Ladies and gentlemen,
The problem whether China can integrate into the global economy without causing severe political turmoil is now becoming one of the central questions for both international politics and economics. Speaking on this topic, I must argue that every country"s path in what is called "world risk sociey" is an experiment. It may succeed, or falter. I think no one is interested in Chi-na"s failure, but there are no - and may no be - any guarantees against it.
Recent years were for China a period of rapid economic growth averaging 9.5% per year from 2000 to 2005. The results are spectacular: by the end of last year, China became 4th biggest economy in the world by GDP calcu-lated under purchasing power parity rules, surpassing France; the biggest destination for foreign direct investment, surpassing the United States; the major hol-der of currency reserves with those approaching $960b; and what is most important, the third biggest exporter in the world after Germany and U.S., with exports of $760b.
All those dramatic changes made China one of the principal economic pla-yers on the global scene, and this requires other players to reassess their own roles - both economic and political. I will say that nobody cares about China"s role as the main FDI destination as well as about the magnitude of its GDP (since the GDP per capita fugures remain relatively small [around $2.7k per person]). Two biggest problems today are from my point of view associated with China"s foreign trade and its effects on the world economy.
First of all, China"s industrial rise makes the U.S., the world"s only super-power, highly dependent on China at least in three respects. Nowadays, the United States runs a $200b+ bilateral trade deficit with China, which is growing. U.S. relies on Chinese imports in improving the standars of live of its own population, which is critical if one takes into account stagnating hourly wa-ges in the American economy. American growth becomes a result of Chi-na"s since more that 34% of country"s GDP it is now created in wholesale and retail trades. And, finally, the stability of the dollar and the U.S. budget balance both depend on China as the holder of dollar reser-ves and by far the biggest foreign buyer of the U.S. treasury notes.
Here comes the problem. The United States believes it still is the most po-werful state in the world - while it dominates the global stage only in milita-ry terms, but not economically. To recognize this will be next to impossible for the U.S. elite. And I believe that it may result in rising feelings that Chi-na becomes the biggest threat for American dominance. In general this is true, but the U.S. lacks an adequate economic answers to this challenge - so you must prepare for political ones. Protectionist measures, political ba-shing, monetary pressure - all this may be used in coming years. And the fact that China becomes one of the biggest military powers with its military spendings next to American, will only aggravate the situation. So I should say that China is now on the way to collide with the U.S. - not militarily, of course, bur surely economically and politically - and this is because at the beginning of the 21st centure America"s political and economic interests be-a-me inseparable one from another.
Another problem comes out from Russia. For decades both Russian politicians and public had considered China as a developing country. As recent as in 1985, Soviet GDP was at least twice as big as China"s and the USSR was one of the world"s industrial leaders. Today Russian GDP is 3½; times smaller than China"s, and while insustrial goods represent 63% of Chinese exports, Russia"s are composed of raw materials and resources by 80.4%. Today Russia looks like a developing country compared to China. And this creates a huge discontent in Russian elites which feels now busy with reestablishing Russia"s past superpower status in global politics. Today, Chi-na and Russia declare each other allies. They have creating the Shanghai Cooperation organization five years ago. They act jointly on global political stage. But to me it"s obvious that the real economic cooperation between our countries does not correspond with the activity of political dialogue. In 2005, only 4.8% of Russian exports went to China. Chinese investments were often blocked by Russian bureaucracy. And it"s necessary to have in mind that the infiltration of Chinese nationals into the Russian Far East is considered a threat by at least 60% of Russians. I think that with China"s sthength growing further Russian political class will feel itself in the re-lations with your country as uncomfortable as it feels itself now in its rela-tions with the united Europe. And since the Russian politics is today clear-ly and authoritarian one, Russia"s attitude to China in coming years seems to me to be much more unpredictible that today.
Here I want to say a few words concerning the general framework of contempopary foreign policy. I"m far from sure that either China or Russia ha-ve a clear vision of the emerging world order - since the politics of so cal-led "multipolarity" looks rather like an involuntary option chosen by those who aren"t satisfied with the existing situation but have nothing to offer instead. Of course, American unilateralism represents a clear threat to the world very much today, but the alternative to it reside in a kind of coordinated actions, not in attempts to tame it in different fields or topics - so I see much more positive experience in the organizations like the European Union that address first of all economic and social problems that those like Shanghai Coope-ration organization obsessed by questions of "security".
One more point which is to be made here is that in our dangerous world it is very challenging to approach openly a dominating power lefting to it the only choice either to react and defend or to step down. The United States are on its own road to decline: first of all to an economic one. I hope that there will be enough patience in China and Russia to let America go this way along, without taking on it in political terms - for the sake of the world.
So my advice will be to foster cooperation and to team up with those nations that are predictible in their foreign policy; interested in economic cooperation with China more than in a political alliance with it; and are not ac-tively engaged in upgrading or defending their role as political superpower. And I should say that there is only one polity of that kind in today"s world - the European Union.
If China considers itself an economic powerhouse it must cooperate with the EU which is the only one net exporter of FDI. If it cares about expanding of its foreign trade it needs to orient towards Europe which today runs in its trade with China a deficit 4 times smaller than the U.S. If China wants to become a peaceful power in the world of tomorrow it should seek a uni-fying role in Asia compared with EU"s role in the Western Hemisphere and not to engage itself in establishing and anti-American center of power together with Russia, or an anti-Russian one together with the U.S.
So I think that China should engage itself more actively into intra-Asian po-litical cooperation while not relying on its relations with either Russia of the United States in establishing a kind of "miltipolar world". In economic terms China should be ready to switch its exports from potentially hostile USA to politically neutral Europe. And I want to finish with saying that it may be an error to engage into tho-se kinds of cooperation with Russia that may be considered in Brussels as openly anti-European. I do understand China"s interest in gas and oil supplies from Russia, but I should say: be aware of counterposing yourself to Europe as one and only alternative destination for Russian energy exports. Russia will not - and cannot - redirect the ma-jor part of its energy flow to-wards the East, but those efforts may severely damage Sino-European re-lationships, which, I think, are of vital importan-ce for your country in the 21st century.