the US within 10 years!

    The historical comparison with the UK is easy: the British empire as a whole was bigger than the US till WWI. The UK could basically target the productive efforts of India whereever they wanted. In comparison, the US now dont have an Empire. Just ask yourself: would Australia at the drop of a hat do whatever the US wanted? No, but any province in China would follow the foreign policy of Bejing.

    As to the supposed great ethnic mix of the Chinese, I am essentially surprised to learn you didn’t get taught this in high-school. Again, the relative homogeneity of China is not a controversial thing to say at all in the literature on ethnic diversity. For a well-cited study, start here: http://ideas.repec.org/a/kap/jecgro/v8y2003i2p195-222.html

    • murph the surf. says:

      I don’t think I can be pinged for saying that the ethnicity of the majority is other than as you suggest- the 92% Han is a figure repeatedly quoted by the authorities to quell dissent as being unchinese!
      Rather I would politely suggest that trying to compare the Cantonese to the people of Fujian or Heiliongjong or Gansu ( or any province other than their own!)will reveal the complex differences that the 92 % figure tries to remove.
      Crikey, even within southern china the dialectic and cultural differences are large – and contribute to many disputes and clashes.The Chui Chow will never accept the Hot Lo!
      These local loyalties lead to the massive dysfunction when the central government tries to effect local actions.So a central effort to control credit falls over as local departments and banks collude to direct investment locally and to related parties.

      JC has a very valid point discussing the rigged exchange rate.I was lead to believe that the theory was that this rigged value lead to the greatest benefit of the greatest number of working class chinese – the problem of massive savings distorting investment patterns worldwide and exporting deflation were tempered by the 100’s of millions lifted out of poverty…….
      And I think catallaxy has had debates about real v nominal growth rates – does this affect your predictions at all?

    • Fyodor says:

      to take the main point head on: in purchasing power GDP terms China should overtake the US within this decade. The underevaluation of the RMB simply hides the true size of the Chinese economy. In terms of exports, China has already been biggest since 2009.
      So the question of size is easy, and not controversial within economics either. At ythe end of last year, the Economist put the date of overtaking at 2018. I challenge you to find a serious projection that does not have China overtake the US within 10 years!

      Repeating the same reductionist point does not make it any more powerful. Moreover, as suggested by JC I would be very careful about fooling yourself with exchange rate comparisons, economic sustainability and rates of relative growth. You’ve been writing about Italy enough to know about Il Sorpasso. That was 25 years ago. Consider its meaning in terms of the primacy you attach to simplistic GDP comparisons.

      The historical comparison with the UK is easy: the British empire as a whole was bigger than the US until WWI. The UK could basically target the productive efforts of India whereever they wanted. In comparison, the US now dont have an Empire. Just ask yourself: would Australia at the drop of a hat do whatever the US wanted? No, but any province in China would follow the foreign policy of Bejing.

      Ah, Paul, if only these analyses were as easy as you claim. The “productive efforts of India” could not be “targeted” wherever the UK wanted because the “productive efforts” of a desperately poor agrarian region were:
      a) not that “productive”;
      b) not readily mobilised; and
      c) overwhelmingly required to administer and maintain that same empire.

      Britain’s empire was huge and sprawling in size but added little to its ability to project power – a capacity that was overwhelmingly provided by the UK itself.

      As for the USA, it is just as much a continental empire as that of the Ming emperor or the Russian Tsar…just vastly more productive with an extraordinary and unmatched capacity to project force anywhere in the world. That it is a democracy does not change this fact.

      As to the supposed great ethnic mix of the Chinese, I am essentially surprised to learn you didn’t get taught this in high-school. Again, the relative homogeneity of China is not a controversial thing to say at all in the literature on ethnic diversity.

      Don’t be surprised, Paul. It’s now aundantly clear that my high school provided me with a far more nuanced understanding of ethnology than yours.

      “Han Chinese” is ultimately a political definition, is about as meaningful a term as “European”, and has been wholly corrupted by Chinese nationalist propaganda, both pre-communism and especially under it. Try reading some ethnologists, anthropologists and archeologists – your authority is a politicial “scientist” – on the subject and you’ll see it’s far more contentious than you blithely assert.

      Also: what Murph said.

      • Paul Frijters says:

        Fyodor,

        To take your three points in turn on GDP, power projection and ethnicity:

        I have answered the questions on GDP sufficiently below. Buy my textbook that covers these projections if you really want to check I know what I am talking about.

