Debate: Topic and Outline
II. Movement towards Anti-Globalization in the US
3.2 Introduction of the opposing views to seeing China as the nextworld leader, and their credibility
With the rise of China (which is, with the US decline especially in itseconomy), more and more people say that “the dominance of the US in the world may not continue.” This opinion is based on the optimistic prediction of China’s economic growth. According to this prediction, ” by 2020, or by the 2020s at the latest, China will surpass the United States and become the world’s economic superpower, and these two countries will be leading the world. This is so called the 2G theory.
Let’s examine this opinion.
This opinion assumes that “China will have sustained economic growth in the future.” (So called ‘linear model’) However, is it reasonable? Is it realistic?
That is, until a few years ago, China is said to have experienced an conomic growth rate of 10%, in recent years of 7~ 8% and optimistic forecasts are made. Will it sustain its growth till it surpasses the US economy?
Now let’s figure out how we can best predict the future of China.
To put it easily, “Will China become the world’s economic superpower by 2030?” This prediction would have a great impact on the international strategy. Also, in turn, it would have an important influence on the foreign policies of Japan; its allied nation.
Let me introduce the views of Mr. Nozomu Takaoka for your reference.
(1) Problem facing China
The population of China is said to be four times bigger than that of the US. Although China is now economically as big as the United States, from the perspective of international power, it does not have immediate significance. According to the World Bank ? IMF analysis, “If China’s economic power is predicted with purchasing power parity, China’s GDP will overtake the US slightly in 2014″. If China continues to maintain its surplus in the trade balance and capital accounts and can prepare a huge foreign exchange reserves, the influence on the international financial market will increase. However, the US, as the key currency country, can monitor the international settlement of dollars and stop the trade if necessary.
China is conscious of this power of the United States, and China- leading Infrastructure Investment Bank (AIIB), which was established without Japan, put forth the internationalization of “Chinese Yuan” as one of its main purposes. In order to promote this internationalization, it is necessary to liberalize capital transactions and there are many
problems to be solved.
(2) Problem 2
It is doubtful whether the economic indicators announced by the Chinese government accurately reflect the actual condition of the economy.
In the past, (2007) secretary Lee Kook-shee (current prime minister), who was at the top of Liaoning Province at the time, stated himself that the indicator called “Li Keqiang ? index,” which included 3 indicators; railway cargo / transport volume, bank loan balance, and electricity consumption, was closer to the Ministry’s economic reality than the government-issued GDP. As this case suggests, the economic management of China needs to be more transparent.
(3) Problem 3: Middle-income trap problem (this problem is more important, more fundamental than the others)
In the future, two large downward pressures will be exerted on the growth rate, and the slowdown will be inevitable.
Here, one factor of the downward pressure is “the trap of middle income people.” This is a situation that happens to many developing countries undergoing economic growth, in which, after reaching a moderate level of per capita GDP, the growth rate slows down and they cannot join other high income nations.
(4) The second downward pressure on the Chinese economy
An important factor that determines the potential growth rate of the national economy in the medium and long term is a negative legacy in demographic dynamics; in other words, it is the aftereffect of declining birthrate by its one-child policy. This policy was abolished in 2015, but of course, the productive age population has declined since then. Therefore, the effect of population increase cannot be expected in the near future. We have to wait for at least 15 to 20 years before the number of the working population can increase. And
until then, it seems impossible to stop its population decline, although the Chinese government is currently insisting that it is possible now with the abolishment of its one-child policy. And until then, it is none other than a downward pressure (effect) on the economy.
In the past, Japan and Korea also experienced a rapid growth of 10%, followed by a stable growth of about 4%, and since then, the growth rate has been decreasing. The major reason for this is the decline of the working population which used to be increasing in the past.
If China can overcome these problems and maintain a growth rate of 6 to 7%, it will be possible to overtake the United States. This will require growth factors not found in Japan or Korea.
Now let’s look at the United States. Due to the inflow of immigrants and the high fertility rate of Hispanics, the production-age population will continue to increase. (This explains about the 2% of the current growth rate improvement.)
For the reasons above, we cannot deny the theory Professor Nye proposes: “the United States’ century will continue.”
For the reasons mentioned above, welcoming immigrants is important for the future of the United States. President Trump’s policy with the focus on national security and countermeasures against terrorism may be appealing and accepted in the short term, but in the medium and long term, it is likely that economic problems will occur.
Written by Mr.Chiba and translated by Mr. Sasaki