Archive Article: China – An Economic Super Power
February 16, 2009
First Broadcast 14th September 2001 on Radio 2GB. Brian Wiltshire Show.
The tragedy in the United States has overshadowed an event that is also of great historical significance: agreement has been reached on China’s joining the World Trade Organization.
The World Trade Organization is the world’s most important international organization governing trade between countries. Countries that join it agree to work towards free trade among themselves. Membership of the organization is seen as a way of increasing economic growth.
China’s entry is a high risk strategy for all members of the World Trade Organization (including Australia) because it is impossible to calculate fully what will be the long term impact. It is more a matter of stepping out in faith and hoping that all will be well.
First, China could become the workshop of the world. It can undercut the production costs of all the other members of the World Trade Organization. It has low labour costs, millions of people as cheap labour, and minimal environmental, occupational health and safety regulations. It is interesting to note that Mexico – which most other countries complain about as operating with cheap labour – has itself expressed concern that China will be able to undercut its own cheap costs.
Second, many foreign corporations hope to make a great deal of money from trade with China. According to the World Bank, China now has the world’s second largest economy (after the US and ahead of Japan). China’s trade surplus with the US alone runs at about US$60 billion per year. 1.2 billion energetic, resourceful people at the beginning of their modernization process represent a tempting prospect for foreign corporations. Never before have so many people had so much economic growth in so little time.
After a long period of weakness, China is once more the strongest power in East Asia. China used to be a super power. It is notable that the record for building the world’s largest ships was held by China. It was only in the 20th Century that Europeans and Americans began building ships bigger than the Chinese had built four centuries earlier to encircle the world. There is an interesting story to be told about how those ships were stopped by the Chinese rulers themselves from encircling the world – and why we in Australia do not speak Chinese as the national language.
Napoleon warned two centuries ago that China was the “sleeping dragon” whose being awoken would shake the world. That was a wise statement because China at that time was being nibbled away by the Europeans, who could never control all of it but tried to get bits of it. The British, for example, started acquiring parts of the Hong Kong region in 1842.
Now all the foreign invaders have left China. It has the world’s biggest population and the world’s biggest army. It is one of the world’s main nuclear weapon countries.
None of this should present an automatic worry to Australia. Indeed, there are Australian corporations that hope to do well out of trade with China. But it is a warning that China will loom larger in world affairs.
In particular, China will loom larger in world league tables. For example, it is the world’s largest steel producer (having overtaken the US) and a few weeks ago it became the world’s largest user of mobile telephones (again putting the US in second position). Now that it is set to join the World Trade Organization, there will be even more economic growth – and the US will find itself being overtaken in still more international league tables. Therefore, the US will have to learn how to be “second” – and China will once be the world’s leading power. It will be interesting to see if it does better this time around.