I was reading again yesterday Paul Kennedy’s 1993 book on Preparing for the 21st Century. My purpose was to see what was right or wrong in his predictions on which country will be the winner in the new century in the light of what is happening now. My concern was China, which he did not believe then to become a super power next to the US, economically, financially, and perhaps militarily.
The 1983 book was a sequel of Kennedys’ 1987 book on the Rise and Fall of Great Powers. There he explored the politics and economics of the Great Powers since 1500, leading to their rise and fall.
In both books, he predicts the most likely positions of China, Japan, and the other Great Powers in Europe in relation to the US in the new century. His main thesis is that like the Great Powers in the past, beginning with Spain and Portugal during the age of exploration up to Great Britain before the last war, the US that ended up as the greatest remaining power after the last war is also bound to decline eventually.
His advised was for the US to see the need to manage its affairs to allow its position to go down slowly and smoothly, if not avoided at all.
Two things came to my attention before reading Kennedy’s 1993 book. The first was the latest attack made by Trump on China’s continuing use of its developing country status at the World Trade Organization (WTO) to enjoy favorable treatment on trade matters even when it is already one of the richest countries in the world. Last Friday, Trump demanded that the WTO change its definition of “developing country” and remove the favorable treatment the designation brings to nations, including China.
The second was the recent news on China’s global retreat economically and financially, which could be due to its trade war with the US and for other reasons. The article cited China’s finance ministry showing a “soothing and moderate decline” of China’s economic strength. However, it also cited the American Enterprise Institute’s report that “Chinese overseas investments of all kinds in the first half of the year of this year averaged only $27.5 billion, half the rate averaged during the same time in 2018 and barely a quarter the rate of 2017’s first half.” This year’s figures were found to be lower than any time since 2008 or three years before China’s admission to the WTO.
Kennedy was emphatic in his 1987 book that economic power goes hand in hand with military power and that any weakening of the economy will cause the decline in military strength.
How did China achieve its present strength when at the death of Mao, it was wallowing in poverty that resulted from the devastation that came with Mao’s Great Leap Forward? The resurgence of China started with Deng who rose to power after Mao.
The first thing that Deng did was to revolutionize agriculture by abandoning the pre-1978 system of communal farming. He allowed the farmers to raise what they wanted and hire farm labor, sell the excess to the open market after meeting the required government quota, and raise the price paid by the government for its procured agriculture products.
In industry, what Deng did was to encourage state firms to respond to market demand in quality and price, allow private run small enterprises to operate, permitted joint ventures with foreign investors, set-up special enterprise zones along China’s coastline, and proclaimed an export led growth.
The result was for China to grew rapidly in the next decades at double digit rates or close to it until the Great Recession disruption that begun in the US in late 2007.
Now China’s growth has slowed down. Although it is still at rates that few in Asia can surpass, the slowdown is nevertheless feared in China because of the social impact that it would bring when it is unable to continue absorbing its excess low-income workers from the rural areas into its high-paying industries in the urban centers.
One last thing that came to my mind before reading Kennedy’s Preparing for the 21st Century was the President’s SONA delivered last week. It was all hogwash. It said very little of what really were accomplished and what are still to be done to improve our position among all the nations in this present world.
Just like in the past, there was no global vision and strategy in the last SONA. It is no wonder that many in government and the private sector do only what is profitable for them personally without regard to the welfare of every one and the whole nation and our position with respect to the rest of the world.