July 21st, 2012
09:51 AM ET

Managing the rise of China

Editor’s note: GPS speaks with historian Niall Ferguson about the rise of China, the likelihood of conflict in Asia and whether Europe is relevant. Watch GPS on Sunday at 10 a.m. and 1 p.m. ET for Ferguson's take on the euro crisis.

One of the biggest stories in international terms this century has clearly been the gradual shift in power from West to East, and especially the rise of China. Is China’s continued rise inevitable?

Not much in history is inevitable, but the shift from the West to the East looks like a pretty profound trend that it’s hard to imagine suddenly stopping. The IMF has China’s GDP exceeding that of the United States within four years, and the way growth rates are right now, something amazing would have to happen here in the U.S., and something very terrible would have to happen in China, for that not to take place.

So I think this is the biggest trend in economics, and perhaps geopolitics, in our lifetime. It goes back to the late 1970s and the reforms of Deng Xiaoping. I don’t think it’s going to stop for at least another 10 or 20 years, at which point demographics and other forces will start to slow the Chinese economy down. But this isn’t something that is just about to collapse, and those that think there’s a China implosion just around the corner are engaging in wishful non-thinking. It’s not going to crash. It may slow, but it’s not going to implode.

Asia faces an unusual situation in that it has an established power in Japan, which is contending with two rising powers in the form of China and India. How concerned are you about the prospect for tensions spilling over into clashes in the region?

We should add into the analysis the United States, which is also an Asian power, and which has been the dominant Asian power since 1945. I think the big question is the one that Henry Kissinger posed in his recent book on China and elsewhere, which is namely, can we avoid repeating Europe’s history of great power conflict and rivalry in 21st century Asia? Can we avoid a 1914 moment when the rising power, now China then Germany, goes head-to-head with the dominant power, today the United States, back then the United Kingdom.

It’s clearly a cause for concern that there are so many frictions, most notably over the South China Sea, but also over other issues such as the water problems in the Himalayas. I think there are no good institutional structures in place to avoid the kind of conflict that Kissinger is talking about. You can’t really see anything in the way of Asian integration that’s comparable to European integration, and in particular you can’t see a mechanism for balancing China’s growing economic power and the much lesser powers of China’s neighbors. And that’s a real cause for concern.

The U.S. is no longer in a position to be predominant in the Asia-Pacific – those days are over. And so we’re moving towards an era of bipolarity in a two-power system, and the lesson is pretty clear from the Cold War and other periods. This is a very tense kind of arrangement – and divided hegemony doesn’t usually produce stability.

One former senior U.S. official once said to me that many U.S. policymakers see Europe as “done” and so less interesting and relevant than Asia. Is that fair?

Europe has unfortunately been making itself highly relevant now by teetering on the brink of disintegration the past couple of years, and particularly this year. But Europe can be like the worst soap opera you’ve ever watched. If you follow the current euro crisis, it’s a question of whether Angela loves Francois, or does Mario prefer Francois to Angela. It can get quite wearisome, and many Americans zone out after a certain number of summits.

But in the end, the eurozone economy is comparable in size to the United States economy, and a crisis there has massive ramifications, not least because of the scale of transatlantic trade. So although Europe can seem boring, it is important, and it isn’t going to stop being important. Indeed, it could end up becoming more important if the current crisis can’t be resolved and we see a break up of the eurozone, which is perfectly plausible at this point, because there seems to be no sign at the moment of the Germans willing the means necessary to prevent that disintegration.

Just one more question – what have you made of the level of debate over foreign policy in the U.S. election year so far?

It has been conspicuous by its general absence from the campaign so far. That’s not surprising – everyone knew at the outset that this election would be dominated by the economy. But of course, the economy is in many ways affected by external forces, so it’s quite hard to have a presidential campaign with the rest of the world omitted.

It’s interesting that President Obama has directed much of his fire against Mitt Romney’s career at Bain Capital because it’s alleged Bain was responsible for outsourcing American jobs. That’s the way the foreign dimension is coming into this election. There’s much less of a clear debate going on about grand strategy. Partly because the Romney campaign hasn’t set out an alternative strategy to the one we currently see. I wish he would – I think that would be a good argument to make. But I suppose I can see why the strategists think that this is marginal to the concerns of the average voter in the United States.

