Rise of China Economically and Militarily

Much might be learned regarding the nature of economic development of China by observing the city, Shanghai, created in 1842 in its modern form when it was opened to the international trade, that nonetheless moved quickly to the forefront of commercial Asian centres, with massive trade and manufacturing, until it was closed in 1949 effectively by the communists, who believed that imperialism or foreign trade was the reason of all ill of the country. Therefore, visitors in nation in early 1980s and late 1970s found a city that was frozen in time instead of a dynamic metropolis, where elderly waiters and chefs were summoned from the retirement for preparing the Western food that they knew how to make from the late 1930s.

Since then, it would seem that almost everything has been altered. Shanghai at present is the showpiece of economic development of China with an opera, a large museum, shopping malls, skyscrapers, and highways intertwined for accommodating over 1million automobiles. Until the 1980s from 1950, Chinese communist government had devalued the cosmopolitanism systematically which had been traditionally symbolized by the city. At the same time, the formidable industrial establishment of the city had been run down by the state, taking more in the profits from various nationalized taxes and enterprises than what was returned in investments (Li, 2009).

Now, the hope of government is that Shanghai will be the economy of Asia if not of the whole world. It would seem to be more or less on track. Moreover, Shanghai and other provinces and coastal cities like it were already starting to be connected into the routes for international trade by 1980s. And by the turn of a millennium, their affect and influence had become quite strong, flooding the US with exports to create an immense deficit of trade, increasing the prices of basic materials like iron ore and sole, as the government of China collected stocks of international exchange which was 2nd in size only to the one belonging to Japan. In double digits, reported rates of growth were so high that government was contemplating about slowing down and economic overheating by 2003. Then suddenly, exports to the country become important for states like Taiwan and Japan that had depended on the US for a long time. Fascinated by the prospect of endless growth of China, some of the observed determine it as a locomotive for the economy of not only regions but also the world.

However, if Shanghai serves as the showplace of the economic development of China, it is also like an object less in the challenges and contradictions of the approach of Shanghai to this development. For unlike the very first leader of modernization of economy after 1978, Hong Kong and Guangdong which depended for growth initially on the foreign and local investment, and attempted to retain profits, Shanghai at present is a state that exhibits excellence.

The impressive skyline of Shanghai today was not created by merchants, relying on profits from investments, similar to its predecessor, whose hotels, factories, and officers were all financed privately by businesses that had been earning profits in China for years, but turned to architecture only when flows of profit were established securely. What one realizes as one observes the prospect of Shanghai at present is a large project of building, completed with moey that was borrowed on the supposition of earnings in the future and with the foreign direct investment which looks to the future balance sheets for its clear rationale (Garnaut & Song, 2004).

The greater area of Hong Kong developed economically once its habitants were permitted to engage in trade. Even today, the downtown Canton cannot match the sheer magnificence of its neighbor in the North. By contrast, recent resurrection of Shanghai was started by a stern political decision and was underwritten with funds from the state. From an economic perspective, this decision was wise. After all, considering the location of Shanghai at the very mouth of Yangzi River, it is a logical centre for exports and imports from a system of river that connects a population which is larger than that of Europe. It made sense even from a political perspective, for Cantonese’s speakers, the accent of far south, have actually been a strong minded, and Beijing was concerned the least as Southerners became self-sufficient politically and economically before drifting away.

For a connector, a political need existed. Therefore, a large investment unfolded millions of dollars created the cityscape which one now views with surprise and awe. No one seems to know the cost of all this to central government, which has paid for it with loans from the banks of state (and FDI or foreign direct investment).

However, in the August of 2004, it was reported by China Daily that 335 billion dollars had been earmarked by the municipality for investment in the growth and development of Shanghai over the period of next 3 years. Whether this investment lose or market money is an important question for the future of China and one which is related directly to the regime’s figure. After all, in Shanghai, it is the state that is investing in the Chinese economic decisions.

They do this by the allocation of loans, drawn from Chinese people’s savings in state banks. These go to enterprises which are owned by the state: bankers predict that one percent of credit of banks goes to private businessmen, and that five percent of economy of China at most is privately held. Furthermore, the remaining is a complex amalgam of local, provincial, and state enterprises, normally competing with each other. Foreign capital is acquiring greater control over economy of China due to its greater efficient in utilization of resources.

This type of economic development is not only beneficial to China but also to the whole world. However, two caveats must be raised by one. First of all, economy of China at present relies on exports to an unhealthy degree and those exports are the product of global business using cheap Chinese labor for value-adding and assembly operations. Therefore, a complete fifth percent of exports of China is accounted for by international participated organizations, and seventy percent its IT sector is owned by Taiwan. And as long as state-owned organizations are favored by Beijing, global private organizations and FDI will be the most effective uitlizers of production factors in China, especially cheap labor. The outcome is clear, it will be an unhealthy degree of international control over economy.

