Canadian International Council

China's Economic Rise and the New Geopolitics Author(s): Oded Shenkar Source: International Journal, Vol. 61, No. 2, Global China (Spring, 2006), pp. 313-319 Published by: Canadian International Council Stable URL: http://www.jstor.org/stable/40204159 . Accessed: 02/10/2013 21:15
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Oded Shenkar China's economic rise and the new geopolitics BACK TO THE FUTURE a quarter of a centuryof robust. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions .butwill also be reclaiming the primacyit firstobtaineda millenniumearlierwhen it pulledawayfromwesternEurope to becomethe biggesteconomyon the the Chinese"factory to the world" is producing not only garplanet.204.87 on Wed. and sets its even The Chinese have launched manned eyes successfully higher.double-digit economicgrowth.A manifestationof the ty and often remaining growingobstaclesen routeto China'smodernization OdedShenkaris the FordMotorCompanyChair in global businessmanagementat the FisherCollegeof Business.Ohio State University. and aircraft.2005).142. space missions. nologies nanotechnology theirnationcementa leadership in the economicarenaas well as position in worldpolitics.Chinawill not onlybe endinga 150yearsof US reign. somethingonly two othernationshavemanagedbefore. China'scontinuouseconomicprogressdependson its abiliNaturally. of the such as and fuel cells. International Journal Spring 2006 313 This content downloaded from 112. His most recentbookis The Chinese Century (WhartonPublishing.cars. to or contain overcomenumerous problems.Today. Following China is now poised to overtakethe United Statesas the world'slargest economy(in purchasing powerterms)within two to three decades.and are Theyare investingheavilyin the techplanningfurtherspaceexploration.When this happens. thatwill help future. ments and toys but computercomponents.

whether individual citizens or provinces. which means that a shrinking working population must support an ever-growing number of retirees whilst a national security system is still in its infancy.87 on Wed. China is facing the prospects of American and European protectionism. In Hong Kong. and military power of the Chinese are not too far from the surface. Milton Friedman's poster boy of a free market. The en" discontent reflects a number of serious problems. political. I 314 I International Journal I Spring 2006 I This content downloaded from 112.that is. by edging ever-closer to a democratic. US-style system. massive pollution. and a demographic time bomb resulting from the one-child policy.204. that is. is likely to continue its economic march forward but is unlikely to follow the route laid by most western observers. as it did in some 25 years of reform. jeopardizing its global and economic prospects. was a British colony whose residents had even less power to elect their rulers than under the current Chinese rule. and is amplified by past professed beliefs in egalitarianism and a long tradition of local squabbling. pervasive corruption at many levels of business and government. but remains hesitant about its future course. making such challenges to the party'sauthority more ominous. In the rest of east and southeast Asia. for now. China has retreated. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions .142. such as China's rising inequality between rich and poor. the dismantling of rural collectives and the decline of state-owned enterprises have taken away what used to be the regime's most effective control apparatus. On the Taiwan front. Most forgot that Hong Kong. Just as these concerns are mounting. where prodemocracy forces are testing the limits of expression and offering an unwelcome alternative model to the mainland's residents. concerns about the rising economic. China. China has pushed itself into a corner such that quasi-dedarations of independence may compel it to invade the island. Further ashore. in my opinion. which represents a serious threat to an economy that is increasingly reliant on exports. despite the early observations of multiple western economists that it was not possible to have a successful free market economy under a non-democracy. China is also facing challenges that may well spill into its own borders. OBSTACLES AND THEIR SOLUTION Can China overcome those daunting challenges? I believe it can. and may be triggered by a single crisis. from enforcing unpopular antisubversion measures. Abroad. by its ability to continue to deliver economic prosperity.naturally a threatening phenomenon to a non-democratic regime whose legitimacy is underpinned by a modern "mandate of heav.I OdedShenkar | is social unrest.

