Managing China

Abstract

When Ezra Vogel’s Japan as Number One hit bookshelves in 1980, the Japanese economy (in PPP terms) was a third the size of the United States’. Despite being a US ally, the decade was punctuated by trans-Pacific trade and other frictions. Japan was viewed by some as an economic threat, and was strategically derided for ‘free riding’ on the United States’ security order. Dealing with China today, these concerns seem quaint. China’s GDP reached a third of US levels in 1998, and now exceeds it in PPP terms. And strategists are probably nostalgic for a rising power that chooses to free ride on an existing order rather than change it. China’s economic footprint alone means that, ready or not, all countries in the world have to manage its impact. The first step is an understanding of the Chinese economy today (to which He Fan, Paul Hubbard and Jane Golley contribute in this edition of EAFQ). This means realising that China itself is not as developed as Japan was by 1980, then already a highincome country. China faces the myriad development problems of middle-income countries everywhere, from its undeveloped financial system, its winding path to rule of law and its myriad environmental challenges (Yiping Huang, Hu Shuli and ZhongXiang Zhang). China’s sheer size means that the inevitable shocks and policy missteps it generates will affect its economic partners. Managing these spill-overs will be much easier for China if it can maintain peace in Southeast Asia, construct its new relationship with India, and expand opportunities beyond in Eurasia (issues addressed by Zhang Yunling, Kishore Mahbubani and David Brewster). Bilateral, multilateral (discussed by Theodore Moran, Peter Drysdale and Zhang Xiaoqiang), and grass-roots (discussed by Peter Cai) approaches can assist in managing the China relationship too. This issue’s Asian Review looks at the transnational threats of extremism and organised crime (Greg Fealy and Roderic Broadhurst), as well as the politics of disillusionment in the West that makes tackling big issues like these so much harder (Hugh Mackay).