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POLS 459 Politics of East Asia

Chinas Economic Rise Regional and Global Implications

Professor Timothy C. Lim California State University, Los Angeles tclim@calstatela.edu

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Chinas Economic Rise

Regional and Global Implications

The rise of China as a major player in the capitalist world economy is likely to become one of the most significant developments in the first half of the 21st century
There probably would be little or no debate from anyone about this statement, but there would be a great deal of debate about implications of Chinas economic rise, both regional and globally
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Implications

Some scholars, such as Nanto and Chanlett-Avery focus primarily on the military-strategic, diplomatic and (narrow) economic implications. They ask questions such as
How will Chinas growth reoriented international trade patterns?

Will Chinese development lead to greater interdependence and regional cooperation?

Will a richer China try to dominate the region and the world?
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Implications

Other scholars, such as Minqi Li, focus on the deeper, structural implications of Chinas rapid development. They ask such questions as
How is Chinas internal structure likely to evolve as China assumes different positions in the existing world system?

Will Chinas rise save or destabilize the global system?

Can China replace the United States as global hegemonic power? Lets focus on this set of questions
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Larger Context

To properly assess the implications of Chinas rise, according to Li, we must understand the larger context within which Chinas ascendance is taking place This larger context is a concept about which we are already familiar

Neoliberalism
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Larger Context

Under neoliberalism, contradictory processes take place in the system of global capitalism
Neoliberal policies put downward pressure on wages in order to maximize profit Global capitalism requires constantly increasing consumption in order to maintain system equilibrium
Resolving this contradiction is not easy, but one way the global economy has been able to avoid a full-scale downward spiral is through the actions of a hegemonic power: for most the postwar period, the US has played this role by pumping demand into the global economy through huge and rising deficits

Chinas Economic Rise

Regional and Global Implications

The Rise of China: Larger Context

This chart illustrates the increasing level and scale of deficit spending in the United States. Starting off at about $500 million in 1940, the accumulated national debt is now (in 2007) more than $9 trillion in in real terms, about $30,000 for every man, woman and child in the U.S.
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Larger Context

Deficit spending by the global hegemon, however, is inherently unsustainable: for the world economy to resume sustained, long-term expansion, global effective demand must have a more stable base Historically, the key base has been _________________ geographic expansion, which allows access to new reserves of cheap labor and natural resources, and new markets for consumption
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Larger Context

In one respect, then, China represent the last major geographic source of expansion for global capitalism

Chinas economic rise, therefore, raises the question: Can the existing world system (and humanity) survive without the rise of China?

How does Li answer this question?

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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Different Scenarios

Basic answer: It depends. Li gives us 4 different scenarios

Significantly, though, underlying his scenarios is another question, namely

Can the existing world system survive with the rise of China?
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Different Scenarios

The Four Scenarios

1. 2. 3. 4.

China may fail (to rise)..

China rises, but in so doing peripheralizes the rest of the semiperiphery .

China rises, but in so doing it catches up with other semiperipheral states in terms of wages ..

China rises, which has an uneven impact on between-country inequality

What are the implications of each scenario?
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Convergence

Key points from the four scenarios
None of the four scenarios is particularly promising The basic reason: Chinas rise will have a necessary impact on the internal dynamics of the system--this is largely a product of the sheer economic size of China, which has a labor force larger than the total labor force of all core states combined or of the entire semiperiphery Chinas huge size, therefore, will necessarily bring a process of convergence, either upward or downward: Neither is good
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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Convergence

Question: So, whats the problem with convergence?
Downward convergence: Puts downward pressure on wage levels in the rest of the semiperiphery, which could deprive the capitalist world-economy of major source of effective demand; the peripheralization of the semiperiphery also threatens political stability Upward convergence (of Chinese wages): Reduces the total surplus available for the rest of world; profit rates are reduced, competition increases, growth in many economies will come to a grinding halt

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Chinas Economic Rise

Regional and Global Implications

The Rise of China: Other Implications

Even if the problem convergence is overcome, another problem remains The rise of China in the sense of China increasingly becoming the center of world capitalist industrialization, is likely to place increasingly greater pressure on the global environment 14 _______________________ _.

Chinas Economic Rise

Regional and Global Implications

The Rise of China: Other Implications

This short segment from CNN provides a general, but telling overview of the environmental threat Chinas development poses, both to China and the rest of the world
From YouTube

Video intentionally removed Click on YouTube link to view video online

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Chinas Economic Rise

Regional and Global Implications The Rise of China: Summing Up
Chinas economic rise has serious, but paradoxical implications
Paradoxically, the world-capitalist system needs China as the last major outpost of global expansion, but Chinas rise could also threaten the stability and ultimately the survivability of the system as a whole Still others see Chinas rise as a potential strategic and politico-economy threat, and, in particular, as a threat to American dominance

Not everyone agrees, of course. Mainstream economists and other liberal scholars generally applaud Chinas economic rise: it represents the triumph of capitalism and last big step towards the end of history
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