The past three years have been very good for China. No country has emerged from the ashes of the 2008 U.S.-led financial crisis stronger and more influential than China. Beijing’s international reserves are now more than seven times larger than the deployable funds held by the International Monetary Fund.
With such a huge cash stockpile, it is little wonder that Europeans turned to Beijing in recent days for financial help. Containing Europe’s current financial crisis will require a massive amount of money. And Europe hopes that Beijing will ante up the necessary billions to save Europe and, by extension, the world.
China has every reason to throw Europe a financial lifeline. The EU, after all, is China’s largest export market. China is also a significant foreign investor in Europe. And, from a strategic point of view, Beijing certainly views Europe’s dire plight as leverage when it comes to other issues that have long bedeviled Sino-European relations. In short, Europe’s financial crisis has handed China a golden opportunity to increase its global heft. Yet it is highly doubtful China will become Europe’s “savior.”
Despite Western fears over the rise of China, Beijing is not entirely comfortable as a global power. The mainland, to be sure, has not been shy about criticizing the United States for its part in triggering the global recession of 2008/09. Beijing has even gone so far as to broach the sensitive topic of having the Chinese renminbi replace the U.S. dollar as the world’s reserve currency. But China, in general, has been careful and coy about stepping out on to the global stage. It is almost as if China’s moment arrived too early — for Beijing and for the world at large. Beijing would like to lead from behind, when it leads at all.
Beijing is reluctant to grasp the mantle of global leadership since that would go against Deng Xiaoping’s famous directive :
“Observe developments soberly, hide our capabilities and bide our time, remain free of ambition, and never claim leadership”
Observe, hide, and bide your time — all of that was possible for China a decade ago, when the global economy beat to the U.S. tune. Then, the global economy was driven by the profligacy of the U.S. consumer. The Chinese pleaded poverty, and for good reason. China’s per capita income — roughly $5,100 in 2010 — is still a fraction of that in the United States or Europe. Sixteen percent of China’s population (some 215 million people) still lives on less than $1.25 a day. The mainland’s energy and food supplies are woefully insufficient for a population that is rapidly urbanizing. With only 8 percent of the world’s cultivated land, China must sustain nearly one-fifth of the world’s population. Decades of pell mell growth has decimated China’s environment. More problematic : roughly two-thirds of China’s approximately 660 cities have less water than they need, and 110 of them already suffer severe shortages. The lack of clean water and the deteriorating environment has become a social and political lightning rod, with the number of pollution-related protests rising steadily over the past decade.
Demographics represent another herculean challenge — China will grow old before it grows rich, placing tremendous pressure on the government to help care for China’s elderly. And income inequality is rising in the People’s Republic, raising the specter of further social and political unrest.
These challenges threaten China’s avowed goal of creating a harmonious society, one economically and politically in unison. This is paramount to Beijing’s chief goal : internal stability. As Kishore Mahbubani, author of “The New Asian Hemisphere,” notes :
“The Chinese mind has always focused on developing Chinese civilization, not developing global civilization. China today is willing to be a responsible stakeholder in the global order, but given these overwhelming domestic concerns, the Chinese leaders have little appetite to lead the world.”
In other words, throwing a financial lifeline to a bankrupt nation like Greece matters less to China than maintaining internal cohesion. The two objectives, of course, are intertwined. China surely understands that it is in its own self-interest not to see Europe implode. At the same time, Beijing risks a domestic backlash if China’s leadership appears to be more concerned about the plight of wealthy Europeans rather than the interests of poor Chinese.
In a sense, the global financial crisis has spawned an identity crisis in China. The country wants to be a global power but on its own terms and timetable.
Against this backdrop, China is most assuredly tempted to ride to Europe’s rescue, knowing that a Chinese Marshall Plan for Europe in 2011 would undermine the economic authority of the United States and subject Europe to the economic humiliation of being under the economic umbrella of the Middle Kingdom. The West, quite frankly, would never be the same. Such a move would confirm the rise of China and usher in a new world economic order.
However, the odds of any of this happening are slim. No matter how tempting, China is not about to become Europe’s “savior.”