China's growing economic footprint - Op Ed
By Ashok K. Roy Major structural shifts continue to unfold and reverberate in the global economy….
Georgia (May 5, 2011) —
Link To Articlehttp://www.chinadaily.com.cn/usa/opinion/2011-05/05/content_12452943.htm
By Ashok K. Roy
Major structural shifts continue to unfold and reverberate in the global economy. One of these shifts, seismic in nature and proportion, is the increase of China's influence on industries across the globe and on the global supply chains.
China is characterized by an array of languages and ethnicities, low ratio of arable land, rising income inequality. In spite of these challenges, within the span of forty years, by compressing development time, China has become a global economic superpower from a poor economy.
The pace of China's economic rise, which causes the rest of the world to gasp in awe, is without precedent in modern history. One of the things I find so unusual is that China has moved from a fairly egalitarian society to a capitalist society----all within one generation.
If I reduce the grand sweep of China's rise to a granular level, I would attribute its rise to timely execution of sound public policy by the Chinese government. Execution of sound public policy is vital in any nation's progress. In 1965, Jamaica and Singapore had the same wealth. Look at their economic difference today. China's quantum leap over the past three decades is no less noteworthy.
As I observed in my article titled "A Journey of Wonder in China" in the China Daily of June 18, 2010, I saw the components of good economic order everywhere I travelled in China. Stanford University's Francis Fukuyama argues in his new book that the strong state, which is at the core of China's strategic public policies, started with the Qin dynasty in 221 BC and continued to the Han state.
China's economic superpower status can be seen simply by considering these impressive achievements: it is the world's largest exporter, the world's second largest importer, has the world's largest trade and current account surplus, has the world's biggest flow of savings, is the world's second largest economy, is the world's fourth largest filer of patent applications, the world's largest automobile producer, and the world's largest consumer of cars. The list goes on and on.
One of the most interesting facts in geopolitics today is that China has demonstrated that a nation can become a global economic superpower without becoming a global military superpower. Paul Kennedy and Oswald Spengler have theorized that nations have a trajectory of rise and fall stemming from economic and military over-reach, the classic examples being Rome, Spain, France and Great Britain.
In similar fashion, I have found that China thinks strategically and not just tactically. China, which is already a world leader in high-speed railways, is now expanding its railway system across its borders into Thailand, Laos, and Vietnam.
Angel Guerria of the OECD has observed that China is the "perfect fit" for Latin America where China has made $65 billion in deals across the region since 2010, as well as surpassing the United States as Brazil's largest trading partner.
With over $3 trillion in foreign reserves, China has latitude in what it wants to do. Beijing holds $1.6 trillion of US debt. The Asian economic tailwind contributes to Pan-Asian economic integration which, in turn, will transform the Pacific Rim's current strategic regional order by shifting Australia's alliances, trade and multilateral institutions.
Let me end where I should have begun. It should be remembered that although Asia today has the world's most dynamic economies producing the most sustained economic boom in modern history, there is not a single entity that wields power and has wide disparities in per capita GDP.
There is no doubt that, in the Asian drama, the gravitational pull of Zhongguo (the Mandarin name for China) is shaking and even shaping the world economy.
The author is an assistant vice President for financial services/CFO & associate professor of Asian studies in the Kennesaw State University, the United States
The opinion expressed reflects that of the author only.
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