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China: The wounded dragon

Jo Harper
October 18, 2019

China’s economy grew 6.6% in 2018, its slowest rate since 1990, with trade issues impacting the world’s second-largest economy. DW asked Martin Jacques, an academic who predicted the rise of China, to unpick the signals.

Peking Long Ma Drache 17.10.2014
Image: Reuters/Kim Kyung-Hoon

Martin Jacques, a journalist and academic, predicted the rise of China as a global power in his bestselling book "When China Rules the World," published in 2009 and selling over 400,000 copies.

In it, Jacques, a senior fellow of politics at Cambridge University, argued that China would become a bigger economy than the US by 2027. A central hypothesis of the book was that China's system of governance was an effective alternative to Western liberal democracy and represented a new form of modernity, that China is more a civilization state than a nation state.

The West, he argued, was deeply mistaken in believing that China was becoming more like the West and an increasingly powerful China would seek to shape the world in its own image.

Critics such as Michael Auslin argue that the Asian Century Is Over. The "Asian Century," once heralded by writers such as Kishore Mahbubani and Jacques, is ending far faster than anyone could have predicted, Auslin argues.

DW: How do you respond to such criticism?

Martin Jacques: There are always silly articles like the one in Foreign Affairs that see the end of the Chinese transformation and the end of the rise of Asia. But these don't grasp the long-term and gradual nature of the process we are witnessing in China. 

China’s economy grew 6.6% in 2018, its slowest rate since 1990. Given that the Chinese economy contributes 30% to global economic growth, the largest of any economy, how will this impact global growth?

The slowdown will obviously have a negative effect on the global economy. The fortunes of the Chinese economy are very closely connected with those of the global economy. But China's economic growth is still the second-highest in the world after India's and China's economy is about three times bigger.

China is attempting to shift its growth model from one powered by trade, investment and infrastructure to one built on domestic consumption. The annual retail sales of consumer goods grew 9.0% in 2018, slower than the growth rate for 2017, which was 10.2%. How will it alter the domestic model of Chinese socialism?

I don’t see lower retail sales as changing the Chinese economy's shift from manufacturing and cheap labor to more value-added sectors. There is massive progress being made and it is still quicker than I thought. The Chinese market will without doubt overtake the US. By and large, I am still very upbeat about the Chinese economy. Growth is now at around 60% of its 2012 peak, but there is a very strong sense of well-being.

Is there a relationship between lower growth and China's more belligerent foreign policy - regarding Hong Kong and Taiwan?

I don't think the Chinese Communist Party is in any real sense vulnerable, aside from small scale conflicts. I think we in the West have got China wrong for a very long time. Obviously the trade war with the US makes this a difficult time. But Beijing is very confident. The crisis is in the West, not in China. We should look with some humility at what is happening in China. We are the ones who messed it up, not them.

How does the Chinese slowdown affect Germany?

Germany has already been serious affected by the Chinese slowdown. Berlin was very long-sighted from back in the 1980s about China, but that success is also now threatened, if you look at car makers in particular.

How do you understand the Huawei row in this context?

The technology arguments, with Huawei and so on, are part of the same trade issues. As for Huawei, states and companies have always been stealing from each other. The US is reacting because it feels threatened. Its tech leadership is being questioned for the first time.

The States must decide either to embrace and open up to China's tech progress and not adopt the belligerent Trump approach. If it pursues this line, the US will be the big loser in the end. The US needs to reconcile itself to the fact that it might have to share leadership globally. It seems to be in their DNA not to want to. But this is short-sighted and stupid.

We in the West are always behind the game as far as China is concerned. We tend to see China as an alien system, but it is in fact a great civilization. Humility in the West would be more appropriate. The Chinese transformation is one of the most compelling human stories ever told and the sooner we come to terms with this the better. Not to do so would be cutting off our nose to spite our face.

To the point - The Long March: China’s Path to Global Supremacy?

The interview was conducted by DW's Jo Harper.