It is likely for a Marxist to grumble about the exploitation of cheap labor by the global capital. What China is facing here is the problem of investment decisions and capital utilization. At present, bank lending is carried out by the state to its organizations. These firms utilize the money for increasing their production, leading an oversupply of products and goods for which, there is no demand, and a downward steady pressure on costs. The money which is lent to these organizations is not recoverable for most of the part. The issue of nonperforming loans seems to threaten the integrity of entire system of banking, owned by the state.

This issue regarding the capital waste and gross misallocation in a poor-capital nation, is maybe the most serious concern facing the economy of China now. Growth on the basis of borrowing is not similar to growth on the basis of profits and raising the efficiency. Nor even the exports will produce sufficient money for raising living standards of the vast majority of people in china, who seem to live on land. If growth is to be sustained by China, then it has to start depending on the internal demand, instead of exports.

China actually has a massive issue with the protection of rights of intellectual property. Recently, various drug patents lifted by Chinese government have been seen with GlaxoSmithKline, as a major player. The company didn’t even decide to contest the decision as the opportunity of success was nonexistent. General Motors, which has seemingly poured a vast amount into its enterprises in the nation, it has been surprised to observe the similarity of the mini-sedan Chery, produced by a Chinese organization to their own Sparkle. However, no recourse is again used by the GM. On a small and large scale, the same story takes place: from Zippo lighter to an automobile technology. In China, Zippo is being counterfeited immensely in inefficient quality imitation, which only serves to deny the market share of Zippo and ruin the reputation of brand.

Lastly, there is a question of the sustainability at long-term of the approach to different economics adopted by China. Economic growth of China has been real but the government, for economic and political reasons, shown a specific preference for holding companies and state enterprises, and foreign investment, opposed to proper domestic entrepreneurship. It is imagined by people that somehow China has become more like a capitalist or market economy. This is not correct at all because partial control of large industries is still present. If the government of China had wanted to privatize, it would have done this years ago. However, it doesn’t want to. Instead, the government seems to utilize financing of government together with expertise and foreign investment as a therapy for creating a competitive economy that is controlled by the state. Whether this is attainable or not, has yet to be seen. However, it is quite certain that survival of a communist party increasingly relies on the maintenance of a rapid rate of growth (Zhang, 2004).

Military Aspects

It has been already mentioned that Chinese policies of growth, and growth itself highly depends on exports, and her diplomatic and military policies, which are often irredentist and proactive, are certainly self-contradictory. The question here is that whether one or the other will be prevailed, or some type of stalemate will emerge. For just as the economy of China has become influential on Asian and worldly economies, the same can be said about its diplomatic and military policies as well. They are backed by military which is transformed in its abilities for long-range general quality and power projection. They are genuinely beginning to impact the decisions of China’s neighboring countries. It is a mystery to just why China would devote an amount to the military budget of the US.

Some believe that buildup of China is just a routinely modernization which is true to an extent. It can be said that 1980s found the nation with a soviet military style that was quite obsolete. Meanwhile, other argue that the buildup of China is a response to provocations and threats, like territorial disputes with its neighbors like Philippines and Japan, as well as the consistent failure of Taiwanese to show a desire to be a part of China. Military power of China over the last 15 years has grown significantly.

Began shortly after 1989’s Tiananmen massacre as in a part of the political payoff to military, this military buildup has been real. It is starting to bring massive changes to the power configuration in Asia, changes which are now beginning to be understood. Japan, India, Russia are the 3 major military powers affected by the current buildup of China. Each had transformed immensely during the time of military modernization of China (Waldron, 2005).

In Central Europe and Russia, the communist system was closed, beginning in the Tiananmen year and ending with the elimination of Soviet Union along with the lowering of its flag over Kremlin. It has been an important factor to influence the programme of Republic of China of people. The basis of this programme is the maintenance of power of party regardless of the cost. With the ending of USSR, a balance could no longer be maintained by India between the US and itself. Nehruvian exceptionalism and neutrality started to be ignored; a reformation in the economy started by Congress Party and BJP continued it. Due to this, the state was lifted into a trajectory of high-growth. This country also has started to react to the military buildup of china which posted both an indirect (Supporting Pakistan’s nuclear programme) and a direct threat.

Presiding over the rise of Germany to global power and authority, Bismarck seemingly went out of is way for avoiding behavior which was military-threatening and reassure all of his neighbors. China would appear to be doing the opposite with respect to Japan. It seems that Beijing doesn’t realize that Japan is not creating its military power not because it is unable to do so, but due to the fact that she has made a choice not to go down this path. Decisive responses of Japan to external challenges of security in both the 20th and 19th centuries suggest that she will do anything to be safe in this century as well.

