CHINAwatch

China's light emerges from under the bushel

"China’s public offer to mediate peace talks between the Taliban and the Afghan government marks a notable departure in Chinese foreign policy. It is the first time Beijing is taking a genuine leadership role, on its own initiative, on a geopolitical issue both sensitive and significant". Says Andrew Small, a Transatlantic Fellow at the German Marshall Fund of the United States, in a New York Times Op-ed dated 26 March, 2015. This marks another turning of China's growing global gravitas. 

This is a marked departure from Deng's famous imperative of "hiding the light under the bushel, and never assuming leadership", which broadly has served China well for past decades. Now that China becomes a ten-ton panda, this dictum has clearly outlived its usefulness. 

Meanwhile, China's economic influence is gathering apace in Europe, with a massive shopping spree to acquire global brands and technologies, as reported in The Economist dated 28 March, 2015. 

Initial U.S. cold shoulder notwithstanding, there is a rapid global rally behind a China-led Asian Infrastructural Investment Bank, as can be seen from the following roll-call of regional and non-regional Members and applicants. 

Download Asian Infrastructure Investment Bank

Supported by Ascent of the RMB, the Chinese currency, all these seem to suggest that the West-dominated world order, defined by American exceptionalism and the post-World War II Bretton Woods institutions of the World Bank, the International Monetary Fund (IMF), and the Asian Development Bank (ADB), is about to give way to a new geoeconomic and geopolitical paradigm more amenable to China's growing global clout. 

2015 NPC/CPPCC - Premier Li's Work Report including military expenditure

China's Economy 

According to Premier's Li Keqiang's s Work Report at the March 2015 National People's Congress, China's GDP grew by 7.4% in 2014, the slowest in 24 years.

Despite slower economic growth, 2014 saw 13.22 million new jobs created in towns and cities, higher than the year before. Newly created businesses increased by 12.93 million units, an increase of 45.9%. Energy intensity dropped by 4.8%, the largest in the past few years. Consumption’s contribution to GDP increased from 50% to 51.2% while Services’ contribution increased from 46.1% to 48.2%.

These data indicate that China's economic model is starting to shift towards slower but more sustainable growth. 

For 2015, GDP target growth is pitched at 7% with inflation rate at 3%. 10 million new jobs are to be created with urban unemployment to be kept within 4.5%. Trade (import-export) is to grow by 6% with concomitant income growth at similar rates. To achieve these targets, broad money supply M2 is to expand 12% or higher if necessary to provide any necessary financial catalyst. 

According to Justin Lin, former chief economist and senior vice president of the World Bank, for China to become a moderately-well-off nation by doubling her 2010 GDP by 2020,  a year-on-year 6.8% growth from 2014 through 2020 would be sufficient. For China to overcome the "middle-income trap", her economy could do well to maintain about 7% growth for 20 years. Click here and here

For a quick run-down of Premier Li's Work Report highlights, the following is a selective translation of a 30-point summary chart published on Xinhua.net, a state online news platform.

Download 30 Highlights of Premier Li Keqiang (Selective translation) 

Download 30 Highlights - Premier Li Keqiang's Work Report, NPC 2015(Chinese)

China's Military Budget

Amid wild speculations, China announced a relatively-mild 10.1% increase in military budget for 2015. Albeit the second largest military budget in the world, it is much less than a third of America's $526.8 billion for fiscal year 2014 Click here, representing China's military budgets' slowest growth rate since 2010. - 

Year       Military expenditure growth   GDP growth 

2010                    7.5%                          10.4%

2011                  12.7%                            9.3%

2012                  11.2%                            7.7%

2013                  10.7%                            7.7%

2014                  12.2%                            7.4%

Many analysts suggest that China's military expenditure, including all hidden items, probably represents anything up to double the amount. Be that as it may, China's military capabilities and sophistication still have to continue to catch up with her Western peers, commensurate with the size and outreach of her economy.

China's military expenditure in 2014 accounted for less than 1.5% in the GDP, lower than the world average of 2.6%, in comparison with 3.8% for the United States, 2.2% for the U.K. and France, and 4.2% for the Russia Federation, according to the World Bank. It also compares with the recently increased 2.8 % (for 2015) for Japan.