Is China's Economic Rise Unstoppable?

      October 01, 2009 09:24

      Japan has so far tried hard to play down China's rising economic status, calculating that the Chinese economy would eventually become weighed  down by problems triggered by rapid growth and social unrest caused by the widening wealth gap.

      But things are changing. During the first half of the year, the United States accounted for just 13.7 percent of Japan's exports but China for 20.4 percent. It was the first time China took up more than 20 percent of Japanese exports during the six-month period. "Until recently, those who said Japan should ally itself with the U.S. and fight China are now shaking with fear over the prospect of becoming a tributary state to China," the Japanese international relations expert Takahiko Soejima said.

      Sixty years since the establishment of the People's Republic, the country has risen from poverty with less than US$50 in per capita income to an economic superpower. China is expected to overtake Germany this year as the world's largest exporter and Japan to become the world's second-largest economy. It is wielding its economic might to increase its global influence, including an open challenge to the supremacy of the U.S. dollar as the key currency in the world.

      Chinese President Hu Jintao (right), former president Jiang Zemin (center), and Chairman of the Standing Committee of the National People's Congress Wu Bangguo raise a toast at a celebratory banquet at the Great Hall of the People in Beijing on Wednesday, the eve of the 60th anniversary of the People's Republic of China. /Reuters-Yonhap

      China is brimming with pride as it celebrates its 60th anniversary. Its rapid growth has led to all sorts of rosy forecasts. The World Bank projects China will surpass the U.S. in terms of GDP in 2019. "China's likely continued success will eventually bring an end to America's global economic preeminence," said Albert Keidel, a senior researcher at the Carnegie Endowment for International Peace. World Bank chief Rober Zoellick said, "America's days as an unchallenged economic superpower are numbered."

      Terashima Jitsuro, Tama University president and head of the Japan Research Institute, said China and the U.S. rather than the G20 are the true powers moving the global economy. China's state statistical bureau on Tuesday said China's contribution to global economic growth was 19.2 percent in 2007, overtaking the U.S., whose contribution was 15.7 percent.

      But critics say China's economic status should not be exaggerated. Per capita national income is just over $3,000, which is low even for semi-developed countries, while GDP is just around 30 percent of America's. Prof. Men Honghua of the Party School of the Central Committee of the Communist Party of China, said, "Although the gap with the United States has narrowed significantly, it will still take a long time for China to catch up in terms of science and technology and creativity." Prof. Yang Yuli of the Shanghai Academy of Social Sciences said, "China is 30 years behind the United States and Japan in terms of culture and ideology."

      The gap between the rich and poor and in living conditions in metropolitan and rural areas is the greatest threat to the Chinese economy. Besides the developed eastern region, per capita national income is less than $1,000 in much of the central and western parts of the country.

      Another problem is China's dependency on exports. Charles Freeman, the head of China research at the Center for Strategic and International Studies, warned, "The greatest challenge China faces is its export-oriented economy."

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