China becomes the world's largest economy and the politics of narratives

The Economist on China's rise to global economy supremacy

The news hit the world this month that China has become the world's largest economy by Purchasing Power Parity(PPP) Measures. The calculations by the International Monetary Fund(IMF) puts the value of the Chinese economy at $17.6 trillion while that of the US is $17.4 trillion. 

The think-tank I run Strategy3 focused as we are among other issues, on China and future studies was among the first institutions to highlight this information. Scanning the media in cyberspace it seems the news has not been given much prominence like the protests in Hong Kong which had more of a burlesque feel than serious political agitation. This steadied ambivalence or stoic blindness does not undermine the fact however that this news is one of the most significant in modern economic history. For the first time in the last 120years a country which is not part of the Euro-American Order has risen to the position of the preeminent economic power on earth. Few experts had given China even a dog's chance to build her political stability after the spasmodic contortions of the 19th and early 20th centuries let alone outrun the formidable US economy 65(in just two generations) years after the People's Liberation Army stormed  Beijing's Chang'an Avenue and took state power.

I have been monitoring the leading media outlets in the Euro-American heartland. Keith Fray(http://blogs.ft.com/ftdata/2014/10/08/chinas-leap-forward-overtaking-the-us-as-worlds-biggest-economy/ )writing for the Financial Times engaged in affected sophistry. Straining to simply accept this new fact of global economic life he is at pains to tell us that China is " far from the richest" economy in the world. And adds the phony tired caveat that China has always been the leading economy at least two millennia before our time( if you know your Pomeranz, Maddison and Gunder Frank it is preaching to the converted). to soften what seems a difficult blow to take. Of course if China was dirt poor and backward her shiny economic past will be reason enough for pride and disdain for those upon whom she will be depending. 

Hong Kong determines China's future?

The Economist also plays games with this news. In its October 4 edition the Economist had bannered the Hong Kong protests in its pages(cover and lead story). The lead story was just too heavy on shrill hyperbole and outright insults for a respected paper as the Economist. In the lead story China's history was described as "grim" and  the country as a "violent" one. In its October 11 edition however the report on China's rise to global economic preeminence is uncharacteristically, for the Economist which has lately been focusing on that country, buried in nondescript manner in a story focusing on Ukraine and Venezuela and "Soverign Defaults." For decision makers with no time it is easy to miss this. In an ill disguised dampener that takes a direct aim at China's economy the column  Free Exchange pontificates on  why " weakening productivity is casting doubt on the sustainability of China's growth."  

My take from these deliberately angled takes is that China's prosperity and growing power matter deeply to the Euro-American Order. In a recent article in Foreign Policy retiring Under-Secretary of State William Burns indicates how the Pacific(which China has made important) has become vital to America's long term strategic interests. African countries need to take a cue if the big boys are plotting and ride the Chinese wave. It will be no easy ride for sure requiring as it will strategic vision backed by the necessary operational infrastructure. Recognizing the major tectonic shifts now underway is however an inevitable necessary condition.         

 

Ghana:Australia is providing Lessons

Serious countries on the globe are reading the signs of the times in a world rapidly re-ordering and de-centering away from the erstwhile dominant West. Australia is showing the way is this most publicly unapologetic way http://australianpolitics.com/2012/10/28/gillard-launches-asian-century-white-paper.html. Australia is positioning herself for the coming era which in fact is here already: ASIA AS VERY INFLUENTIAL GEO-ECONOMIC AND STRATEGIC ENTITY.
I called for this sort of policy document for Ghana way back in 2007. If anybody listened where will Ghana have been on this matter? Good to daydream at the very least I guess.

Ghana and Africa must learn lessons or lose out. And this involves clear vision, concrete plans and the institutions and brains to pursue such an AGENDA. The future actually is here already.

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Generation Next: Rethinking Africa & China

