[Op-ed] China will rule the world in 30 years!

[K. A. Pital]

Given centuries, Mongolia may just rise to superpower status again for all we know.

I specifically specified one century - I feel that is a sufficient time to build up a genuine superpower. The USSR did it faster, but it cost the nation it's... well, integrity - the great leap made the industry collapse later.

[TheKwas]

China may become the biggest economy (which I never doubted even for a 30-50 timespan), but do you think it will eclipse both America and the EU to the extent where it can be said to 'rule' the world?

Right now, combining the EU's and America's population, they have roughly 800 million people compared to China's 1.3 billion. Assuming mostly stagnate population growth (a silly assumption, but generous since any more pop growth in China will limit it's ability to influence the outside world, since more precious resources will have to be spent on the populace with a small marginal increase in labour power as a tradeoff), China would have to achieve an per-capita income of 60% the first world just to match America and the EU economic size. To actually obtain a dominate position would take even more impressive growth, which I doubt is possible due to resource constraints (in other words, China's economic 'steady-state' is lower than the West's due).

Furthermore, even if China matches the Western world in terms of economic size, the fact that the Western world will be richer on a per-capita basis will also mean that they have more 'disposable' resources that can be directed towards toys like planes, aircraft carriers and wars.

[K. A. Pital]

China may become the biggest economy (which I never doubted even for a 30-50 timespan), but do you think it will eclipse both America and the EU to the extent where it can be said to 'rule' the world?

Look around. Having the biggest economy (for a while, so that it's influence has time to spread) is already enough to rule in a certain sense. Let's look at America, the largest economy.

1) Cultural hegemony? Check.
1.1) Language spread? Check - the final phase of English expansion was completed in the last decades, when English knowlege became quite ubiqutous in almost in every nation.
1.2) Arts spread? Check - Hollywood completely eclipses national cultures' cinema industries, often classical literature gets likewise swamped away with the tide of Western boulevard novels
1.3) Culture spread? Check, self-explanatory, the consumerist culture has infested almost all societies on Earth to a greater or lesser degree.

2) Military hegemony? Check. The biggest economy means the biggest paycheck to the military. That means more 100,000 ton monstrosities hauling around the seas ready to rain death on any miscreants.
2.1) Unilateral invasions? Check. The US gets a lot done thanks to it's economic weight. It can coerce others to at least be silent if they won't outright support the US, no matter how strong the pressure.
2.2) Sea, air, ground power - see point 2, military budget.

3) Economic hegemony - the largest economy, especially one that is providing goods to itself and also supplying a great number of other industrial nations is going to be one hell of a lever.
3.1) Reserve currency. China will start with what it already planned - a motion to change the reserve currency to a multi-currency basket weighted on G20 currencies or the like. In a while, that lever might become stronger.
3.2) Annihilation of competitors. A vast, relatively modern and competitive, price-wise (thanks to climate and price-wage level differences in China) industrial complex is a powerful attack means. You can sell your shit to other nations which experience trouble with their own industries, undercut their industrial base and make them collapse. Example - the influx of extremely cheap Chinese goods is a major factor that is constraining the possible growth of Russian industry and bringing efforts to make it rise again to naught.
3.3) Energy hegemony - the largest industrial complex takes lots of energy. If you play cards wisely, the energy satellites around you will form a natural buffer zone (see Monroe Doctrine) being utterly dependent on your massive demand for their welfare, with their other economic sectors destroyed. These shall be the "resource appendages", and China can well forge itself some out of the SCO, without much effort even - many are already naturally falling into this place. China is taking away the European Union's former resource colonies.

[His Divine Shadow]

Seems to me if the western nations want to retain supremacy, or even a leverage, they gotta go into space reallt. Future of cheap resources and energy is all there once a foothold is gained. If they get the upper hand there they can remain influential, remaining and navelgazing on this globe is a dead end.

[Surlethe]

Hey, TheKwas -- I think you're not extrapolating properly. To wit, I've gone ahead and replicated your graph:



Now, if we extrapolate those growth rates for the next two decades ...



Even if China's growth slows, being proportionally larger than the OECD, it will still catch up in a matter of decades. If you require a numerical example, I'd be happy to provide it.

[wolveraptor]

1) Cultural hegemony? Check.
1.1) Language spread? Check - the final phase of English expansion was completed in the last decades, when English knowlege became quite ubiqutous in almost in every nation.
1.2) Arts spread? Check - Hollywood completely eclipses national cultures' cinema industries, often classical literature gets likewise swamped away with the tide of Western boulevard novels
1.3) Culture spread? Check, self-explanatory, the consumerist culture has infested almost all societies on Earth to a greater or lesser degree.

Are any of these possible for China in the coming decades? The first seems verging on impossible, particularly due to the importance of English to technology like computers and the internet.