        On projections of power you will have to make your point clearer by arguing how differential power projection would be different from China, i.e. you have to argue the case that China for some reason would not be able to use its productive capacity to form armies and buy influence proportional to that production.

        On the remaining issue of ethnicity, we are going around in circles, so let me make this my last statement on it: for sure within any ethnic group you will find differences that will have at times be perceived to be huge. Within Europe, North-sides of cities have a different dialect than South-sides and 10 kilometers is often perceived to be as large a divide as continents. As the Arabs say “me against my brothers. Me and my brothers against my cousins. Me and my cousins against the world”.
        The issue is hence not if there are no differences and if there has not been a war between sub-groups, but more one of cultural and visible similarities. How to decide what then an ethnicity is, when to count people in the same group, etc.? A complicated mix of history, language, politics, convention, convenience, etc. goes into it. Ultimately, I take my cue from the studies by geneticists, anthropologists, etc., that I can find. I have already referenced several well-cited studies that openly say China is very homogenous (including a whole chapter by Jared Diamond on this literature and the paper cited above which is representative of a large literature looking at the effects of ethnicity in economics). I could cite many more, such as the genetic study here that calls the Han-Chinese the worlds largest ethnicity. For sure, there is the usual game within social science of knocking down any ‘big statement’ and blowing up whatever differences one can find, but I have not found respected summary positions that talks of China as more diverse than India, Europe, the US, etc. If you can find those, I will change my mind. If not, well then it seems to me you are trying to be difficult for the sake of wanting to disagree…..

        • Fyodor says:

          I have answered the questions on GDP sufficiently below. Buy my textbook that covers these projections if you really want to check I know what I am talking about.

          You wrote a textbook on other people’s projections? Curious. That you know that other people have made optimistic assumptions about China’s economic growth doesn’t tell us that:

          1) these forecasts are accurate; or that
          2) you know what you’re talking about.

          As for answering the points on GDP, you have not covered off the following:

          1) Uncertainty about rates of economic growth and their sustainability – there are significant problems with the sustainability of China’s economic model, yet you assume these away;
          2) Uncertainty about the correct exchange rate to be applied to the Chinese economy. Again, you assume the RMB is under-valued, yet this is a highly contentious point, as is the issue of the price level and “true” underlying inflation in China;
          3) Uncertainty about the time frame required for China’s GDP to surpass that of the USA Your first assertion was that it would take China 18 years to overtake the USA. When challenged that this does not represent an “interregnum”, you reached for earlier estimates. There was no response to my comment on Italy’s Sorpasso, presumably for the obvious reason.

          No, what we get is boiler-plate assertions about ever-more imminent GDP-hurdling.

          On projections of power you will have to make your point clearer by arguing how differential power projection would be different from China, i.e. you have to argue the case that China for some reason would not be able to use its productive capacity to form armies and buy influence proportional to that production.

          OK, let me restate: it is facile and reductionist of you to assume that mere hurdling of the USA’s GDP will result in China immediately supplanting the USA as “superpower” because the second, important, word in that compound relies on more than just the economic potential to build armies, fleets, etc. but also the ability and willingness to build and use them.

          I cited the example of the USA overtaking the UK economically in the late 19th century because it demonstrated that the possession of economic might was necessary but not sufficient for the USA to supplant the UK as hegemon, an event that did not take place until several decades later, arguably at the close of the Great War. Your fixation on mere GDP as the yardstick misses this very important point, because we will not wake up on 20XX, the day after China’s GDP overtakes that of the US, and all suddenly decide that China is top dog. The process of China’s maturation into THE superpower, if it happens, will take more time, hence you are premature in your assertion that we are living in an “interregnum”.

          On projection of power more broadly, you should also consider how difficult it will be for a one-party state that relies upon its army primarily to suppress dissent and control the ruled population to project power externally. This will represent a hurdle – albeit surmountable (it was for the Soviet Union) – to China’s pretensions to global power projection. Right now, the USA can transport the world’s most powerful army to the other side of the Earth and sustain it there long enough to defeat most of the world’s states. China is a very long way from having anything like this capability.

