Thanks to the new US president’s erratic behaviour and policy changes, the eastern giant may stand tallest earlier than predicted.
CHINA, under the powerful leadership of Xi Jinping, may overtake the United States to assume the global leadership position sooner than expected – thanks to the chaos created to the world order by the new American president, according to scholars.
The policy changes propounded by President Donald Trump and the instability he has injected into trade and foreign relations are among reasons that the US might be displaced as the global leader earlier than projected.
When Xi came into power in 2012, there was already a flurry of projections on when China would assume global leadership. The International Monetary Fund (IMF) and the Economist magazine of London in 2012 saw this coming in the next decade.
But with the blunders Trump has made since taking office on Jan 20, some academics are seeing the hastening of this possibility.
Trump’s abdication of globalisation and free trade for protectionism with the objective of boosting investments in the US may hurt not only international trade but also the US economy, economists warn.
And his erratic behaviour, unpredictability and fast change of tact do not instil confidence in nations looking to America for leadership. Holding its breath, the world now follows developments in the US closely.
Trump stirred up apprehension in Asia when he tweeted that the US did not have to agree to the “One China” policy that has been endorsed by previous leaders for decades. On Feb 10, however, he reversed his stance over a long overdue phone conversation with Xi.
“If Hillary Clinton were the US president, I would say that the US will still be a world leader for a long time,” says Dr Ngeow Chow Bing, Universiti Malaya’s deputy director of the Institute of China Studies.
“But Trump has injected so much uncertainty and unpredictability to the extent that China today seems to be a much more stabilising factor compared to the US,” Dr Ngeow tells Sunday Star.
Abdicating leadership in TPP
By abandoning the 12-nation Trans-Pacific Partnership Agreement (TPP), which the US mooted and negotiated for five years with 11 other nations during the presidency of Barack Obama, Trump is seen as having abdicated US leadership in this vital trade pact that covers 40% of global GDP (gross domestic product).
One key objective of mooting the TPP by the US administration was to isolate China.
But to counter TPP, Xi announced in 2013 his strategic one-belt one-road economic initiative to benefit 65 countries populated by 4.4 billion people. This long-term plan, seen as extending China’s influence internationally, is seeing acceptance by 100 nations.
Focusing on the construction of infrastructure – in particular the high-speed rail – the programme will link China with Europe, Central Asia, the Middle East, as well as Africa, South-East Asia and the Pacific, thus boosting international trade as rail cuts shipment time.
In a comment Why Trump cannot bully China published last week, Prof Dr Kenneth Rogoff of Cambridge University tacitly warns that “the US has been duped into enabling China’s ascendancy”.
“One day, Americans will come to regret it. We economists tend to view the abdication of US world leadership as a historic mistake,” says the former chief economist of the IMF.
“In fact, the TPP would have opened Japan far more than it would have affected the United States. Rejecting it only opens the door to Chinese economic dominance across the Pacific,” adds Rogoff in his write-up.
According to Moody’s, United States’ failure to implement TPP represents a lost opportunity for exporters – particularly from Vietnam, Malaysia, Brunei and Mexico – aiming to gain greater access to major TPP markets.
The international rating agency observes in a short note: “Some countries have begun exploring other trade options, bilaterally or with China through the Regional Comprehensive Economic Partnership (RCEP).”
To Rogoff, Trump’s policy to “bring home” American jobs and create a system that will extend US dominance might not produce the desired outcome.
“Unfortunately, with this inward attitude, it is hard to see how the US can maintain the world order that has benefited it so much for so many decades. And make no mistake: America has been the big winner. No other large country is nearly as rich and the US middle class is still very well off by global standards.”
Stating that it would be naïve to reverse the trend of globalisation, Rogoff adds: “The fate of China is now in the hands of the Chinese and their leaders. If the Trump administration thinks it can reset the clock by starting a trade war with China, it is as likely to accelerate China’s economic and military development as it is to slow it down.”
China aims to be world leader
Indeed, China is seen as harbouring the ambition to play a bigger and more important role on the world stage since 2014 and to alter the global balance of power.
At a lecture at Sunway University last month, China affairs expert Prof Dr Anthony Saich of Harvard University points out that Xi has, since December 2014, promoted his “China Dream” that envisages China playing a strong role in global affairs, regional politics and economy.
