Size and Strength of the Asian Economy
In January 2011, the American government recognized China as an equal partner by receiving President Hu Jintao during his state visit to the US. Before 2022, China’s real GDP in terms of purchasing power parity will exceed that of the US as IMF estimates US growth rate at 3.5 percent and Chinese growth rate at 8 percent. This is because China gains more revenue from large exports and imports than any other country. Similarly, Asia has investment economic assistance from other nations. For example, China has the fastest supercomputer technologies and is the world’s largest wind energy producer, nuclear energy, and solar panels. Chinese consumer goods flood the world market as they have a broad scope of customers.
Factors Contributing to Rapid Economic Growth in Asia
The human capital of high quality in abundance is inherited from thousands of years of history and well-functioning market institutions despite shortcomings, such as corruption and large government ownership of assets such as land. Rapid growth will continue in the next 10 to 15 years because these fundamental factors provide political stability.
Institutional Advantages
The US is enjoying its democratic government that allows for much more freedom and rights for the citizens, while China is practicing a one-party rule with citizens enjoying less political freedom and human rights. The Chinese government is much more efficient in making decisions affecting the national economy. Top government officials can increase government expenditures during an economic slowdown in China while subject to debate in the US Congress. The President and Congress members’ political interests affect the US’s financial decisions as they are concerned about the next election.
Since 2001 the US has waged war against terrorism in Iraq and Afghanistan, using up many economic resources, human and nonhuman, and increased the US government debt. War on terrorism has affected the US’s proper functioning as a world economic leader while China is gaining ground.
As a world economic leader, China has its government officials cooperating with Chinese entrepreneurs to invest abroad and spread its economic influence worldwide. The US government is often taking an opposite side with business interests. Competition among Chinese enterprises is allowed in domestic economic development and when they try to acquire foreign assets. Competition has made domestic economic development and the extension of China’s economic power abroad more efficient. China’s economic influences in Asia, Europe, South America, Africa, and the US have increased. China has established its foreign political and economic relations with other countries on mutual interests China’s influences abroad. China has increased its investment abroad. Investing abroad is advantageous for China as the Chinese capital seeks a higher return rate, and China can secure control of essential mineral and energy resources abroad. Chinese investment is also advantageous to the host countries as it promotes their economic development through the inflow of Chinese human, financial and physical capital, technology, and development know-how. Many developing countries welcome China’s investment more than US investment, partly because the Chinese have accumulated recent experience promoting its economic development. In contrast, the US economic development experience is much older and less relevant for rapid economic growth in the 21st century.
Asia’s Role as the World’s Leading Economy and Possible Benefits to the World
Since globalization in the form of flows of goods, capital, people, and technology among nations is beneficial to the world, China’s taking part in globalization as an economic leader is helpful. The possible disadvantages of globalization are recognized but are not a topic of this lecture. Recent signs of China’s aggressions, resented by China’s neighbors: China’s relation with Japan deteriorated in 2010 after it posed a strong stand against the Japanese government in a Chinese fishing boat colliding with a Japanese navy patrol boat in territorial water claimed by both countries. Even after the Japanese government released the captured Chinese fisherman, the Chinese government demanded an apology from the Japanese Premier. China argued for territorial rights in the South China Sea against Vietnam’s objections and some other neighbors. Recent signs of aggression show China’s changing position.
China is building up its military power, including jet fighters, aircraft carriers, and anti-shipping ballistic missile called a “carrier-killer” for its potential to strike the big pages that will challenge the American military presence in the Western Pacific. China remains a peace-loving nation as it spreads its economic power in the financial world. We all hope that the Chinese government will maintain its current peace-loving stand as stated in its policy for a peaceful rise. China can benefit from maintaining its image as a friendly and relaxed, loving country. This would be good for China and the peaceful development of the world.