          On the remaining issue of ethnicity, we are going around in circles, so let me make this my last statement on it: for sure within any ethnic group you will find differences that will have at times be perceived to be huge. Within Europe, North-sides of cities have a different dialect than South-sides and 10 kilometers is often perceived to be as large a divide as continents. As the Arabs say “me against my brothers. Me and my brothers against my cousins. Me and my cousins against the world”. The issue is hence not if there are no differences and if there has not been a war between sub-groups, but more one of cultural and visible similarities. How to decide what then an ethnicity is, when to count people in the same group, etc.? A complicated mix of history, language, politics, convention, convenience, etc. goes into it. Ultimately, I take my cue from the studies by geneticists, anthropologists, etc., that I can find. I have already referenced several well-cited studies that openly say China is very homogenous (including a whole chapter by Jared Diamond on this literature and the paper cited above which is representative of a large literature looking at the effects of ethnicity in economics). I could cite many more, such as the genetic study here that calls the Han-Chinese the worlds largest ethnicity. For sure, there is the usual game within social science of knocking down any ‘big statement’ and blowing up whatever differences one can find, but I have not found respected summary positions that talks of China as more diverse than India, Europe, the US, etc. If you can find those, I will change my mind. If not, well then it seems to me you are trying to be difficult for the sake of wanting to disagree…..

          You cited Wikipedia, Jared Diamond (a physiologist by background), James Fearon (a political “scientist”) and a genetics study (that, incidentally, shows considerable genetic variation correlated with geography and language).

          What you haven’t noted is the considerable body of work by ethnologists and anthropologists on the contentious nature of the term “Han” Chinese, and its association with the nationalist project both pre- and during Communism. I’m a little surprised that you’re not even aware of the debate, given how certain you are in your view. Here’s a sampler:

          http://www.worlddialogue.org/content.php?id=489

          http://escholarship.org/uc/item/07s1h1rf#page-12

          http://www.comw.org/cmp/fulltext/0003gladney.htm

          As noted several times above, by several people, your assertion of a monolithic homogenous “Han” ethnic group is simply wrong. When Yue-speakers from Guangdong have to resort to their second language – Putonghua – to converse with Wu-speakers from Shanghai, also using Putonghua as their second language, indeed you ARE looking at a situation similar to India, where English is the lingua franca between, say, Tamil and Marathi speakers. That you don’t expect this says a lot about your preconceptions.

  17. JC says:

    I challenge you to find a serious projection that does not have China overtake the US within 10 years!

    Okay I’ll take up the challenge.

    Let’s say the under valuation is correct and that China normalizes the exchange rate over the next decade to PPP. Lets take The Economist Big Mac undervaluation of around 40%

    So all things being equal China’s GDP in US Dollar terms rises from $8.5 trillion to (1.40 * 8.5) $12 trillion by 2022.(CIA is the CIA estimate on their website)

    Let’s assume the US growth is 2.5% and we see compound growth from $15.9 trillion to $20 trillion.

    To match the US by that time, let alone overtake it China would have to grow from $12 trillion GDP to $20 trillion which is a growth rate of 7.5%. That by the way is assuming they normalized the currency in the first three years. And by the way you’re just reaching parity. not overtaking it.

    I frankly don’t think it’s possible they could obtain that sort of growth rate with a normalized currency rate in 7 years as part of their growth story has been currency undervaluation.

    Now there are people like Scott Sumner who have made arguments that China has possibly reached “parity” with the US in the coastal regions on a per capita basis, however it’s a while since I read that part of his blog and can’t recall the arguments he put up. However when I read that I thought he wasn’t doing a good comparison because in do that sort of thing you ought to eliminate the poorer regions of the US too.

  18. Paul frijters says:

    JC,

    Good. This is useful. Let’s start out by agreeing that China needs to outgrow the US by around 5 percent a year to catch up in 10 years. You take a generous 2.5 percent for the US per year. It is generous compared to the last 5 years, though pretty close to the average of the last 30 years.

    If we look at China this year, the current World Bank forecast is 8 percent whilst the US is at best looking at 2 percent. For 2013 the World Economic Outlook gives China 8.8 percent and the US 2.4. If we then look at the next 10 years, the World Bank gives China around 8 per cent per year. Hence the organisations which are looked at most for this sort of projection have China overtake the US before 2012.

    If instead I do what you for the US, which is simply give it the average of the last 30 years, then China would have around 9 percent growth and overtake the US even earlier, which is what the study quoted in the Economist does and what I also have calculated in the past.

    I will thus grant you that the CIA has ludicrously low growth forecasts for China but would add they are not seen as serious growth projectors. In terms of GDP per capita I do not expect China to catch up at all.

    http://www.economonitor.com/piie/2012/03/14/chinas-economic-outlook-in-2020-and-beyond/

  19. JC says:

    Hi Paul

    Look, I gave you a currency appreciation over the next decade which would uplift Chinese GDP by 40% and I then gave you a 7.25% compound growth rate which would frankly be unique in modern economic history to have that sort of combo… and that would only match US GDP by 2022!

