Wednesday, Jun 26, 2019
HomeOpinionOp-EdThe burgeoning economic power of China

The burgeoning economic power of China

Last month, the White House National Security Council (NSC) employed its bullying tactics in a statement warning Caribbean leaders about the supposedly predatory economic and trade practices of China.

The statement was in the lead-up to a meeting in Florida between U.S. leader Donald Trump and a group of Caribbean heads, including Prime Minister Dr. Hubert Minnis.

Around the same time, the U.S. also similarly warned Italy as Chinese President Xi Jinping arrived in Rome with an impressive 500-strong delegation as a part of the former’s Belt and Road Initiative. The Chinese visit was a display of confidence.

As did The Bahamas’ prime minister and the other Caribbean heads who met with Trump, Italian officials stressed their good relations with both the United States and China.

World leaders understand that they need China increasingly as much as they currently rely on the economic, political and military prowess of the U.S.

Global leaders do not want to offend or ignore China, which is a sea-change in geopolitics in the lifetime of most of the world’s inhabitants.

Australia’s largest trading partner was once the U.S. The worldatlas.com website notes that today: “The economy of Australia is the 12th largest economy in the world by nominal gross domestic product (GDP), which in 2015 was $1.62 trillion.

“Australia’s biggest two-way trade partner is China. Its exports to China are valued at $98.2 billion and its imports from China are worth $54.3 billion. This gives Australia a $44 billion positive trade balance with this country. Approximately 34% of Australia’s total exports go to China.”

It is in the interest of China, the U.S., and the world, including The Bahamas, for the two leading economic powers to negotiate a series of trade and currency settlements.

But over time, these settlements will increasingly favor China’s strategic global interests.

The Donald Trump brand of bellicosity toward China will increasingly become a thing of the past as China outstrips the U.S. as the world’s leading economic power.

Investment

Italy, a strong U.S. ally, is a G-7 country, along with the U.S., Canada, France, Germany, Japan and the United Kingdom. It is the third largest economy in Europe and the eighth largest in the world.

The economy of Italy is beset by longstanding and tremendous structural, political and economic problems, including massive deficits and one of the highest debt burdens in Europe.

Italy needs Chinese investment to meet its entrenched economic challenges. So do many other countries.

In an interview at the end of last year, one of the BBC’s HARDtalk moderators, Stephen Sackur, grilled Asad Umar, Pakistan finance minister, on the country’s economic relationship with China, including under the newly minted Prime Minister Imran Khan.

The finance minister was clearly bemused by Sackur’s parroting of U.S. talking points about countries being indebted to China. With gleeful whimsy, Umar smiled broadly and calmly as he observed that he never recalled such concern by the U.S. when Pakistan was raking up debts to the U.S. and various Western institutions.

Of course, the burgeoning economic power of China does not only affect countries like Italy, Pakistan, and Caribbean and Latin American states.

Writing at the end of March on the website TheBalance.com, Kimberly Amadeo notes the indebtedness of the U.S. to China: “The U.S. debt to China is $1.13 trillion as of January 2019. That’s 28 percent of the $3.97 trillion in Treasury bills, notes, and bonds held by foreign countries.”

Amadeo writes: “China is more than happy to own almost a fifth of the U.S. debt owned by foreigners. Owning U.S. Treasury notes helps China’s economy grow.

“It keeps the yuan weak relative to the dollar. As a result, Chinese exports are less expensive than U.S. products. China’s highest priority is creating enough jobs for its 1.4 billion people.”

She also notes: “The United States allowed China to become one of its biggest bankers because the American people enjoy low consumer prices. Selling debt to China pays for federal spending that spurs U.S. economic growth.

“It also keeps U.S. interest rates low. But China’s ownership of the U.S. debt is shifting the economic balance of power in its favor.”

Balance of power

China is the banker to the world, helping to supply trillions of dollars in funds for private enterprise and bankers, and for governments throughout the world. The Belt and Road Initiative will accelerate Chinese investments globally.

