China Is Quietly Reshaping the World

from The Atlantic

The Pakistani town of Gwadar was until recently filled with the dust-colored cinderblock houses of about 50,000 fishermen. Ringed by cliffs, desert, and the Arabian Sea, it was at the forgotten edge of the earth. Now it’s one centerpiece of China’s “Belt and Road” initiative, and the town has transformed as a result. Gwadar is experiencing a storm of construction: a brand-new container port, new hotels, and 1,800 miles of superhighway and high-speed railway to connect it to China’s landlocked western provinces. China and Pakistan aspire to turn Gwadar into a new Dubai, making it a city that will ultimately house 2 million people.

China is quickly growing into the world’s most extensive commercial empire. By way of comparison, after World War II, the Marshall Plan provided the equivalent of $800 billion in reconstruction funds to Europe (if calculated as a percentage of today’s GDP). In the decades after the war the United States was also the world’s largest trading nation, and its largest bilateral lender to others.

Now it’s China’s turn. The scale and scope of the Belt and Road initiative is staggering. Estimates vary, but over $300 billion have already been spent, and China plans to spend $1 trillion more in the next decade or so. According to the CIA, 92 countries counted China as their largest exports or imports partner in 2015, far more than the United States at 57. What’s most astounding is the speed with which China achieved this. While the country was the world’s largest recipient of World Bank and Asian Development Bank loans in the 1980s and 90s, in recent years, China alone loaned more to developing countries than did the World Bank.

Unlike the United States and Europe, China uses aid, trade, and foreign direct investment strategically to build goodwill, expand its political sway, and secure the natural resources it needs to grow. Belt and Road is the most impressive example of this. It is an umbrella initiative of current and future infrastructure projects. In the next decades, China plans to build a thick web of infrastructure around Asia and, through similar initiatives, around the world.

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4 Comments

  1. China may overtake the U.S. as the world’s premier economic superpower but really is that such a bad thing? To be clear if we’re talking about China overtaking the U.S. in terms of G.D.P. this will take a very long time. In 2014 China’s G.D.P. was about 10.36 trillion dollars and the U.S. had a G.D.P. of 17.42 trillion dollars. With China having an annual G.D.P. growth rate of 7.4% China could hypothetically catch up to the U.S. in under a decade. That however isn’t taking into account that the U.S.’s G.D.P. is also growing by 2.4% annually and that China’s annual growth has been slowly falling since 2010 while the U.S.’s has remained mostly stable (http://www.visualcapitalist.com/china-vs-united-states-a-tale-of-two-economies/). Yet that’s just nominal G.D.P. in G.D.P. (PPP) and amount of exports China has already caught up and surpassed the United States. Taking that into consideration many would say that China has already taking the U.S.’s place as the world’s foremost economic superpower, one source making that claim being the International Monetary Fund (https://www.huffingtonpost.com/nake-m-kamrany/chinas-rise-to-global-eco_b_6544924.html). So if that is true then where is the apocalypse? Why hasn’t the world stopped spinning now that China is on the same economic footing as the U.S.?
    The fact is just because China has started to outpace the American economy on a large scale they are still very much behind. China’s G.D.P. (PPP) may be larger than the U.S.’s but that doesn’t mean that the U.S. will just disappear as if it never existed. If China’s ultimate goal is not overturn the world order but just to balance the scales as the article has said then there really isn’t any reason to panic. So as an American I will say the last few decades of ultimate economic superiority have been nice, but that imbalance does little to ensure everybody body gets an equal seat at the table. All this being said if China really wants to be in the same footing as the U.S. they’re going to start having the same problems as the U.S. For one as the article points out with China’s Belt and Road initiative they need to start getting more influence on a global scale if they want to be considered a superpower. America’s status as superpower while largely due to our economic status is also due to our worldly presence. We have thousands of military bases and alliances with countries all over the globe and China as of now just can’t say the same thing. Another important difference between the U.S. and China is G.D.P. per capita, in the 2014 the U.S. had a per capita G.D.P. of 54,000 while China had a G.D.P. per capita of 7,500. That is a pretty stark difference in the wealth of the individual citizen.
    To me it seems pretty clear that China is where the U.S. was 60 years ago where our economy relied mainly on factory jobs and the goods we produced and that just isn’t the case anymore. The U.S. is now an overwhelmingly service based economy and as that G.D.P. per capita starts increase in China it will start to follow the same pattern the U.S. did. People will finally have the money to pay for things to be done rather than do those things themselves and China will make the same transition the U.S. did where we lost many of our factory jobs and started working in service based industries. So essentially if China really wants to balance the scales that’s not necessarily a bad thing as it means that the U.S. just won’t have the overwhelming power to do whatever it wants like it’s had for so long. If that’s the route China wants to take then in order to compete with the U.S. they’re going to need to spread their presence in order to achieve actual worldly influence. Finally if China does accomplish the balancing it desires it will start to face the same problems U.S. has like a loss of factory jobs and the responsibility of interventionalism.

