Did China Benefit From the Economic Crisis?

MUMBAI, July 31, 2012 — Unlike most developing countries, China has seen GDP growth hold relatively steady through the global financial crisis. Exploring this and its many ramifications, best-selling author, Visiting Senior Fellow at LSE and world-renowned expert on China Martin Jacques spoke at Asia Society India Centre's private BASIC (Breakfast at Asia Society India Centre) Series roundtable to answer questions on China's future, not only with regard to the financial crisis but also in grasping how it has become such a large superpower within the Asian sphere of influence.

In a candid setting with other leading scholars, businessmen and policy makers, Jacques further discussed his theory of China as a "civilization-state" and the implications this holds for India and the rest of the world.

Jacques began by analyzing how political systems within Western nations, India and China directly affect overall growth. He claimed that China's success with a system of heavy government involvement in the economy may usher in a re-definition of the relationship between states and markets in a globalized world. According to him, China has developed a streamlined government system that has allowed it to grow quickly and relatively peacefully without implementing democratic ideology.

In the West's push to "privatize everything" for the sake of democracy, Jacques suggested that perhaps the West and India should begin re-evaluating what their definition of democracy represents and whether it is worth striving for in the face of the financial crisis. Due to the fact that China exists as a civilization-state, Jacques cautioned that other nations should not try to copy China's model of economic growth and development, and instead "should all seriously start learning from China's way of handling business and the state."

Jacques went on to claim that the world has become nervous about the PRC because of how quickly and quietly it has become a shaper of global economies and developing markets. Since it lacks a transparent government, many nations feel threatened by the rapid expansion of China's power and influence. China is now the majority trading partner to most countries in the world and the RMB (renminbi) is projected to become the primary trade currency in half of the world's trading markets — all while the Chinese government's agenda has remained shrouded in mystery.

Putting the recent economic crisis into historical context, Jacques recognized that 2008 might "represent the singular moment for a shift in power" away from Western democratic ideology and towards a more Chinese style of governance. 

He cautioned, however, that the path forward for China will not be easy. The issues facing it will continue to become more complex, both internally and externally, as its power and GDP continue to grow. As China becomes more involved in world affairs, it needs to calm its neighbors' nerves and shift its foreign policy strategy — moving towards reinforcing transparency, stability and political reform — and moving away from the "Chinese way" of dealing with politics behind closed doors.

Reported by Harold Sheffery, Intern, Asia Society India Centre