The rise of the Asian Century – Will China emerge as the New America?

Scholar Parag Khanna asserts that the “Asian century” has begun and according to him, the advancement of the region is rather structural than cynical. The speedy development of the Asian economy has not just contributed to worldwide advancement but has also placed them in competition with global giant countries.

Will China emerge as the New America?

A considerable number of Asian countries in recent decades have hurled themselves into the classes of middle-income and also advanced economies. This reveals the region’s steady and continuous industrialization and urbanization, its increasing demand and productivity growth, and its vibrant corporate sector, an obvious shift in the world’s center of gravity.

East Asia houses some of the world’s most prosperous economies while Southeast Asia possesses some of the world’s fastest-growing emerging economies. McKinsey Global Institute (MGI) during research studied 71 developing economies of which 18 were selected for always posting strong economic GDP growth. The entire seven long-term outperformers and five from the 11 recent outperformers are located in Asia.

Over fifty percent of Asian trade presently is intra-regional revealing the firm’s development of autonomous regional supply chain to accommodate Asian markets and the intensification of trade relations within the Asian countries. The Regional Comprehensive Economic Partnership (RCEP) is a recent trade agreement that comprises 16 countries throughout the region including China, Japan, India, and Vietnam.

Fortune Global 500 ranking in 2018 revealed that 210 of the world’s biggest companies by revenue were Asian. Within the past two decades, Asia’s share of the top-performing firms globally has risen from 19 percent to 30 percent.

Asian firms are taking over the global market not just the industrial and automotive sectors bus also areas such as technology, finance, and logistics. Innovation hubs are gaining a foothold with more than one-third (119) of the world’s 331 “unicorns” (start-ups valued at more than $1 billion) from Asia.

China is said to have 91 of these companies, followed by India with 13, South Korea with six, and Indonesia with four. The United States has 161 unicorns, while the United Kingdom has 16, followed by Germany with nine. It is said that India’s top six conglomerates alone employ more than two million people.

China, Japan, South Korea, and Singapore are included among the most digitally advanced nations of the world. China joined these ranks at an alarming pace. A decade ago, China contributed below 1 percent to the value of worldwide transactions in e-commerce, presently its value is over 40 percent.

China’s top three internet giants, Baidu, Alibaba, and Tencent— are setting up a robust digital environment currently rising beyond them. The regions have consistently fostered economic reforms positioning them at the forefront of power.

China is advancing towards becoming the world’s largest economy and formidable military power. The country attempts to transform the prevailing world order not only in Asia but globally. China’s gross domestic product (GDP) growth throughout the years has virtually doubled annually.

The commencement of economic reforms in 1978 largely expanded China’s yearly gross domestic product (GDP) by an average of 10 percent. The World Bank revealed that the country’s unprecedented economic growth has lifted 800 million Chinese people out of poverty. This is said to be the largest number of people at the fastest rate in history.

China’s leaders in a period of four decades were able to broaden the country’s economic scope in international affairs, making China, not just the world’s largest trading nation, but also the second-biggest defense spender behind the United State.

China’s low-cost labor force participation in global markets unlocked the door to international trade making the country the world’s largest trading nation by 2013 as reported by the World Bank. China’s GDP in 2016 was a high $11.2 trillion while the U.S figure stood at $18.6 trillion. Its trade in 1960 was just about 12 percent share of GDP which in 2005 had leaped to 65 percent.

There has also been a rise in China’s military spending. According to CIA World Factbook, China’s military budget in 2016 was estimated at $200 billion, almost one-third of the U.S. annual defense budget that year. The U.S. National Security Strategy of December 2017 and the National Defense Strategy of January 2018 notably considered Russia and China’s potential threats.

America’s Department of Defense (DoD), in 2016 disclosed that China spent US$180 billion on the People’s Liberation Army (PLA). Based on China’s official figures, its defense outlays in 2016 was US$151 billion—the second largest in the world (after America’s giant US$573 billion defense budget) but still the largest in Asia. SIPRI (Stockholm International Peace Research Institute) also estimates that China’s defense budget in 2015 was greater than the combined defense outlay of all 23 countries in Northeast, Southeast, and South Asia.

China in 2010 outperformed Japan to become the world’s second-largest economy. It has been predicted that sometime before 2030, China will surpass the United States and emerge as the world’s No 1. economy. Undoubtedly, if purchasing power was employed to measure the size of its economy (like the International Monetary Fund (IMF), China in 2014 would have obtained the position.

China’s obvious intention to reshape the international world order starting with Asia is ample evidence of the country’s foremost desire to be the region’s paramount power. It is however doubtful that China will down rightly challenge the existing highest power which is the United States to accomplish its goal.

China’s advancement since 1978 is clearly splendid, but the prominent question is can the country sustain its spectacular economic growth? China’s economy is still confronting several drastic challenges, some of which are rising debt levels, industrial overcapacity, capital flight, and what economists refer to as the middle-income trap (where a country’s income attains a particular level but then ceases to rise).

Handling these challenges will demand significant reforms of which may result in huge loss of jobs, industrial turmoils, and political fluctuations.

China from 2007 to 2017 nearly tripled its production of labor-intensive goods with a rise from $3.1 trillion to $8.8 trillion. The share of gross output China exports also decreased from 15.5 percent to 8.3 percent revealing the consumption of more goods locally as opposed to exportation.

China’s growth is engineered by labor-intensive manufacturing for export which in history, has been the major pathway to economic development for poor countries. There are however competing countries in the area of low-cost labor coupled with the increase in wages around the region especially with the mass adoption of automation technologies.

A few other significant challenges include demographic problems. Economists have stated that with the country’s rapidly aging population, ‘China may grow old before it grows rich. Environmental problems such as pollution, deforestation, severe water shortages, and a few more are still prevalent. Ethnic unrests in areas such as Tibet and Xinjiang are yet to be resolved.

Despite China’s position as one of the world’s biggest defense spender, the country spends more on internal security than external defense. This shows there is more threat within than without.

China’s intention to become the highest of Asia’s power pyramid is also contested by States in the region such as Japan. The unsettled legacies of Japan’s aggression in China during the 1930s and Second World War persist, affecting associations. Tokyo and Beijing forcefully strive for prominence in Southeast Asia.

It is no doubt that China’s speedy economic growth has profited most countries across the region, and will remain so in the future considering the outlook of things, but China’s military dexterity and unclear motives have led to mixed reactions in regional capitals.

Although there have been arguments of the U.S. declining power in comparison to other countries, America continues to maintain its position as the global superpower. The United States with no exception is also experiencing considerable challenges.

The country is still in agitation from lengthened political disruption amid its elites coupled with domestic economic challenges, in particular unemployment, wealth inequality, and declining middle-class incomes. Nevertheless, U.S remains the world’s largest economy, with the most powerful armed forces, and is the only country with the capacity to project formidable power across the globe.

U.S. government controls international political influence like no other country. Besides, this is not the first time that prediction is being made of America losing its global power. There have been forecasts since World War Two, yet the nation continues to reign supreme.

However, the weakness of the U.S. would be to undermine China as history reveals the rise and fall of global giant countries. It would be considered sheer ignorance to say it cannot be repeated. The U.S emerged its global position by overthrowing the U.K. It might take decades for China to gain ties with the U.S. before advancing to overtake the great nation, nevertheless, it is possible. The staggering question is not how but when?