WhyChina won't be Asia's dominant power
China may be Asia's economic powerhouse butit won't become the region's dominant power, according to a new report.
"In examiningthe factors that go towards the development of Chinese national power-and itsability to use it to achieve national objectives-predictions about a Chinesesuperpower with the ability to dominate Asia would be premature,if not improbable," said Paul Dibb and John Lee, authors of thereport published by Australian think tank Kokoda Foundation.
The argument that China is already Asia'spre-eminent power based on its growing economic and military capacities isweak, the authors say. They expect the limitations of China's economic might, alack of close bilateral relationships and weak military capability to keep the country from becoming an advanced political-economythat wields influence in the region anytime soon.
"China is a dominant power,but it's not the dominant power in the region or the world. It's got theeconomic hardware in place... as a collective country, there'sno denying that it's an economic and military power," said VishnuVarathan, senior economist at Mizuho Bank.
An unproductive economy
An unproductive economy
China's gross domestic product growth rateof 7 percent may be a five-year low, but it's still the envy of most countries.However, experts say declining productivity is one of biggest tell-tale signs that China cannot maintain itscurrent pace of growth.
"The capital-output ratio estimate for2012 was 5.5:1, meaning that a capital input of $5.50 achieves only $1 [ofoutput]. As economic logic insists, and the developmentexperiences of other East Asian countries show, capital-output ratios at thislevel depict an enormously wasteful and capital-inefficient economy that is notsustainable," said the report.
Other experts agree: "For amiddle-income country, capital productivity has dropped too much. Thisoccurred mainly in the past ten years, reflecting the efficiency problems on China's development path,"said Xiaolu Wang and Yixiao Zhou, authors of the 2014 academic paper 'DeepeningReform for China's Long-term Growth and Development.’
Furthermore, China will be unable to makethe jump from middle-income to high-income status - a requirement for adominant state- unless it improves the standard of living for citizens, thereport added.
Doing so would require the allocation ofmore government funds to public goods such as social security and unemploymentbenefits, as well as healthcare, which only constitute 10.5 percent and 6.1percent of the 2014 budget, respectively.
WANG ZHAO | AFP | Getty Images
The defense sector receives the lion'sshare of government finances, nearly 15 percent of the 2014 budget, but Dibband Lee believe China will not become a military superpower until it's capableof taking decisive action on a global scale.
"Although China has developed potentmilitary capabilities to make it hazardous for U.S. forces to operate in theapproaches to China, the fact remains that Beijing could not enforce a fullmilitary blockade of Taiwan or attempt a full-scale amphibious invasion of thatisland," they wrote.
As a result of territorial disputes withJapan and the majority of Southeast Asia, China has few friends in Asia. Areport from the Pew Research Centre earlier this year showed respondents infive out of eight Asian countries had overwhelmingly unfavorable views ofChina.
This unpopularity undermines Beijing'sinfluence and capacity to wield power in the region, Dibb and Lee said.
Mizuho'sVarathanagreed. "China doesn't have the charismatic soft power that Asia'sdominant power ought to have, it is still trying to gain friendships andinvestments in the region," he said.