“Let China sleep, for when she wakes, she will shake the world.”
— Napoleon Bonaparte
A recent report published by HSBC on the state of the world economy in 2050 identifies China as the world’s largest economy while the small-population, ageing, rich economies in Europe like Switzerland, the Netherlands, Sweden, Belgium, Austria, Norway and Denmark are predicted to go into decline.
Nothing more clearly captures the inexorable rise of China than President Hu Jintao’s recent assertion that the current US dollar-dominated currency system is a “product of the past.” He went on to outline moves to turn the yuan into a global currency.
China is a clear example of how an authoritarian regime can deliver economic success if the system manages to set in place the incentives that a market-based system naturally delivers, namely competition and a motivation to drive efficiency. In the midst of the global economic downturn, China has emerged stronger than ever. In the second quarter of 2010, China’s GDP surpassed Japan’s, ranking it second in the world.
Despite international criticism of its lack of democracy, China has insisted on modernisation squarely on its own terms. The general assumption that democracy is synonymous with progress and sound governance is challenged by China’s remarkable rise.
Despite Pakistan heeding to the clarion calls for democracy, poverty, instability and civil strife continue to persist. As Pakistan struggles with a gaping budget deficit, soaring inflation, stringent IMF conditions and an acute energy crisis, the benefits of democracy have proven elusive. Pakistan’s growth for 2011 is predicted at 2.5%. A widening rural-urban split, unemployment, unchecked corruption and civil unrest continue to strain Pakistan’s capacities. Since China is Pakistan’s key ally and a strategic investor, the country’s dizzying success story warrants close attention.
In recent years, China has witnessed dramatic growth. In 2001, China joined the World Trade Organisation, opening up to foreign direct investment and global trade. In 2009, China’s contribution to world economic growth was a stupendous 50%. In 2010, the Chinese economy grew by a staggering 10%. Going forward, China is actively investing in low carbon technologies and energy conservation programmes.
China’s growing economic clout is amply demonstrated by the fact that it has arranged almost $4 billion of debt relief for 50 developing countries. With economic strength comes increasing geopolitical influence evidenced in China’s enhanced global status: the World Bank has agreed to increase China’s voting power from 2.77% to 4.42%, catapulting it to third place after the United States and Japan. China’s share in the IMF has also increased by 2.39 percentage points to 6.39%, once again placing it just after the US and Japan.
The increasing influence of the Shanghai Cooperation Organisation (SCO), a non-military alliance devoted to improving security in Central Asia, has drawn international recognition as many countries vie for observer status within the SCO. Trade relations between China and the other SCO member states has augmented significantly and from January to October 2010, China’s trade volume with SCO member states reached $67.9 billion — an increase of 37.4% from 2009.
With 150 million people still living below the poverty line, overcoming poverty remains a top priority for the Chinese government. In October last year at the 65th Session of the UN General Assembly, Chinese Premier Wen Jiabo reaffirmed China’s determination to meet its commitment to the UN Millennium Development Goals (MDGs). One important MDG is the reduction of poverty in China by half from 1990 to 2015 and the country appears to be squarely on track to achieve this ambitious goal by 2015.
China’s commitment to poverty reduction drew international attention when former Chinese premier Deng Xiaoping was recognised for transforming and modernising China’s economy in the shortest time and for the benefit of the largest number of people in human history. Within just two decades, some 300 to 400 million peasants and workers were lifted out of chronic poverty.
China is continuously pilloried in the press for its authoritarian government. However, China’s government has delivered many of the promises that democracy has failed to deliver: economic prosperity and poverty reduction. The democracies of developing countries are often ridden with economic inequities, sucked dry by corrupt and mendacious elites who flourish under the veneer of a democracy that does little to improve the lives of its citizens.