Will China be next SUPERPOWER?

The role and place of China in international system

ARTURAS JURGELEVICIUS

BILGESAM

ISTANBUL 2010

CONTENT

• China’s profile

• International system and China

• China as (super)power

China’s profile

History’s profile

• 1949 The People's Republic of China (PRC) • Great Leap plan resulting 30 mln deaths• 1966 “Cultural revolution ” was launched• 1976 Mao death resulted some liberal policies

carried out by Deng Xiaoping • President Jiang Zemin and Premier Zhu Rongji

were appointed for their in 1990s.• Current President Hu Jintao

Political profile• China is considered to be on of the last five

communist states (Laos, Vietnam, N. Korea, Cuba)

• Communist, socialist and authoritarian

• Country is ruled by single political party Communist party of China

• Central governance is highly centralized, although there is elections at small towns level

China’s wars because of territorial disputes

• The Sino-Indian War in 1962

• The Sino-Soviet conflict in 1969• The Sino-Vietnamese War in 1979

Economic policy

• Moa’s economic policies ended with catastrophe

• New program “Socialism with Chinese characteristics” was launched by Deng Xiaoping in 1978

• Goal of the project – market economy

Reform steps

• Initial reforms, 1978-84- decollectivization- foreign investments- special economic zones

• Gradual industrial reforms, 1984-93- privatization of local businesses - inflation

• Rapid privatization, 1993-05- large scale privatization- reduced tariffs, trade barriers other regulations- reduced inflation, joining WTO

• By 2005, the state sector made up only 30% of GDP

• Sectors of strategically importance remained to be state owned

These reforms have resulted

• China became 3rd economy in the world• GDP growth from 1978 to 2005 at 9.5% a year• Real wages rose sixfold between 1978 and

2005• China runs a trade surplus with the world’s

three major economic centers—the United States, the European Union, and Japan.

• The second military expenditure in the world

• 15% of growth of important and export at average since 1978

• More than 150 million people pulled out of poverty during last decades

• Fifth FDI receiver in the world

• First foreign exchange holder in the world

• …………………………………………………….

INTERNATIONAL ORGANIZATIONS AND CHINA

• United Nations• World Bank• International Monetory Fund• World Trade Organization• Shanghai Co-operation Organization• G-20• BRIC*

United Nations

• China became a member of UN in 1972 as well as a member of Security Council of UN

• China has participated in 10 UN peace-keeping operations

• So far China has sent 650 military observers, advisors or staff officers and 800 (in two batches) engineering officers and men to the UN peacekeeping operations.

• 53 Chinese military observers are still serving in 6 regions, and 2 staff officers working in the UN peacekeeping departments

• China has used 5 times its veto in security council (USSR/Russia- 120, USA-77, UK-32, France-18)

World Bank

• World Bank Increases Voting Rights for China (and other developing countries)

• China’s voting share in the WB increased from 2.77 percent to 4.42 percent

• The transfer of voting shares now puts China third on the list, below only the United States (16.4 percent) and Japan (6.84 percent).

• The shift in voting rights reflects the changing distribution of economic power in the world

International Monetory Fund

• China joined the IMF on December 27, 1945, as one of its 35 original members

• In February 2001, the Board of Governors of the IMF approved an increase in China's quota from SDR 4,687.2 million to SDR 6,369.2 million. As a result of the increase, China's voting power in the IMF has increased from 2.19 to 2.95 percent of total.

• Since 1981, China has twice used IMF credits -- in 1981 and in 1986. The credits under these arrangements have been fully repaid

• China gave $50 billion to the IMF this year.