    Say they stayed with the 40% undervaluation than they would need growth of 9.5% per year just to match US GDP by 2022.
    I don’t think it’s likely.

    Perhaps you’re right, but it’s an outside bet.

    By the way I got the GDP numbers from the CIA website and nothing else. I didn’t read their analysis as you may have thought.

  20. Paul frijters says:

    All the references I gave so far were as GDP in purchasing power parity terms. The rankings linked, the Madison tables, the Economist forecast, the OECD numbers, the World Bank numbers, etc. So there is point being slippery with the goal post and start talking in terms of exchange rates, pretending you are doing me a favour by considering it!
    A 10 year period of only 7.5 percent for China would mean lower growth than any of the previous 3 decades. That is indeed a stunning growth record.

  21. JC says:

    So there is point being slippery with the goal post and start talking in terms of exchange rates, pretending you are doing me a favour by considering it!

    I don’t quite understand the reason for your reply, Paul. What goalposts am I moving around exactly?

    I used the CIA website as a quick reference for both countries GDP. I always do when looking for GDP estimates. I’m not even close to the familiar with those references you cite.

    You mentioned something about the CIA being very conservative with their estimates and I explained that I have no idea what the CIA predicted for China, as I thought that you believed that’s what I suggesting.

    I raised the issue about the exchange rate for a good reason. If China experienced a 40 % revaluation there is close to zero possibility its growth rate over the next decade would follow the same trajectory as in the past. The appreciation would clobber their exports. At least that’s what i believe.

  22. RT Green says:

    WordPress neither lets me log in, nor see comments I know were made because I see them in email and on the dashboard.

    I think the argument on ethnicity mainly shows just how useless the concept is when thinking about the potential for conflict. It’s true that the Han ethnicity is largely an idea developed in the late 19th century under the influence of Western nationalist ideas, and radically understates the true diversity if I try to compare to European countries without reference to states. The concept of ethnicity, as opposed to the huaren-barbarian divide simply wasn’t a important idea in China, so they were unlikely to be constantly defining subcategories. By the time the Chinese nationalists adopted the idea Romanticism, which had prompted the “inventions” of innumerable regional identities, had mercifully receded somewhat, so they werent going to start defining them then.

    But it’s equally true that we’re unlikely to see ethnic diversity as a root of conflict.

    Imagine explaining the difference between Orangemen and Republicans to an ignorant Chinese, and explaining how much violence that has caused. Unless we were to stress the doctrine of transubstantiation, we’d have to refer to the history of conflict. Which suggests that ethnic divides are endogenous to violence. The latter causes the former. Recall the old quip that “a language is a dialect with a navy”. Italian is far more easy to understand (orally speaking) to a Spaniard than Beijinghua to a Cantonese, yet because the Roman Empire splintered and the Chinese state has stayed more or less intact (at least as an idea), we consider the former separate and the latter similar. In regard to the written language, we should note that Castellano and Tuscan only replaced Latin in written contexts well after the languages had diverged.

    We may well see ethnic divides in China because of internal conflict, but not the other way. As it stands, I think there’s likely to be simple path dependence. China will have a unified national identity, and remain unified, simply because it has been largely unified more often than not.

    Essentially, I think ethnicity is a tremendously unhelpful concept here. The definitions are so subjective and ropey they can be used to support any and every hypothesis. Disputing each others definitions is as about as fulfilling as metaphysics.

    • murph the surf. says:

      I haven’t been so worried about the idea of defining ethnicity but the conclusions Paul reaches after having decided that a genetically similar group of people will be more likely to co-operate and place this above their possible separate concerns.
      Interesting to see that now Paul has an article on the role of the CCP- they need unity more than forces in a democracy.
      So the ethnic unity ties into their control.
      The 20th century was a time when warlordism ruled in China.
      Mao was just a rebranded warlord.

  23. Paul frijters says:

    Richard,

    Yep, mostly agreed, though I do think the notion of cultural distance is important in an international context. Murky as such concepts are, they do matter and I prefer a good guess to declaring it too hard to say anything.

    Btw, I also completely agree with your fear of internal conflict in the Party. Like you, I agree that it is one of the biggest geopolitical issues in the next 50 years. I will write on it soon, but it would be good to hear your thoughts on what you think goes on there too.

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