[mr friendly guy]

One thing is, the internet will now have web addresses in non English languages. However I don't necessarily think having language spread out is necessary for a hegemony, especially given things can be translated. I will even offer an example of a hegemony without its language being spread out. The Mongol empire in its day supposedly communicated to their Chinese subjects in Chinese and made an effort to make sure the Chinese failed to learn the Mongol language. I very much doubt Mongol language survived in those other areas eg Russia, middle east where their empire once had dominion.

I will offer another example. The Chinese themselves had developed a written language earlier than some of their Asiatic rivals eg mongols, Jurchen/ Manchus etc. At that time these cultures had to rely on Chinese for written communication. Didn't stop China being attacked by these other powers when China had something they wanted. I submit in this case having a more dominant culture isn't as valuable as having the economic and military means to defend oneselves, thus the cultural aspect of hegemony is less important.

That being said, Chinese arts seems to have gotten more attention in the West than when I was growing up. For example some Chinese language films are shown in Western countries such as Crouching Tiger Hidden Dragon and the recent Red Cliff. I think this simply occurs as China gets bigger and more influential politically and economically.

Again I don't think one needs a cultural hegemony, one simply needs the economic clout.

[Thanas]

An even better example would be the Greeks and the Romans. The Romans utterly conquered them, but the entire Roman aristocracy spoke Greek (many of them even preferred it to Latin), nearly all of them studied in Greece and there was not a single one who did not make sure he owned pieces of greecian art. Greek always was the predominant language in the east and in time became the only language of the empire, displacing latin.

[TheKwas]

Hey, TheKwas -- I think you're not extrapolating properly. To wit, I've gone ahead and replicated your graph:

Now, if we extrapolate those growth rates for the next two decades ...

I don't I explained my purpose for posting my original graph clearly. The graph was meant to illustrate the fact that China can have the crazy growth rates it currently does because it's starting from such a small original stock, and those growth rates can't/won't continue into the future once China's economy starts to reach a larger size and starts hitting it's resource and marginal productivity limits. Growth in absolute terms means something as well as growth rates. So extrapolating those growth rates would be committing the exact error I wanted to warn against.

Furthermore, I think it's that sort of rough/simplistic extrapolation that leads the author of the original article, and many other people, to come to conclusions that are a bit wild concerning China. It's the same sort of thinking that led people to think Japan would jump ahead of both America and the Soviet Union while it was experiencing it's extremely fast growth in the latter half of the 20th century, when it instead converged to relatively normal growth rates.

I'm not sure if anyone would find my graphs interesting, but this point concerning growth rates is the basic insight of the Solow Growth model.

Look around. Having the biggest economy (for a while, so that it's influence has time to spread) is already enough to rule in a certain sense. Let's look at America, the largest economy.

Having the biggest economy among midgets is a fantastic way to establish hegemony. However, having the biggest economy among a group of giants is a more complicated situation. America, for example, was the biggest economy throughout most of the 20th century, but I wouldn't say that they established anything resembling a global hegemony until the 90s. Not because America grew much bigger then, but because their rivials became much smaller. The Soviet Union, although smaller and weaker, had enough geopolitical influence in Eastern Europe and Asia that they could legitimately stand up against a variety of American interests in those regions.

When China does become the biggest economy, they'll still be against a number (atleast 2, if the EU continues to grow and intergrate politically) very strong rivials who will make global dominance an even longer term goal.

China might very well establish a global hegemony, but I don't see it occuring within the next 30 years.

[K. A. Pital]

It's the same sort of thinking that led people to think Japan would jump ahead of both America and the Soviet Union while it was experiencing it's extremely fast growth in the latter half of the 20th century

Japan overtook the USSR by GDP per capita, and quite frankly by life level it overtook the USA too. You were looking at per capita indicators. That example does not help your cause.

Moreover, judging by the above graph, Japan also overtook by GDP p/capita the nations of Western Europe, Northern Europe and Southern Europe; only slightly failing to overtake "European Offshoots" (USA+Australia, etc),

Yet, like I said, even as Japan failed to overtake them, Japan still enjoyed a far higher life level than they do. In fact, Japan's HDI has been consistently higher than the OECD average.

The fact that it's economy by bulk size did not overtake the USA is a matter of them having too few population.

If Japan had 300 million versus 128 they have, their economy would be equal to that of the USA. If Japan had 1,4 billion like China, it's economy would be 4 times that of the USA.

When China does become the biggest economy, they'll still be against a number (atleast 2, if the EU continues to grow and intergrate politically) very strong rivials who will make global dominance an even longer term goal.

Oh, that I don't dispute. It would certainly take a little longer than just reaching the size of the largest economy; like you said, the US was the largest economy for the greater part of XX century, but became a complete hegemon only at the end of it with the collapse of it's last large geopolitical rival.

