China's Economic Rise and Global Power in the 21st Century

Introduction: China's Economic Transformation

From the end of World War II to the early 1970s, China was relatively isolated from the global landscape. It was part of the Soviet Communist Bloc, but remained inwardly focused on improving its own infrastructure and economy, all the while poised for rapid modernization. Openness toward the West began around 1978 with increased trade, a small degree of additional internal transparency, and at least the semblance of allowing more capitalistic models — such as private business ownership, more modernized factories, and reduced journalistic control. After 1978, Mao's successor Deng Xiaoping realized that the government had to raise the standard of living for its population or face revolt. Deng, and the regimes that followed, focused on market-oriented economic development. By the turn of the century, Chinese output had quadrupled, and living standards as well as personal choices improved — to a degree. There has been increased global trade, outreach, dialogue, and participation in international organizations of all types (Central Intelligence Agency 2010). China is not operating in a vacuum; it pursues patient diplomacy alongside a firm policy of foreign direct investment into the United States and other developed economies.

China's massive growth has produced an economy roughly one-quarter the size of the U.S. economy. China's output is projected to exceed America's in the 2020s, and its overall standard of living will continue to rise. However, many experts do not regard this as a straightforwardly viable threat. The concern is that China will destabilize the world economy, distort trade, cause financial imbalances, and intensify competition for certain raw materials. China has proven to be a patient and strategic actor: by running a predatory trade policy while simultaneously hoarding essential raw materials — oil, natural gas, copper, and others — it secures its own interests. If the rest of the world suffers in consequence, China may emerge dominant (Samuelson 2008).

China has consistently favored a long-term economic paradigm over the short-term model preferred by many American investors. Through 2012, for instance, China received $59 billion in direct investment, surpassing the United States by $2 billion. As one analyst observed, "China's biggest attraction to global investment is now its huge market, contrasting the long-time low cost, which is now ranked third or fourth. The economy is growing in China, outperforming the U.S. and the EU, which are suffering medium- or long-term troubles" (Trifunov 2012).

History shows us that many wars are fought on ideological grounds but are rooted in economic causes — if not territory, then resources. How would Western democracies respond to oil and gasoline shortages, or to placing their populations on rationing? (Von Mises 2008). There is little reason to assume China will be different. A second question is whether China's strategy is deliberately designed to intimidate the world, or is simply the consequence of a country with an enormous population that must, by its very nature, pursue both hegemony and domestic satisfaction in order to survive.

As far as the United States and European Union are concerned, there is often a lack of cohesion in their strategy toward China. China, by contrast, has maintained a central strategy toward the developed world — one that has simmered since the 1970s and has become increasingly aggressive as the realities of globalization took hold in the 21st century. It was almost as if China anticipated global trends, and understood that if it could structure its economy to supply the goods and services necessary for the developed world's evolving paradigm, it would simultaneously increase the value of internal needs and imports — winning on both sides of the trade ledger (Wan 2008).

International Security in the Modern Era

In the modern global economy, international security focuses on the measures that nation-states and international organizations take to ensure a safe, prosperous, and economically viable world. China cannot be viewed myopically — using foreign policy, economic policy, and investments as isolated strategies and tactics. Instead, the investment and economic paradigm must be understood as part of the broader security framework, since any conflict with China is likely to occur at that level rather than on a traditional battlefield. These measures may include military action, diplomatic treaties, economic sanctions, or some combination of the three. International security and national security are therefore linked, sharing significant overlap and common ground (Baylis 1997).

International security and international relations have changed dramatically since the dawn of the 20th century. The post-World War II world and the ensuing decades of Cold War were unlike past experiences with fixed lines, settled preconceptions, and consistent ideological goals. Instead, a more sophisticated form of Otto von Bismarck's realpolitik became the dominant paradigm, in which the basic construct of global security was tied to the economic health of the nation-state. The premise became: if state security is maintained or enhanced, the security of both the economic system and the citizenry will logically follow. Militarily, this relied on a balance of power. After World War II, for example, both the Soviet Union and the United States continued to expand their militaries to ensure that no imbalance arose that might make conflict inevitable. In realpolitik, states are thought to be rational actors that pursue national interests, evolve to protect their territory from invasion, and keep their populations relatively content and under control (Hough 2008, 2–42).