The capability of Asian powers of targeting with the nuclear missiles not only is forced by the US in Asia but also the continental US. The meaning of this is that extended deterrence exhibited by Washington is not credible anymore. Therefore, two possibilities are faced here. One is that China and North Korea alter their policies of military, which will reassure Japan that she will be safe even when she is resisting the development of military. This seems very unlikely. The other one is that, realizing the new risk and understand the US is not capable of handling it without any assistance. Tokyo will be changing its constitution and develop a military capability that is self-sufficient with great sophistication. Another approach to prevent it is to support that if China stays on her military course, capabilities will be developed by Japan comparable to Russia and India (Shambaugh, 2013).

Future direction of Russia still seems to be unclear. However, it can be discussed that past is the worst. Communism has been eliminated, mass media has been limited again after getting freedom, and democratic politics have come to stay with statist tendencies and strong authoritarian. The economy is actually recovering from the post-Soviet period. Being a part of this massive process, Russian military is undergoing a reformation. It can be said that a re-consolidation is important if Russia wishes to survive and it will present another treat to china both on sea and land.

Therefore, one of complex puzzles of the last ten years or so is just why Russia has proved to be a willing weapon supplier to China. Instead of having to manufacture systems of weapons form the start, China has actually benefitted from two significant infusions of Russian or Soviet technology of military. During the period between the Sino-Soviet split and Korean War, the first came in the ending of 1950s. During it, the Soviet technology of Missile was obtained by China together with a promise from Moscow to transfer the technology of nuclear weapons as well. However, this promise hasn’t been fulfilled.

The second one started as the government empowered the Liberation Army of People in the wake of massacre of Tiananmen in 1989. It has actually witnessed the transfer of finished technologies and weapons: missiles, quiet submarines, and advanced jets. Assisted by other important transfers of technology from the US, Israel, Ukraine, France, and UK, China has been capable of modernizing her structure of force much faster than if China had relied on only indigenous capabilities. Of course, the price is a high degree of reliance on Soviet or Russia. The history suggests that Russia will not always be with China. How can this paradoxical policy be explained?

First of all, money of China keeps the military of Russia afloat. And indeed, some of it enters the pockets of individual military experts of Russia. Secondly, China doesn’t enjoy any other source of such an advanced formula and technology which cannot be developed by itself. Though, just why China feels urgency for this capability is still a question. Thirdly, sales to the country are quite controversial in Soviet or China. It is suggested by reports that high command has tried ruling the export of advanced items out and controlling the general situation. Still, the outcome of Russian exports actually has been to convert the armament qualitatively of the most advanced units of China First, Chinese money keeps Russian military research afloat, and no doubt some of it finds its way into the pockets of individual Russian military experts. Second, China has no other source for such advanced technology which it cannot itself develop quickly – though why China should feel so urgent a need for this capability is a hard question to answer. Third, sales to China are controversial in Russia, and reports suggest that the high command has attempted to rule out the export of the most advanced items and generally bring the situation under control. Still, the net result of Russian exports has been to transform qualitatively the armament of the most advanced Chinese units.

The military rise of China is an unexpected and tremendous improvement in its prowess that started after the massacre of Tiananmen in 1989. Actually, it is transforming the relations among great powers of Asia in the ways which are not favorable to China all the time. it can be said that the most unfavorable and drastic reaction has been military modernization of India which creates a permanent second front in almost any issue.

Meanwhile, the most beneficial reaction would be Russia’s which has seemingly transferred advanced weapon technology to China worth billions of dollars. However, in a long-term, the most consequential reaction to the military rise of China will be Japan’s. It is quite likely and is about developing forces and military prowess of her own sufficient in offsetting the military of China.

In other words, balancing is more likely to be the overall effect of rise of China on her 3 most significant neighbors. Similar to the situation during the Cold War, neither side gained an advantage, in spite of spending billions of dollars on military. Thus, rearmament of China will lead to Asia that will invest a lot more in its military forces than at present. It will make war more costly than likely. In such situations, the danger indeed is that a power will either sense a momentary advantage slipping and go after pre-emption or overestimate its military prowess and initiate a war by just miscalculation (Glaser, 2011).

 References of Rise of China Economically and Militarily

 Garnaut, R., & Song, L. (2004). China's third economic transformation: The rise of the private economy. Routledge.

Glaser, C. (2011). Will China's rise lead to war? Why realism does not mean pessimism. Foreign Affairs, 80-91.

Li, M. (2009). The rise of China and the demise of the capitalist world economy. NYU Press.

Shambaugh, D. L. (2013). China goes global: The partial power (Vol. 111). Oxford University Press.

Waldron, A. (2005). The rise of China: military and political implications. The rise of China: military and political implications, 31(4), Review of International Studies.

Zhang, W.-W. (2004). The implications of the rise of China. Foresight, 6(5), 223-226.