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Asean Affairs   24  January 2014

"When America Becomes Number Two"

When China surpasses America


Since the 1920s, the United States of America (USA) has been the world's largest single national economy. Currently, it is still the strongest developed country. For the past few decades, the People's Republic of China (PRC) has been one of the fastest-growing economies. As the biggest developing country, it has successfully risen to the world's No. 2 economy. Perhaps, it is now time to envisage the unthinkable: China is going to surpass America.

 So when will China surpass America? According to the World Bank and the US National Intelligence Council, it may be in 2030. It may also even be as early as in 2016, based on the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD). Nonetheless, there is also a strikingly different voice saying that “China may not overtake America this century after all”. Regardless, if China really surpasses America in the future, are we ready for the change?

 First, America may not be ready, but does not need to worry too much.

 According to Professor Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, both US policymakers and intellectuals are just pretending to be ‘blind’ about the possibility of becoming ‘number two’. In fact, America does not need to worry too much. This is because although the GDP size does matter, the overall national competiveness is more critical.

 According to the latest IMD World Competitiveness Report 2013, America has regained the championship this year, thanks to its rebounding financial sector which comprises an abundance of technological innovation and successful companies. In contrast, although China is increasing its competitiveness, it is still lagging 20 ranks behind America. Overall, America’s much stronger competitiveness will continuously ensure a more sustainable and higher quality of growth than China for a long period of time.

 Moreover, if taking into consideration America’s well established military and political power, as well as its globally cultural influence, it will likely remain as the most powerful nation in the future even if its total GDP slips to No. 2.

 Second, China may not be ready too, and still with a long way to go.

Again, according to Prof Mahbubani, China is not prepared to be the world’s No.1 and seems reluctant to prepare for the consequences of its growth in power. In fact, China had been at the top position of the world economic ladder on earth for the last two thousand years, according to a research by economist Angus Maddison.

 Why is China at the moment not ready to regain its global championship? This is largely because those reigning Chinese leaders are still enshrining Mr. Deng Xiaoping's motto, "Hide one's capacities and bide one's time (tāo guāng yǎng huì)."

 Currently, China is focusing more on tackling its domestic challenges and this should be understandable. China has four times population (1.3 billion) as does America. Although China has been becoming stronger, its majority are still not wealthy. According to the CIA World Factbook, China's GDP per capita (PPP) in 2012 was $9,100, less than one fifth of America's ($49,800). Meanwhile, the poverty-stricken population in China still stood over 100 million by the end of 2012.

 Last but not the least; the rotation will likely bring more positive news than bad news for the whole world.

 The traditional 'old type of major power relationship' is typically competitive and suspicious, while ‘power transition’ will further spur conflicts. Therefore, to ease the external fear or jealousy, China has repeatedly stressed that its rise or self-called renaissance will be peaceful.

 Nevertheless, China's irrepressible rise does make its neighbours nervous as well as America and the EU uncomfortable. China’s escalating territorial disputes, including in the East China Sea with Japan, in the South China Sea with Vietnam and the Philippines, in the Aksai Chin border with India, and its increasing trade disputes with the EU and America are all the symptoms.

 Despite, the world should readily welcome China's development rather than confine it. This can help to avoid China transforming into an equivalent of 50 troublesome North Korea (if in terms of population). A more prosperous and stable China is unequivocally a bliss for the whole world.

 Undoubtly, the rest of the world has already benefited significantly from China’s development through trade and investment since its reform and open-up in 1978.

 Besides, with reference to the Euromonitor International, China’s middle class will expand to 700 million by 2020 as a result of its economic development. Such huge mass of middle class is the cornerstone of social stability and thus will act as the backbone of China’s future reform towards further freedom and democracy. An increasingly democratic China will contribute more positively to the world.

 Both Chinese President Xi Jinping and U.S. President Barack Obama just recently vowed to forge ‘a new model of cooperation’ for the future China-US relations during their first meeting in California.

 If such ‘new type of major power relations’ featuring more ‘win-win cooperation’ than ‘competition and conflict’ can be achieved, there will be a better world in the future.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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