About China and the future of the world economy

The title of the article by Celso Ming, in today's edition of Estadão, is "China is already the largest economy in the world". Nothing that informed analysts - and less preconceptions - did not already take for granted: for them, it was not "if", but “when” this would happen… Actually, the calculation that led Ming to make such a statement was based on the “Gross Domestic Product by Purchasing Power Parity” (PPC), that is, "How much a country can buy in goods and services with its currency". This parameter has already been used, by the way, by the International Monetary Fund, by the World Bank and the American intelligence agency itself, to CIA, to measure income-related quantities. For him, this benchmark reflects the real economy better than data such as “nominal GDP”, that computes the total wealth produced by a country, but not sharing with the real economy produced by the population .

By correction in your analysis, he points out that “by the conventional measure, China's GDP will still be $ 15.2 trillion, or almost 27% less than the US $ 20.8 trillion of GDP in the United States, calculate the IMF, but measured by the CCP, China's GDP already reaches US $ 24, 7 trillions, that is, it's almost 20% higher than U.S. GDP, of US $ 20,8 trillion ” (sic). Continuing the analysis, Celso Ming adds that "the Trump administration does not hide its opposition to the advancement of the eastern dragon and has decided to face the challenge with the hard game that has already been called the New Cold War".

Your opinion is supported by none other than Jim O'Neill, the head of global economics research at the Goldman Sachs group, from New York, and president of Chatham House, From london. By the way, O'Neill was the analyst who coined the term BRIC’s, to mean the set of countries that, in his opinion would be the emerging powers that – “right or wrong” – would conform to the United States the five largest economies in the world in the 21st century.

In a recent article you published on the last day 08, on the influential international website “Analysis Syndicate”, titled “The Logic of Sino-Western Détente”, O'Neill stated that “although much of the crowd against China has subsided somewhat during the COVID-19 crisis, the fears that enliven western attitudes towards that country have not disappeared and may reappear at any time. These tensions represent a major dilemma for the world, given China's enormous and growing economic power. And the situation was certainly not benefited by the failure of the other great economic power, the United States, to manage the current crisis effectively ”.

Continuing, he says that “due to my professional training, I usually approach issues like the Sino-American relationship first as a macroeconomist. But as president of Chatham House, I've been developing a more nuanced view of the theme, taking into account not only the economic dimension, but also security, to diplomacy, culture and other factors ”. In a candid way, he adds that “in this context, it seems reasonable for us to adopt a broader spectrum (what he calls the “optimization framework”) understanding and managing relations between China and the West ”… “Not oversimplifying things, but if the economic opportunity that China represents can be expressed as a target “X”, Western leaders who decide to confront it about real or perceived transgressions need to weigh the potential costs of doing so against that target. Such thinking is natural, and I suspect that it has already been implicit in the British and European governments' approaches to China in recent years ”. Continuing his reasoning, he ponders that “policymakers need to ask themselves a more subtle question: strong economic engagement is more effective than inflexible confrontation to achieve the desired political changes in China?”And concludes that“ answering these questions will require an open mind ”. Cynicism… or “real politics?”

Finishing, he adds that “soon, we will have data on real growth (adjusted for inflation) of China in the third quarter, and many analysts expect to see an acceleration to about 5% yes yes, over an estimated growth rate in the second quarter of 2,6%. If so, there will be good reason to believe that China is experiencing a classic recovery in the form of “V”, putting it on the right track to record growth in 8% in 2021.

In view of this situation, the dilemma that mobilizes governments and societies on this side of the globe: Western democracies must prioritize relations with what is already the world's first economy over the values ​​that are the basis of their civilization and benefit from the expansion of international trade “by China” and its by-products, or resist, and with that run the risk of seeing the caravan of History pass by the West, known that Asian economies interact closely and support themselves, in such a way that they could even do without this part of the planet and still survive, and even expand? This would be the best scenario, that more radical analysts are classifying as a next step: the “deglobalization” of the world economy?

And the question arises that does not want to shut up: it will not be possible to find a “modus convivendi”, in which the values ​​of each civilization are maintained - and respected - removing preconceptions and prejudices that cloud shared understanding and coexistence? Does Rudyard Kipling's poem, british soul, and Indian by birth, predicting "oh, East is East, and West is West, and never the twain shall meet ”still makes sense?… But, if this was in the 19th century… It is clear that the equation is difficult to solve (if there will be a…), given the overlap of so many factors, who claim the role of statesmen and not “professional politicians”. This search may seem like a naive and utopian thought, but I believe that it is the utopias that move the world…what is not convenient is discarded, and take advantage of what it adds.

I believe that the elections in the United States may somehow present new factors for this equation. Not that everything will be different if the leadership changes there; instead, a Democratic administration may be as or more severe than the Republican in dealing with the Chinese. But it would change, I believe, the tone: no longer an irrational vocation of the genre “Chinavirus”, but a less rhetorical dispute and more focused on the bonuses and burdens of living in a changing international system.

It is us?…

I suggest reading the article The Logic of Sino-Western Relaxation

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Doctor of Public International Law in Paris. He entered the diplomatic career in 1976, served in Brussels embassies, Buenos Aires, New Delhi, Washington, Beijing, Tokyo, Islamabade (where he was Ambassador of Brazil, in 2004). He also completed transitional missions in Vietnam and Taiwan. Lived 15 years in Asia, where he guided his career, considering that the continent would be the most important of the century 21 - forecast that, now, sees closer and closer to reality.