  2. The Belt and Road policy is one of the hall marks of the 21st century that is currently being led by the Chinese government. This policy is one of the main diplomatic efforts which is allowing China to grow its influence and economic power to many of its surrounding countries. While this is all happening the Chinese government is running laps around the slow and strict US government and is rapidly becoming the next world power. A great example of Chinese foreign policy is that the US has provided billions of dollars’ worth of aid to Pakistan in hopes of swaying the Pakistani government into favoring them over China. Instead China has sweeped in with its massive loans that have very little questions and large infrastructure projects allowing the Chinese government to have Pakistan in its back pocket as an unwavering ally. An interesting side note is that the recipients of these loans are in desperate need of Chinese loans as they do not care about human rights violations or other sensitive issues. With the Chinese government being the only provider of these morally wrong loans they are able to charge increasingly higher interest rates that are reaching 5% causing difficulty paying it back and possibly allowing the Chinese firms to seize these assets. This is the era of economics where money rules as king in these lands and the U.S. is being left in the dust with its massively overpriced military believing its military will make it the world’s only superpower. My concern is that the US is leaving China unchecked in its expanding reach and it effectively allowing it to undermine alliances that the U.S. has spent years working on improving. While there is obviously cause for concern, the threat level is not as high as it is presumed to be as china’s rapid economic growth is slowly diminishing. The president of the Chinese government has stated that its goal is for a more equitable international system, but it does not want to unravel the international order. Along with Chinese leadership not wanting to top the U.S. in rankings these loans that were allowing china to spread its influence around the world are slowly becoming less lucrative. The Chinese government has published more stricter guidelines for outbound investors and the Chinese infrastructure investment bank (AIIB) has also started looking to apply world class standards which make these loans less likely to reach these “sketchy” governments. Even with these news guidelines slowing down Chinese influence in other countries should the U.S still worry about China becoming the world’s next superpower?

  3. To go further with your argument, many people around the world still look to the United States for major economic and relief efforts such as American Red Cross and State Department’s USAID. The United States also has a major presence in the world not only because of military bases but also because of its soft power. According to Harvard Business Review, soft power is the “ability to shape the preferences of others.” In other words, a country or an individual can employ a more subtle approach to dealing with other parties. This means that force is not always necessary in persuasion. Instead, a person’s reputation or values can play important roles in the negotiating room.

    Traditionally, social scientists and economists looked to GDP and military might for a country’s status on the global stage. However, having a strong GDP and military power have certain limitations. There are times when offering either the carrot or the stick is not enough to convince someone to submit. For example, North Korea is on the verge of perfecting its missile capabilities even though the United Nations imposed multiple economic sanctions for many years. However interestingly, the former North Korean dictator, Kim Jong-II, agreed to release two American hostages. Also oddly enough, the chief negotiator was the former United States president Bill Clinton. Back in his presidency years, Clinton was one of the first people to offer condolences to Kim Jong-II when the dictator’s father passed away in 1994. Although this small gesture could have meant nothing, Kim Jong-II surprisingly agreed to let two American journalists return home.

    Another area that represents the United States as a major soft power is Hollywood. Almost everyone around the world knows and watches American movies. Some of them include Forrest Gump, Pixar’s Finding Nemo, and Catch Me if You Can. Whenever Hollywood movies are available worldwide, people in different countries attempt to create bootleg versions or illegally download them. Hollywood movies such as Westerns created such an impression that a typical American stereotype is associated with a cowboy. Pixar films also resonate strongly with families all over the world. Especially now that Disney’s animated films are targeting diverse members, hopeful artists and animators from everywhere want to work for Pixar animation.

    Finally, China is never going to beat the United States because of the differences in fundamental values. China has been around for thousands of years. However, the United States has been around for roughly two hundred years. Despite the age difference, the United States is able to attract people from all over the world because the country values diversity. The United States is a land of immigrants that encourage and welcome people to bring their own values and cultures to enhance the American experience. According to 2015 analysis from Pew Research Center, the United Nations estimated that 46.6 million people living in the United States were not born there. The number alone shows the influence the United States has on the world stage. The United Nations’ headquarter is also in New York City. Therefore, China has a long way to go if it wants to surpass the United States.

  4. The United State has always been considered by many as the sort of “capital of the world” for finance, business, and trade, but it now seems that China is the superpower that is backing many countries to grow and thrive. Based on size and population, it makes sense that China would control so much of the world’s resources. Anja Manuel’s is seemingly in favor of the Chinese business strategies in this situation, for good reason. If China is revitalizing poor, rundown towns such as Gwadar to become “a new Dubai”, then why not be in favor? The reason being that some may oppose, is that some see the Chinese business techniques to be aggressive and often hurt the environment and local employees, however Manuel mentions numerous times throughout his article that they are improving and taking on more responsible methods as well as greener, and more humane regulations. Personally, I believe that as long as the Chinese government is being mindful of local laws and adequately treating employees, unlike what we have seen in the past, Foxconn for example, then it should be considered a benefit to the world if China is indeed loaning and helping other nations grow. I found it interesting to read that because China has paid for so much infrastructure in and around Gwadar, they now practically own the town, and if Gwadar cannot pay back the loans, they will continue to sacrifice more and more of their town and country to China. Hotels, highways, high-speed rail systems, and more have all been implemented to boost the struggling Gwadar, and so far, it’s working wonders. This article shows just how valuable location really is, even in an old, rundown town, if the location is right it can be priceless. In this case Gwadar is in prime location for shipping lanes, oil trade, and fishing between India, the Middle East and east coast of Africa. One of my final thoughts on the article, from a business perspective, is if Gwadar is supposed to be the next Dubai as it has been predicted, then would investing in real-estate now be a smart move?

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