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Topics: China • Economy • Europe • Germany • United States

soundoff (126 Responses)
  1. peter

    "But this isn’t something that is just about to collapse, and those that think there’s a China implosion just around the corner are engaging in wishful non-thinking. It’s not going to crash. It may slow, but it’s not going to implode"

    I like how the author suggests that the succession of china as the world superpower is very likely, but could actually not happen, but states that china imploding is just NOT going to happen. Really? The worlds largest communist nation has NO chance of crumbling within its own walls? I'm just saying theres a chance of that, I wouldn't be so arrogant to say theress NO chance.

    July 23, 2012 at 6:18 pm | Reply
    • Sowhat????

      The US have already imploded with arrogance and ignorance and ill wishers, but karma will get people like you ^.^

      July 24, 2012 at 11:24 am | Reply
  2. cyg

    A week ago they were falling – which is it?

    July 23, 2012 at 6:37 pm | Reply
  3. CAS

    China has enough nukes to shower at every NATO nation, any CIA like sabotage of its nation, as the CIA have done in South America and Africa in unlikely.....such idea is laughable as Chinese are way smarter than that.....

    Long live China....now Africa has to get its own set of Mugabes...Africa should clone Mugabe for every country...

    July 23, 2012 at 7:36 pm | Reply
    • LibCom

      Saying "long live china" is like saying long live totalitarianism. You like totalitarian societies?

      July 24, 2012 at 6:46 pm | Reply
  4. sftommy

    China does seem bent on a slow conquest of the world. Tibet, the South China Sea, the Uyghur people.

    To the extent they kill internal dissent they will fail and fall into revolution.

    Economically, they discourage innovation and free thinking of most any sort, so that will keep them behind the progressive powers of the West on that front.

    July 23, 2012 at 7:41 pm | Reply
    • Maersk

      You definitely sound like one of those American kwok heads who have zucked his uncle's limply kwok one time too many and swallowed one mouthful too much. Aren't you full of kum already?

      July 23, 2012 at 10:15 pm | Reply
  5. ELRod

    This shift is caused by investment dollars of American corporations. Lets kick them out and call them Chinese. That should fix the issue quickly.

    July 23, 2012 at 9:48 pm | Reply
  6. Richard B Long

    We are asking ourselves the wrong question. The real question is "is Americas continued decline Inevitable?" We have an increasingly distorted view of ourselves, our place and our future in the world order. Awareness is always the first step toward a solution and we have yet to take it!

    July 23, 2012 at 10:09 pm | Reply
  7. doregroj

    China has been growing leaps and bounds over the U.S. and others because it has been cutting corners and has not had to live up to the consumer, environmental protections other countries have. Sooner or later this is going to catch up with them just like Chernobyl caught up with the Ex-Soviet Union. Without consumer and environmental protections at some point Murphy's law will apply. Something, somewhere is going to go wrong. It could be nuclear, it could be their banking system, it could be contamination of water. Without a good checks and balances sytem, things will go wrong sooner or later.

    July 24, 2012 at 12:41 am | Reply
  8. jake

    americans will soon be ocean hoping to work in china.

    July 24, 2012 at 1:16 am | Reply
    • Grammy

      or, maybe, muslims will beg for work visas to China so that they can work the fields, factories, or as slave labour ...

      July 24, 2012 at 10:24 am | Reply
  9. Skeptic

    If China stays the way Hu Jintao wants it, China will never become a real world power. A country that lacks social freedom is just not going to be creative, and without inventions, China is just a super sized Saudi Arabia, with no greater contribution to the world other than an endless labor force.

    July 24, 2012 at 5:59 am | Reply
    • Sowhat????

      Ummm, if you don't now the number of patents in China is third in the world...So you're a skeptic who's also delusional!

      http://en.wikipedia.org/wiki/List_of_countries_by_patents

      July 24, 2012 at 11:21 am | Reply
  10. O'Doyle

    Why are we ignoring China's recent economic hardships? While its economy has expanded astronomically in the past half-century, China is not immune to decreases in external demand from some of its biggest trading partners (the U.S. and Europe). Minxin Pei, Professor of Government at Claremont Mckenna, has written about the fallacy of China's certain and imminent rise to economic dominance, citing specifically that, "The Chinese bubble – as much an intellectual and political bubble as an economic one – has burst. As China’s economic deceleration exposes its structural vulnerabilities and flawed policies, the much-hyped notion of 'Chinese exceptionalism' is proving to be nothing but a delusion." Read why Pei feels China is no longer the invincible economic machine it was once thought to be: http://www.project-syndicate.org/commentary/why-china-can-t-adjust

    July 24, 2012 at 6:18 am | Reply
  11. Robert

    China growth and threath can be stop asap, if Americans and American companies moved their producction out of China ,do not grant the USA preference un trade and people refuse to buy the cheap quality of products they sell us.
    The USA helped on their grow. I do not buy nothing mad in China.