[J]

A few monkey wrenches in the works.

http://www.scribd.com/doc/26781802/Chin ... atsenelson

Of particular interest are slides 7, 8, 14 and 15.

[K. A. Pital]

Slide 7 is a misleading partial analysis.

China's electricity consumption grew 5.96% in 2009 to 3.643 trillion kilowatt-hours (kWh), according to a statement released Wednesday by the National Energy Administration (NEA), state media reported. Consumption in the primary industry sector grew 7.86% to 94.7 billion kWh, while consumption in secondary industries grew 4.15% to 2.7 trillion kWh. Tertiary sector demand rose 12.11% to 392.1 billion kWh. Residential power grew 11.87% to 457.1 billion kWh. Investment in coal-fired projects fell 11%, while investment in nuclear projects rose 75% and in wind power grew 44%. China's total installed power generation capacity grew 10% in 2009 to a total 874.07 million kilowatts.

Of course if you take the immediate moment of collapse (2008) and do not analyze the entire year 2009, that's what you'll get.

China's electricity consumption in January 2010 grew 40.14 percent year-on-year to 353.1 billion kilowatt-hours (kWhs), the National Energy Administration (NEA) said in a statement on its website Friday.

Consumption in the primary industry sector topped 7 billion kWhs last month, up 23.5 percent year-on-year.

Secondary industry consumption rose 45.99 percent to 262.4 billion kWhs and the tertiary sector demand was up 25.61 percent to 39.8 billion kWhs.

Residential power use rose 25.9 percent to 44 billion kWhs, according to the statement.

Slide 8 is just the same shit, except done in sensationalist cry-fashion.

It is all the more damning because elsewhere in the presentation he uses figures for the entire year 2009, which means the report is recent enough not to make such omissions.

[adam_grif]

Didn't everybody think that Japan was going to rule the world in the 1980's? Not saying "they were wrong then, therefore they're wrong now", but the future rarely turns out exactly as predicted.

[K. A. Pital]

Didn't everybody think that Japan was going to rule the world in the 1980's? Not saying "they were wrong then, therefore they're wrong now", but the future rarely turns out exactly as predicted.

Japan became the 2nd largest economy and, compared to it's population which is a mere 100+ something million, this is a fucking awesome result. If China gets the same per capita development levels, multipled by population taht will make it #1 economy eclipsing both US and EU.

[adam_grif]

Yes, but Japan is hardly the omnipresent force that many people feared it would become. I'm reminded of quite a bit of 80's cyberpunk.

My approach, as always, is wait and see.

[K. A. Pital]

Yes, but Japan is hardly the omnipresent force that many people feared it would become

This is plain stupid - even achieving the highest per capita development levels for a small population nation will not give it enough bulk size to strongarm the world to whatever it wants.

That aside, Japan is pretty omnipresent, economy-wise, in it's traditional export sectors.

For being a "force", Japan lacks enough of a military and it does not really pursue to have more of a military than one capable of dealing with regional threats - never did. So why exactly was this bullshit peddled? I don't know.

Unlike the realistic prospects of what happens if 1,3 billion man economy reaches a development level at least similar to the advanced Second World, not to mention First World, the prospects of a ten times smaller population can't be much better than Japan.

[adam_grif]

even achieving the highest per capita development levels for a small population nation will not give it enough bulk size to strongarm the world to whatever it wants.

I'm aware that the idea that Japan would take over the world was quite silly, but we say that in retrospect. It wasn't until the Japanese economy suddenly started slowing down in the late 1980's that the pop culture image of Japan taking over the world economically started to subside (regardless of how justified it may or may not have been).

I have no clue about economics, the extent of my understanding is that Supply and Demand are somehow related to each other. Because of this, information I get from this thread doesn't really mean anything to me, and thus, my approach is not to make any predictions at all.

[PainRack]

This is plain stupid - even achieving the highest per capita development levels for a small population nation will not give it enough bulk size to strongarm the world to whatever it wants.

The Japanese Way was hailed as a marvel.... before the nineties when the American Way became the new way.

God knows why

[Blayne]

The various chapters on Japan in Rise and Fall by Paul Kennedy do a good job on describing the process, but Japan is large enough that its armed forces if it spent approx. the same per capita as others.....

[J]

China's electricity consumption grew 5.96% in 2009 to 3.643 trillion kilowatt-hours (kWh), according to a statement released Wednesday by the National Energy Administration (NEA), state media reported. Consumption in the primary industry sector grew 7.86% to 94.7 billion kWh, while consumption in secondary industries grew 4.15% to 2.7 trillion kWh. Tertiary sector demand rose 12.11% to 392.1 billion kWh. Residential power grew 11.87% to 457.1 billion kWh. Investment in coal-fired projects fell 11%, while investment in nuclear projects rose 75% and in wind power grew 44%. China's total installed power generation capacity grew 10% in 2009 to a total 874.07 million kilowatts.