Assistant Professor at Ashesi, Lloyd G. Adu Amoah, discusses the future of Sino-Africa relations in the Ashesi University Bulletin. The latter half of 2012 will prove a momentous period for China with long-term implications for Africa. Keenly awaited by close China-watchers this year is the convening of National Congress of the Chinese Communist Party (CCP), the highlight of which will be the handing over of power – only the second time this century- from China’s ‘fourth generation’ leadership to its fifth. The late Communist leader and head of the ‘second generation’, Deng Xiaoping, instituted many of the market oriented reforms seen today, but it was the current President Hu Jintao and Premier Wen Jiabao who have stabilised the booming post-Deng years. This Hu-Wen generation – mostly born during the World War II - was deeply marked by the chaos of Mao Zedong’s Cultural Revolution and thus adopted an almost machine-like technocratic style of policy formulation and implementation. It is no accident that both Hu and Wen are engineers. China’s courting and engagement with Africa has been critical in achieving this stabilisation. In fact, the value of trade between the two partners has crossed the $100 billion mark in the past two years. And China’s infrastructural footprints have become very visible on the continent in the past decade of which the construction of the African Union headquarters in the Ethiopian capital Addis Ababa is the most symbolic and daring expression. Chinese companies - state, quasi-state and private - have invested heavily under the Hu-Wen administration in the extractive, telecommunications, manufacturing and financial sectors in virtually all parts of the continent. And for a decade now, Africa has also responded on her own terms to China’s overtures. An indication of this is a burgeoning African diaspora visible in major China cities such as Macau, Guangzhou, Shanghai, Beijing, Hong Kong, Chongqing and Wuhan. The fifth generation Chinese leadership, who will likely coalesce around Xi Jinping and Li Keqiang, probably anticipate that they will have to deal with, and be judged by, a languid or maturing Africa-China partnership. In other words the key concerns of the potential Xi-Li administration will be less about planting a strategic toe hold in Africa, something their immediate predecessors focused on, than ensuring that that delicate Chinese toe in question is not exposed to debilitating bruises or forcible amputation. They would do well to take note of a couple of warning signs. One sore point of Africa-China relations is the year-on-year trade deficits that African countries have had to endure on account of commerce with China. The upshot of this – for China at least - is the emergence of Chinese traders in the retail sector of African markets who are corralling the supply chains of Chinese commodities in high demand in Africa and competing directly with African traders. The Ghana United Traders Association (GUTA) is not standing for it and has protested about the dominance of China in its domestic markets. GUTA’s protests have led to a June ultimatum by the Government of Ghana for Chinese retail traders to close shop ‘or face the consequences’. In an election year, Ghana’s government may not want to upset its voters. In China itself, more protests are flaring up in the diaspora communities over the heavy handed treatment of African migrants on the mainland. In Guangzhou, for instance, riots have broken out leading to injuries. In the short run however the Xi-Li administration could be side-tracked by something much closer to home – the infamous Bo Xilai affair – dubbed one of the biggest scandals ever to hit the China’s ruling party. He was the former Communist Party chief in Chongqing, who lived a lavish lifestyle and is now facing charges of corruption. His wife is also being investigated for murder. The Bo matter has become a microcosm of the challenges that the new leadership will face. Bo can be considered a veritable dross on the shine of a ruling Chinese elite that has diligently cast itself as austere and selfless and deployed this to attract a steady stream of investments from the West. The Xi-Li team will probably focus on presenting Bo as an aberration rather than a norm in China to, at the very least, reassure foreign investors that the new Chinese leadership remains a trustworthy business partner. There is a lot at stake here. In China the Bo imbroglio touches a raw nerve given the widening gulf between the country’s rich and poor, and the potential for mass social unrest. For the Xi-Li cohort these realities may leave Africa-China relations on hold; a matter to tackle after the fire-fighting over Bo has been done. One senses, at least in the short-term, that the new administration will want to project a business-as-usual approach to Africa while it diverts its energies to crises on home soil. This is very risky. Primarily it means that China’s new rulers will be taking their eyes off growing discontent in Africa over the country’s conduct on the continent, all the while trying to douse simmering discontent at home. Promises of pro-poor policies in China may work for now. But if one considers how key Africa is to China’s future growth – and thus its continuing stability – it would be a gross miscalculation of the new regime if those promises of poverty attenuating policies did not extend to the African continent as well. In the meantime, the time is ripe for Africa’s policymakers, civil society organisations, academics and other interested parties to seize the initiative and lobby Beijing in order to reform relations with China for the mutual benefit of both parties. Originally written for: July-September, 2012 edition of the BBC Focus on Africa magazine.

China's Next Power Team: Implications for Africa

My latest article on the imminent power shift in China and the implications for Africa!

Strategy3 Policy Brief

Policy Brief

March 2012

Ghana and the China Question: what next after 50 years?

Nana Akufo-Addo

The presidential candidate of the New Patriotic Party Nana Addo Dankwa Akufo-Addo devoted significant ideational space in his recent Oppenheimer Lecture(http://www.iiss.org/conferences/oppenheimer-lecture/oppenheimer-lecture-2012-nana-akufo-addo/), Houston Texas Speech and appearance on BBC Hardtalk programme to Ghana-China relations.

    

Ghana’s diplomatic relations (est.5^th July, 1960) with China have already gone past the golden jubilee mark. Nana Akufo-Addo is providing compelling signals that as a potential president of the Republic of Ghana post the upcoming 2012 General Elections he intends to reconfigure Ghana’s economic, trade and diplomatic relations with China along a clear and robust win-win axis.