theywill be I International Journal I Spring 2006 I 315 I This content downloaded from 112. continuinga millennium-old troloverboth cultureand information.with the formerin charge. demonstrations.87 on Wed.towardsthe hinterlandare beginningto bearfruit.Onecan imitateonly by technology thatmuch.the government can alwaysuse nationalism uncertain. Whataboutthe protests? The Chineseare tryingto deal with some of the rootcauses. No wonderother developingcountriesand their rulersare reflectingon whetherthis is not a bettercourse than plunging electionsand changing into the uncertainand chaoticworldof democratic regimes.both domesticand foreign. goes the argument. mechanism for monitoringand control. for economicleadership The weaknessis ingredient to the currentleader. in which a of made up of a combination ruledthrougha capablebureaucracy dynasty and professional experts.courtchallenges.so once the Chineseare ahead. the Chineseareshowingthattheycan andwill with Chinese characteristics" by turning the engage in "modernization on its head.204. but China will model that many nations. beyond Beijingand the 2008 Olympicsremains though implementation as In the meantime.as they meet the economicrealitiesof an increasinglyexpensivecoast. the United especially glaringwhen Chinais compared States. In addition.which is by far the most innovatingcountryin the worldas judged flows (thoughnot on a percapitabasis). something not too removed from the imperial model. Forinstance. the commune. and the tradition of stateconstate-owned enterprise. Pollutioncontrol is suddenlyin vogue.turningit into a internet. Here. not to mention at home. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions . insteaddevelopand prosperwith an alternative control especiallyin the developingworld. generalists investors are enamoured by Chinese efficiencies:no need to Foreign wait for publichearings.I China's economic rise and the new geopolitics | Not only will that not happen in the foreseeablefuture. inability produce acknowledged possibly in a moderneconomy.142. the virtualcommunityis replacingthe physicalcommunitiesof the clans. A new leadership model A commoncriticismof the Chinesemodel of economicdevelopment is its to an but overstated innovation.as an instrumentof democratization.will find appealing:one-party of powbut withoutseparation via a merit-based administered bureaucracy ers. in as it did an antidote to political recently launchinganti-Japan aspirations.massiveincentivesand proddingby the governmentto shift investment.and the endless politicalbickering one encountersin some otherinvestmentdestinations(suchas India).

to suggest leadershipby imitationsounds like an oxymoron. MILITARY AMBITIONS Of particular concernto the United States and other nations (Japan.thoughit has consistentlyfailedto producethe sustainablescience that would enableit to build on past sucilludecadesof communism. In the meantime.withits "innovation cesses. thoughonly time will tell if it working will be successful.you may be lookingat a new business model.the copier is not a thirdworldcountrywith the abilityto imitateand reverseengineersimple level.204. China is (see.YetChinais now manufacturing importation the most ambitious one of attemptsin historyto reversethese undertaking to invent)and developwhat weaknesses.Chinais engagedin the most massivecopyingenterprise undertakenin modern time.it is worth that the Chineseempirehas had a stellarrecordof innovaremembering from the tions. From the repatriation firms on their more innovativestaff the of to abroad) acquisition foreign acquisitionof IBM's PC business). This time around. is the substantial increase in military expenditureby the Chinese regime.87 on Wed.somethingthey cannotdo undera non-democratic system.I OdedShenkar | forcedto innovate.restorewhatit had (thecapability to developscience and its variousapplicait did not have (the capability of its "turtles" (Chinese students educated tions).142. and this one is China'sto win. did not help. but an economywith advanced capabilities productsat a low-quality sometimesat a levelwhereit can a sophisticated thatcan replicate product.WhileI will be the firstto admitthatthe debateandtransparencyassociatedwith democracyare a boon to innovation. Not so fast. leveraging it out of the investmentto undercutits pricingpowerand eventually push market.In today'sage.wherethe copiertrumpsthe innovator. its R&D of a new order. hardlybe told apartfrom the original. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions . nor did earlyyears of reformswith their wholesale of complete. for example). for example. Several by decree" sions.So while foreignfirms are told that we may be seeing the development continuousinnovationis their saviour. compassto the abacus. While China and the United States are sharplydivided over the actual expenditure(the United States claims it is much larger I 316 I International lournal I Spring 2006 I This content downloaded from 112.turnkey systems. Lenovo's its to overcome hard shortcomings.but once you combine the rise of the accomplishedcopier with the commodifiinstitutional environment (China)and its supportive cationof productmarketsand with the rising globalchallengesto the current copyright regime.

the army as moretechnological capabilities being for and as a recipientof such technologies. coming on the heels of a bipolarand then a singlefrom yearspast. nations.will representa dramatic departure superpower is China the long run. years investment of the constantone retained nomicreformhave tie-up foreign WTOcommitmentsnot to mainto technologytransfer.having thathas become powersin the technology laggedbehindthe majormilitary that numbers and and endeavours so vital to military having recognized willpoweralone will not win a modernwar. benefitsbothdirectly.This is criticalas technology transferhas now been expandedto include R&Dcapabilities. military's objecinterests(e.so do the military capabilities Whatis not dear yet is the extentandprecisenatureof China's regionaland is set to achieveor protectand how such globalambitionsthatthe military with China'seconomicaspirations..somethingakinto the managerial capability Chinese the with other as al enterprise. resources. Twenty-five and applications.Second.g.142.As China'sambitions it is aspiringto obtain. China's military but economicprogressis likewisevitalfor the militaryto achieveits goals of growth and rapid modernization.Economic growth produces more towards and those can be channelled buildup.g.the Chinese militaryis indeed in need of modernization. in technology staffwho arewell-versed instanceby absorbing development ecoChinese of And transferthey do. evidencesuggests it is still there.. ambitionsare intertwined is not onlythereto protectChina'seconomicinterests.Why the investment? First. military to transferred are China.and these driveto build long-termcapabiliare essentialin the military's capabilities thatbefits modernarmed ties and to achievethe continuousimprovement forces. Despiteapparent tain the tie.I China s economic rise and the new geopolitics | than the official numbers suggest) and over the intent of the military buildup(offensiveor defensive).conwithTaiwan). and interestsexpand.which. WELCOME TO THE NEW "NEW WORLD ORDER" At the geopolitical level. In order.there is no questionthat Chinais investing heavily in upgradingits militarycapabilities.Similarly.At issue are not only weapon multipleunits of diverseand far-flung systemsbut the abilityto coordinate to run a modernglobservices.the rise of Chinawill introducea returnto a multipolarworld. indirectly. cation" includingthosethatareprimarily trol of vital raw materialsand their supplyroutes). "reunifitives areto protectand fulfillnationaland strategic economic(e.204. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions . clearly seeking strategicparitywith the United I International Journal I Spring 2006 I 317 I This content downloaded from 112.87 on Wed.