There's something fishy with the numbers. Most of China's electricity comes from coal power, according to the China Coal Industry Association the amount of coal burned by Chinese power plants fell by 8.9% in the first half of 2009, and was forecast to grow slowly for the rest of the year. I should have access to more recent data at my work but unless there was a strong surge in the second half of 2009 the coal consumption figures do not square with the electricity generation numbers. It does match with the graph on Slide 7 in the article from my last post. Though China has brought non-coal generating stations online, the percentage of electricity generated by coal has remained steady at a bit under 80% so power generation is still highly correlated with coal consumption.

[Surlethe]

This is plain stupid - even achieving the highest per capita development levels for a small population nation will not give it enough bulk size to strongarm the world to whatever it wants.

Absolutely right.

What makes a country an economic superpower, anyway? It needs to be (relative to its rivals) extremely productive in total magnitude, not per capita, so the question really becomes, what makes an economy extremely productive? The answer is, to first order, very simple. To produce things, you need lots of capital and lots of people. (You also need good "technology" - i.e., efficient use of capital, such as industrialization, efficient geographic capital distribution, efficient production, good infrastructure, institutional proclivity, etc. - but those are details in this sort of first order model.) So when a country with a huge population starts to industrialize and the capital level in the country shoots up, you can guess that its total productivity will rise dramatically, and it will not be too long before it overtakes smaller countries that might perhaps have a much higher per capita GDP.

To test this hypothesis, examine history and the world superpowers at each period of time. To my level of knowledge, this model generally holds true -- I do not know of any world superpowers that did not have a large population, a (relatively) large capital stock, and relatively high "technology".

[Illuminatus Primus]

Foreign Policy linky

Robert Fogel is director of the Center for Population Economics at the University of Chicago Booth School of Business and winner of the 1993 Nobel Memorial Prize in Economics.

Yeah, well that's what happens when you go to the Ministry of Economic Propoganda the University of Chicago business/economics departments, and get the Swedish Central Bank Prize in Economic Sciences the "Nobel Prize" in Economics. Nassim Nicholas Taleb is right, they need to cancel that shit as a hazard to public safety.

[Bilbo]

Not an expert but I see lots of assumptions here.

First off how do you grow like that, with that many more of China's population sharing in the prosperity while retaining the ironclad control over society that the government has?

Second as time passes India, parts of SE Asia, even possibly parts of Africa will get their act together and become the new importer of cheap crap to the Western world that so far is dominated by China. Will China adjust to this and become like the western nations or will it see the bottom fall out as its customers go to the new cheap place for goods.

Finally I cannot imagine how any of this is possible without China's population getting in the way. Its just too massive.

[J]

Yeah, well that's what happens when you go to the Ministry of Economic Propoganda the University of Chicago business/economics departments, and get the Swedish Central Bank Prize in Economic Sciences the "Nobel Prize" in Economics. Nassim Nicholas Taleb is right, they need to cancel that shit as a hazard to public safety.

Not all of the Chicago School economics wonks are peckerheads, there is at least one decent person in there. Luigi Zingales has participated in memorable debate on TVO's The Agenda[/url] where he slammed the US government, Fed, Treasury & banks over the asinine bailouts of fall 2008. One of his articles appears here.

I don't know about Robert Fogel though, I don't know of him and haven't bothered to look up his background.

[K. A. Pital]

First off how do you grow like that, with that many more of China's population sharing in the prosperity while retaining the ironclad control over society that the government has?

What is the problem? China's control (like the controls of many other relatively industrialized authoritarian nations) is far from "ironclad", and sharing the prosperity requires well-thought mechanisms for re-distribution.

Second as time passes India, parts of SE Asia, even possibly parts of Africa will get their act together and become the new importer of cheap crap to the Western world that so far is dominated by China.

Such a view is beneficial for China - it means China can maintain it's growth rates by shifting out industrial production to these nations, where goods will be cheap, and thereby try to replicate what the First World did to artificially increase it's well-being by outsourcing production to the Third and Second World in 1980s-1990s.

Will China adjust to this and become like the western nations or will it see the bottom fall out as its customers go to the new cheap place for goods.

China is already at a high stage of industrialization. India and Africa most certainly are quite far behind.

Finally I cannot imagine how any of this is possible without China's population getting in the way. Its just too massive.

Population is a resource just as much as a liability - with sufficiently high industrialization rates, you can involve more and more of your populace in the industry and thereby expand it; China's population so far has been a resource for China much more than a problem. You don't wonder how the European Union can "do it" with a 500 million population, don't you?

Like many others said in this thread, for China to reach superiority it does not need to achieve a First World GDP per capita level; even high second world or average second world will already make China the largest bulk economy.