China In The World Economy And The New Silk Route

China in the world economy and the new silk route

Introduction

During an interview the American philosopher, political scientist and activist Noam Chomsky said: “Among all the alleged threats to the reigning superpower in the world there is a rival who is emerging silently and vigorically: China. And the United States is closely scrutinizing its intentions.”(Chomsky, 2012) This is a very successful expression to define China’s current situation as a new hegemonic actor in the international system. China is emerging to occupy the place that the United States apparently insists on leaving, through its great economic, commercial and military influence, not only in the Asia-Pacific region, but throughout the world.

China is currently considered the second economy worldwide. For the 2017 to 2021 period, the International Monetary Fund predicted an average growth of 6.4% (IMF, 2019) and for the first half of 2019, the economy grew 6.3% (Qingqiao, 2019) In that context, the IMF considers that China has the ability to maintain strong economic growth, however, the Chinese economy also presents challenges such as: “A deceleration with respect to previous years, the commercial war with the United Statesand the exponential increase in public and private debt ”(Barría, 2019).

Therefore, the analysis of China’s economy is of the utmost importance, which is already considered the second worldwide after that of the United States and is expected to become the first.

To do this, we will briefly address China’s economic history, the current state of the economy, outstanding events such as the commercial war with the E.OR. And the ambitious project of the new Silk route, the new economic challenges, all with the aim of answering the next question, will China become the new great super power and the next world hegemonic leader?;And finally we will give some conclusions.

Developing

History of the economy

China, with more than 4000 years of existence, has always been considered one of the largest and most influential empires in the Asia-Pacific region. He managed to consolidate as hegemonic empire mainly through military battles, and trade. "China has sometimes been considered more powerful than European empires". (Gon, 2016) Today, it is considered the second economic power worldwide and it should be noted that the Chinese economy has suffered a series of transformations throughout history since it began trade with Europe until its exponential current growth current. China traveled from an incipient economy and a rural society, to be a technological and world trade leader;which threatens the economic hegemony of the United States.

In 1644 the Manchures (a northern tribe helped by the population) invaded China and founded the Qing dynasty. During this dynasty the borders of the Empire were expanded: Taiwan was conquered, the East Tibet and Turkestan was incorporated. The rise of trade between the East and West was given, therefore, numerous clashes arise, however the superiority was on the European side, which was revealed in the Wars of Opium 1839-1860 (two wars between China and Great Britain) which end with the delivery of Hong Kong to Britain and with the destroyed imperial palace. In 1866, China "sent its first ambassadors to Europe, a diplomacy forced by Great Britain after it won in the opium wars, however, this moment is considered the origin of direct trade between Europe and China" (APD,2018).

China achieved great advances during the seventeenth century in technology, government and commerce, but for the 18th century, Europe made greater advances than China in science, economy and technology, mainly England. The above due to China lac. At the beginning of the 19th century, China was already a country with great inequality of opportunities, which was revealed in cities such as Shanghai, where modernity and luxury lived with poverty and workers’ exploitation. That is why, in the mid -nineteenth century, China is left behind with respect to Europe, who was already exercising power around the world, and by the end of the nineteenth century, “China had already been divided into areas of influence of thedifferent powers and diminished in power ”(Gon, 2016).

In 1911 the Qing dynasty is overthrown by the League of the Revolutionary Republican with which China begins a new stage in its history ”(Gon, 2016). During the first half of the twentieth century, Chinese society lived practically isolated from the events that transformed Europe, was more focused on the constant struggles inside and in the civil war (which began in 1927 and resumed after ending the Japanese occupationIn 1945), that of the two world wars. "When Mao amounted to power in 1949, China was fundamentally an agricultural society" (APD, 2018). Although during the next three decades the Chinese Communist Party "presented important initiatives in economic matters, such as: the great leap forward or the cultural revolution, China did not achieve economic growth equal to that of the rest of the world" (APD, 2018). Mao dies in 1976 and in 1978 he am rising to Deng Xiaoping.

With Deng Xiaoping, it begins a radical change in China’s economy, since capitalist economic reforms are established. The 1978 reforms included the desertivization of agriculture, the country’s opening to foreign investment and the granting of licenses for private sector companies. "This denationalization of services, coupled with the end of the cold war and the height of international trade thanks to the increase in exports, allowed the growth of China’s economy" (APD, 2018).

Current economy and challenges

Economic growth was accelerating in almost all regions of the world and was projected at 3.9% for 2018 and 2019. However, new events have emerged, which have produced important changes: the escalation of commercial tensions between the United States and China, macroeconomic disasters in Argentina and Turkey, conflicts in the automotive industry in Germany, the hardening of the policies ofCredit in China, and the contraction of the financial conditions that occurred in parallel to the normalization of the monetary policy of the strongest economies, contributed to a significant weakening of world expansion in 2018. This weakness is expected to be persisted or increased for 2019, in World Economics Perspectives (Weo Report) a growth contraction in 2019 is projected for 70% of the world economy.

