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China Is Set To Dominate the World in 2050.

August 10, 2008

China Is Set To Dominate the World in 2050 Martin McCauley writes: The Olympic Games s have placed China at the centre of world attention – even though the conflict in South Ossetia did spoil the occasion by distracting the world media. But still, many people are finding out more about China and are quite probably wondering whether the time of Chinese dominance is approaching? Could it be that China will replace the US as the most powerful nation on the planet? And if it does, what would it mean for the rest of us?

A recent study by the Carnegie Endowment for International Peace attempts to predict where China will be in 2050, and beyond. It makes sobering reading for Americans and Europeans. The Carnegie fund concludes that the Chinese economy will be the same size as the American one in 2035 and that the country will produce double the US Gross Domestic Product (GDP) in 2050. This will have massive political, economic and military implications for the rest of the world.

China’s economy has been growing by over 10 per cent annually during the current decade. Contrary to widespread perception that this growth was export driven the engine of economic advance was, in fact, domestic. Export surpluses contributed to about a quarter of annual growth. This allowed China to expand while the rest of the developed world’s economy slowed down. All this meant that China had created an economic model which is gradually becoming immune to world trends.

China’s success will eventually bring to an end American global economic dominance that began in 1945. American superiority is likely to last less than a century and, once China becomes the world’s number one economic power, it will not be easy – if possible at all – for any other nation to overtake it.
When Mao Zedong died in 1976 he left an impoverished country. Since then China has gone through four dramatic phases of economic change. In the 1980s land had been distributed to farmers, the outline of a modern management system took shape and coastal zones were set up to promote commerce and growth. The decade, though, ended in protests and violence in Tiananmen Square. In the 1990s profit incentives and modern management reforms promoted an increasingly corporate system. Tens of millions of urban workers were laid off as the market took hold. But rural poverty increased and urban redundancies fuelled social unrest. From 2001, with market reforms in place, China’s domestic investment and consumption grew at staggering speeds.

The fourth phase began in 2008. A new ‘scientific development strategy’ – based on government and academic studies – has replaced GDP growth as the key criterion of development. Growth is now deemed acceptable only when it is accompanied by environmental protection and development of social welfare.

State driven economic reform in China rejects the insights of Adam Smith. He argued for small government, believing the ‘invisible hand’ of the free market should be permitted to operate. The Chinese have followed the prescriptions of another classical economist, Friedrich List. The latter argued that the state must be a key player in economic development. This included protectionism and promoting national economic champions.

Economic historians argue that countries pass through phases linked to their level of development expressed as per capita GDP. This places China where Japan was in the 1950s and South Korea was in the 1970s. It is likely that China’s institutional development, including its political institutions, will mature in the coming decades in parallel with its economic development. This means that change will be gradual.

Developed economies, such as Germany, Japan and South Korea, have closely followed American economic trends. China, however, has accelerated when America slowed and slowed when America accelerated. This shows that China is not subject to the US economic cycle. Indeed, surging Chinese imports – they reached $65 billion in 2007 – have helped to keep down interest rates and inflation in the US.

China’s per capita GDP is over $2,000 at present. When Japan, South Korea and Taiwan were at this level, they all achieved growth rates of between 8 and 10 per cent. A rule of economic growth states that if a country begins modernisation at a later stage expansion becomes more rapid. Hence China is likely to grow faster than its neighbours when they were at this stage. If this happens, by mid-century the Chinese economy will be twice as large as the American while the standard of living will be higher than that of America today.

If the Chinese economy becomes twice as big as the American one by 2050 it will give China world commercial and institutional leadership. Chinese trade and investment patterns will shape the world economy. Any downturn will send ripples throughout the world. China will have the financial clout to penetrate all corners of the world and heavily influence international relations.

A critical factor in world politics in 2050 will be China’s military potential. Will China compete with the United States to become the world’s number one military power? This is unclear at present. Of course, it depends on the international security environment.

What could derail China’s march to pre-eminence? Poverty and growing inequality spilling over into social unrest, widespread corruption and pollution appear to be the most serious of obstacles. As regards the latter, it is worth remembering that Japan in the late 1960s was regarded as one of the most polluted countries in the world. Now it is one of the cleanest and a leader in developing environmentally friendly technology. And as for corruption, the evidence from other countries confirms that it tends to decline as the economy accelerates.

Social unrest could be avoided as the Communist Party of China and the government are becoming more sophisticated in their management of socials problems and keeping tensions under control. China is a corporate technocracy and no longer dominated by one comrade. The party leader and the Prime Minister serve for fixed terms. This promotes the replacement of top officials and the adoption of new ideas.

China’s economic success reveals that there is a viable alternative to the ‘Washington consensus’. Will the Chinese model take over as its economy outstrips the American? The world is changing rapidly and it is not going the American Way.

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2 Responses to “China Is Set To Dominate the World in 2050.”

  1. Brian R on June 28th, 2009 11:00 pm

    well, a couple of months have passed, and indeed it seems like china is on its way to claiming superpower title. thay already have influence. sooner or later we will be looking up to the chinese, and practically “whorshiping” them. white western domination is about to be over. hello to the new chinese dynasty. china has been the most civilized for 5000 years. only until 1850 with the opium war did china collapse. they have invented the fork, chopsticks, glasses, paper, printing, compass. calculator, umbrella, pizza*, gunpowder. heck the world actually copied from china. not the other way around. the world is truly made in china.

  2. Henry C on July 18th, 2009 1:04 pm

    Being a Chinese and having lived and worked in mainland China in the last 20 years, I venture to say that this will not happen. A lot of “Chinese Experts” are looking at this issue in a very simplistic perspective, and based their predictions on simple extrapolation, the World Bank predictions are good examples. The current chinese society lacks most of the required elements to be the most poweful country in the world, also, they lack almost every facets of the “soft power”, which I think takes at least two generations’ time to develop (about 50 years), and they have not taken effective steps to develop that, yet. I will give them a real chance when they start to reform politically.

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