Apr 21 2008

China’s challenge – reestablishing its standing as an economic superpower

Live from Shanghai – OnPoint with Tom Ashbrook

The 21st century has been called “China’s Century”. With the Olympics in Beijing in a couple of months, the torch relay touring the worlds’ major cities has been met with fierce anti-China protests as angry activists have accused China of countless offenses from human rights violations to oppression of democracy movements to environmental destruction. Although it may be “China’s Century”, it sometimes seems that the rest of the world is not too happy about China’s emergence as a global superpower.

Last week, NPR’s Tom Ashbrook, journalist and host of the OnPoint radio program, visited Shanghai and featured daily stories about China in the world today. Below is an excerpt from the first of these stories, which caught my attention because it shared a minor fact that I had never heard before but which I find extremely interesting. Ashbrook’s guest, David Lampton, is a leading scholar on China’s re-emergence as a global superpower. Listen to what he says here:

“Re-claim their share of global GDP?” you might be asking? Here’s the thing… for much of the last 2,000 years, China was THE leading superpower in the world. In fact, up to the 1430’s, China had the largest navy in the world, had established tributary relations with dozens of kingdoms from Southeast Asia to India to Africa, had established and secured trade routes stretching overland to Europe and by sea as far away as East Africa, and some even think Chinese explorers had made it to North America seventy years before Columbus! While Europeans were dying of the plague by the millions and struggling under absolute poverty in a feudal society where the idea of national unity was still a century off, China had grown to be the largest empire the world had ever seen, first under the Yuan Dynasty and then the Ming.

As professor Lambert says, China’s GDP, or its total output of goods and services, accounted for ONE THIRD of the world’s output during much of the common era. This fact shocked me, but made sense once I thought about it. China truly was the greatest example of a global superpower the world had known by the 15th Century. Much of its wealth and power was a result of its efforts to globalize, or to integrate itself with the economies of the foreign nations, empires and kingdoms. Trade with its neighbors, near and far, had helped enrich China, but also built among China’s leaders a rightful sense of superiority over the other peoples of the world.

It was this sense of superiority that would lead to a long period of decline in Chinese dominance of the global economy. In 1432, the Ming emperor ordered the trading vessels of Admiral Zheng He destroyed. 3,000 of the largest ships the world had ever seen were sunk to the bottom of the Yangtze river and the East China Sea. The emperor declared China as “The Middle Kingdom” and ordered that all links with the outside world be severed, as China had no need for trade with others. China, the emperor claimed, was totally “self-sufficient” and could flourish without trade with the “barbarian” outsiders.

What followed was a long period of decline in China’s superpower status. From 1432, through the fall of the Ming in 1644 throughout the subsequent Qing Dynasty, into the 20th Century which saw repeated shifts in power between KMT, the Japanese and finally the CCP, China for the most part resisted attempts by its own and by foreigners to open its doors to the world, welcome trade, and encourage globalization of China’s rapidly dwindling domestic economy. The belief that China was “self-sufficient” endured while China’s share of total economic activity in the world dwindled to nearly nothing.

In the mean time, Europeans “discovered” the New World, philosophized about the gains from trade, integrated their own markets and later the markets of the colonies in Asia, America, and Africa, and grew wealthy as a result of these global exchanges. All the while, China stuck to its path of isolationism and self-sufficiency, as its influence and power slipped ever deeper into obscurity.

This period of isolation essentially lasted until the death of Mao Zedong, who could basically be called China’s last emperor. Since 1978, China has followed a new path, one that has attempted to reverse the mistakes of past dynasties, based on the doctrine of isolation and protection of domestic markets. Since its re-emergence as a global economic superpower, China has rapidly seen its share of global GDP increase from less than 2% in the 1970’s to around 16% today; a rebound achieved only through year after year of rapid economic growth, fueled by exports to the rest of the world. Isolation, it appeared, was not the path to wealth and power. China had discovered a new path, one that has done wonders for it income and standing in today’s circles of global power.

China’s re-emergence was made possible by one simple shift in doctrine and philosophy among its leaders: the belief that trade is good. While today the country still has many obstacles to overcome, such as the environmental challenges posed by growth, achieving a more equal distribution of wealth and income, fostering the growth of a domestic market to lessen its dependence on exports, and the challenges relating to human rights and demands for democratization, it would be wrong to say that China has not benefited from economic globalization in many ways.

A little history lesson is sometimes necessary to better understand where China is coming from and where it is going on its path towards re-emerging as a superpower in the global economy. The West, in the mean time, should pause to consider the rightful place the Chinese people believe is theirs based on their long history of economic power and dominance that for hundreds of years placed China at the pinnacle of power in the world economy.

