International Political Economy Essay – China and The New Economic Order
One of the most discussed topics in economic circles is the rise of China and the possibility of it displacing the United States as an economic leader. There are those who believe this declinists attitude is validated by recent the recent rise in China’s exporting and the immense population. However, the United States holds the strongest educational resources, technological power and trade restrictions as well as the ability to utilize its hegemony. While some may believe in declinist’s ideas the facts remain that the United States is still far beyond the China in almost every standard of living and globalization will only empower it if it approached and utilized correctly by the government and private sector. While both countries have fiscal challenges, the United States is still in a position of power and will remain so regardless of global changes in the economic and trade systems. This study will address the tools at the disposal of the United States and how it can utilize these to maintain its position as the leading world power.
There is no issue more discussed in the media and amongst economists than the rise of China and the economy. China’s economic growth is growing continually while the United States appears to be in decline. The wars in Iran and Afghanistan along with huge budget deficits appears to have plunged the United States into recession while China is doing so well that there is speculation over what will be the economic outcome for America. Much of the decline of the United States economy is the result of globalization and technological development in third world countries. The United States has had undergo powerful changes and carry the burden of globalization.
While one view believes that America cannot bear this burden and China will become an economic front runner, there is another viewpoint on this matter. Many economists believe that the United States is durable and it will gain advantages as a result of globalization. There are economists who see the United States being able to take advantage of globalization and gaining economic activity as a result of this trend. This study will argue that the hegemony of the United States is strong enough to be able to do gain from globalization. Those who tend to favor the belief in the declining United States power are focused on issues of gross domestic product and population as well as focusing on the size of the population in a country. These are not necessarily indicators of a country’s power and financial sustainability. There are many more indications of a country in a decline and these will be examined along with the strengths the United States does have that indicate it will prosper as a result of globalization. When viewed through different modalities of measurement the United States definitely holds its position of economic world leadership. How that will be maintained and the path of China and the United States economically is projectable and various economic lenses will show the durability of the United States economic power and how it will utilize globalization to its advantage.
Measuring the Hegemony of a Nation
One of the major errors in measuring how a country is doing globally in the economic hemisphere is to measure it in what Michael Beckley describes as snapshots. To view only the GDP or the population of a country is to limit the lens through which one is seeing the whole entirety of the power of a nation. Beckley states that, “However, GDP correlates poorly with national power; more than 90 percent of China’s high-tech exports are produced by foreign countries and consist of low-tech components” (Beckley, 2011). Beckley also points out that while America does suffer from a huge debt issue, it is not solving well politically China has also got internal problems on even a larger scale that it is not resolving through its political system.
Beckley points out fallacies used in evaluating whether China is catching up with America by looking at China as it was formerly. For example. He points out, “many studies note that the growth rates of China’s per capita income, value added in high technology industries, and military spending exceed those of the United States and then conclude that China is catching up” (Beckley, 2011). Beckley points out that the focus here is wrong. China has high growth rates because it’s starting point was exceptionally low. Therefore, China may be growing but this does not indicate that it is surpassing the United States in any way.
Arguments For and Against Decline
Beckley takes a detailed look at the arguments American decline and broadens the scope of the picture. This methodology is also backed up by author, Mack, in his work on why larger nations lose small wars. He states, “In order to rise to industrial leadership, states must prevent vested interests from blocking structural change. States that are unable to do this will get locked into yesterday’s technologies and industries, and will effectively have consigned themselves to long-term stagnation and decline”. (Mack, 1975). Mack basis his methodology on looking at the economic and military power of countries over decades as opposed to closed lenses that only focus on a small period of time. Beckley takes the same approach, and believes that the view of America’s decline is a small lens that is not seeing the large picture. For instance, Berkely looks at China and America over the past twenty years and finds mixed results. However the majority of historical fact shows that the United States has not decline and is now wealthier an even more innovative.
