Commentary: The Rise and Fall of Great Powers is a 1987 book by Paul Kennedy in which Kennedy argues that Great Power ascendency is strongly correlated with a strong economy and that decline is often associated with imperial overreach.
Kennedy’s book has lessons for the current conflict between the United States and China over dominance in Asia and Africa. This is a struggle that will playout over decades.
In this conflict, China appears to have the advantage. China’s miraculous economic growth over the last 40 years means that China now has the resources to become a global superpower, just as did the Spanish, British and Americans before them. Moreover, China economic miracle has given the Chinese leadership the credibility that will allow them considerable latitude as the leadership pursues foreign adventures.
Meanwhile, the United States has suffered a period of economic stagnation following the 2008 financial crisis, undermining the country’s trust in its leadership. This mistrust is further amplified by military misadventures in Vietnam, Afghanistan, and Iraq give us pause about further interventions. Social media makes the distrust of our leadership just that much worse.
In some sense, the more assertive China is a return to a more typical situation. China’s eclipse by European powers following the 1849 First Opium War is not the normal way of things.
After all China both in 1849 and today is the most populous country on earth, so should be expected to be dominate. Indeed, in 1750, produced about a third of the world’s manufactured goods. By 1880, that share had declined to one-eighth. Today, China produces about a quarter of global output.
In Africa, China lent $100 billion between 2000 and 2015. There is little doubt that these loans were meant to by influence. Some of these loans go to line the pockets of corrupt officials. And no doubt there are white elephants among the projects funded. But much of the loans go to fund much needed infrastructure that can be used by locals. That China is funded these infrastructure projects allows China to say in the design, allowing China to tweet to their advantage. If Chinese firms but also by China.
Then there is the Belt and Road initiative, which is a massive infrastructure project to increase connectivity among Asian countries and China. The initiative will tie Asian countries more closely to China by making transportation—both of products and people—easier. The funding of the Belt and Road involves a great deal of lending by China to less develop Asian countries.
Should the African and Asian countries default on their loans, they may almost be better from China’s point of view as China can use the potential for financial bail out to force borrowers to conform to China’s wishes. This is page right out of the playbook of the United States, which quite effectively used its control of the IMF to force Latin American countries to adopt policies that greatly increased U.S. firms access to local markets.
The fear of China’s leveraging of loans to gain political power was a major factor in the recent Malaysian election. The winning candidate, 92-year-old Mahathir Mohamad ran on a platform calling for a review of Chinese investment. Upon winning election, Mahathir cancelled a loan from China funding the building of new port because he feared that the debt could not be repaid.
Christopher A. Erickson, Ph.D., is a professor of economics at NMSU. His specialty is the role of the financial system in economic development. The opinions expressed may not be shared by the regents and administration of NMSU. Chris can be reached at chrerick@nmsu.edu.