The fast-growing Chinese economy is staring the world in the eyes. The ever-strong Yuan is a pain in the neck for many heretofore strong currencies. It is for this reason that China is under tremendous pressure to devalue its currency. It is said that China is the lender of the last resort to the most powerful country on earth. It has the second largest economy. According to the latest projections, China’s economy will be the largest and the strongest economy by 2050. It has the largest army in the world with 2.26 million active troops but its military spending is just 2% of its GDP which explains the enormous size of its economy. Its formidable military machine is a force to reckon with. It has export-oriented defense industry and it is capable to produce anything that you can imagine. The quality of its high-tech defense equipment is improving at a fast pace.
Is this Asian country on its way to challenge the sole super power and re-write the world order? We will see that but the first thing first.
Foreign Policy in its recent issue, has quoted the worst nightmare from Super Sad True Love Story, which imagines a not-very-remote future in which the United States, having giddily spent itself into bankruptcy, falls into the hands of Chinese bankers, who call in their T-bills, precipitating armed warfare and state collapse. Is that not, in fact, what lies ahead? In a recent column titled "Too Many Hamburgers?" the New York Times' Thomas Friedman offered a particularly stomach-wrenching version of the nightmare, in which America is personified by an overweight and overconfident boy who loses a footrace to a fiercely competitive Chinese kid. Nothing is foretold, of course.
The United States remains unmatched in economic and military might. It leads because no other country -- and certainly not China -- aspires to the job, much less has the capacity for it. But the United States no longer enjoys the deference paid it only a decade or two ago. And the country has begun to run up against the limits of its resources as international commitments become increasingly mismatched with capacities. American hegemony has thus slipped both in relative and in absolute terms.
The scholar Michael Mandelbaum has been first out of the gate with The Frugal Superpower: America's Global Leadership in a Cash-Strapped Age. Mandelbaum argues that the United States suffers not from "imperial overstretch" but from "entitlement overstretch" -- too many promised hamburgers without the ability to pay for them. Leaders will have to impose a foreign-policy diet, cutting out the gratifications of the past couple of decades of reckless abundance. The humanitarian interventions of Somalia and the Balkans "will not be repeated." The same is true of interventions designed to bring democracy to authoritarian states. Even peaceful intervention will come to be seen as an unaffordable luxury: "The enterprise of state-building ... will disappear from the foreign-policy agenda of the United States." The complete article may be read in the latest issue of Foreign Policy.
Now the economic and military situation is very interesting. In the bi-polar days of the Cold War, USSR was another super-power. Its economic resources were bled by design in the Afghan War causing its demise. President George Bush Sr embarked on the mission of re-writing the world order in which he was the President of the only super power capable to change the world at will. Now the US is facing a similar situation where it is being bled profusely in Iraq and Afghanistan war. It is trying hard to contain Chinese expanding influence in the way it used to contain the USSR with only one difference; it has switched its partners. It will now have India as a junior partner to challenge China which has a considerable influence in the region.
The US panic suggests that China has all the pre-requisites of challenging the leadership of the US. Is the world going back to the era of bi-polarity? Is the new world order being made? How does Sam Huntington view this situation? Let us sit back and watch the events unfold.