    July 24, 2012 at 7:46 am | Reply
    • cnncoments

      Yes I agree with Bob, don't buy cheap merchandise from China, we will buy things cost $99 instead of $0.99 to help our country growth.

      July 24, 2012 at 10:07 am | Reply
      • Jack

        That's .99cents in China's pocket or 99.00 dollars in our economy. Buy American, you may pay a little more but you get waht you pay for. If you've bought Chinese products you must know how cheaply they are made.

        July 24, 2012 at 11:23 am |
  12. Person of Interest

    Both of you don't really have a clue due you (Saeed and Sarah)? Currently China is more concerned with having a regional hegemony first. They have 1 aircraft carrier and while they do have significant land-to-ship missile systems that had great results during development, that isn't exactly a way to push power outside their typical sectors of influence. They are for the near to medium future content to continue to aggravate their neighbors and force themselves into the premiere rare earths producer and an economic powerhouse. Which is why the South China Sea is where the most likely conflict is to occur, not Britain nor Africa.

    If China can grab those areas where most rare earths are it will continue to have a huge say in global politics without any need to pursue world-wide hegemony. Every technologically advanced country needs these to further develop so they will be at the whim of China until they can (if possible) produce their own.

    Vietnam, Malaysia, and the Philippines are having tons of issues right now and have all requested assistance with this due to China's territorial water claims. Not to mention, Kashmir-Jammu area is also claimed by Pakistan, India, and China (all 3 nuclear states); then there's also Taiwan. But good job coming up with preposterous claims that have a virtual zero chance of happening. You guys should be B movie writers, maybe you could write Anaconda 12 or something?

    July 24, 2012 at 10:29 am | Reply
  13. The_Mick

    China passing the USA in GDP in 4 years is based on "purchasing power" so it treats a 50 cent Chinese Big Mac the same as a $4 American Big Mac. That's fair enough but it also treats plowing fields with Chinese Water Buffalos like plowing with Tractors in the USA. In REAL GDP, China won't even be at HALF the USA in 4 years. Additionally, as Chinese income rises, Chinese costs will rise.

    July 24, 2012 at 11:44 am | Reply
  14. Belleville

    Lets break this down, China all by itself has a call option on USA debt. Thats called absolute power. Aside from years of controlled currency, this will eventually wither the dollars value demanding more dollars for the value. Unfortunately the US can not undue this predicament, hence the tough words from politicians. Since the majority of US wealth historically is simply faith in paper assets, the Chinese have scored a trump card in demanding a growing share of that wealth, its happening as you read.

    July 24, 2012 at 12:19 pm | Reply
  15. Brian

    China will eventually bury the West in economic power. The west has tied it's hands with regulation and political correctness. China's middle class continues to expand at a ever increasing rate while the middle class in the west stagnates. Once there people can afford the products they create the west will lose importance. When China makes the decision to do something it is done, period. In the west, they spend 15 years doing environmental impact reviews and then another decade fighting it in the courts.

    July 24, 2012 at 12:41 pm | Reply
  16. andyst

    If China's economy is anything like the crap they manufacture, it will fall apart in no time.

    July 24, 2012 at 1:05 pm | Reply
  17. jackinbox

    China needs to come out and renounce Communism. It has been a lie and it is doing more damage than good. If you tell the business people in the country: we let you run for a while but will get you in the end. What would they do? They skim as much money as quickly as they can, park their money outside, then immigrate.

    July 24, 2012 at 1:18 pm | Reply
  18. ted

    Has Zakaria said anything new?

    July 24, 2012 at 1:35 pm | Reply
  19. Yawn..

    Boring-

    Mariah Carey is a new IDOL Judge Yippee!! Now that's news...