World Trade Organization

• Negotiations with China for membership in WTO started in 1990

• Preconditions for membership: - the lowering of tariffs for imports

- the permission of foreign firms to sell directly in the Chinese domestic markets

- the opening of the telecommunication and finance sectors to more foreign competition

• China implemented all requirements successfully and became a member in 2001

Impact of China’s entrance into WTO on the world economy

• China runs a huge surplus with major economies (USA, EU, Japan)

• Between 2001-2008 USA lost 2,4 millions jobs in every Congressional district ($270 billion in 2008 )-undervaluated yuan (at least 41%)- depressed workers rights

• U.S. national interests have suffered while U.S. multinationals have enjoyed record profits on their foreign direct investments

Shanghai Co-operation Organization

• The organization was established in 2001 to help ensure security along the border between China and former Soviet republics

• The SCO includes Russia, China, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan

• SCO helped to solve border problems to China with neighbouring countries

• China’s strategic partnership with Russia is based on Beijing’s desire to create a multi-polar world that synergizes with Moscow’s long-standing desire to strengthen influence over Central Asia

• Anyway there might be huge contradiction between them because of competition for energy resources in Central Asia

• Some expert claim that “the SCO is the largest international security organization in existence. The future will reveal whether it can influence the world with one strong voice.”

G-20

• Chinese officials want a new global reserve currency and reforms of international financial institutions to give developing nations more power (London summit, 2009)

• “We expect the summit to achieve concrete progress in promoting world economic recovery, settling the problem of imbalance development, speeding up the reform of international financial institutions and fighting against trade protectionism” (Pittsburg summit 2010)

BRIC

• BRIC is abbreviation of rapidly growing developing countries – Brazil , Russia, India, China.

• This block might cause serious shift of distribution of power in the world

Categories Brazil Russia India ChinaArea 5th 1st 7th 3rdPopulation 5th 9th 2nd 1stPopulation growth rate 107th 221th 90th 156thLabour force 5th 6th 2nd 1stGDP (nominal) 8th 12th 11th 3rdGDP (PPP) 9th 7th 4th 2ndGDP (nominal) per capita 60th 59th 139th 98thGDP (PPP) per capita 75th 51st 128th 99thGDP (real) growth rate 113st 206th 12th 4thHuman Development Index 75th 71st 134th 92ndExports 21st 12th 23rd 1stImports 24th 14th 15th 2ndCurrent account balance 47th 5th 169th 1stReceived FDI 11th 12th 29th 5thForeign exchange reserves 7th 3rd 5th 1stExternal debt 28th 24th 26th 23rdPublic debt 47th 122th 29th 98thElectricity consumption 9th 4th 5th 2ndNumber of mobile phones 5th 4th 2nd 1stNumber of internet users 5th 8th 4th 1stMotor vehicle production 6th 19th 7th 1stMilitary expenditures 12th 5th 10th 2ndActive troops 14th 5th 3rd 1stRail network 10th 2nd 4th 3rdRoad network 4th 8th 3rd 2nd

Definition of super power

• A superpower is a state with a leading position in the international system and the ability to influence events and project power on a worldwide scale

• Superpower is a state powerful enough to influence events throughout the world

• A superpower is a very powerful and influential country, usually one that is rich and has nuclear weapons

Is China growing

SUPERPOWER?• Domestic problems (low qualitative rates,

environmental issues, huge social differencies, big corruption for 2008, China was ranked 72 of 179 countries, Tibet issue )

• “Five principles of peaceful coexistanve”- mutual respect for sovereignty and territorial integrity - mutual non-aggression - non-interference in each other's internal affairs - equality and mutual benefit - peaceful coexistence

Is China growing

SUPERPOWER?• Energy policy (Canada, Australia and Iran,

Sudan, Venezuela, Central Asia ) “Five principles of peaceful” coexistence

• Growing BRIC cooperation

Conclusion

• During last 30 years China has made tremendously huge progress

• During last decade China has increased its power internationally

• China seeks to reform international system, however at the present moment it integrates into that

• By integrating into IS China represents the interests of other developing countries

• Economically China is becoming threat/opportunity to other countries (inward investments-export-import network)

• The increased power of China in international system testifies the shift of the distribution of the power in the world

• The perspective of China in the future is China will be on track keeping economic growth, investments and exports alive, this will lead to deeper integration into world economy and political institution (international system)

• Will China become superpower or not depends on:1) Will China identify itself as superpower?2) How will China implement “Five principle” policy?3) Will China’s policy become more aggressive?4) How “North pole” will respond to the distribution of power in the world?