Friday, May 21, 2010


"About thirty years ago the fear of the 'Yellow Peril' was the fashion. It was said that China and Japan were about to advance towards the economic and perhaps also military conquest of Europe and other regions. Much was written to stress the vast size of the yellow races, their modest standard of living which ensured the low prices of manufactured goods, the political sense of Japan, the reawakening of China after a sleep of centuries. Then gradually these fears abated and were replaced by others....There can be no doubt the reawakening of the Orient, not only Japan and China, but also of India and Islam, is about to become an important factor in the balance of world power, and no human force is in sight which can stop this natural
course of events".

Vilfredo Pareto, "Russia," first published on the 13 June 1922 in "Il Secolo." The Other Pareto, edited and translated by Gillian & Placido Bucolo, 1980, p. 258.

"China’s current reputation for power benefits from projections about the future. Some young Chinese use these projections to demand a greater share of power now, and some Americans urge preparation for a coming conflict similar to that between Germany and Britain a century ago. One should be sceptical about such projections. By 1900, Germany had surpassed Britain in industrial power, and the Kaiser was pursuing an adventurous foreign policy that was bound to bring about a clash with the other great powers. By contrast, China still lags far behind the US economically and militarily, and has focused its policies primarily on its region and on its economic development. While its “market Leninist” economic model (the so-called “Beijing Consensus”) provides soft power in authoritarian countries, it has the opposite effect in many democracies....

Per capita income provides a measure of the sophistication of an economy. While China’s impressive growth rate combined with the size of its population will surely lead it to pass the US economy in total size, that is not the same as equality. And since the US is unlikely to be standing still during that period, China is a long way from posing the kind of challenge to America that the Kaiser’s Germany posed when it passed Britain at the start of the last century. Nonetheless, the rise of China recalls Thucydides’ warning that belief in the inevitability of conflict can become one of its main causes.

During the past decade, China moved from being the ninth-largest exporter to the largest in the world, but China’s export-led development model will probably need to be adjusted as global trade and financial balances become more contentious in the aftermath of the financial crisis. Although China holds huge foreign currency reserves, it will have difficulty raising its financial leverage by lending overseas in its own currency until it has deep and open financial markets in which interest rates are set by the market, not the government.

Unlike India, which was born with a democratic constitution, China has not yet found a way to solve the problem of demands for political participation (if not democracy) that tend to accompany rising per capita income. The ideology of communism is long gone, and the legitimacy of the ruling party depends upon economic growth and ethnic Han nationalism. Some experts argue that the Chinese political system lacks legitimacy, suffers from a high level of corruption and is vulnerable to political unrest should the economy falter. Whether China can develop a formula that can manage an expanding urban middle class, regional inequality and resentment among ethnic minorities remains to be seen. The basic point is that no one, including Chinese leaders, knows how the country’s political future will evolve and how that will affect its economic growth.

In 1974, Deng Xiaoping told the United Nations General Assembly: “China is not a superpower, nor will it ever seek to be one.” The current generation of Chinese leaders, realising that rapid growth is the key to domestic political stability, has focused on economic development and what they call a “harmonious” international environment that will not disrupt their growth. But generations change, power often creates hubris and appetites sometimes grow with eating. Some analysts warn that rising powers invariably use their newfound economic strength for wider political, cultural and military ends.

Even if this were an accurate assessment of Chinese intentions, it is doubtful that China will have the military capability to make this scenario possible. Asia has its own internal balance of powers and, in that context, many states welcome a US presence in the region. Chinese leaders will have to contend with the reactions of other countries as well as the constraints created by their own goal of growth and the need for external markets and resources. Too aggressive a military posture could produce a countervailing coalition among its neighbours that would weaken both its hard and soft power. A recent Pew poll of 16 countries found a positive attitude towards China’s economic rise, but not its military rise.