Xi’s belt and road economic initiative along the old silk and maritime routes is seen a major well-crafted strategy to engineer China’s economic expansion and diplomatic influence overseas, apart from serving its own need to export China’s over-capacity.
“As a leader in China, Xi has been adept at accumulating power and dominating the political discourse within the mainland,” observes Saich, the director of the Ash Center for Democratic Governance and Innovation.
By getting himself named the “core leader” of China in late October 2016, Xi is no doubt the most powerful person in the republic now.
“Xi is a much more confident and stronger leader. He looks like a leader, moves like a leader, walks like a leader and dresses like a leader,” Saich says in his lecture titled Can Xi Jinping achieve his dream?
Also a guest professor at Tsinghua University, Saich points out that when China – which is already reshaping geopolitics – takes the lead, the world will have to contend with two important features:
1) For the first time, the largest economy is not in the Western world and it has a different set of values;
2) For the first time, the world’s largest economy will not be the one that enjoys the highest standard of living and quality of life.
Indeed, Xi demonstrated that China – the world’s second largest economy – could take over global leadership role at the recent World Economic Forum at Davos, Switzerland.
His speech on Jan 17 won praises and support from political and business leaders at this prestigious annual event. But top political leaders from the US and Germany were absent at this function last month.
Unlike Chinese officials participating in the previous meetings focussing on China’s economic situation, Xi assumed the leadership role by calling for the world’s political and business leaders to join hands to achieve inclusive development.
He viewed boosting free trade as a solution to global sluggishness, voiced his opposition to isolationism and protectionism, and stressed that no one would emerge winner in a trade war.
“This is a stance that reflects the changing role of China from a participant to a leader in the global economic system,” commented the official China Daily.
After describing the long and arduous journey that China had taken in 38 years of opening up and reform, Xi stated China’s readiness to take leadership in driving global growth for the benefit of people in China and the world.
CNN, in its news commentary, observed: “Beijing is positioning itself as a global leader at a time when Western powers, and especially the US, are retreating from the world stage and questioning globalisation that now defines global trade.”
Reuters opined Xi’s speech as underscoring “Beijing’s desire to play a greater global role as the US turns inward”.
At the forum, Xi told the world China had provided foreign countries with over 400 billion yuan (RM250bil) of aid between 1950 and 2016. And since 2008, China has contributed to annual global economic growth of over 30% annually.
The forum was told that for the next five years, China would import US$8tril (RM35tril) of goods, attract US$600bil (RM2.6tril) of foreign investment and plan US$750bil (RM3.3tril) of outbound investment. Chinese tourists would make 700 million of outbound visits.
Xi also stated China would continue to pursue a foreign policy of peace and was ready to enhance friendship and peaceful cooperation with all other countries.
China – not there yet
But according to China experts, China will have to put its house in order and improve its economic performance first before claiming global leadership.
“China is plagued by many internal problems and at the same time, has hesitation to claim a leadership role. Although some Chinese officials and scholars seem to suggest that China can and will take a leadership role, I think its leadership is still uncertain,” opines Ngeow.
A high-profile anti-corruption campaign that has shamed and jailed powerful politicians and businessmen is seen by Saich as Xi’s strategy to remove his rivals. This also reflects the fierce and intense power struggle within the ruling Communist Party of China led by Xi.
But Ngeow has a different view: “Xi’s anti-corruption campaign is the most sustainable and widespread in recent memory and it has even affected economic growth. This certainly goes beyond simply ridding of rivals.
“There is a genuine sense that errant party and government officials have to be disciplined after years of uncontrolled behaviour.”
To economist Lee Heng Guie, Trump’s bold policies on foreign relations, immigration and protectionism may pose “unusual challenges” to China and the rest of the world.
And economically, China still has a long way to catch up to overtake the United States.
Although in terms of purchasing power parity basis, China has overtaken the United States as the biggest economy since 2014, it is still trailing behind America in other aspects.
According to IMF data, the US economy was ahead of China by US$7,170bil in 2016 using the current market rate.
Lee, the executive director of Malaysia’s Socio-Economic Research Centre, adds:
“To surpass the US in GDP, China will have to accelerate economic and financial reforms to uplift its growth potential – driven by innovation and productivity. It must achieve a sustainable growth of 6.0%-6.5% growth per annum over the next decade.”