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

9 responses so far

9 Responses to “China’s challenge – reestablishing its standing as an economic superpower”

  1. Helenon 22 Apr 2008 at 10:16 pm

    A similar thing happened in Russia. Much of tsarist Russia missed out on transformations that reshaped Western Europe, such as the scientific revolution and the rise of individualism, and that eventually led to their defeat by Britain and France in the Crimean War. This again goes to show that autarky is neither economically nor politically ideal.

    Both of these countries can be compared to Aesop's "The Tortoise and the Hare", with Russia and China being the arrogant rabbit that "slept" (aka went into isolation) and the rest of the world being the turtle that slowly caught up and even went past the rabbit. The rabbit didn't know any of this until it learned it the hard way. Just like the rabbit would have won the race for sure, think how different China, and even Russia, might be today had they not isolated themselves from the rest of the world.

  2. yunqimokon 23 Apr 2008 at 9:34 pm

    So for everyone who doens't know why we study something dead and useless like history…now you know! China was one of the first examples that proved the insufficiency of a self-sufficient economy. In fact, after China was brutally ripped open by the British in the 1800s with the Opium Wars and such, Japan learnt from the example and did not resist when Commodore Perry from America reached its shores and demanded that Japan open itself up to trade with the rest of the world.

    Pride, it goeth before a fall. China learnt that very painfully and very quickly too. Arrogance kept China from progressing, and if you really think about, if China had decided to go around expanding, it could possibly have conquered the whole world. We would have a global empire of all people speaking Chinese, one currency, one religion…

  3. Christina Huon 24 Apr 2008 at 9:25 pm

    China is truly amazing… I mean, not the last couple of hundred years but the fact that it remained a superpower for such a long time, longer than perhaps the United States ever will, I'm slightly sorry to say. And despite its dramatic downturn, it has come back so quickly economically, although it is a hundred years behind the west in terms of humanitarianism and common courtesy on the road… that aside, though, China will become the superpower again, once it establishes a stable domestic market (so crises in other countries won't strike it a death blow) and once people get it through their thick heads that China is no longer really communist -.-

  4. Conrad Liuon 25 Apr 2008 at 12:21 am

    Wow, YunQi that really makes a guy think…it seems like China's just destined to remain a superpower no matter what. Simply by changing its philosophy that trade is good, it's now gone from one of the most underdeveloped countries to a major superpower? That, coupled with the fact that it now holds the most foreign assets, around 1.4 billion, as we've been told in class (mainly because of….*sigh*….the U.S.), can only serve to show how resilient this country is economically. After last class, we now know that China will probably keep increasing these reserves, as the U.S borrows more and more from China, while China happily accepts it. Sheesh, maybe they ARE the "central" country…

  5. Jeff Yeon 27 Apr 2008 at 8:37 pm

    I find it interesting how the more China expands and develops, the more opposition there is from the U.S. against "red China", even though a relatively large portion of American economy depends on China. I think it's also amusing how, as Conrad put it, one of the most underdeveloped countries can progress to one of the world's, if not THE world's, top superpower(s) simply by trading more with other countries. All i can say is, AznPride!

  6. richardtuon 28 Apr 2008 at 3:40 pm

    China sure is an amazing economy bloom. As we all know, if China expands its economy, then it will definitely surpass America's economy and become the world's largest financial place. However, it doesnt choose to do so, because they want to be the largest export nation. Therefore, they focus on trade with other countries.

  7. KatherineYangon 28 Apr 2008 at 6:49 pm

    China is impressive, but I still worry about it expanding too much. You know, the higher you go, the harder you fall and all that. But I guess that's true about other countries too, like the Roman empire.

  8. Jack Loon 28 Apr 2008 at 8:48 pm

    China is a perfect example of why complete isolation SUCKS. Now that China has again opened up its market to trade, it is on course to become a global superpower once again. From another standpoint, free trade isn't always about economics. I know that this is an economics class and all we care about is efficiency. But in reality, we're not just economic beings. As John C. Calhoun said, "I regard free trade, as involving considerations far higher, than mere commercial advantages, as great as they are. It is, in my opinion, emphatically the cause of civilization and peace."

  9. andyxuon 28 Apr 2008 at 11:13 pm

    Basically, China is indisputable proof that trade, through the comparative advantage mechanism, will benefit both the importer and the exporter.

    Will China "reclaim their share of the world GDP?" probably not for at least the next few years, as China cannot forever rely on manufacturing and services for its GDP growth. But because of trade, China is certainly on the right track to great success. God bless China.