The fact that China is not likely to become a peer competitor to the US on a global basis does not mean that it could not challenge the US in Asia, and the dangers of conflict can never be ruled out. But Bill Clinton was basically right when he told Jiang Zemin in 1995 that the US has more to fear from a weak China than a strong China. Given the global challenges that China and the US face, they have much to gain from working together. But hubris and nationalism among some Chinese, and unnecessary fear of decline among some Americans make it difficult to assure this future".

Joseph Nye, "China's Century is not yet upon us." 19 May 2010, in

"Either Germany is definitely aiming at a general political hegemony and maritime ascendancy, threatening the independence of her neighbours and ultimately the existence of England; or Germany, free from any such clear-cut ambition, and thinking for the present merely of using her legitimate position and influence as one of the leading Powers in the council of nations, is seeking to promote her foreign commerce, spread the benefits of German culture, extend the scope of her national energies, and create fresh German interests all over the world wherever and whenever a peaceful opportunity offers, leaving it to an uncertain future to decide whether the occurrence of great changes in the world may not some day assign to Germany a larger share of direct political action over regions not now a part of her dominions, without that violation of the established rights of other countries which would be involved in any such action under existing political conditions....It would be of real advantage if the determination not to bar Germany's legitimate and peaceful expansion, nor her schemes of naval development, were made as patent and pronounced as authoritatively as possible, provided care was taken at the same time to make it quite clear that this benevolent attitude will give way to determined opposition at the first sign of British or allied interest being adversely affected. This alone would probably do more to bring about lastingly satisfactory relations with Germany than any other course".

Sir Eyre Crowe, "Memorandum on the present state of British relations with France and Germany," 1 January 1907, in British Documents on the Origins of the War, 1898-1914, Vol. III, Edited Gooch & Temperley, 1928. Appendix 'A', pp. 417-418.

As usual, the words of Joseph Nye, are very wise indeed, and, point out some home truths which need to be repeated and listened to. Particularly in light of such nonsensical treatises on this subject as say Martin Jacques recent book (see: Martin Jacques, When China Rules the World, published in 2009). It is commonly agreed, that as of yet, the regime in Peking, is still not up to the task of competing with the USA either militarily or politically. Not even in the area of the Pacific. On the other hand, one cannot hardly not be aware of the fact that the tentacles of the Chinese, both official and non-official are spreading ever so wider the world over. From trying to buy up natural resources all over Africa and Latin America, to the provision of economic assistance to regimes as far from each other as Burma, Ceylon and the Sudan. Nor is it certain pace Nye, that the PRC will not try to match the USA militarily within ten to twenty years time. Per se, with it having the world's largest foreign exchange reserves, there is nothing which could prevent it from doing so. At least financially speaking. What is certain is that China does currently possess a political culture, and a domestic structure which makes it difficult to imagine that it can very easily replicate the relatively peacefully rise of say the USA to being a weltmacht & regional hegemon one hundred or so years ago. Additionally, as I have pointed out in the Financial Times recently, contemporary China, unlike the USA of one-hundred years past, faces a less than inviting neighborhood. Being involved in regional conflicts with almost all of its immediate neighbors: Japan, Formosa, Vietnam, India and the Philippines (for my small contribution to this discussion see: "China no clone of Bismark's Reich," 23 April 2010, in In fact the power which it has the most similarity in this respect was the Kaiserreich of the 1890-1914 period. Like the PRC, it was an authoritarian / semi-authoritarian regime, which was to an odd extent, afraid of its own domestic public, and, therefore conducted its foreign policy with an eye to how it would play at home. Id est, the classical example of primat der Innenpolitik. Peking's sometimes paranoid reactions to rather benign comments and or actions of other powers (like say France's meetings with the Dalai Lama of Tibet, or American arms sales to Formosa) is a result of this particular dynamic. The key differences though between Peking and the USA of one hundred years ago is that fact, as Nye puts it, that the PRC, has yet to come to grips with how to manage its domestic political structure both near and long-term. It is not too much of an exaggeration to say that the PRC's only domestic policy is to keep its Han Chinese population contented via continuing high rates of economic growth. As Nye also points out, the likelihood is that the current double-digit rates of growth will not continue for very long hereafter. Something that the similar cases of Japan and South Korea has shown, a change which tends to occur much more rapidly than was anticipated. How the rulers of the PRC will adapt to that circumstance and the most likely negative reaction of its subjects to such a change is less than clear at this time. One way of dealing with such problems would be to bang the patriotic drum over such issues as Formosa, among other things (for this likely transition, see another Nye article: "The Chinese forecasts of a US decline are off the money," 25 March 2010, in Unfortunately, as the history of the Wilhelmine Germany shows, such exercises in official manipulation from above are: i) difficult to control; ii) notoriously dangerous. The anti-Japanese riots which broke out all over China a few years back, initially encouraged by the authorities, before being reigned in, being a perfect example of the former. Additionally, unlike the USA or the Kaiserreich of one hundred ago, the PRC, has to deal with two serious separatist threats in Tibet and Sinkiang. An additional variable which hobbles any attempt by the PRC to assume the mantle of regional hegemon or a full-fledged weltmacht. Added to which is the fact that again unlike say the USA or Germany circa anno domini 1900, the PRC is still a poor country on a per capita basis. With over half of the population 'living' off an income of two dollars per day. And, with approximately forty percent 'living' off income of one dollar a day (for these statistics, see: Peter Zeihan, "China: crunch time," 30 March 2010, in This poverty while not per se, an absolute barrier to a decision by the PRC to engage in a partial (which is what is probably happening now) or even a full-scale military build-up, does make any such decision much harder to engage in. Much less explain or justify to its population. Although of course, Peking can if need be, try to do so by engaging in exercises in Hurrahpatriotismus.

