'We have now come to a period of greater realism'

Jonathan Fenby believes China's domestic challenges will make it difficult for it to play a wholly dominant role in the global economy. The veteran China commentator, who was speaking before the publication of his new book, Will China Dominate the 21st Century?, says the country has a number of key weaknesses - particularly in relation to the United States - holding it back.

Chief among these, according to Fenby, is capital misallocation where bloated state-owned industries get the major share of resources, weaker safety standards, a pollution crisis, a poor innovation record and a reliance on imported resources and foreign technology.

"The emergence of China in the world and the economic effect of China has been the most important event globally since the end of the Cold War. I don't think there is any doubt about that. It is the big gamechanger in all kinds of ways from investment in Africa to that also in Australian and Brazilian iron ore mines," he says.

"But I don't think that this means China rules or dominates necessarily and that is partly because of these domestic considerations," he says.

Fenby, 71, was speaking in the living room of his mansion flat in Bloomsbury in London, just a stone's throw from the British Museum.

The book is the 14th in 15 years that the former editor of the South China Morning Post and The Observer newspapers has produced. These have included his Penguin History of Modern China and Tiger Heads, Snake Tails, a forensic examination of contemporary China.

He says Will China Dominate the 21st Century? strikes a new note of realism in the debate about China that contrasts with some previous China books that suggested the former Middle Kingdom was going to take over the world.

"I can remember when the likes of Goldman Sachs were saying around 2007 that there was no stopping growth and that it was going to be around 12 percent and the sky is the limit. I think actually that this is the last thing Chinese economic planners wanted to hear since they wanted much more controlled growth," he says.

"We have now come to a period of greater realism and this appears to coincide with the Xi Jinping's administration's acceptance of the need for slower and more sustainable growth."

Fenby, however, insists he is not negative about China's imminent overall prospects.

"As I say in the book I am not a China-collapse person partly because it can prevent itself from collapsing. The state has a lot of money and it can basically bail itself out, if it ever needs to."

He says he does depart with those who argue that we are heading to a Sinofied world, where China holds sway over everyone else.

"I think the idea of any country dominating the world just doesn't work. Just look at the United States and its wars in Iraq and Afghanistan, for example," he says.

"Even at the height of its powers and influence, America didn't dominate the world. There was the Soviet Union and to a lesser extent China then, which meant that a huge amount of the world wasn't run by America."

In his book he quotes former Singapore prime minister Lee Kuan Yew that the Chinese are in "no hurry" to "carry the burden" of being the No 1 power in the world.

"I think part of Xi Jinping's dream is to be regarded as equal to America but that is still, I think, an aspiration for the future, if you look at the differences between the fundamentals of their economies such as in areas like innovation," he says.

"I don't think China wants to displace America but also I don't think America is a hegemon running the world at the moment. We are in a much more multi-polar world."

Fenby, who is also a founding director of the London-based emerging markets research consultancy Trusted Sources, says the challenge for China is to play a more significant role in global institutions and in forming a new world order.

"I think actually the Americans would like to see China play a bigger role in a lot of international organizations. I think this would suit China too because they are faced at present with a lot of rules that were formed before they came on the scene," he says.

The author says the 21st century will be interesting in terms of how China's major geopolitical relationship with Africa develops.

China is now Africa's leading commercial partner with trade now $166 billion (122 billion euros) annually.

"With Africa the question is whether it is a purely economic relationship based on developing and extracting raw materials and minerals or a broader political relationship. You need, however, to go beyond the first to build the second," he says.

Within China itself, Fenby says, the current leadership has clearly taken the view that the country's future position in the world does not depend merely on artificially fueling growth.

"With Xi Jinping you see a definite change in the style of leadership. I was in Beijing in November talking to people and there is much less of a fixation with crude GDP growth numbers for their own sake. I think 6.5 percent will eventually be OK," he says.

Fenby says he is wary as an outsider of making pronouncements on China's future, however.

"I had a meeting with some senior officials after a recent Party conference and said a lot of things about the situation in China and at the end a leader of a delegation came up to me and said to me that I must come back and 'tell us how to run China'. I thought there might be a degree of irony there," he says.

He is aware also that he is not going to live to see whether his predictions of how the power balances will eventually play out in the 21st century.

"I am not going to live to see whether I am right or not, although my grandchildren might. I think what you are going to have is a world where the emergence of China more than balances the removal of the Soviet bloc. I think now China is the new counterbalance to the United States."

andrewmoody@chinadaily.com.cn

(China Daily Africa Weekly 01/17/2014 page7)