From its founding in 1949 until 1978, the People's Republic of China operated on a Soviet-style centrally planned economic and political system. Ideologically aligned with the Soviet Union, the major focus was internal control and as rapid a pace of modernization as possible. This arrangement fit well within the global hierarchy of the time — everyone knew where everyone stood and with whom. However, following Chairman Mao's death and the end of the Cultural Revolution, the new Chinese leadership began the arduous process of economic reform, moving toward a mixed economic system while retaining one-party rule. In 1978, for example, China and Japan normalized their diplomatic relationship, enabling China to borrow money from Japan to fund modernization. Under Deng Xiaoping, the leadership recognized that production could only increase by dismantling collectivization and privatizing agriculture. This created a movement toward a different kind of nation — one in which Cold War paradigms no longer applied (Meisner 1999, 413–40).

Once the Soviet Union collapsed and Eastern Europe opened up, China was well on its way to reform. Without the tensions and hierarchy of the Cold War, a new security model emerged: security was now threatened by hardships arising from internal state activities as well as from non-state actors such as terrorists. But it was increasing poverty, disease, hunger, violence, and human rights abuses that carried the greatest potential for destabilization — more so than external political events. Indeed, by channeling resources into militaristic frameworks, many states found that they had undermined internal security by neglecting their own populations (Baylis 1997).

China, like the rest of the world, recognizes that certain basic elements of global cooperation and safety are necessary for international security to function. Rather than a state-centered view, the new template is more holistic, acknowledging the need for cooperative and collective measures designed to protect as many people as possible. Terrorist threats that jeopardize global shipping (piracy) or transportation (hijacking) are thus threats against all of humanity, not just individual nations. Similarly, as global economies become ever more intertwined, even natural disasters and catastrophes pose global threats because they disrupt the flow of resources (Global Security Engagement: A New Model for Cooperative Threat Reduction 2009).

This new model represents a clear and dramatic shift from the historical way China and the world interacted. Rather than a climate of complete mistrust, a form of human security is emerging that moves toward what is best for the greatest number — a utilitarian guiding principle for foreign policy. The world is simply too interconnected to allow elections and policy changes, or even the shifting nature of alliances and enmities, to determine its direction. If a state can now best maintain its security and the security of its citizens by participating in the security of all other nations, then globalism becomes more than an economic system (Matthew and McDonald 2009, 209–11).

China Awakens as a Global Power

For years, China was known euphemistically as the "Sleeping Giant of Asia," and in the 21st century it has emerged as a key barometer of economic health and stability across the region. Considered logically, China holds over one-fifth of the world's population, possesses intercontinental nuclear weapons, holds veto power on the UN Security Council, and has achieved one of the most dynamic economic revitalizations in modern history. From a lumbering Marxist economy, China has emerged in the 21st century as a market-oriented economy integrated into the global interdependence model. Many observers now see China as advancing rapidly enough — with sufficient strategic political and economic progress — that it is well on its way to superpower status (Khanna 2008, 269–72).

It is important to note, however, that like most countries, China's economic trajectory is tied to its political security. China's new model signals to the world that economic security is as important as military security. At present, based on the prevailing economic and political configuration of the world, China remains focused on domestic economic issues and a slow but steady ascent toward socio-political power and a strategic role in global affairs (Zakaria 2008, 86–94).

China has also begun to recognize — possibly in the wake of the Tiananmen Square events — that human rights are often tied to global economic outcomes. It may not fully understand why the West reacts so emotionally to events such as those surrounding the Olympic Games China hosted, but the government is aware that global public opinion has a monetary value, both in terms of imports and exports. China remains authoritarian — cracking down on Internet access, restricting certain films and literature — but does so in a manner that is less heavy-handed than before, more akin to a paternalistic authority that believes it knows what is right and wrong for its citizens and acts to protect them accordingly (MacKinnon 2010).

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