Peter Nolan IS CHINA BUYING the WORLD?
Total Page：16
File Type：pdf, Size：1020Kb
Peter Nolan IS CHINA BUYING THE WORLD? polity Contents 3.6 Chinese fi rms ‘going out’ of China into the high-income economies: ‘I have you within me but you do not have me within you’ 95 Contents 3.7 Constraints on China ‘buying the world’ 102 4 The Complexity of ‘Us’ and ‘Them’: The Case of Strategic Industries 110 4.1 Banks 110 4.2 Commercial aircraft 119 Conclusion 132 Is China buying the world? 132 List of Tables vii Who are we? 133 Acknowledgements ix Who are they? 136 The complexity of catching up 142 Introduction 1 1 Who are We? Who are They? 11 References 144 2 Who are We? 15 2.1 Globalization and industrial concentration 15 2.2 Evidence from automobiles and beverages 25 2.3 Globalization and ‘going out’ by global fi rms 38 3 Who are They? 55 3.1 China catches up 55 3.2 China is still far from ‘catching up’ 66 3.3 China’s deepening relationship with developing countries 70 3.4 Oil companies and energy security 75 3.5 Multinational companies ‘going in’ to China 84 v vi Introduction than 3 per cent in the high-income economies.2 If things continue in this fashion, China’s GDP will soon exceed that of the USA. China’s rise is a puzzle for most commentators. Introduction The central proposition of the ‘transition orthodoxy’, espoused by self-designated transition experts such as Jeffrey Sachs, Anders Aslund and Janos Kornai, was the incompatibility of the Communist Party with a market economy (Nolan, 1995). For the ‘transition orthodoxy’, this was the lesson that China should have learned from the USSR and Eastern Europe: ‘The col- lapse of communist one-party rule was the sine qua China’s rise has astonished and mesmerized the public non for an effective transition to a market economy. in the high-income countries.1 If one proposition has been tested by history, it is that In 1990 China’s GDP (at market prices) was just 1.6 the communist parties of Eastern Europe would not per cent of the world total and it was the world’s elev- lead a process of reform suffi ciently deep to create enth largest economy. By 2008 its share of world GDP a real market economy’ (Lipton and Sachs, 1990).3 had increased to 7.1 per cent and it had risen to become To the amazement of the mainstream view, China’s the world’s third largest economy (World Bank, 2006, economy has prospered beyond imagination under the 2010). If national output is measured in ‘purchasing rule of the Chinese Communist Party, which now has power parity’ dollars instead of using market prices, over 80 million members and has just celebrated its then China’s share of total world output is 11.4 per cent ninetieth anniversary. Following the collapse of the and it is the world’s second largest economy. Indeed, Communist Party of the Soviet Union, the economy using this measure, China’s gross national income is and society disintegrated, with huge suffering for the already 54 per cent of that of the USA (World Bank, mass of the population. The contrast between ‘China’s 2010). China’s GDP growth rate in the past two decades has been over 10 per cent per annum compared with less 2 Unless otherwise indicated, this book follows the World Bank’s classifi ca- tion of countries into ‘high-income’ (those with a Gross National Income per person at market prices of $11,906) and ‘low- and middle-income’ countries below this level (World Bank, 2010: xxiii). 1 One should, more correctly, speak of China’s ‘renaissance’. Before the 3 The forgetfulness of the ‘transition experts’ is reminiscent of the charac- European Industrial Revolution China was by far the world’s largest ter in Samuel Beckett’s monologue Not I, which was written for Billie economy, with an estimated one-third of total global output of goods and Whitelaw. In the short play she describes her awful life and periodically services, far above that of Europe until the nineteenth century. punctuates the story with piercing cries of ‘not I’. 