To conclude, unlike say Jacques, I agree with Nye, that the likelihood of the PRC becoming a hegemon, either regionally, much less `a la the USA or the UK in the 19th or 20th century is widely off the mark. And, as Pareto's comments show the 'Yellow Peril' has long been with us regardless of elementary facts. It is the case still that the PRC at this point in time is still: too poor, too backward, too hemmed-in, in its own region by less than trusting neighbors. It also suffers from the twin defects of a political regime which is not entirely legitimate in the eyes of its own populace, and, on-again, off-again rebellions in two of its largest provinces. Added to the fact, that Chinese soft-power is for all intents and purposes non-existent outside of some official circles in Sub-Saharan Africa, and, one fails to see the makings of a future world hegemon. That being said, one cannot gainsay the fact that the PRC, has in recent years, thrown its weight around diplomatically speaking in a way which is different than that recommended by say Deng Xiaoping during the 1978-2004 period. The reasons for which have been outlined above. How one may inquire should the USA and the West in general react to, and or handle this change? There are those such as Henry Kissinger who say that the West needs to handle the PRC with 'kid gloves', and, in essence appease its rise to being a weltmacht, regional and otherwise, in order to avoid an unnecessary conflict with the regime in Peking. There are others, myself included, who opt for a different policy. Akin in fact to what Sir Eyre Crowe recommended to Sir Edward Grey about England's German policy in the years prior to the Great War. A policy in essence of containment (for lack of a better way of describing it), in which the potential hegemon is put on notice that any attempts to forcible overturn the status quo ante, will be met with by force. `A la the American policy in the Formosa mini-crisis of 1995. It is difficult to imagine that a softer line will work with the PRC. As we can see, its domestic structure and the problems following from the same, make them disinclined to be adherents to a Kantian view of international relations. To put it mildly. As Crowe put it aptly in his famous memorandum of 1907:

"To give way to the blackmailer's menaces enriches him, but it has long been proved by uniform experience that, although this may secure for the victim temporary peace, it is certain to lead to renewed molestation and higher demands after ever-shortening periods of amicable forbearance. The blackmailer's trade is generally ruined by the first resolute stand made against his exactions and the determination rather to face all risks of a possibly disagreeable situation than to continue in the path of endless concessions".


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