To start with. is to build a global position to rival that of the United States. from Zimbabwe to Iran. At a risk of oversimplification and as an outsider looking in. relativelydocile population (unlikely to complain about foreign aid. I 318 I International Journal I Spring 2006 I This content downloaded from 112. Its goal.I Oded Shenkar | States.87 on Wed. China is pushing into the Americas.as New Jerseyis to New York. Canada is America's backyard. for instance). or pirating somebody else's knowledge.142. its modest size. Here. and that an involved China is in everyone's interest.its very limited capability to sustain genuine innovation as opposed to copying. Regionally speaking. and lack of global military ambitions sit well with China's version of what a strategic partner should be. the Middle East.or veer towards the expansionary policies of other totalitarianregimes. though it is unlikely that this will signify a return to the bipolar world of yore. Europe. China itself does not harbour the aggressive ambitions of the Soviet Union. Canada also represents a foothold in North America. imitating. and. Canada's early recognition of the mainland regime. and time will tell if China will retain its imperial ways. while active in Asia. which China needs for its burgeoning economy. Africa. and lack of inhibition about dealing with rogue regimes. in my opinion. let me suggest how I believe the Chinese are looking at Canada and what this view will imply. China is set to build coalitions across the ocean. as in the recent CNOOC bid. even though the Chinese leadership is trying hard to sell the notion that this is not a zero-sum game. This is because we now have a semi-unified Europe and because. This is the subject of much contention.204. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions . a pied-a-terre of a sort where one gains entry to the continent without confronting head-on opposition on the part of the US government. Finally. Canada is in the same boat with Israel and other innovating economies that can provide a counterbalance to American technological dominance and can compensate for China's Achilles' heel. leveraging its economic power. Canada is viewed as a haven of oil and minerals. CANADA AND THE NEW "NEW WORLD ORDER" What role will Canada play in the new "new world order"? Let me start with the bilateral level. In the interim. Canada represents a source of innovation.which the Chinese badly need and for which they worry about having to depend on the United States. to a lesser extent.modest regional incursions while aiming to beat its enemies by way of cultural supremacy.close enough yet more open to Chinese foreign investment and less suspicious of China's intentions. for now.

it is not clearat all that it will not shift away resourcesfrom industryand services. but I do see risks in the relationship. I International Journal I Spring 2006 I 319 I This content downloaded from 112. century. "newworldorder"?This looks more promising.204. role be in the new what will Canada's Beyondbilateralrelationships.87 on Wed.perhaps putes. involvement Canadian more as diverse Canada's that view countries between receppopulation pin disin crossborder mediator of opinion.anda less-biased tiveof differences a Canadian about be should also we If this talking happens.It can serve as a bridge between countries that might feel less intimated by a lynchthan by Americanor Chineseinvolvement.142.and Canadian suspimay cooperation ciouslyby some.Once China'sraw materialneeds come undercontrol(forinstance. sourcfrom other and enhanced the boom countries.A secondproblemfor Canada issues as over such with the United States energy frayingrelationships diversionand the technologytransferof so called"dual-use" technologies. 2 Oct 2013 21:15:46 PM All use subject to JSTOR Terms and Conditions .The riskfor Canada that of over-reliance on the energy and mining sector to the neglect of is thatof futuresourcesof economicgrowth.In a multilateral world. Canadacan play a much more prominentrole than it does today. towards The currentatmospherein Washingtonis not very sympathetic be viewed Chinaand the Chinese. as for any countryin this situationis to a suddenhalt. appetite to Canada in the shortrange. may come ing efficiencies).I China's economic rise and the new geopolitics | What' s in it for Canada? It is not for me to determine. while China's for raw materials is a boon First.due to increasedlocalproduction.