Over the last week, I’ve read a flurry of new pieces on China, plus started a new book. Here’s how things look:
1. The best of the bunch is Ethan Devine’s “The Japan Syndrome” piece in Foreign Policy, which makes the case that massive problems are still in the way of China’s development into an innovative, service- (and therefore domestic-demand-) dependent society, problems that, if left unattended, will lead China to enter a period of Japanese-style stagnation. In short, China is still in the world Paul Krugman described sixteen years ago writing about Japan here (partly gated). Devine concludes:
History has given China this moment to do what Japan could not. The Japanese did not seriously attempt to rebalance until their economy was well-developed, ossified, and allergic to change. So when the jig was up on their longstanding economic model, rather than rebalance, Japan unraveled. In this sense, the global financial crisis was serendipitous for China. By reminding China’s leadership that relying on exports means depending on unreliable foreigners, the crisis put the pain of rebalancing in perspective. It is not out of altruism that we have seen renminbi appreciation accompanying Chinese wage hikes and other rebalancing measures. A slight loosening of controls over media and finance could be in the offing. Deregulating the service sector might be a frightening political proposition, but perhaps less so than not having one when the exports dry up.
2. Not even time-tested IR theorists, such as Steve Walt, know whether China’s growth will lead to a balancing coalition against it. As Walt argues here, whether Asian states will choose to balance against, or bandwagon with, China “is far from certain, however, and I frankly don’t expect it to occur before the end of my own career.”
3. This question of regional balance against China is coming to the fore because there’s more and more speculation (evidence?) that India will outgrow China. (This is, in my view, a debate heavily tinted by ideology, as it supposedly pits democracy against authoritarianism.) The Economist recently had a cover and a couple of pieces about this, here and here, though gated. The magazine is sanguine about India’s prospects for growth:
India’s GDP is expected to grow by 8.5% this year, and could grow even faster. Chetan Ahya and Tanvee Gupta of Morgan Stanley, an investment bank, predict that India’s growth will start to outpace China’s within three to five years. China will rumble along at 8% rather than double digits; India will rack up successive years of 9-10%. For the next 20-25 years, India will grow faster than any other large country, they expect. Other long-range forecasters paint a similar picture.
And it pins these hypothetically higher growth rates on demographics and democracy, with the latter ensuring a strong Western audience for such punditing. Democracy is the factor that will enable India to generate the kind of service-sector innovation that will boost domestic demand and therefore guarantee stable growth.
The only certainty I have is that the difficulty (impossibility?) of predicting the growth rate of a billion-plus country will not deter the emergence of another cottage industry mirroring the “China’s rise” one, this time devoted to India. Good luck there.
3. Edward Steinfield’s Playing Our Game: Why China’s Rise Doesn’t Threaten the West, makes the case against worrying, by arguing that China is, well, playing the West’s game:
The bottom line is that China today is growing not by writing its own rules, but instead by internalizing the rules of the advance industrialized West. It has grown not by conjuring up its own unique political-economic institutions, but instead by increasingly harmonizing with our own. In essence, China today — a country at the peak of its modernization revolution — is doing something it historically never did before. It is playing our game.
I’m only part of the way through, but Steinfeld’s book is a good read, helpful in answering the fundamental question few of the doom-and-gloomers ask: What is it in the international system that China would change if it could? Without a clear answer to this, it is hard to see why China would become a threat to the West.
4. In sum, nobody knows. As usual. If there ever was a topic — perhaps Japan in the 1980s — that demonstrates how we privilege information over knowledge, it is the whole rise of China thing. Every week, every day, someone (your humble blogger included) writes something about it, yet we know little about the outcome, because we know little about the underlying factors that determine whether such things as hegemonic transitions take place peacefully or not. Someone should write a good book about it.