The myths of a China-led global order

The idea that the world’s second-largest economy and leading trading country might grab the banner of globalisation has suddenly gained currency.
Chinese President Xi Jinping, in his address to the World Economic Forum in Davos on January 17, put up a staunch defence of free trade and the existing global economic order. He warned that “Pursuing protectionism is like locking oneself in a dark room. While the wind and rain may be kept outside, that dark room will also block light and air.” He then pledged to create “an external environment of opening up for common development”.
A few days later President Trump used his inaugural address to announce his protectionist “Make America Great Again” programme. Instead of bringing mutual benefits, he said, globalisation only “made other countries rich while the wealth, strength and confidence of our country have dissipated over the horizon”. He promised instead to bring back jobs, business and capital from overseas. 
The contrast between the rhetoric of Xi and Trump could not be more stark.
The American economy has been so dynamic precisely because it has been mainly market-driven. Now, as Trump politicises his economic policies, the dynamic aspects of American capitalism are at risk. Concern is rising that his presidency might just mark a historical turning point into decline for the US economy.
The US was instrumental in creating the open and market-oriented post-war international economic order with the establishment of the World Bank, International Monetary Fund and the rules-based international trade system, along with the Marshall Plan that facilitated Europe’s post-war recovery. The US-led international economic order then facilitated Japan’s post-war recovery and the successful economic take-off of East Asia’s “Four Little Dragons” – South Korea, Taiwan, Hong Kong and Singapore.
The US, in providing easy access to its vast domestic market, along with liberal capital flows and technology transfers, has been singularly beneficial to these export-oriented East Asian economies. Later, China’s economy also benefited from the relatively open US market, albeit with more restrictions.
For developing countries, Pax Americana also came with the imposition of US political and social values, particularly during the Cold War era. Yet any emerging economy that successfully plugged itself into the American-led economic order would benefit from rapid economic growth.
That order, along with its guarantee of growth, now seems on the wane. 
Currently, China’s economy is about 60 per cent of the US size. Yet the American economy’s long-term growth rate is around 2 per cent owing to relatively low productivity growth and mediocre human resource development – the US ranks near the bottom in skills level among developed countries. Furthermore, increasing political and social division in the US may accelerate its economic decline.
China’s economy is likely to continue growing at around 6.5 per cent a year till 2020 under the current 13th Five-Year Plan, and around 5 to 6 per cent for the next Five-Year Plan. As such it is projected to overtake the US as the world’s largest economy by 2030. But despite that landmark China will still be a low-income developed economy, with per capita GDP of only around US$17,000 (World Bank figures) –equal to Singapore in 1993 and Japan in 1970. In other words China will still be years away from being a truly affluent society.
Xi is a patient man. Currently, he is preoccupied with helping China to achieve a Xiaokang (moderately well-off) society by 2020.
To realise his “Chinese Dream”, he has aimed higher with a long-term vision of a fully developed Fuqiang (rich and powerful) country by 2049 – exactly 100 years after the founding of the People’s Republic in 1949. Such is the timeframe for the possible emergence of the Pax Sinica Global Order - about the same time span needed for the transition of Pax Britannica to Pax Americana!

‘Already centre of the world’

It is thus farfetched to speak of China quickly filling the US leadership vacuum, even though America is visibly turning inward. Beijing is far from ready to fully embrace globalisation. 
China’s leaders have always been wary of negative effects of globalisation. Deng Xiaoping once warned: “When you open the window, some flies will come in.” Not surprisingly, China has continued to maintain strict censorship on foreign media and a tight firewall and censorship for its cyberspace. 
It will remain a “reluctant global player” for a long time to come. This is not just because China today is ruled by the Communist Party. The mindset of Chinese leaders has been shaped by their culture and history.
In his seminal book “When China Rules the World, Sinologist Martin Jacques argues that “China does not aspire to run the world because it already believes itself to be the centre of the world, this being its natural role and position”.
What is sufficiently clear is that China will be a different global player.
During the transition, a less assertive Pax American global order will continue, gradually giving way to a multipolar global order. China in the meanwhile will continue to expand its political and economic influence in developing countries, particularly in Africa and Latin America, where it has already built up a strong presence through trade, investment and economic assistance. China’s One Belt, One Road programme will further reinforce its endeavour. Together, these add up to the possible scenario of a China-led economic order in the developing world.

John Wong is a professorial fellow at the East Asian Institute, National University of Singapore.