Why China won't be the next great superpower

China is and will be a power - but the next great superpower it is not nor ever likely to be

China's state-led capitalism can only take the country so far
Ghaffar Hussain
On 3 December 2012 10:01

All talk amongst global trend watchers these days is about the rise of China; how China is the next big thing, the new superpower, and how China's rise will change the world we live in. A closer look at trends within China, however, point to a different story.

In a recent interview with The Times, a young well-to-do Chinese couple discussed what life was like for the nouveau riche in China today. They spoke about their trendy new apartment, their designer clothes, and the first class private education their daughter was receiving. When asked what they wished for their daughter most of all, without any hesitation, they replied “Canadian citizenship”.

There are good reasons why most of China's new middle class are dreaming of a new life in the west.

China's incredible economic growth in recent years was always fragile, never sustainable for long. Not only was it state-led and state-controlled, it was fuelled largely by the availability of cheap labour, a complete disregard for the environment, and state investment in grand infrastructure projects.

According to a RAND report, the proportion of the Chinese population of working age peaked in 2011 and has started to decline in 2012. This means the share of the elderly in the population is going to steadily increase in the coming years, which will increase labour costs, reduce savings, and inflate healthcare and pension costs.

As mentioned, China's economic growth has been sustained, in large part, by ignoring environmental concerns. Currently, China is the world's largest emitter of CO2 gases; it emitted 8.2 billion tonnes of CO2 in 2010, which is up by an incredible 240 percent since 1992. Water and air pollution in the country causes 750,000 premature deaths a year. Large infrastructure projects have also forcibly evicted and displaced millions whilst threatening the health of livelihoods of many millions more.

Needless to say, such policies are simply not sustainable. Local and international pressure is starting to bear fruit and many grand infrastructure projects being cancelled in the process.

Beyond economics, the lack of meaningful political reform is also helping to stunt progress. The state is still characterised by endemic corruption, weak rule of law, and a lack of political accountability. Despite attempts by the state suppress dissent, newly affluent citizens are also becoming increasingly assertive and demanding more rights and freedoms.

The challenge for China was always whether it would be able to instigate economic reform without political reform. State-led capitalism that relies on cheap manufacturing and little innovation can only take a country so far. A lack of deviance in the system means that intellectual creativity and innovation are often shunned in favour of conformity and imitation. In short, economic reform cannot continue without its political equivalent.

China has created immense wealth without bringing happiness, security, and, over all, well-being to its citizens. It is for these reasons that China’s wealthy use their fortunes to find a route out of the country.

China does have many things going for it. It is a huge country full of resources and people that are ready to work hard. The world's most populous country should always be an economic power house of sorts; hence the recent economic growth should be interpreted as more of a correction rather than a unique phenomenon.

On-going environmental concerns, an ageing population, competition from India, Vietnam, and Brazil, internal dissent and unhappiness, and a culture that doesn't encourage risk and creativity will combine to slow China's economic growth and leave the elites frustrated.

In theory, China can change course and embrace democratisation as well as take steps to ensure future economic growth is more market-led. But China's history informs us that these changes are highly unlikely. China is and will be a power - but the next great superpower it is not nor ever likely to be.

Ghaffar Hussain is a counter terrorism expert and Contributing Editor to The Commentator. Follow him on Twitter @GhaffarH

blog comments powered by Disqus