1 2 Introduction Introduction rise’ and ‘Russia’s fall’ (Nolan, 1995) is one of the most If you can fi gure out how to integrate a Chinese com- signifi cant issues in modern world history. munist dictatorship with over a billion people who There is constant discussion of China in the inter- go where they’re told to go; who work in the industry national mass media and an avalanche of publications they’re told to told to work [in]; who get paid what on different aspects of China’s rise. The over-riding they’re told they’re worth; who have no way to answer sentiment in both Europe and the USA is fear. This back, if you can fi gure out how to integrate that into the world economy, please let me know. is refl ected in the titles of the best-selling books on China, such as Martin Jacques’s When China Rules China’s foreign exchange reserves have risen from the World: The Rise of the Middle Kingdom and the relatively insignifi cant amounts to become by far the End of the Western World (2009), Stefan Halper’s largest of any country. In the year 2000 China’s foreign Beijing Consensus: How China’s Authoritarian Model exchange reserves stood at just US$166 billion. After Will Dominate the Twenty-First Century (2010) and China joined the World Trade Organization (WTO) Arvind Subramaniam’s Eclipse: Living in the Shadow in 2001 its exports grew at high speed. By December of China’s Economic Dominance (2011). The fears are 2006 its foreign exchange reserves had increased to comprehensive, covering all aspects of the relationship $1,066 billion. By April 2009 they exceeded $2,000 with China. billion, and by June 2011 they stood at $3,197 billion. The profoundly fearful sentiments on America’s China’s foreign exchange reserves are now almost three Capitol Hill are refl ected in the US–China Economic times as large as those of Japan ($1,138 billion), which and Security Review Commission, which was set up in are in turn more than twice as large as those of the October 2000 by the US Congress in order to ‘monitor third-ranked country, Russia ($531 billion). China has and investigate and report to Congress on the national become by far the largest foreign holder of US public security implications of the bilateral trade and eco- debt. By June 2011 it held $1,170 billion of US Treasury nomic relationship between the United States and the bills, notes and bonds, compared with $911 billion for People’s Republic of China’. The commissioners are all Japan, $350 billion for Britain and $230 billion for the appointed by Congress. The commission has produced oil-exporting countries. China accounted for 26 per a succession of annual reports, each of which expresses cent of the total foreign holdings of US government deep apprehensions about the implications of China’s debt.4 This has aroused intense media discussion of the economic rise for the United States, including the impact on US employment and conditions of work and upon 4 As well as foreign holders, domestic entities account for 52 per cent of the country’s technological and military superiority. At total holdings of US public debt. In other words, China’s share of total US public debt is only around 12 per cent. If all US government debt is one of its hearings Vice-Chairman C. Richard D’Amato included (publicly held and non-publicly held) its share falls even lower, to commented: around 8 per cent. Moreover, Japan and Britain between them own more 3 4 Introduction Introduction implications of the USA’s high level of indebtedness to In pursuing advanced military capabilities that can its largest single creditor, China. threaten its neighbours in the Asia-Pacifi c region, China There is wide discussion in the high-income countries is following an outdated path that, in the end, will about the impact that the integration of China into the hamper its own pursuit of greatness. It is time to reaffi rm world economy has had upon real incomes, income dis- the essential role of American military strength. We must tribution and conditions of work. In the United States build and maintain our defences beyond challenge . Our forces will be strong enough to dissuade potential it is argued that ‘de-industrialization’, stagnation of the adversaries from pursuing a military build-up in hopes median wage and increased inequality are closely linked of surpassing, or equalling, the power of the US. with China’s explosive growth of industrial output and exports.5 China has over 950 million people of working The Pentagon’s Quadrennial Defense Review of 2006 age, compared with 720 million in all the high-income stated: ‘Of the major powers, China has the greatest countries combined. China’s exports of mainly labour- potential to compete militarily with the United States intensive products grew by 14 per cent per annum in and fi eld disruptive military technologies that could the 1990s, accelerating to 25 per cent per annum after over time offset traditional US military advantages 2000. China is now deeply integrated into the world absent [sic] counter strategies.’ trading system. Its merchandise exports amount to 59 There are deep fears also across the high-income coun- per cent of GDP, an exceptionally high fi gure, and three- tries concerning China’s impact upon the values that quarters of its exports are to the high-income countries will govern the global community in the years ahead.