When democracies lose economic power democracy itself is weakened.
This year China, the world’s largest dictatorship, overtook Japan to become the second largest economy in the world and replaced the United States as the world’s top manufacturing country.
The US on the other hand, as we all know, has a huge budget deficit and its credit rating has been down graded. China is the largest holder of US debt, so no wonder it’s showing its power.
Fiercely Chinese anti democracy rhetoric
Chinese state-owned media openly blasted the US and the failures of the West. Even warning Chinese citizens about the dangers of democracy.
Following the U.S. debt deal, Chinese newspapers provided some of the most biting anti-Western, anti-democratic commentary. For example:
“The West can no longer cover up its problems. The rise of emerging powers is challenging Western dominance. However, the West only tries to deal with these problems by highlighting past achievements. Political reform is unlikely to make any more progress in the U.S. than in other countries — despite the illusion of change that comes as parties rotate with elections … Western countries are losing the authority of their democratic system.”
Contrast that to statements supporting the US dollar coming out of Japan, the second largest holder of US debt.
China buying Europe at bargain prices?
Not only does China hold a lot of America’s debt. Chinese premier, Wen Jiabao, has also thrown the euro zone a vital lifeline and pledged to buy billions of euros of European debt to keep the single currency project alive.
And unless someone else, like Saudi Arabia or India, start buying continued Chinese purchases of U.S. and European government bonds will be essential to maintaining global financial stability.
“Stable Europe vital to China”
When Chinese Premier Wen Jiabao was on a tour of European capitals recently, he stressed that a stable euro zone is vital to China, Europe’s friend.
From Beijing’s perspective, when it comes to Europe, self-interest and altruism actually coincide.
If China were to buy, say, half of all outstanding Greek sovereign debt (for a bargain of around $220 billion), it would not only resolve the euro zone’s problems and add to Chinese prestige but it would contribute to giving Beijing the kind of reserve asset it needs to diversify its holdings out of dollars.
And it’s interesting to note that as a result of U.S. and European actions in financial markets, there is now the possibility that China could buy even sensitive assets from Europe, at bargain prices.
Money makes the world go round
China is today able to do what the US did yesterday i.e. sequence and prioritize policy objectives across a great number of sectors and focus on achieving them, ignoring distractions, and not allowing events or passions to hijack national attention.
China continues to produce and Westerners keep on consuming on borrowed money, not least from China, which is an equation that doesn’t add up. Soviet communism declined because the economy didn’t add up but that’s not the case with China whose economy is capitalistic while the government keeps a firm grip on power and its people. Most likely the majority of Chinese would like democracy, but for China to become a functioning democracy is nevertheless way into the future since their government will crush dissent.
What’s the strategy of the West?
Today America and Europe are suffering from lack of vision and strategy and seem unable to resist the next big battle in Washington or Brussels and the desire to take on yet another complex security challenge (maybe Syria) to distract from the more important geo-strategic challenges of the day.
China stays on track — and the West seems unable to come back
Not only is the Chinese economy performing very well, they are also partly bankrolling the West. And money talks.
The US, Europe and India are the worlds largest democracies and China is the world’s biggest dictatorship. It does matter who has the best performing economy in the world. To ignore that would be a fatal mistake. But for some reason it seems Western politicians are not able to make an effort to stop power slipping away. That the center of the world is moving East has been obvious for a long time, but what surprises me is that the West doesn’t seem to be able to come up with a strategy to stop, or at least delay, it. What’s your opinion? Is China’s geo-strategic policies making them the winner of the geo-political global chess game? Do you believe China is taking over the West? Or will Western politicians get their act together and, again, start start making intelligent moves on the global chess board that work? If not, it will be a set back for democracy.
(Photo: United States Government Services – Flickr)