Tom Phillips, writing in the UK Guardian, described the Belt and Road Initiative: “In concrete terms, the Belt and Road Initiative is an immensely ambitious development campaign through which China wants to boost trade and stimulate economic growth across Asia and beyond.

“It hopes to do so by building massive amounts of infrastructure connecting it to countries around the globe. By some estimates, China plans to pump $150bn into such projects each year. In a report released at the start of this year, ratings agency Fitch said an extraordinary $900bn in projects were planned or underway.”

Phillips notes: “According to the global consultancy McKinsey, the plan has the potential to massively overshadow the U.S.’ post-war Marshall reconstruction plan, involving about 65 percent of the world’s population, one-third of its GDP and helping to move about a quarter of all its goods and services. Some describe Xi’s scheme as the biggest development push in history…

“Bewilderingly, the ‘road’ is not actually a road but rather a sea route linking China’s southern coast to east Africa and the Mediterranean. The ‘belt’ is a series of overland corridors connecting China with Europe, via Central Asia and the Middle East.”

Still, panicked by China’s burgeoning economic, political and military strength, the American hegemon, with increasing vehemence under Donald Trump, continues to attempt to throttle the emerging Chinese superpower.

In 1803 Napoleon Bonaparte, the great French military genius and later emperor of France, stood pointing at a map and is reported to have said, “Here lies a sleeping lion. Let him sleep, for when he wakes up, he will shake the world.”

There are variations of this famous quote but that he was talking about China is not in doubt. 

Civilization

Napoleon and many other educated Europeans were aware of the great sleeping giant of Asia.

They were becoming more knowledgeable about the culture and history of this ancient Asian civilization and the genius of a people who bequeathed to the world many inventions including paper-making, movable type printing, gunpowder and the compass.

Europe by this time had already progressed well into its age of expansion, which began in the 15th century and resulted in the domination of much of the globe, including much of Asia, Africa and the New World.

The European expansion was marked by colonialism, imperialism, slavery and genocide along with ruthless appropriation of resources.

Today, as Napoleon predicted, the Chinese lion is wide awake and is indeed shaking up the world.

The rise of China after many centuries of internal struggle and imperial predations has been phenomenal. In about three decades the Chinese lifted some 800 million people out of poverty. This is unprecedented in human history.

Unlike the European model of expansion, the Chinese seem to have adopted a policy of mutual development. The maintenance of international stability is in their best interest and the interest of other states.

It is perhaps inevitable that some among the powers that have dominated the globe since the age of expansion should feel discomfort at the prospect of an economically powerful China with trading partners and influence all over the world.

Still, it is spectacular hypocrisy for the administration of Donald Trump to try to warn The Bahamas and other countries of accepting Chinese development assistance and investment.

After all, the U.S. has welcomed many billions of Chinese money into the U.S. economy. China holds more than a trillion dollars’ worth of U.S. debt.

Nevertheless, Trump’s bellicosity is welcomed by any number of local China-haters. Their objections to Chinese investment in The Bahamas are based not only on their cold war attitudes and hankering for the old days of British imperialism. They are also suffused with racism. One commentator in print wondered if the Chinese had any sense of the aesthetic; never mind that China is an ancient civilization that has created much in the way of art, beauty and culture.

Another commentator was convinced that the roofs of the buildings in Baha Mar resembled coolie hats. Never mind that Baha Mar was built but not designed by “the Chinese”.

And a cartoonist in this journal drew what many considered an overt racist cartoon of Chinese figures with exaggerated facial features in traditional peasant costumes.

The anti-Chinese and racists among us would do well to better understand the imperative of The Bahamas enjoying good relations with a world power that has previously and will continue to tremendously influence the course of world events and human history.

Like every superpower, China will leave a mixed legacy. But we cannot bury our heads in the proverbial sands, pretending that we can try to sideline such an extraordinary world power.

When the FNM and Hubert Ingraham recognized the People’s Republic of China, there were panicked naysayers who preferred that we retain diplomatic ties with Taiwan, because of the fear of the Chinese bogeyman.

The Chinese haters and racists were on the wrong side of history then. They are now sliding into utter historical irrelevance.

frontporchguardian@gmail.com.

 

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