Berkley points out that declinists state that history is cyclical and repeats itself and will focus on the rise and fall of empires such as the British Empire or the Habsburg French. This cyclical theory “fuses hegemonic stability theory with a traditional balance of power theory”, (Berkely, 2011). Berkely points out that if America is seen as providing goods to the world which then gets a “free-ride” on America’s back while engaging in sabotage and “erecting diplomatic and economic obstacles to U.S. initiatives and forming anti-American alliances”, (Berkely, 2011). This is what Mack pointed out in his statement that a country would have to be blocked from structural change. In this scenario other countries rise while the United States is overstretched and declines.
Berkeley also deals with convergence theory that states where there is an open global market poorer countries will excel economically while wealthy countries decline. The main point Berkely is making here is that, “Globalization thus stimulates growth abroad while undercutting it at home, diffusing technology”, (Berkely, 2011).
Berkely and others dispute that there is an alternative view that is overlooked by those who insist that decline is imminent for the United States. This same vision is adopted by in his work on the subject where he states that, “One should be wary, however, of extrapolating long-term trends from cyclical events, while being aware of misleading metaphors of organic decline”, (Nye, 2010). Nye’s work suggests that it is far too early to judge long-term effects of globalization. According to his statistics the World Economic Forum still has the United States economically rated as the second most competitive in the world after Switzerland and China is ranked as twenty-nine (Nye, 2010). Structural power is not only maintained but reinforced by the United States according to Susan Strange, who writes about the myths of the loss of hegemony. Strange, whose findings demonstrate that stability “rests not with a realignment of-the world order, but with an internal re-evaluation of the United States’ expression of its hegemony vis-à-vis the outside world”, (Strange, 1987). What those who see a broader picture of the United States in terms of globalization can see is that it will be America’s own ability to adapt, which has always been one of its transcending qualities that will keep the country from falling behind in a globalized economy.
The United States and Tools of Hegemony
The United Stated has many bargaining tools that other countries are lacking in a globalized world. Its ability to restrict or even deny access to its vast technological market, its aid to other countries and political infrastructure which hold enormous power is still very much in-tact. The United States also has what Berkely refers to as “structural power”. As he puts it, the United States has power over aspects of the international system itself”, (Berkely, 2011). It still sets schemas and structures that decide how countries interact with one another. The United States can put covert or direct force upon other economies and countries. Berkely states that this is benevolent but coercive and the goods then produced by the United States, “are less collective goods than private ones, accruing primarily to the hegemony and thus helping maintain its hegemony”, (Berkely, 2011).
As Berkely and many of his colleagues point out, militarily the United States is still in a position of superiority over the rest of the world. Shifting military units around the world is a combination of covert and direct coercion used by the United States as a way of asserting its hegemony.
Soft Power as Hegemony
The term, “soft power” is often applied by economists that are looking at China and Asia during financial crisis. China has utilized the concept of soft power to build bonds utilizing cultural enhancement as a political tool to ease other countries into liaisons. This “soft power” has limitations however. According to Nye China’s attempt at a “charm offensive: failed. He writes that, “A poll taken in Asia late in 2008 found China’s soft power less than that of the United States when the BBC poll of 28 countries in 2010 showed that China had a positive image only in some parts of Asia while it was poor to neutral in the Americas and Europe”. (Nye, 2010). So while China has been applying its new strategies, it appears that American hegemony still holds the staying power that it needs to hold its position of a leading power.
Another issue that has become what declinists would like to label a competitive advantage for countries like China is low standards of living. Due to this the workers in these countries are willing to work for very low wages and thus are forcing outsourcing and leaving American companies no choice except to hire these workers instead of paying good wages to American workers. Berkely refers to this as “cost innovation” and writes, “The production of high technology products at a fraction of the cost of technological leaders leaves no competition from rich nations who may have little choice but to outsource parts of their business to the developing world” (Berkely, 2011). Once again there are answers to this seeming dilemma.
As globalization has allowed more access to technology, it has also created a new mode of production. Globally networked production and standardization has created cut off protective trade barriers. This allows the wealthier countries to cut off any way of upgrading technology. While poorer countries can also protect their industries they are not legally or financially set up to do so. So while “soft power” is a strategy for countries such as China, it is not a strategy that is able to compete with the hegemony of countries such as the United States.