World growth, which touched a maximum of 4% in 2017, decreased to 3.6% in 2018 and would continue that trajectory to be 3.3% in 2019. While a global expansion of 3.3% is still reasonable, the perspectives faced by many countries are very hard, marked by considerable short -term uncertainty, especially as the growth rates of advanced economies converge towards aModesto long -term potential. (IMF, 2019)

Since 1978, China left its dependence on agriculture, to become a leader in the financial and technological sectors. The fall of the communist bloc and the end of the Cold War, consolidated during the 90s the new economic direction of the country, establishing that the only way to build a solid economy would be through foreign trade and foreign investment. Since in 2001 China entered the World Trade Organization, “Tariff barriers, import installments or closed sectors to investment have been relaxing progressively” (APD, 2018).

The Chinese economic model had been based on foreign trade (export), industry and investment;Currently, it seeks to travel to a model that is basedfrom China. Recall that the economic theory Model Heckscher-Ohlin states that: “Countries specialize in the export of goods whose production is intensive in the factor in which the country is abundant, which could continue I feel used by China despite its desireto focus on internal consumption ”(Ceupe, 2019).

For example, according to figures from the Ministry of Commerce of China, the investment of the Asian country in Latin America went from 200 million dollars in 1975 to 100 billion in 2010. In the same vein, the Economic Commission for Latin America and the UN Caribbean (ECLAC), predicts that in about five years China will move to the European Union as the second commercial partner of Latin America. Of 7.6% of total sales to the region in 2009, will go to 19.3% in 2020. (Tele Sur, 2014)

In that sense, the main challenges for the Chinese economy are: the economic slowdown, the rise in public debt, the commercial war with the United States, the increase in social inequality and the realization of the project of the new Silk route. China’s economic growth has been December in recent years, however, it continues to be one of the largest worldwide (World Bank, 2019). 

The United States-China War

The commercial war began when US President Donald Trump carried out commercial actions with protectionist characteristics, for example with the establishment of new tariffs, in order to stop curbing the commercial expansionism of China. And although there were some attempts to find solutions to disagreements, the fight in the technology area, limited any type of negotiation.

These events resulted in a commercial war that already shows affection to trade between the two countries, especially for the United States (its exports have decreased approximately 12%), as well as international trade. However, Donald Trump continues with his threats that, in the event that China does not modify its commercial policies and practices, the United States government would apply new additional tariffs to the total imports of the United States that come from China (Garza,Jorge or. Armijode la, 2019)

The new Silk Route

China began a commercial economic project never seen in world economic history, it is considered by some analysts as a total revolution in terms of infrastructure for the displacement of passengers and goods and, this project could be decisive for China to reaffirm me as the powerhegemonic of the Asia region and also as the global hegemonic power;Likewise, to be launched, it will be a project that will alter the economic map of the region and the entire world.

To the original land route, China annexed a maritime with which you can enter the Africa and another with which you can access South America and can connect the Atlantic Ocean with the Pacific Ocean through a possible railway line. This project will allow China to renew its trade, its industry and even culture.

According to the president of the Bank of China, Tian Guoli, the land and sea routes affect 4,400 million people and 65 countries, which will offer important opportunities for China, Asia and Europe. In that sense, the European Union (China’s main trading partner) is very interested in strengthening relations with China and participating in the project. (Higueras, 2015)

Conclusions

The International Monetary Fund considers that the commercial crisis between the United States and China, as well as a probable recession of the Asian country, could decisively influence world economic growth, mainly in international trade and the growth of emerging economies, with whichWe can deduce the great influence that China currently has (IMF, 2019).

The international system is in a constant restructuring, mainly in terms of power poles and, currently China is increasingly influential and challenging "(Chomsky, 2012). China is currently emerging as a global power mainly in the economic field, through its commercial agreements, investments in almost the world and their foreign policy. In addition to this, the isolationist and hostile foreign policy of the United States stands. That is, a new world order is emerging that is no longer dominated only by the United States.

Likewise, unusual events have emerged, such as the arrival of Donald Trump to the presidency of the United States or the vote in favor of Brexit in the United Kingdom, events that have revealed the emergence of a new world order, in which China playsa determining role especially in the economic field. China is considered the second economic power worldwide, mainly due to its exponential economic growth (although it is currently in deceleration) and in terms of international trade. It is also considered the first in the Asia-Pacific region, which is enormously complex, since it is made up of powerful states with its own ambitions, which generates a certain degree of tension.

Until today, China had based its economic growth in international trade through export and its financial growth through investment, currently it seeks to travel towards a model that is based on services and domestic consumption, with the aim of increasing the standard of livingof its population. However, trade and investment will probably continue to be important pillars of China’s economy.

Probably the concerns of the United States with respect to China are understandable, if the virtually irrefuted assumption is taken into account that this country must maintain an "unquestioned power" over a large part of the world, with "military and economic supremacy", guaranteeing the sameTime "The limitation of any sovereignty exercise" by states that can interfere with their global designs. (Chomsky, 2012) United States (specifically the government of Donald Trump), has sought by different ways the confrontation with China, the most outstanding event today is the commercial war between these two nations, which are the two largest economiesworldwide, war that is currently considered a factor for determining world economic growth. With all the above, we can conclude that China is emerging as the new world and commercial super power worldwide.

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