The Rise of China and BRICs A multipolar world in the making?

    
    摘要:It is commonly said that the world is entering a multipolar phase in global governance with the“rise of the South” or the increasing powers of emerging economies China,India, Brazil, Russia and South Africa (from hereon the BRICS) and the strengthening of their relations as seen in the succeeding BRICS Summit since 2011.

The Rise of China and BRICs: A multipolar world in the making?


By Dorothy-Grace Guerrero

It is commonly saidthat the world is entering a multipolar phase in global governance with the“rise of the South” or the increasing powers of emerging economies China,India, Brazil, Russia and South Africa (from hereon the BRICS) and thestrengthening of their relations as seen in the succeeding BRICS Summit since2011. By the time this article sees publication, the BRICS Summit in Durban,South Africa would have added new achievements to further that notion. Manybelieve too that with the economic stagnation in the Eurozone and the US, BRICScountries are gaining more wealth, expertise, consumption power and thepolitical clout to influence and re-arrange the global system to their advantage.The lingering economic crisis in the US is also seen as a signal of thebeginning of the end of US hegemony and that among the new powers, many thinkthat China is the most likely challenger to US dominance[1].

Will the North allowthe BRICS to take the lead in global governance? Can China and the other newactors present a new and better leadership role in the various political arenasand centers of decision-making? More importantly, since China is seen as thetop contender to the North among the BRICS, is it offering a better model ofpartnership with other developing countries or it is turning out to be a“sub-imperialist”[2] powerthat will continue the same or more intense practices of exploitation andextraction of natural resources from poorer countries to further enrich itself?Social movements and activist academics are increasingly wary that the economicmodel it is advancing is the same unsustainable and unjust paradigm thatfacilitates accumulation of wealth by a few while resulting in thedispossession and pauperization of the already marginalized and powerless.

China’s Role in Promoting a Multipolar Order and BRICS

Jiang Zemin officiallyincorporated the concept of multipolar world (duoji shijie) into Chinese foreign policy at the14th Congress of the Communist Party of China in 1992 to support China’s stancethat a fair, just and peaceful world is only possible through multipolarity.China’s foreign policy since Jiang’s leadership has acknowledged that asingular and unchecked superpower can be very dangerous as exemplified by theUS invasion of Iraq without a UN sanction and the US/NATO actions in Kosovo.

The China – RussiaConstructive Partnership Agreement of 1994 that was later renamed China –Russia Strategic Agreement in 1996 not only strengthened Chinese-Russian relations, but also their preference to multipolarity as against the unipolarworld order that had emerged after the collapse of the bipolar world order. TheChina - Russia 1997 Joint Statement strongly emphasized that a fair and justsociety could only be possible in a multipolar world and not in a unipolar one[3]. TheShanghai Cooperation Organization, which the two countries also lead, isanother manifestation of interest to advance multipolarity.

BRICS’ precursor was the Russia-India-China group formally initiated by Russia in 2002 to serve as itsplatform after its former power had been weakened by the collapse of the SovietUnion and the challenges it had faced with its borders. The history ofalliances, tensions, rivalry and differences between these three countries aredeep but it seems that these challenges are being overcome by the will tostrengthen BRICS.

China worked for the inclusion ofSouth Africa in December 2010. South Africa’s involvement worked well inexpanding the geographic representation of the group and further strengthenedthe multipolar and non-Western character of BRICS. China is now the strongesteconomic power in BRICS and the most influential in its economic and financialagenda.

BRICS leaders areplanning to set up a new development bank to mobilize resources forinfrastructure and sustainable development projects within BRICS and otherdeveloping countries. The BRICS Bank will supplement the existing efforts ofmultilateral and regional financial institutions for global growth anddevelopment. China is expected to press for it to be based in Shanghai and tooperate in yuan, the Chinese currency. From the roadshow discussions happening now inpreparation to the Durban summit, the BRICS Development Bank will initially becapitalized at $50 billion, with $10 billion from each of the BRICS members.

China’s Rise as Global Power: what does it mean to therest of the South

Various forecastspredict that China will soon surpass the US as the top global economic power[4]. Whetherthis will happen as early as 2016[5] as theIMF predicted using purchasing power parity as basis of analysis or by 2020[6] or 2030[7]according to the World Bank, the “guesstimates” agree that it will be earlierthan previous assessments.

China’s role in theglobal political economy entered a new stage in 2005 when it started to becomea new exporter of capital. China is currently the largest holder of foreigncurrency reserves on the planet, 54 percent of its USD 3.2 trillion in foreignreserves are in US dollars[8].

Since the 2008 globalfinancial crisis, China has accounted for more than 35 percent of all globaleconomic growth[9]. For thefirst time since 2003 China surpassed the US as the world’s largest recipientof global foreign direct investment (FDI) in the first half of 2012. The datafrom UNCTAD show that US FDI inflows reached $57.4 billion in the first halfsaid year, down from $94.4 billion in 2011 while China attracted $59.1 billionin foreign investment in the first six months, down from $60.9 billion[10].Although short-lived, as the US regained dominance by end of 2012, thisindicates that investors continue to be attracted by China’s huge market.