    July 24, 2012 at 1:38 pm | Reply
  20. Matt

    China and India are only rising because of their cheap labor markets. Once enough people have had the taste of middle class, they're going to want more than can they provide while sustaining wage disparity with the West. We could produce the same crap for the same terrible wages if our people didn't feel the need to live in nuclear households, own cars for each family member, have cell phones and broadband subscriptions, eat meat with every meal and have all the other luxuries of the west. If Africa could ever get organized under a coherent economic leadership, they could probably replace China once China gets too greedy.

    July 24, 2012 at 2:06 pm | Reply
  21. History Bear

    China is using capitalistic principals to buy up rights to minerals and resources that are scarce in China. That means a cooresponding increas in sea lift capacity and the military to protect it. China is rising becasue Europe and the US are fixated with the Islamic problem. INdia will be increasing it's presence over the next 10 years or so and watch out for Brazil to make a move to control more of South and Central america through investment and treaty. The West isn't dead, it's just rapidly sliding into irrelavenece as other than a market.

    July 24, 2012 at 2:26 pm | Reply
  22. Lila

    There will always be an upper class feeling about Europe and the US vs China and India. The East has the largest populations and the majority of those people live in extreme poverty. Essentially many of them are slaves. First, how many countries want to copy their success? none,they would rather exploit those poor workers in those countries instead. Second, how long will those workers go along with being exploited like that? It's inevitable they will want more. It's a difficult sell to poor people that their country is great and rising when they can only see a few reaping the benefits. Third, how long will these rich few tolerate being controlled by a communist government with all their demands and control? For the most part, most welcome China and India doing well and are not threatened by it. They are very greedy and have their own issues just like other countries. The West and East and will be viewed as countries with different opportunities not one is better than the other.

    July 24, 2012 at 2:37 pm | Reply
  23. Michael E. Mouse, Esq.

    The US spends too much on its military. Time for the rest of our allies to pay for the own defenses.

    China will eventually be torn apart from within. Its government structure is not sustainable. People there are starting to understand the unfairness with the social structure.

    July 24, 2012 at 3:52 pm | Reply
  24. vince

    I agree with the cheap labor comment. China 'rose' for two reasons - cheap labor and unfair trade practices that the US allowed to continue including currency manipulation. Yes, China has 1.3 billion people - but that is comparible to the populatiosn of India, Philipines and Indonesia - which is now far cheaper labor costs. So I'm not sure China's continued rise is inevitable. Also too they still have a vast poor population that has not seen the benefits of economic growth like the more properious region - and china is not known for charity - so these masses may one day rise up and then central governement will have some serious problems.

    July 24, 2012 at 5:22 pm | Reply
  25. outawork

    No, when the US economy finally collapses it'll drag them and the rest of the world down too.

    July 24, 2012 at 7:27 pm | Reply
  26. Max

    Boycott china's products..............................

    August 1, 2012 at 7:14 am | Reply
  27. Max

    The only way now is to boycott as many chinese products as possible, or attack them before it is too late.

    August 1, 2012 at 7:29 am | Reply
  28. The Mad Hedge Fund Trader

    One of the great things about running a website with a truly global reach is that readers send me material which is nothing less than outrageous. So I had to laugh when I found in my inbox an animation of two bears discussing the hopelessly idiotic approach the US government has taken towards its trade with China over the past two decades.

    America gave away 25 million jobs, got nothing in return, with the end result that our standard of living is falling, while China’s is rising. The Chinese made this easy by devaluing their currency 50%, thus giving their exporters an unassailable price advantage. This has enabled the Middle Kingdom to buy an increasingly larger part of the US every year at knock down prices.

    The US could address this imbalance at anytime through the imposition of punitive import duties and forcing a revaluation of the Chinese Yuan. But any attempts to do so are fought off by well-financed libertarian pro business elements spouting the principals of free trade. So China laughs all the way to the bank, and the unemployment rate here ratchets ever skyward.
    The Mad Hedge Fund Trader

    August 14, 2012 at 11:19 pm | Reply
  29. James Dudon

    You can unblock sites and surf anonymously in China using http://www.mastervpn.info

    August 26, 2012 at 6:45 pm | Reply
  30. Beef Lo Mein

    Guys, let's face it. China is the new superpower. All, step aside and let the new leader emrge. It is inevitable. The shift is in process. Can you feel it?

    September 11, 2012 at 3:17 pm | Reply
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