Market crash, shuddered China’s economy

Market crash, shuddered China's economy
Market crash, shuddered China's economy

Report 9 : Recently, a packed house Harvard audience, with a number of Chinese students attending, heard a keynote address on the progress showing China’s rise towards becoming the world’s pre-eminent power at America’s expense was absolutely unavoidable and US’s attempts to stabilise Pacific power equations weren’t going to move things.

After few months, it appears a changed world as Chinese President Xi Jinping, hailed till recently by western media for assembling the most power since the charismatic Mao, entered in the US in the wake of bedlam in China’s stock market that lost 30% value since its June high.

A few days back Chinese foreign minister Wang Yi plainly told a high profile seminar in Beijing that bondings with Japan were bound to improve – as they had with Russia – once the Japanese reconciled to the inevitability of China’s rise.

Indeed, the muscle flexing over the nine-dash line that left the Philippines bruised and Taiwan, Malaysia, Vietnam and Brunei watchful and wary seemed China’s way of doing away with any pretence of the humility urged by leaders like Deng Xiaoping (“hide your brightness, bide your time”).

As Xi guarantees US audiences that China will not depreciate the yuan and let market forces to guide the troubled currency, it’s time to think if Deng’s lessons require to be persevered for some more time.

In comparison, Prime Minister Narendra Modi starts his US yatra on a more positive note despite shortage of success in negotiating the parliamentary blocks that have stalled important tax and land acquisition reforms.

Modi is not having to reconcile claims to impending glory with changed circumstances. In fact, India is just a blip in the US policy universe, and the scenario has only changed somewhat after Modi’s election generated a buzz around him.

India’s energetic diplomacy in Asia and elsewhere over the past year has highlighted its traditional stance of a stable power that is not a threat to anyone. Inspite of problems with some neighbours, India does not come across as a hegemonic presence as China does to a wide arc of nations.

Modi’s challenge lies in overcoming the comprehenstion that he has not done enough to check cultural chauvinists and those actions against certain NGOs are an assault on civil society. But he has the entire support of Indian diaspora, long starved of a mascot capable of invoking national pride and modernism in the same breath.

This doesn’t bring Xi’s China dream to an end. As general secretary of the communist party – his far more relevant title than the arcane president – Xi would know how the remarkable interpenetration of the state by the party gives China’s rulers an abundance of levers to influence economic and social life.

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The mamoth economy of China with its large domestic market will continue to be a magnet for global commerce. Its talented and nationalist middle-class remains a high quality asset. But the estimated $144 billion spent in shoring the capital markets shows the dragon can trip on its own success.

In ‘Is the American Century Over?’, political scientist Joseph Nye reassures his American audience that the US can, if it acts wisely, project its power – with some compromises – well into the current century. The Chinese fall will see resurrection.