China is now investingin Central and Eastern Europe. Premier Wen Jiabao’s Europe tour in April 2012promoted bilateral and economic trade relations between China and Iceland,Sweden, Poland and Germany and was seen in the Chinese and European sides as anindication of China’s willingness to help alleviate the debt crisis in Europe.A $10 billion credit line to support Chinese investments in Central Europeaninfrastructure, new technology and renewable energy was set up in April 2012during China-Central Europe-Poland Economic Forum in Warsaw, attended byleaders of 16 countries in the region who all traveled to the Polish capital tomeet with Wen[11].

China’s economic priority isensuring access to its goods, expanding outward investments, and consolidatingits position as a regional and global hub of advanced production networks. Forcountries in the South, the more important question about China’s challenge tothe US and other old powers is whether such rivalry is making other developingcountries more prosperous and stable or if it is leading to more desperate“race to the bottom” among the weak.

China’s aggressiveFTAs are underpinned by two objectives. The first is to secure long-term energysupplies and establish sources of other natural resources that it needs for itsmanufacturing exports. The second objective is to expand its market to variousregions to enable it to continue its growth. Currently, China has 14 FTApartners comprising 31 economies and regions including the Asia-Pacific region,Latin America, EU, Africa and Oceania[12]. Since2002 China has signed FTA Agreements with the ASEAN, Chile, Pakistan, NewZealand, Singapore, Peru, Costa Rica as well as Economic Partnership Agreementswith Hong Kong, Macau and Taiwan. It is negotiating FTAs with the GulfCooperation Council (GCC), Australia, Iceland, Norway, Southern African CustomsUnion, Japan and South Korea (China-Japan-SK FTA), and Switzerland. It is inthe stage of finishing FTA Feasibility Studies with India and South Korea.

Until 1993, China was a net exporterof oil. The need to find a secure supply of energy prompted it to negotiate oiland gas deals with various countries in the Middle East, North Africa,Sub-Saharan Africa, Russia and Eurasia, Southeast Asia, Australia, and theAmericas.

China’s export creditand guarantee agencies; particularly China EximBank and Sinosure are nowplaying a crucial role in fostering the rapid expansion of Chinese trade andoverseas investments. The China EximBank, a state bank solely owned by theChinese government and the country’s official credit agency, is the world'slargest export credit agency. In total, China has extended $12.5 billion more inloans to Sub-Saharan Africa in the past decade than the World Bank; $67.2billion was also lent to the world’s poorest region between 2001 and 2010compared with the World Bank’s $54.7 billion[13]. TheChina Development Bank, the world's largest development institution in terms ofassets, is putting more resources behind the overseas expansion of Chineseenterprises, particularly in natural resource projects.

Contrary toimpressions, it is not true that Chinese investment or loans have no stringsattached to them. A study on Chinese banks financing in Latin America, showedthat Chinese loans have more stringent demands than World Bank loans. In 2010China Development Bank lent $20billion to Venezuela in exchange for Venezuela’spayment through oil shipments to China. China sent 30 consultants, led by aformer vice-governor of CDB, to Venezuela for 18 days with a mission to checkhow Venezuela will deliver the oil and to make proposals how to reform itseconomy to ensure that it will get its money back[14]. InAfrica, many riots were spurred by the fact that Chinese workers had beenbrought in by Chinese investors instead of hiring local labor. Cheap Chineseproducts are also flooding local markets.

The North Still Rules the World

Despite impressive economic figures,it is misleading to think that China’s rise to the top means that China willsoon rule the world the way the US has been done. The US is still the world’slargest economy and its military is still the most powerful. However, it isfinding it increasingly difficult to assert a hegemonic role the way it used todue to its own crisis, its burgeoning national debt, the impacts of the Iraqand Afghan invasions and ongoing wars, the relatively “reluctant” global roleplayed by President Obama.

The rise of new powerslike BRICS does not necessarily mean that they are seeking to assume the formerhegemonic role of the US. It is more likely that a multipolar world means thata new mix of leading countries will define the global political economytogether with the US. At this point too, the emerging economies are stillplaying supporting role to the US and the West. The old powers are stillmaintaining the lead in many political arena and spaces of decision-making likein the UN, the World Bank and International Monetary Bank (despite latestattempt to put a non-American in the WB in 2012), and in trade and investments[15].

China is alsograppling with huge internal problems. Chinese leaders are constantly preoccupiedwith the task of finding the best formula to address the need for stability andreform as the continued success of China’s economic agenda and more importantlythe survival of the Party and the current character of the state are at stake.It is also misleading to focus on China's and India's soaring GDP consideringthe huge number of people in both countries that are poor. Another reality isthe huge gaps between the old and new powers’ technological know-how, militarycapability and political influence in international affairs[16].

China achieved what the 200 years ofindustrial revolution and modernization efforts of the now advanced economieshad achieved into three decades of fast-paced experimentation using an unusualmix of communist politics, developmental experiences of other East Asiancountries and capitalist economics. The grow-at-all-cost development paradigmthat has enabled it to make the giant economic leap has now reached its limitsas shown by its increasingly degraded environment, growing inequality andeconomic imbalance.

