China is Becoming a Global Business Player
From The Globe & Mail
But Hu didn’t leave it at that. He used the UN spotlight to lay out a plan to reduce emissions to combat climate change, managing—for at least one week this fall—to steal the focus from Western leaders, particularly American President Barack Obama, who had positioned himself as the green president. Hu’s speech, and China’s policy proposals, put Obama in the unusual circumstance of playing catch-up.|
The rest of us had better get used to it: China, which has spent most of the past 60 years in self-imposed isolation, is for the first time in its modern history asserting itself on the global economic and political stage.
Assistance to developing nations? China is moving in to fill a U.S. void, and, in return, getting access to massive oil and mineral deposits, including many in Africa. Though Chinese foreign aid programs are opaque and often ad hoc, one U.S. study found evidence they totalled as much as $25 billion (all currency in U.S. dollars) in 2007, up from less than $1 billion in 2002.
Diplomacy? China is still the single most influential player when it comes to dealings with rogue state North Korea and its nuclear ambitions; it regularly freezes out states whose leaders dare to meet Hu’s nemesis, the Dalai Lama; and—as evidenced in ongoing spats with American naval vessels in the South China Sea in recent years—it is growing increasingly assertive toward Taiwan, which it regards as a renegade province.
Then there are trade relations. When the United States recently announced a tariff hike on imports of Chinese-made tires, China reacted swiftly, launching anti-dumping investigations into American shipments of auto parts and poultry as a warning to the Americans to stand down. The threat worked. Fears of a higher-level trade war have not, so far, materialized.
China’s bold stance reflects the fact that it’s one of the major nations with economic muscles to flex. Thanks to massive state spending, China’s is the only economy expected to reach or surpass 8% GDP growth this year. (By comparison, U.S. economic growth is expected to languish in negative territory at -2.7%; Canada, at -2.5%, will be just as bad.) China holds more than $800 billion in U.S. Treasury securities, making it the United States’ biggest creditor. And cranes still loom over building sites across Beijing and Shanghai, though many of these developments are being helped along by generous, state-encouraged bank loans.
So it shouldn’t be a surprise that China is seeking its rightful place in the world order—including increased influence in the United Nations and the World Trade Organization, where China deeply resents a U.S. “safeguard” clause that allows tariffs against excessive numbers of cheap imports. China also wants to correct the imbalance at the International Monetary Fund, where its voting share falls behind not only that of the U.S. but also those of Japan, Germany, the United Kingdom and France. “We have a more and more complicated relationship with the United States,” says Wang Yong, director of Beijing University’s Centre for International Political Economy Research. “China feels it is a newcomer.”
For decades, even centuries, China has regarded the West with equal parts of awe and suspicion. Though these sentiments still exist, the thaw has begun on the corporate front, with Chinese companies moving more aggressively in recent years. This started with Lenovo’s historic takeover of IBM’s PC group in December, 2004, but also includes Minmetals’ successful bid for many of Australia’s OZ Minerals’ assets and, more recently, a not-yet-settled bid for General Motors’ Hummer division by Sichuan Tengzhong.
These corporate moves set the stage for Hu’s New York appearance, which had the feel of a very expensive, and very choreographed, debutant’s coming-out. He wasn’t just there to boast of China’s climate change initiatives. Rather, he was taking one more step toward assuming his nation’s mantle of superpower. It’s not yet a comfortable cloak, and China’s many failings—corruption and a lack of democracy, among them—will no doubt hold it back. But as the world increases its reliance on this growing economic powerhouse, political power will undoubtedly follow.