Chinese Future?

Chinese Future? November 23, 2015

Is China poised to rule the world? Will its growing economic and political clout fundamentally transform the way the world whirls?

Ho-fung Hung (China Boom) doesn’t think so. On the contrary, China “has both helped to perpetuate the existing U.S.-centered global neoliberal order and reshaped the balance of power in this order at the same time.” Hung’s premise is that “the persisting U.S. economic and military power is attributable largely to the ongoing status of the U.S. dollar as the most widely used reserve currency and international transaction currency in the world for the past thirty years,” a status that has remained dominant even after the collapse of the Bretton Woods system and after the collapse of the Soviet bloc. 

China has done more than any country to support the dollar’s status and therefore American global hegemony. Theoretically, with China hoarding US Treasury bonds, it could dump “its dollar assets anytime to induce a run on the currency, financial collapse, hyperinflation, and fiscal crisis in the United States. If this happens, it would spell the final disintegration of the global dollar standard.” It’s unlikely to do that, since its own export boom has depended on the dollar’s dominant. And by buying up US debt, China “has helped Washington pay for its ever-growing budget deficit, particularly during the ongoing wars in Iraq and Afghanistan. It also establishes a floor for the dollar’s plummet.” In short, Hung argues, “China’s purchase of U.S. Treasury bonds has become a compulsion generated by its export-led model of development. China’s dumping of these bonds owing to its geopolitical rivalry with the United States is unthinkable.” And this is ultimately good for America: “China’s central bank and the U.S. Fed are now the two most important players holding up continued U.S. political and economic dominance.”

China’s economic rise depends on the current system of global liberalism, dominated by America. As long as China wants to prosper, it will support the system that has enriched it.

Hung also analyzes the political impact of China’s rise. He puts it into long-term historical context: “premodern China’s view of the world was dominated by a universalism in which the distinction between entities ‘inside’ the empire and those ‘outside’ the empire was not clear cut. The world in China’s imperial view was made up of concentric circles, with the emperor at the center, directly governed provinces in the circle around the center, and tribute vassals located in the next circle. This world order diverged from the Western model of empire originating in Roman times and was not grounded on the logic of tributary extractions from the center. Instead, its operation rested on the principle of benevolence from the center and reciprocal loyalty from the periphery.” It was a gift-and-gratitude empire: Vassals of the empire sent gifts to the capital and received gifts of even higher value from the emperor.

Contemporary China replicates this system to some degree. China has invested in and provided loans and other economic assistance to poorer neighbors. It has invested heavily in Africa as well.

Hung isolates two main differences between the old and the new forms of Chinese power. In premodern times, “Sinocentric tribute–trade order was culturally grounded on Confucianism, which justified the practices of reciprocity between the center and the periphery as benevolence from the center to the periphery and filial loyalty from the periphery to the center.” That no longer exists, and the central importance of China rests only on “naked economic interests and realpolitik.”

The other major factor is the US, which has a persistent presence in the region. Chinese power is limited by its very path of economic development, so dependent on the dominant dollar and on exports to the US: “its rising political influence on its neighbors is a direct outgrowth of its increasing economic significance, but that political influence is checked by continuous U.S. dominance, which China ironically perpetuates through its financing of U.S. fiscal deficits.”

China’s emerging role has emboldened third-world countries who resist Western and American dominance. But China itself has become a target of anti-colonial rhetoric.

Hung concludes that “China will not be a new hegemonic or dominant power in the world anytime soon, but its increasing presence across the developing world is already changing the dynamics of global politics by empowering other developing countries.”

(Photo by chensiyuan.)


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