Davos, Switzerland – “Has China Won?”
Kishore Mahbubeni, the Singaporean author and intellectual, greets me warmly in a conference lounge here and hands me a card promoting the March release of his new book, bearing that provocative question as its title.
The cover blurb announces that he will explain “how, while America became arrogant and distracted, a three-thousand-year-old civilization is well on the way to becoming the number one power in the world.”
The year ahead is likely to provide the most profound trial yet for that thesis and for the durability of China’s rise.
Several new shocks and challenges, ranging from a potential pandemic to slowing growth, will test the resilience of China’s authoritarian leadership and the state-run capitalist system that has provided the country four decades of record growth.
It thus also could mark a significant year for the emerging, generational clash, not of civilizations as Samuel Huntington had argued, but rather of economic and political systems, between democratic and authoritarian capitalism.
The latest blow to China has been the spread of coronavirus from Wuhan, whose geographic centrality and 11-million population make it a Chicago-like crossroads for China and to the world. Add the fact that the outbreak coincided with Chinese New Year travels and celebrations, and you have a nightmare plot that’s still unfolding.
The virus, which has already claimed 42 lives with confirmed cases now in 8 countries and 3 continents, will test how much China has advanced in its capability to respond since the 2003 SARS outbreak through its investments in medical science and health infrastructure. Also, can it deliver on its commitment to greater international transparency and cooperation during such a crisis?
At the same time, China faces several other daunting challenges.
Its society is aging and its economic growth was already slowing to 6% — its lowest level in 30 years – before the expected hit by virus response of a percentage point or more. The Phase One trade agreement with the United States will do little to change that, and indeed the bite of still-existing tariffs will continue impacting $112 billion of goods.
January elections in Taiwan and continued demonstrations in Hong Kong have underscored the stubborn fact that educated and prosperous Chinese societies, even if not yet those in the People’s Republic, will continue to demand more freedoms and resist Beijing’s long arm. (That said, the closing of Hong Kong schools over the coronavirus provides a government reprieve).
Meanwhile, richly detailed news reports on China’s repression of its Uighur minority have highlighted the limits of state censorship – while also demonstrating China’s increased use of facial recognition and artificial intelligence technology to track and control potential dissent.
And at the same time, Asian, European and particularly American support and sympathy for China’s rise over the past four decades has turned to greater wariness and suspicion. That includes greater international scrutiny, perceived debt traps, and other abuses in China’s Belt and Road development program.
Despite all that, the consensus among delegates in Davos with whom I discussed China’s challenges was that none of them would throw China off its trajectory of becoming the world’s number one power – economically, politically, technologically, and eventually also militarily.
The arguments behind that are that President Xi Jinping has consolidated power over a remarkably capable technocracy, that technological advance has given him greater ability to identify problems and control dissent, that for most Chinese life has been steadily improving and, finally, that the attractions of U.S. and other Western democracies have grown less compelling.
So, the debate here over China’s emergence as the world’s leading power tends to revolve more around pace, process, impact and, of course, U.S. response.
Given the magnitude of the issue, however, there was surprisingly little discussion in Davos on how an increasingly Chinese-influenced global system might differ from – or perhaps even up-end – the post-World War II rules-based order of institutions and principles that spawned the World Economic Forum’s creation 50 years ago.
“To a degree still difficult for outsiders to absorb, China is preparing to shape the twenty-first century much as the United States shaped the twentieth,” wrote Evan Osnos in a New Yorker opus this month. “Its government is deciding which features of the global status quo to preserve and which to reject, not only in business, culture and politics but also in such basic values as human rights, free speech and privacy.”
Secretary of State Mike Pompeo put it more bluntly on a recent visit to Europe. “China wants to be the dominant economic and military power of the world,” he said, “spreading its authoritarian model for society and its corrupt practices worldwide.”
One only must reflect on the dramatic changes of the first 50 years of the World Economic Forum to recognize the potential for a similarly dramatic shift in the next half century.
When mostly European and Americans gathered for the first annual meeting of the World Economic Forum in 1971, China was still ruled by Chairman Mao Tse Tung as a largely irrelevant global actor with but 2% of global GDP despite 22% of world population. China’s GDP has grown by 14,028% since then to $14.1 trillion in 2019 from $99.8 billion in 1971. It now has 16.4% of global GDP, compared to 23.9% of the United States. According to a PwC study, China would have 20% of global GDP by 2050, making it clearly number one, compared to just 12% for the United States, which would fall to the number three position behind India.
A half century ago, the U.S. and Europe together accounted for 65% of global GDP and the international institutions they had created together – the United Nations, the European Community, NATO, the IMF, the World Bank and others – were young and brimming with ambition.
Though the Soviet Union posed a security threat and an ideological challenge, its communist, state-controlled economic system never produced enough growth or innovation and thus lacked China’s attractiveness as a model.
An Africa businessman in Davos, who asked to remain anonymous, expects China’s influence on his continent, which he believes has already surpassed that of the United States, to expand even more dramatically in the decade ahead behind what Chinese officials have told him will be $1 trillion in new investments.
“The turn toward China will be hard to stop,” he says.
Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.
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