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As Number One, China to Face Hour of Choice

China is on track to become the world’s largest economy, and the Chinese welcome the milestone, anticipating greater influence over world affairs. But economic size does not automatically translate into greater or less power and influence, warns Richard Bush, China expert with the Brookings Institution. He compares today’s rankings of economies – the US, China and Japan – with those existing in 1913. Just prior to World War I, the US, China and Germany were the top-ranked economies. At that point in history, the US did not wield broad international influence or possess the strongest military. The impending conflict was hardly inevitable. When economic order shifts, rising countries are called upon to make choices between aggression or accommodation, displays of leadership or status quo, narrow commercial interests or investment in research, flashy infrastructure or sustainable prosperity. “In short,” Bush concludes, “the choices that major powers make are more important than their economic rank.” – YaleGlobal

As Number One, China to Face Hour of Choice

Big is not necessarily better – China must decide what to do with its economic might
Richard Bush
YaleGlobal, 30 June 2011
China's choice: With economic power comes the responsibility to choose the right course

WASHINGTON:  Recently the International Monetary Fund confirmed what the average Chinese has long anticipated: China will soon have the world’s largest economy, surpassing the United States. There may be quibbles about measuring sticks and low per capita GDP, so timing is imprecise. But the trend is clear. In terms of gross domestic product, China will become number one in this decade or the next and the United States will become number two. Yet rankings do not automatically confer power and influence. More important is how a major country chooses to use its power, for good or ill.

That China will have the world’s largest economy is a remarkable achievement. In 1949, when the Chinese Communist Party came to power, China was a very poor country, the result of more than a century of decline. Thirty years later, it was still a poor country, wracked by continual political turmoil. But China’s leaders then abandoned central planning and autarky in favor of export-led growth fueled by external investment and local initiative. They stuck to that strategy while adapting skillfully to changing circumstances. They improved the living standards of hundreds of millions and transformed the face of the country

China’s economy is poised to become
the largest, an important milestone psychologically and economically.

This milestone is as important psychologically as it is economically. Chinese take pride in their civilization.They believe that their country, in its weakened state, was victimized for more than a century by the countries of the West plus Japan. To restore China to its past glory and position as one of the world’s great powers would right those wrongs. That this growing power is coming at the expense of the United States, with which China at best has had a difficult relationship for much of the last 60 years, is particularly sweet.

Some Chinese believe that passing this milestone will have automatic consequences for international politics, giving China more international influence. In their view, other countries should then confer more deference on China and accommodate to it on issues that China regards as important, rather than China continuing to accommodate them. At some point, Beijing will likely insist that the head of the International Monetary Fund or World Bank be a Chinese

The GDP in 1913. US$ Billion at 1990 prices.
Enlarge Image

Discussions of China’s having the largest GDP come with a subtext – that rapid rise of a new power can destabilize the international system and even lead to conflict. Economic power can be translated into military power and political influence.

But as history shows, the path may not have a single destination. According to the conventional narrative, Germany challenged Great Britain’s dominant position in the international system and World War I was the result. Yet this narrative is at odds with the economic rankings at that time, according to estimates of the late Angus Maddison, a prominent economic historian.

In 1913, the year before the outbreak of World War I, the United States had the world’s largest GDP, with just more than $500 billion in 1990 prices. Next, four countries were bunched together, each with $225 to $240 billion. Germany and Great Britain were in this group but so were Russia and, surprisingly, China. France was at $144 billion and Japan only had a GDP of $71 billion.

China’s second-tier economy is not surprising. In 1913, as today, it had the world’s largest population. More people can produce more stuff. But China then was also politically weak: divided internally and vulnerable to external imperialism.

While, of course, the world today is very different from what it was a century ago, the 1913 configuration is instructive.

Some Chinese
believe the milestone has automatic consequences,
giving China more international influence.

First of all, the 1913 rankings demonstrate that a large economy itself does not automatically translate into global political influence. In 1913 the United States may have had the world’s largest economy, but was virtually irrelevant in Europe’s gathering storm. Great Britain, on the other hand, “punched above its weight” to preserve stability in the international system.

Second, a large economy does not necessarily result in a robust military. The United States had a comparatively small military establishment in 1913, despite having the largest GDP. Relative to their economic size, Germany and Japan had large armies and navies.

