Anything that moves

2017: The year China became the leader of the world (thanks largely to Donald Trump)

The biggest story of the year was China seizing the lead from the United States in areas of trade, climate change, and infrastructural development

In 1916, the output of the United States overtook that of the entire British Empire, inaugurating a hundred years of American dominance. In the present century, as China’s output has grown at extraordinary pace, the sheer weight of its population suggests it will soon overtake the US as the world’s largest economy, reclaiming the title it held for much of the two thousand years before 1800 CE, occasionally ceding it to its close competitor, India.

At the moment, China’s Gross Domestic Product is around 60% of the USA’s. In terms of incremental GDP growth, though, it is comfortably ahead, making it the largest driver of global development. India has done well to secure third spot in the incremental GDP growth race, but its claim, made before the current slowdown, of being the world’s fastest-growing major economy needs to be put in perspective. If China expands at 6% and India at 7%, China’s performance measured as incremental GDP growth, given its far bigger economy, is the equivalent of India growing at 30%.

Matter of scale

The numbers associated with China’s development are often mind boggling, but a personal experience encapsulates them in my mind. I attended a conference in Guangzhou a few years ago, and one evening the hosts took us on a cruise along the Pearl River, which flows through the city. At one point, one of the people on the boat, gesturing toward a cluster of glass-clad highrises, told me, “That used to be an open field where I rode my bicycle and played football.” What astonished me was that the person who spoke those words was a 21-year-old student volunteer assigned to me as an interpreter. China does rapid execution at scale like no other nation.

This capacity is not unrelated to its history. Think of the Great Walls (there was more than one), or the Forbidden City. Indian culture, far less regimented, works best on a human scale. When our politicians make grand pronouncements, like the Minister of Road Transport Nitin Gadkari claiming that India’s car production would shift entirely to electric vehicles by 2030, they set themselves up for miserable failure. Indians bought just over 2,000 electric four-wheelers in 2016. The comparable figure for China was half a million, or 40% of global sales. That nation’s stock of electric vehicles includes 200 million two-wheelers and 3,00,000 buses. Yet, the Chinese don’t talk of going fully electric. They prefer ambitious but realistic goals to pipe dreams.

Turning point

In 2017, China produced more rice, wheat, cotton, steel, gold, electricity and manufactured goods than any other country, and overtook the US as the nation with the most cinema screens. One of the ways Hollywood is harnessing the power of the Chinese film market is by including East Asian characters in a number of blockbuster franchises. Donnie Yen, a Hong Kong-based star of kung fu movies, gained major roles in Rogue One: A Star Wars Story and XXX: The Return of Xander Cage. The latter film, starring Vin Diesel, flopped in the US, grossing just $45 million in the North American market against a production budget of $85 million. However, thanks largely to Donny Yen’s participation, it made $165 million in China, and ended with a tidy profit. Deepika Padukone had a major role in the film as well, despite which its Indian revenue added up to only $8 million. The best indication of the market’s relative size might be the case of Aamir Khan’s Dangal, which did over twice the business in China of its record-setting domestic release, gaining 30th place among all movies released in 2016 with a cumulative $302 dollar gross.

However impressive these figures, they don’t capture what made 2017 a turning point, a historical watershed. It was the election of Donald Trump to the US Presidency that gifted China effective leadership of the world.

Trump’s first bestowal was pulling his country out of the Trans-Pacific Partnership, an ambitious trade deal negotiated by his predecessor Barack Obama with leaders of East Asian nations that was at least partly aimed at stemming China’s influence. At the World Economic Forum’s annual meeting in Davos last January, Chinese President Xi Jinping responded to Trump’s withdrawal by casting his nation as the foremost guardian of free trade. Xi’s move was as disingenuous as it was brilliant, considering that China protects local manufacturing and businesses in a hundred ways. I expected Trump to fight China’s policies through retaliatory tariffs, but he has refrained from doing so, perhaps heeding advice of senior cabinet members or because of his great regard for authoritarian rulers such as Xi and Vladimir Putin. Whatever the cause of Trump’s hesitation, it allowed the Chinese economy to break out of a potentially disruptive slowdown.

Big moves

Trump’s withdrawal from another multilateral treaty was even more consequential. He took the US out of the Paris Agreement on Climate Change Mitigation, a crucial global accord aimed at cutting carbon emissions. At the Communist Party congress in October, Xi proudly asserted that China had “taken a driving seat in international cooperation to respond to climate change”. While nations like Germany might contest the driving seat bit, China’s efforts to curb pollution are no public relations exercise. Last year, the country spent $88 billion, or around Rs 5.6 lakh crore, on clean energy initiatives. In 2016, it added 35,000 MW worth of solar capacity, or nearly half the globe’s photovoltaic capacity augmentation. The comparable Indian figure was 4,000 MW. India is expanding its solar power programme rapidly, but has a long way to go before it can match China.

The third reason China could be said to have seized global leadership in 2017 was the rapid progress made with its One Belt One Road plan. The largest infrastructure initiative in the world, OBOR was cemented in May at a forum organised in Beijing which India boycotted. There are many sensible commentators who view OBOR negatively and, thus, supported India’s decision. One can see the “new silk route” as a cynical Chinese manoeuver to find new places to park money, now that returns on infrastructure investment in China itself are abysmally low. One can foresee nations getting into debt traps and China becoming a quasi-imperial power. The other side of the equation is the potential OBOR provides to dozens of nations to upgrade infrastructure, boost trade and find new markets. A BBC documentary about a dry port called Khorgos, built from nothing in the Kazakh desert, provides a hint of what OBOR could potentially accomplish. I have argued that India’s boycott of the OBOR summit meant we will miss the best opportunity of developing the country’s North East.

OBOR is the first major international initiative in centuries not driven by the Europeans or the North Americans. Perhaps, the Non Aligned Movement qualifies as a precursor in non-Eurocentric formulation, but it was mired in contradictions from the start and achieved few practical gains. It was, in fact, a kind of Brahminical conception founded in ideology and ideals. OBOR is more typical of Chinese culture, transactional and pragmatic. It is not a zero-sum game and, as long as nations take decisions in their own interest, there is no reason why all members of the initiative can’t benefit.

Geopolitical limitations

There are distinct limits to China’s pragmatism. It beats the nationalist drum as hard as any nation. The Chinese Communist Party brutally puts down any perceived threat to its authoritarian rule, as happened just this week when it handed down excessively harsh punishment to a human rights activist. Its decades-long refusal to have any dialogue with the Dalai Lama is evidence of its absolutism regarding issues of nationality. Outside these spheres, the party treads lightly, and has not attempted to lead from the front on any geopolitical crisis. If its relative heft has grown, it is because of the US disengaging from a series of conflicts, or at least not engaging as deeply as it would have done in the past.

The process began with Obama, who refused to commit troops to any new conflict zone in the world, whether Libya, Syria or Yemen. This led to nations like Saudi Arabia joining wars directly instead of waiting for the US to do the job for them. It also permitted Putin to enhance his international standing through a series of assertive interventions. Trump, for all his aggression on Twitter, has done little thus far to reassert American hegemony. In the most dangerous theatre in the world today, North Korea, he has acceded to China’s central role, and cajoled rather than threatened Xi and his comrades.

2018 could produce nasty surprises for China. I continue to believe that Trump’s inner protectionist will assert himself and destabilise the global economy. If that happens, China will lose more than most nations. Meanwhile, the daily proofs of Trump’s unfitness for office make Xi look statesmanlike and underline the respect China commands and the power it wields.

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Following a mountaineer as he reaches the summit of Mount Everest

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