Does China Have the Ticker?


‘The time will arrive when we look back over our shoulder and find Europe and America lagging far behind’, Sun Yat Sen, 1905.

Last time I wrote for New Matilda (click here for the article), I spoke about China’s importance for Australia’s future. But in approaching the ‘China Miracle’, it might also be a good idea to try to see it in the context of China’s own history rather than through our own political and economic anxieties.

For over 4000 years, China was the undisputed hegemon of its known world. Until the seas which isolated the empire were transformed by colonial zeal into sea lanes of European commerce, China enjoyed a power unrivalled until the 19th century. It was then that the British (with the help of a few gunboats) reversed their trade deficit by forcing China to import opium (mainly sourced in the British colony of Indian) in exchange for the silk, tea and porcelain desired by Europeans.

It worked a treat, and by 1839 China had to ship out 30 million taels (or 37.4 g) of silver to balance the resulting trade deficit with Great Britain.

China’s defeat in the First Opium War (1840-42) and the subsequent Treaty of Nanking made it vulnerable to other Western economic interests each seeking their share of territory, trade concessions, resources and cultural dominance. The Chinese have seen what desperate nations can do in the name of free trade and are, to this day, extremely wary of superpowers lumbering around with imprudent trade deficits.

Eight years after the Opium War (and two years after the publication of the Communist Manifesto) Hung Hsiu-ch’uan, who claimed to be the younger brother of Jesus Christ, declared war on the foreigners and sought to overthrow the Qing dynasty which accommodated them. The Taiping Rebellion of 1850, which Hung led, went on to establish an autonomous region stretching from Nanking to the western reaches of the Yangtze River. Until 1864, the rulers of this massive portion of China abolished private property, granted equal rights to women, prohibited concubines and prostitution, distributed surplus agricultural produce to famine stricken areas and abolished inheritance.

Thanks to Sharyn Raggett

Thanks to Sharyn Raggett

Sound familiar? A Communist state 100 years before Mao’s Peoples Republic, and all in the name of Christian love! No wonder the authorities today are just a little suspicious about ‘religious movements’.

Both the Taiping Rebellion and the later Boxer Uprising were peasant revolts and this goes some way to explain why the Chinese Communist Party succeeded in breaking the Marxist mould by basing their revolution on the peasantry rather than the industrialised working class.

So, in the light of these historical anecdotes, China does not see itself as an emerging Third World basket case playing catch-up with the rich kids on the block. Nor does it carry any political baggage of the class struggle and ideological correctness. It sees recent history more as a brief 150-year period of interrupted hegemony in which it’s had to suffer the indignities of foreign occupation and exploitation while first resisting the invader and then reconstructing its institutions in order to take its natural place in the world “ at the top of the heap.

So let’s have another look at those facts and numbers.

Zhou Xiaochuan of the Peoples Bank of China recently announced an increase in Chinese exports for August, to over $US68 billion (up 33 per cent on August last year). This translates into a trade surplus of $US10 billion for the month and over $US60 billion for the year to date.

China’s foreign reserves stand at over $US700 billion, predominantly invested in US treasury bills. And the country’s central bankers are still resisting pressure to significantly revalue the Yuan, which is now calibrated to a basket of currencies after being pegged to the US dollar for over a decade.

China now accounts for 31 per cent of the global increase in the demand for oil and consumes over 20 per cent of the world’s aluminium, nickel, copper and iron.

So much for that much anticipated – and feared – slowdown.

Justin Yifu Lin of the China Centre for Economic Research predicts that China can maintain a growth rate of 9 per cent per annum for the next 20 years. At that rate by 2025 it would have a GDP nearly 10 times larger than it has now. At even half that rate, China’s growth would aggravate the current scramble for limited natural resources, which is already causing significant price rises in commodities and bringing it head to head with US and Japanese interests.

China has been busy forming trade pacts with foreign-aid sweeteners in areas of the globe which are traditionally within US spheres of influence (tar sands in Canada, minerals and energy in Australia, gold from Bolivia, oil from Ecuador and Venezuela, coal from the Philippines, etc). Through multilateral forums like the China-Africa Co-operation Forum (CACF) and the Arab League, China has successfully formed ‘new types of partnerships’ securing 30 per cent of its oil imports from Africa and about 50 per cent from the Middle East. Trade with Latin America has already passed $US40 billion annually, having quintupled over the last six years.

To add insult to injury, it has formed significant bilateral trade and diplomatic ties with Third World countries on the US ‘Axis of Abhorrence’. As well as a $US70 billion oil and natural gas deal with Iran, China imports 5 per cent of its oil needs from the Sudan while stationing a rumoured 4000 troops there to protect its interests, despite a US embargo on American oil companies doing business with Khartoum.

Meanwhile, back at the ranch – what’s a poor Texan to do?

Well, there’s not a lot he can do. You don’t bomb your banker and while Tex might like to get into the place for a quickie regime change, the place is just too bloody big to cover all the bases, and the good Lord only knows when you’d be allowed to leave.

Economic shootouts are out of the question because cheap Chinese merchandise has become an essential ingredient in the fight against inflation in the OECD. (Remember that ugly ‘stagflation’ we had to endure, before the flood of cheap t-shirts?)

If only our Texan ranchero were a student of history he might realise that he could use his naval strength to play funny buggers with access to the sea lanes. The Strait of Malacca would be a good start. Or maybe bring on Taiwanese independence, while you still have the bigger shooter. But would it be worth it? Who would ride the boundary with North Korea now that Japan and South Korea have sent our cowboys packing?

There is always the British solution, of course, and I hear that the poppies are blooming in Afghanistan again.

Postscript from Beijing
‘You Australians are always joking! We don’t have a problem with your Prime Minister’s position on Iraq. Who do you think is bankrolling the US over there? Who else has the cash? We won’t let them forget Iraq the way they forgot Vietnam. Getting in is the easy bit. Getting out in one piece is another matter. Anyone who helps keep them tied up there can’t be all that bad. Thanks John. So we are happy customers to Australia and happy creditors to the States.’

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.