A friend of mine and I were chatting on FB about the dangers of the Chinese buying into the debts of countries that were in danger of collapsing (greece and ireland for example) and the possible dangers of those moves and that got me thinking about this topic. So thought I would throw my two cents in and stir the pot a bit….
I believe China’s economic and foreign policy reflects a grand strategy for building China into a wealthy and powerful international entity while ensuring the continued rule of the Chinese Communist Party.
This strategy has been necessary to build new sources of political support for the Communist Party as belief in Communist/Marxist ideology has eroded worldwide. This need became particularly acute after the 1989 Tiananmen massacre and the collapse of communism in Eastern Europe and the Soviet Union.
Chinese leaders have long emphasized the importance of rapid growth as a strategy for regime survival, with the goal of rebuilding legitimacy by demonstrating the party’s ability to build an advanced economy and to raise living standards.
China’s leaders have achieved remarkable success in building a booming economy and holding their political system together after communism collapsed in Eastern Europe and the Soviet Union. Although prospects for continued growth are good, Chinese leaders are faced with an international system dominated by the United States and a globalized world economy where sophisticated multinational corporations possess technology and management skills decades ahead of their Chinese competitors. This could put spokes in the plan of maintaining the current rate of growth, which is essential to distract attention from growing domestic challenges.
China faces a host of domestic challenges, ranging from environmental degradation produced by headlong growth to social tensions created by rising inequality between coastal and interior provinces and between rural and urban workers.
The party’s response emphasizes efforts to alleviate social pressures by devising economic policies that will produce more balanced growth with fewer negative side effects. This represents an adjustment from previous policies focused on maximizing growth at any cost. But Chinese leaders will still emphasize the importance of continued rapid economic growth for maintaining domestic stability as a prolonged economic slowdown or downturn in growth would aggravate simmering social problems and stoke and stimulate protests.
China’s increased global activism is intended to secure inputs for this rapidly expanding economy while protecting itself against a possible containment strategy by the US. This focus on resource access has led China to build close relations with questionable regimes such as Iran, Sudan, Angola and Burma who share China’s intent in resisting a growing worldwide movement to promote democracy and a known US strategy to intervene in other countries to drive this agenda while securing their own interests.
Beijing has also become increasingly dependent on exports to and investment from developed countries to maintain economic growth and this has made them very uncomfortable and quite possibly led to them investing in those economies as a reciprocal strategy.
It is for these reasons I believe that Chinese moves in international markets are more about protecting their internal interests rather than about taking over the world.
As usual would love to learn more by hearing any views on this.
