The Rise of China

In the previous section we had a look at the scale of China’s rise today, to understand why China has become a favourite by analysts around the world to become the great power of the 21st century.

In this episode we will take a look at the challenges that China will have to overcome in order to assert its influence over the world.

China’s Debt Bubble

In May 2017, the Credit rating agency Moody's cut China’s debt rating for the first time since 1989 and warned that the country’s financial health is suffering from rising debt and slowing economic growth. More recently S&P Global Ratings downgraded China’s sovereign rating for the first time since 1999, citing the country’s greater economic and financial risks.

These Fears about debt levels in the world's second-largest economy have reignited debate over the fundamentals of China’s future – whether the country is leaping over the middle-income trap with a leaner and more sustainable growth model or whether it is on a debt-fuelled path to disaster. But where did this debt come from?

In 2012, China’s President, Xi Jinping, said “The greatest Chinese dream is the great rejuvenation of the Chinese nation.”

In the previous two sections we had a look at the scale of China’s rise today as well as the economic challenges China must overcome before it can become a great power of the 21st century.

Xi Jinping “Reborn”

Xi grew up in the struggle to survive the madness of Mao Zedong’s Cultural Revolution. Reflecting on that experience, he once noted that “I see the detention houses, the fickleness of human relationships. I understand politics on a deeper level.”

Xi was the son of a trusted colleague of Mao, the Vice Premier Xi Zhongxun, who had fought alongside him in the Chinese civil war. Destined to grow up in Beijing’s “cradle of leaders,” he awoke shortly after his ninth birthday in 1962 to discover that a paranoid Mao had arrested his father. In the days that followed, his father was humiliated and eventually imprisoned for the duration of the Cultural Revolution.

During what Xi describes as a “dystopian” period, Red Guards repeatedly forced him to denounce his own father. When his school closed, Xi spent his days defending himself in street fights and stealing books from shuttered libraries to try to educate himself. Sent to the countryside by Mao to be “re-educated,” Xi found himself living in a cave in a rural village in Yan’an, shoveling dung and snapping to the demands of his peasant foreman.

Depressed by deprivation and abuse, his older half-sister, Xi Heping, hanged herself from a shower rail. Instead of suicide, Xi chose to embrace the reality of the jungle. There—in his apt word—he was “reborn.” As one of his longtime friends told an American diplomat, he “chose to survive by becoming redder than red”—and doing whatever it took to claw his way back to the top. Xi was nothing if not persistent.

In 2014 Xi Jinping told a gathering of Eurasian leaders;

“In the final analysis, it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia.”

Whilst Chinese leaders recognise the role the US has played since WW2 as the “guardian” of regional stability and security, they now want America to leave.

Much as Britain’s role in the Western Hemisphere faded at the beginning of the twentieth century, so must America’s role in Asia.

The attempt to persuade the United States to accept the new reality has recently become most intense in the South China Sea.

$60 billion is the amount that China’s President Xi Jinping pledged for new projects in Africa at the latest annual Forum on China-Africa Cooperation in Beijing earlier this month in September 2018. The African leaders are buzzing as they see more money come into Africa for areas ranging from industrial promotion, infrastructure construction and even scholarships for young Africans. It’s now been almost ten years since China surpassed the United States to become Africa’s largest trading partner back in 2009.