Critics of Asia’sdevelopment paradigm have long argued that free trade and neo-liberalism haveincreased inequality and poverty in the region and especially in China andIndia despite the two countries’ phenomenal growth. China and India ranked120th and 170th in the global human security index. China’s market socialism inits modern form is a predatory, dysfunctional and grossly inefficient systemthat is enormously wasteful and unsustainable[17].China’s model merely reflects 21st century capitalism, which is characterizedby high-speed accumulation by the few, dispossession of the majority’s accessto resources and marginalization of their voice in the management of resources.Majority of the current analysis about China’s role in the changing globalpolitical economy fails to locate China in the context of neo-liberalglobalization.

In the context of the ongoing debateabout China’s growing environmental footprint in other developing countries,two aspects are seldom discussed: the limits to growth and a planetary transitionto low carbon consumption. China’s rise to the top was achieved throughimportation of natural resources and their re-exportation in the form ofvalue-added inputs of final products for consumption in other countries, mostlyin the West. In effect, the emergence of China as the factory of the world isupholding the unsustainable consumption and production patterns in thedeveloped world. There is also the reality of Chinese TNCs joining the gamethat has given transnational corporations from developed countries unbridledpower.

[1]Ikenberry,G. John, “The Rise of China and the Future of the West: Can the Liberal SystemSurvive?”, 87 Foreign Affairs, January/February 2008.

[2]PatrickBond defined sub-imperialism as deputy-sheriff duty for new powers such as theBRICS countries, while controlling their own angry populaces as well as theirhinterlands. The eco-destructive, consumerist-centric, over-financialised,climate-frying maldevelopment model throughout the BRICS works very well forcorporate profits, but the model is generating crises for 99% of the people andfor the planet. See also Bond’s “Bankrupt Africa: Imperialism, Subimperialismand the Politics of Finance”, Historical Materialism, Volume 12:4, Leiden, 2004,pp.145-172.

[3]Sino-Russian Joint Statement” of November 10, 1997, the “Joint Statement onSino- Russian Relations at the Turn of the Century” the “Joint Press Communiqueon Sino-Russian Summit Results” of November 10, 1998, and the “Sino-RussianTreaty on Good-Neighborliness, Friendship, and Cooperation” in 2001

[4]Maddison,Angus, 2006, “Asia in the world economy, 1500‐2030”, Asian Pacific Economic

Literature, 20(2): 1‐37.

[5]Arends,Brett, “IMF bombshell: Age of America nears end, Commentary: China’s economywill surpass the US in 2016”, Marketwatch, The Wall Street Journal, November20, 2012, http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25?link=MW_home_latest_news

[6] Shirley,Andrew (ed), The Wealth Report 2012: A Global Perspective on Prime Property andWealth, Knight Frank Research, 2012 http://www.thewealthreport.net/

[7] BBC NewsBusiness, “China to overtake US and dominate business by 2030”, March 24, 2011 http://www.bbc.co.uk/news/business-12848449

[8]Orlik, Tomand Davis, Bob, “Beijing Diversifies Away from the Dollar”, The Wall StreetJournal, March 2, 2012

[9]Beams,Nick, “China Slowdown Deepens Global Crisis”, World Socialist Website, August16, 2012, http://wsws.org/articles/2012/aug2012/pers-a16.shtml

[10] Hannon,Paul and Reddy, Sudeep, “China Edges Out US as Top Foreign Investment Draw AmidWorld Decline”, The Wall Street Journal, October 23, 2012.

[11]Millner,Caille, “Eyes on the Price: Beijing Sets its Sights on Central Europe”, DerSpiegel, May 18, 2012 http://www.spiegel.de/international/europe/with-10-billion-dollar-credit-line-china-deepens-presence-in-central-europe-a-833811.html#ref=rss

[12] ChinaFTA Network, http://fta.mofcom.gov.cn/topic/engcc.shtml, also www.bilaterals.org

[13] Cohen,Mike “China Exim Lend More to Sub-Saharan Africa than the World Bank – Fitchsays”, Bloomberg, December 28, 2011 http://www.bloomberg.com/news/2011-12-28/china-exim-loans-to-sub-sahara-africa-exceed-world-bank-funds-fitch-says.html

[14]Rabinovitch,Simon, “ A New Way of Lending”, Financial Times, September 23, 2012.

[15] Wade,Robert, “The United States and the World, The Art of Power Maintenance: HowWestern States Keep the Lead in Global Organisations”, Challenge, Vol.56. No.1, January/February 2013, M.E. Sharpe, Inc., pp.5-39

[16]Ju,Zhongwen, “Moving toward multipolar world”, China Daily, Dec.12, 2010, http://www.chinadaily.com.cn/opinion/2010-08/12/content_11141897.htm

[17] J. Lee,Will China Fail? The Limits and Contradictions of Market Socialism, Center forIndependent Studies, 2007

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