China: Superpower or Bust


At this meeting, Bremmer discussed China’s rise as well as his recent cover story in The National Interest, “China: Superpower or Superbust.” Jacob Heilbrunn, editor of The National Interest, moderated the event.

Event Summary

“There is no question in my mind that the largest political risk…is what are the implications of the rise of China” and how successfully China’s government will be in handling the exigencies and changes brought about by this ascendancy, said Dr. Ian Bremmer, president and founder of Eurasia Group, at the Center for the National Interest. Nothing else is close, he insisted.

While emphasizing the international salience of the rise of China, Bremmer also disagreed with the idea that the United States is in decline – a notion that is sometimes attendant to arguments about China’s ascendance. However, he qualified his position by stating that, while the US is not truly in economic decline, America’s foreign policy is on the downturn. Some of that is due to the growth of emerging markets, the challenges of working with distracted allies and rivals with different rivals, and a weak second term Obama foreign policy team. And the implications of this foreign policy decline, Bremmer argued, will be most severe in Asia, a situation that China can and likely will attempt to exploit.

Beijing’s recent declaration of an Air Defense Identification Zone (ADIZ) over the East China Sea is one example, Bremmer continued. While the origins of Beijing’s recent ADIZ policy are unclear, he said it seemed to be a government-wide policy rather than a unilateral action by the People’s Liberation Army simply due to the coordinated, whole-of-government response from China as the region and the world reacted.

The ADIZ declaration, Bremmer asserted, was “pretty good policy” from China’s perspective, and was largely successful in achieving its two principle objectives: beginning to drive a wedge between the United States and Japan, and using carrots and sticks to ensure that most other countries do not support the latter’s position on its territorial disputes with China. Declarations by U.S. policymakers notwithstanding, it is simply not true that there is no daylight between the United States and Japan on the ADIZ issue; for instance, while Japan demands a rollback of the ADIZ, the United States has thus far declined to take the same stance publicly. He said that Vice President Biden, who was recently dispatched to the region, understands that Washington is closer to Tokyo, but that China is more important. He is trying to “act more as a mediator” to ensure regional stability. Bremmer does not foresee Southeast Asian nations respond well to this well, and pointed out that in Northeast Asia, South Korea has already considered responding unilaterally, by expanding its existing ADIZ in the East China Sea.

The dismal state of relations between Japan and South Korea, which Bremmer characterized as “pretty much broken”, provides additional opportunity for China to exploit the situation for political gain. Yet while Beijing surely possesses significant regional influence, which will enable it to better capitalize on these and other openings, Bremmer argued that China’s international influence is actually significantly exaggerated.

In terms of Washington’s Asia pivot, Bremmer argued that China is more pleased with U.S. foreign policy in the Asia-Pacific region than it was a year ago, in part because Hillary Clinton, Kurt Campbell, and other Asia “hawks are gone” from the Obama administration. In a related, positive development, relations between Washington and Beijing at the upper levels of government are “going a little better.”

More broadly, Bremmer said, despite China’s growing influence, we are unlikely to witness the reemergence of a bipolar international order; China is neither ready for nor welcoming of such an arrangement. However,  either are we likely to return to a unipolar, US-dominated international order, which is something Beijing  ould never accept. Most probably is a “G-0” environment, in which there is no dominant leader, according to Bremmer.

Although China has close ties to a number of countries across the globe, Bremmer said the overwhelming bulk of these are “rogues,” such as Venezuela, Iran, and Zimbabwe; risky places for Western companies to do business for a host of political and economic reasons. China has chosen to fill in the cracks by investing in countries that have seen either no or very little investment from the West. The net result is that China’s portfolio, while certainly robust, is highly exposed to political risk.

Focusing on the overall trajectory of China’s rise, Bremmer expressed that he is more worried about the medium- and long-term sustainability of China’s political, social, and economic model – and economy – than he is about the next two to three years. In describing the nature of the challenges faced by China, Bremmer employed the analogy of a high-powered car heading towards a fork in the road, with a steep cliff on one side and paved road on the other. Both the US and China know there’s a cliff, yet they don’t agree on its exact location. And nobody – whether in Washington, Beijing, or elsewhere – knows how good the car’s steering is, nor how skilled in maneuvering the driver is; indeed, there may be no steering. Although Bremmer predicts a “strong, top-down” response by the ruling Chinese Communist Party to this challenge, it remains to be seen whether China will be able to keep all of its rubber on the road.

Bremmer was less concerned about China’s environmental and health challenges – which he believes Beijing can manage – than by changes in labor productivity. As China modernizes and increases productivity, which will be necessary to maintain competitiveness, he argued productivity gains must eliminate jobs. Will China be able to create enough jobs as it does so? Or, alternatively, will artificially high employment undermine competitiveness and growth? Bremmer saw these as critical questions for the future of China’s economy and the global economy.