Sunday, July 5, 2015

HHH Sherry Gray: "China's success is in the U.S. interest"

Reprinted from Star Tribune: http://www.startribune.com/china-s-success-is-in-the-u-s-interest/311520351/

COMMENTARY 311520351

China's success is in the U.S. interest

Time, resources and governance are key to the global giant’s ‘peaceful rise.’ 
In the United States and China both, our big public questions reflect our anxieties about one another, and in recent years the focus has been on the “rise of China.” Since the late 1990s, there have been questions on both sides, with the Chinese wondering “how to manage our rise without antagonizing the U. S.?” and Americans asking, “What will China’s rise mean for our role in the world and our prosperity?”
The rise and fall of concern in the U.S. seems as much related to domestic issues as it does to changes in China. (When I started my teaching career in the early 1990s, the focus in my political economy courses was on the challenge posed by Japan and the Asian “Tiger” economies.)
Fears of a resurgent China are not new. After the end of World War II and the rise to power of the Chinese Communist Party, hysteria broke out in the U.S. about “red hordes” and “yellow peril,” and, later in the 1960s, about “blue ants” swarming over the U.S. The infamous McCarthy political purges of the 1950s targeted China specialists first.
But neither is the reality of the U.S. confronting China new. China and the U.S. fought two wars (Korea and Vietnam), and the U.S. today maintains military bases and naval and air patrols that surround China completely. The Chinese cannot take a step outside their coastal waters without risking a confrontation with the U.S. 7th Fleet.
This can be really annoying to many Chinese political analysts, but China cannot affect that the U.S. is a global power and also an Asian power. China sometimes challenges the U.S. position, and the world is taking note of the resurgent leadership under Xi Jinping showing a bit more assertiveness in the region.
When thinking about China, it is useful to look at a map and understand the regional context. Do American and Chinese citizens share perspectives of our place in the world? (Do we even see the same world?) Put yourself in China, look around the neighborhood and think about the obvious relationships. China is big, but in a complicated neighborhood. With a land area about the size of Europe — the fourth-largest, after Russia, Canada and the U.S. — China dominates the east of the Eurasian continent. Its continental competitors are Russia and India, but mountains and deserts limit those competitions. It has had border issues with nearly every one of its 14 neighboring countries and has fought border wars with Russia, Vietnam and India in the past five decades. The main territorial issue today remains a solution to the Taiwan dilemma, but there are serious areas of dispute in the South and East China seas islands disputed with Japan and nearly every ASEAN member (the Association of Southeast Asian Nations).
We need to keep scale in mind, and the sheer size of China reflects why everyone else on the planet has to pay attention. Today there are more than 150 metropolitan areas in China with more than a million people; as of 2012, more than half of the population was urban (it was only 20 percent in early 1980s).
Some Chinese were gloating in recent years, pointing to economic and political problems in the U.S., Japan and Europe, with a lot of Internet traffic about the decline of the West and the rise of China. But what Xi Jinping and the Chinese leadership worry about are three things: time, resources and governance.
China is in a race to make the transition into being a high-middle-income country (like South Korea or Spain) before time (a demographic bubble and the rise of other economies) and resources (population, energy, productive environment) run out, and it is trying to create good governance at the same time.
A closer look at these issues:
Time
China is in a race against demographics, jobs creation and environmental disaster.
The median age of Chinese citizens is about 35 years, compared with about 36 years in the United States, but by 2050, the United Nations estimates that China’s median age will be 45 (compared with 43 in the U.K. and 41 in the U.S.), and heavily male.
Growing enough jobs is a key part of this race as employment and labor unrest are tied to unemployment and underemployment. China’s labor force is nearly 800 million, with more than 100 million, or about 13 percent of the population, below the poverty line. Annually, 25 million job seekers enter the market in China.
China’s unemployment rate is officially between 3 percent and 7 percent, but anecdotal evidence is that unemployment or underemployment are higher than reported. A crisis persists in a shortage of educated employees, with high unemployment for college students graduating from “mid-level” universities.
The International Labor Organization estimates that about 150 million adults are underemployed (surplus labor) in the rural areas, and most of these are part of the “floating population.” China will need to create 300 million new jobs over the next decade to compensate for job losses in agriculture and former state-owned enterprises.
Meanwhile, there’s the question of whether China will implement cleaner manufacturing before it pollutes its soil and water beyond limit. This is a race between modernization and environmental destruction.
Resources
The issue of resources is often covered in the global press and will be familiar to readers. China needs sufficient and affordable energy and raw materials to continue as the “world’s workshop,” but it is facing the loss of one-fifth of arable land since 1949, the need to develop research and development, and education for its vast population, especially rural.
Polluted air, water and land, water shortages, and food taint scares all contribute to growing unease throughout China, while rising labor costs and global economic competition mean that China’s labor is getting more expensive as new economies enter global manufacturing.
Governance
The central government battles pervasive regionalism, and Xi Jinping has taken on corrupt, greedy and independent local officials, to general popular approval. China still suffers from inadequate and unenforced legal and regulatory systems, and from understaffed and undertrained civil agencies, which are often prone to political interference.
Political unrest related to regional issues, often around land seizures or polluting industries and a nationalist response to international issues, has spawned a more active citizenry, while leaders note that the Sunflower Movement in Taiwan or the Umbrella Occupy Central in Hong Kong can easily become inspirational.
Other regional issues include the problem of domestic protectionism, with 91 percent invested in firms within their own provinces and 86 percent in their own city, and with the growing debt encumbrances of local and regional authorities.
China’s unique position as a developing country but also a donor country means that it intersects with the rest of the world from a dual position — poor and rich, vulnerable and powerful. Its rise to greater regional and global power is inevitable. The U.S. needs to understand the challenges facing the Chinese political establishment and the role this country can play in partnership to achieve what the Chinese leaders nicely call “a peaceful rise,” and we can start by recognizing the genuine achievements of China’s development and the importance its continued success has for our own interests.
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