China

The last 30 years have witnessed the era of globalization which has been marked by the creation of an integrated global economy. Globalization has been the product of both policy and market forces, and U.S. policymakers have persistently been in the vanguard. However, what began as a project of globalization has been transformed with little explicit public discussion into a project of China-centric globalization.

While winter is in full swing in Tehran with snow blanketing the capital, senior officials of the Islamic Republic can be forgiven for feeling hot. Over the past three weeks, the major powers have dramatically turned up the pressure on Iran over its nuclear programme. We have now entered the oil-squeeze phase.

Almost a year ago, President Obama set a challenge in his State of the Union speech: "We need to out-innovate, out-educate, and out-build the rest of the world." He had just signed a law that ordered the Department of Commerce to write a report on American “competitiveness.” That report was released last week and claims that "elements of the U.S. economy are losing their competitive edge which may mean that future generations of Americans will not enjoy a higher standard of living."

This year proved a tipping point for China’s approach to the world. The confluence of Europe’s debt crisis and America’s contracting defence budget has created rising expectations that China will shoulder ever greater power burdens for international stability. No longer can it keep a low profile in international strategic and economic affairs. Could it join America as a world policeman sooner than expected?

Will it be able to come up with a new one? Here is a story that Robert O’Brien tells in a recent paper in the journal China Security. In 2005, China’s National Development and Reform Commission, which had the power to set government procurement policies, said that state-owned wind farms could only buy turbines that had 70 percent of their parts made in China.

Is China a bubble?

This question - once the domain of a small group of China sceptics in the global investment community - has gone mainstream. Time magazine posed the question on its cover, warning its readers to "Be Very Afraid of the China Bubble". Global news agencies such as Reuters and Bloomberg are raising troubling questions about China's over-leveraged banks, inflated housing prices and highly indebted local governments. A Wall Street Journal columnist recently wrote: "Forget Greece. Forget Italy. Forget 'Occupy Wall Street', The really ominous news right now? China."

It is now a foregone conclusion that China’s economy will become the biggest in the world sometime very soon. According to the World Bank, the size of China’s economy is $10.1 trillion, compared with $14.6 trillion for the U.S., based on purchasing power parity (which adjusts exchange rates to account for the different prices people pay for goods and services across countries). But China is narrowing the gap in a hurry. Over the past 10 years, the annual real growth of China’s gross domestic product averaged 10.5 percent, compared with 1.7 percent in the U.S.

Henry Kissinger's 2001 book Does America Need a Foreign Policy? opens with the observation that "[a]t the dawn of the new millennium, the United States is enjoying a preeminence unrivaled by even the greatest empires of the past.

Of all the formulations deployed in recent years to describe the emerging world order, G-2 is probably the worst and most dangerous.

Americans don’t like the idea of another rival so quickly achieving strategic parity and influence, and the Chinese are uncomfortable with such a high-level responsibility commensurate with their weight.

The U.S.-China relationship can hardly be described as agreeable, progressive, or even productive. And yet people keep coming back to the idea of a G-2 because the alternatives can seem so inefficient.

The terrorist attacks of September 11, 2001, on New York and Washington led to a remarkably unanimous response, not just from the West but also from the entire international community.

For the only time in its history, NATO invoked the principle of collective defence enshrined in Article 5 of its founding treaty. This guarantees that the alliance will respond to an armed attack on one of its members.