The True Hegemony of the United States
The true strength of the United States will not only work with globalization but will hold up and flourish in this new world economy. Berkely (2011) asserts in his study,
“Finally, given its position at the top of the world trade regime, the United States can distort international markets in its favor.48 Declinists expect the hegemony to use its power magnanimously. According to the alternative perspective, however, American foreign economic policy involves the routine use of diplomatic leverage at the highest levels to create opportunities for United States leverage. U.S. trade officials, “acting as self-appointed enforcers of the free trade regime, asserted the right with their own national law to single out and punish countries they judged to be unfair traders.”50 Globalization, therefore, may not be a neutral process that diffuses wealth evenly throughout the international system, but a political process shaped by the United States in ways that serve its interests.
This will be how globalization will create more opportunities for the United States and how the nation will maintain its position as the economic leader it has been and will continue to be.
Strange, in her work states that the United States holds dominance in the acquisition and superiority of education and in cites that thirty one of the one hundred best universities are in the United States. The United States also has the greatest military budget in the world and that military has superior technology to any other. Experimentation is more advanced in the United States military than in any other country in the world. Strange, like Berkely asserts that structural power is necessary for American hegemony and that in looking at global affairs it is clear that the United States continues to dominate the world in areas of, “National security, productive capacity, controls of finance and credit, and the procurement of knowledge”, (Strange, 1987).
Despite claims that the world economic crisis has brought the United States into a pejorative position in global economics, it is clear that the leadership of the country is addressing internal and global issues. Furthermore, it will be the United States that will reinstate solidity to the international economic structures now in crisis.
China is a formidable concern in the economic crisis we are faced with as we move to a globalized world. There is no question that the United States has war debts and that China is growing at a rapid rate. When one analyses the low quality of life and economic disarray of the China until recently, the nine percent growth rate of the country is not significantly a threat when compared to the quality of life, economic conditions and power stature of the United States. If the United States did not maintain its hegemony in the current globalized climate it would be a result of the loss of political structure, convenient policies and its collapse in an attempt to assimilate international standards that would cause any decline. It is unlikely that this would ever be a reality with the power structures the United States has in place. With national security, and the ability to use overt and covert coercion to maintain its power structures, the United States will hold its place a world power. Technologically the world may be moving forward, however, it will be the United States that continues to produce and deliver new technologies to the global community. It ability to control trade will continue to keep the country in its current state of authority and maintain control over international commerce. With dominance in academics and the ability to access and finance research the country still emerges as a leader in knowledge and its attainment. China has tried strategies such as “soft power” to form alliances and met with little success. While their population is exceptionally high and outsourcing is an issue that the United States faces, these are not insurmountable barriers.
When comparing the United States with China across all the numerous regions that are of significance, including economic, technological and military indicators, as Berkely and many other scholars have, there re many mixed result, however the volume of facts the support the hegemony of the United States is still an overwhelming body of evidence in terms of its ability to sustain its place as the leading economic world nation. While globalization and fiscal burdens have increased for America, while China has grown as an exporting nation, China faces its challenges far greater than those the United States must overcome and does not have the \and global problems on multiple levels. While China has more scientists, they have not found a way to make that fact work for them qualitatively. As the debate goes on as to whether China will dominate the world market, the United States continues to hold its place as a world leader, and globalization will be one more avenue for that hegemony in spite of the scrutiny of economic declinists.
Beckley, M. Why America’s Edge Will Endure: China’s Century? (2011). Journal Article, International Security, volume 36, issue 3, pages 41-78
Mack, A. (1975) “Why Big Nations Lose Small Wars: The Politics of Asymmetric Conflict”, World
Nye, J. (2010) American and Chinese Power after the Financial
Crisis. Center for Strategic and International Studies The Washington Quarterly o 33:4 pp.
Strange, S. (1987) The persistent myth of lost hegemony. International Organization 41.4 p.
Gill, S. and D. Law (1988) The Global Political Economy: Perspectives, Problems and Policies,
New York, Harvester Wheatsheaf, “American Hegemony and International Order”, Chapter
Hurrell, A. (2006) “Hegemony, Liberalism and Global Order: What Space for Would-be Great
Powers?”, International Affairs, 82, pp. 1-19.