China surging ahead - A new age of Chinese dominance

History offered another one of its delicious ironies yesterday when a World Bank report suggested that China, hardly 30 years after Communist demigod Mao Zedong’s death, will become the world’s biggest economy and the country with the greatest purchasing power this year, several years earlier than had been anticipated.

It was after all Mayday, the day when socialist leaders — often tyrants, sometimes merely bewildered — once celebrated whichever brand of the ideology they advanced with grand military reviews and threatening nationalism dressed up as something else altogether. The great tattoos in Moscow’s Red Square or Peking, as it was then, were designed to intimidate neighbours — Ukrainians still understand this — and potential enemies as much as they were to impress socialist fellow travellers.

China understood the power of political and military pomp too and even if it quickly discounted the World Bank prediction, probably to avoid concessions on trade, climate change or currency parity, the change in China’s place in the world since it embraced, and adapted, capitalism is still one of the great shifts in history. Indeed, there is hardly a change of direction or objectives as dynamic or forceful in all of human history.

This reversal from state-controlled socialism to state-controlled capitalism has unleashed forces we hardly understand yet but it has made a significant contribution to lifting hundreds millions of Chinese workers out of poverty though very few western workers would be happy to work in the conditions their Chinese counterparts face. This disparity is borne out by the fact, even if all of these things are relative, that even with a population of 1.3bn China barely ranks in the top 100 countries for income per person. This gap is reflected in growing labour unrest and expectations across the country. How these demands met is one of the great challenges facing President Xi Jinping and his colleagues.

China has been slow to acknowledge previous milestones along its journey towards economic dominance, specifically when it passed Germany as the biggest exporter, Japan as the world’s second economy and America as the biggest trader. Rather, its leadership preferred to emphasise China’s status as a middle-income country thereby resisting pressure to accept obligations on greenhouse gas emissions for which their country is the biggest source.

The country’s appetite for the world’s raw materials is undeniable and almost frightening as is its determination to control large swathes of Africa to build their country’s food and fuel security.

America has been the world’s largest economy since overtaking Britain in 1872 and the waning of the American century-and-a-half, more or less, has a significance far beyond economics. Just as American hegemony facilitated the spread of American views, principles and culture, China’s ascendency will bring a change in emphasis too. It will undoubtedly bring huge economic and business challenges, it will add to an already out-of-control climate crisis and increase demand — and the cost of — many raw materials. The western view of human rights and the independence of the individual are likely to be challenged in this new world.

This force, this level of competition alone, justifies the existence of the European Union because without a unified approach it is hard to see how even Europe’s most powerful economies can compete in this radically altered world.