That the China question[1] will inevitably condition Ghana’s medium to long term national transformation strategy is undergirded by that country’s increasing economic and diplomatic influence on the African continent. China was Ghana’s largest investor in 2007(and still held the record half a decade latter in 2011[2]). Against this backdrop and the imminent ascension to power (at the upcoming 18^th Party Congress) of the fifth generation of Chinese leaders led by Xi Jinping the necessity for a win-win posture as articulated by Nana Akufo-Addo takes on a certain urgency.     

The key question however is how to flesh out the details of this win-win engagement with this Asian power. Our view is that Ghana requires a comprehensive China Policy document to anchor and provide the needed ballast as a matter of national strategic long term positioning . This is a vexing matter that both government and opposition need to provide leadership on.

In 2000 China launched the Forum on China Africa Co-operation (FOCAC). The last FOCAC (summit meeting) was held in Beijing in November 2006. The fifth FOCAC ministerial meeting is scheduled for Beijing in 2012. The FOCAC has emerged as the foremost framework through which China and African nations discourse and strategize on pressing socio-economic and political issues facing Africa and the wider world. In January 2006 China released its Africa Policy Document. It is clear that China has offered the basis and framework for her engagement with African countries. A fitting response to this by Ghana lies in crafting her very own China Policy document which will inter alia:

n     provide the needed clarity, focus and coherence for Ghana’s engagement with China.

n     define the principles, values and basis for Ghana’s relationship with China. This is important in respect of Ghana’s engagement with other bilateral and multilateral partners. For Ghana-China relations the conduct of both parties will judged by these standards.

n   elaborate and define the core areas/sectors that Ghana considers of top priority strategic importance in her relations with China and to construct the mechanisms for co-operation in these areas.

n   signal to the Chinese that Ghana takes its relationship with China seriously and seeks a two-way relationship that is mutually beneficial to both countries.

n  provide an empirical and legalo-regulatory framework for handling misunderstandings, potential conflicts and strengthening and improving bilateral relations between the two countries.

n   allow Ghana to have clear guidelines for positioning herself strategically in a reconfigured world in which China undoubtedly is playing a key part.  

As the Chinese say: Talk does not cook rice. Ghana’s sages also provide useful wisdom in the view that : "Woforo dua pa a, na yepia wo" (to wit "When you climb a good tree, you are given a push."). From the years of Deng Xiaoping, through Jiang Zemin to Hu Jintao Ghana has not had a documented, living China blue print. With Xi Jinping set to take power in China this year will Ghana still deal with this new generation of China’s leadership with the same adhockery?

Lloyd G.Adu Amoah, Ph.D.

Strategy and Governance Unit

Strategy3

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[1]See the upcoming March 2012 edition of Business World magazine(http://www.businessworldghana.com/) for a comprehensive analysis on this question by the author.

[2] Of the 83 investment  projects tracked by the Ghana Investment Promotion Centre for the last quarter of  2011, China accounted for 25 of these(and was third in terms of value of FDI) followed by India with 16. China remained the leading investor country (in terms of registered projects) to Ghana overall in 2011.

South Africa, China and Mining

My sources indicate a formal launch(already consummated: see http://www.promet.com.au/prometdadi.asp )  of the  merger of Promet Engineers(SA wing; firm is essentially an Australian company) and Dadi Engineers Development Group one of China's largest project engineering firms on November 17, 2011. Are the Chinese using the South African minerals terrain as a bridgehead into Africa's minerals sector? What are the implications? For me the central issue is the multiplicity of ways in which China is positioning itself on the African continent. Strategy3 my think-pad is watching closely.  

African Economic Outlook 2011 on China and other Rising Powers and Africa : Chapter 6

The Africa Economic Outlook 2011(see  http://www.africaneconomicoutlook.org/en/in-depth/africa-and-its-emerging-partners/) has just been released. Chapter 6 of this report focuses on the BRICS, Korea and Turkey. I find the call for African unity in respond to these countries antiquated. The focus should be on the long term strategic thinking of African countries(which the report itself admits).

I made that case in 2010 (http://twnafrica.org/index.php?option=com_content&view=article&id=321:africa-china-planning-for-the-long-term&catid=37:african-agenda&Itemid=58) and also in 2011
( http://www.brill.nl/african-engagements;Public Policy Formation in Africa in the Wake of the Global financial Meltdown: Building Blocks for a New Mind in a Multi-polar  World;Chapter 14; 2011, Brill, Lieden, Netherlands ).

The AU is too hide-bound and bureaucratic to be relied upon for the kind of detailed policy thinking that a strategic response to these countries requires.