Third, the emergence of a new economic number one doesn’t mean that international conflict is inevitable. By 1913, the United States was the dominant power in the Western Hemisphere, but Great Britain accepted this decline in its global influence. Japan, on the other hand, had fought and won wars against two countries three times its economic size: China in 1894-95 and Russia in 1904-05. Despite their commercial and colonial interests, however, Britain and the United States chose to accommodate Japan rather than challenge it.

In short, the choices that major powers
make are more important than their economic rank.

Fourth, when conflict occurs, it is not necessarily because a rising power is bent on aggression. Germany’s decision to go to war in the summer of 1914 was driven by rigid alliance commitments and anxiety, probably misplaced, that Russia was growing stronger. Berlin opted to strike preemptively to preserve its security. Russia was caught in the same dilemma.

In short, the choices that major powers make are more important than their economic rank. As number one, China may assume that it has the right to extend its influence at the expense of others. Its expansion of its strategic perimeter in the East and South China seas is a case in point. Or it may continue to focus on its economy and create a prosperous life for most of its people, letting the United States continue to bear the burden of international leadership. If so, it will remain a country that has global impact, as Kenneth Lieberthal, director of the John L. Thornton China Center, puts it, but is not a global player. Or it may opt to work with other major powers to meet the critical challenges to the international system – that is the Obama administration’s hope. Or it can read the worst into what others do, particularly the United States, and act on its fears. Which choice China makes will have profound consequences for East Asia and the world.

The United States has choices too. It can regard becoming number two as another sign that of permanent decline and retreat from international leadership. It can choose to rebuild the pillars of national power that have been neglected – government finance, education, science and technology, and so on. It can conclude – without justification – that China is sure to become America’s adversary and base policy on that fear, producing a dangerous vicious circle. Or it can forgo the temptation to read the worst into China’s revival and instead seek to influence China’s trajectory in the direction of cooperation rather than conflict.

And for each country, not making conscious choices about future direction is also a choice.

China is going to be number one, but that’s no reason for Americans to head for the hills.

Richard Bush is director of the Center for Northeast Asian Policy Studies and a senior fellow of foreign policy with the Brookings Institution. His two-decade public service career spans Congress, the intelligence community and the US State Department. 

Rights:Copyright © 2011 Yale Center for the Study of Globalization

Comments on this Article

24 July 2011
Watch out for the COMING COLLAPSE of the Chinese economy.
-Alvaro Gomes , Lisbon Portugal
11 July 2011
China has inevitably become one of the big powers in the world. However the sheer economic size cant say anything about people's happiness at home. Netizens being deprived of access to supposedly negative news of the country; national resources being taken by the entrenched interests groups, roaring house prices keep ordinary salary men toiling for life for a place to live in....LIke people talking a lot about corporate responsibility, as a member of UN and a series of other international institutions, China is expected to assume more responsibilities and represent a more righteous force. If the capitalist countries are destined to be profit-driven, can the communist heavy weight be more of a humanitarian force? Lets keep our finger crossed.
-linh , China
8 July 2011
a good review of chinese economy.
-Hiller , china
7 July 2011
The author did not mention what the GDP ranking of China during the 1960-70 period when the Cultural Revolution was taking place. I am quite sure China was no where near anywhere on the chart. The Chinese were able to stick to the principle and had worked hard to bring over 400 million people(more than the total US population) out of poverty in less than 30 years is a miracle in human history!
We should be happy for that success as a planet! No need to fear but embrace the progress, China's up does not have to be US down! Not all countries have to be adversaries, we need to promote more understanding, more learning, more tolerance, try to live together on this already crowded earth!
-Mike , Washington DC
6 July 2011
Excellent post. China should share its economic power with other developing countries to foster their growth.
Dr.A.Jagadeesh Nellore(AP),India
E-mail: anumakonda.jagadeesh@gmail.com
-Dr.Anumakonda , Nellore(AP),India
30 June 2011
If China decides use their economic might the same way the United States of America (back on the good times) the world may well be DOOMED!
But I doubt China will cling to this medieval concept that one nation can own the world (the belief that single handedly brought America DOWN) and freely dispose of it's resources as America has believed so far regardless to whom it belongs to!
It looks as Bim Ladem will be posthumously sucessfull!
-Paulo Borges , Brasil