More on Why I Don’t Believe That the Chinese Are the Next Great World Power

by Pejman Yousefzadeh on October 20, 2010

I mean, I suppose that they can be if the United States just goes ahead and defeats itself, but in seeking regional and global hegemony, the Chinese are doing some pretty stupid things (while being hamstrung by various economic and demographic limitations). Daniel Drezner analyzes Chinese attempts to halt mineral shipments to Japan and the United States, and concludes the following:

China’s foreign economic policies with respect to raw materials suggests that Beijing doesn’t think market forces matter all that much — what matters is physical control over the resources. This is a pretty stupid way of thinking about how raw materials markets function, and it’s going to encourage some obvious policy responses by the rest of the world. Non-Chinese production of rare earths will explode over the next five years as countries throw subsidy after subsidy at spurring production. Given China’s behavior, not even the most ardent free-market advocate will be in a position to argue otherwise.

More importantly, China’s perception of how economic power is wielded in the global political economy is going to have ripple effects across other capitals. If enough governments start reacting to China’s economic statecraft by taking similar steps to reduce interdependence with that country, then China will have created a self-fulfilling prophecy in which geopolitics trumps economics. Another possibility is that the rest of the world will operate as before in dealing with each other, but treat China differently, developing CoCom-like structures and fostering the creation of explicit economic blocs.

That really would be the worst of both worlds for Beijing. China is growing, but the economic weight of countries that prefer market-oriented ways of doing business is still much, much larger.

In going for the short-term gain, China is inviting a long-term containment policy. That might allow for some rally-round-the-flag support at home, but it’s going to be a massive net loss for their economy.

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