International Consultants Ltd Andrew Leung Global Dynamics of the China Dream and Possible Turkish-China Partnership on a Silk Road to 2023 Renaissance Andrew K P Leung, SBS, FRSA A presentation at the Conference on The Post and the Past in Central Asia's Future Cambridge University Cambridge, 14-15, March, 2014 1
What’s the “China Dream” ? More than American Dream Gov’t cleaner, army for people Strong China Civilized China Harmonious China Beautiful China Robert Lawrence Kuhn, New York Times, 4.6.13 2
Back to the Future Prosperity of Song Dynasty (A.D. 960-1279) • Golden Age of Tang Dynasty (A.D. 618-906) The Tang dynasty was a period of expansion, especially in trading with foreign lands. Caravan routes travelled as far as Syria for items ranging from glassware and tapestries to jasmine and other exotic herbs. Global outreach of Ming Dynasty (A.D. 1368-1644) 3
Reality check - mountains to climb 4
Middle-income Trap Most countries reaching $3,000 to $8,000 @income seem to stall in productivity and income growth 5
Getting old before getting rich • In 2009 , 167 million over-60s = 1/8 of population. By 2050, - 480 million • In 2000, six workers for every over-60. By 2030, barely two. • The 4-2-1 family structure . 150 million single –child offspring faces burden of elderly support • Working age population (15-64) starts to dwindle from 2015 6
Soft power deficits U.S. Public opinion on China and Foreign Policy, Chicago Council on Global Affairs, 10 Sept, 2012 • Wars overstretched America for dubious gains. More Americans are wary of getting involved in potentially high-cost foreign entanglements . Majorities (both Republicans and Democrats) oppose using U.S. troops if China invaded Taiwan (69%, up 8 points since 2004) and if North Korea invaded South Korea (56%), • A majority (53%) says that the United States should put a higher priority on building up strong relations with traditional allies like South Korea and Japan, even if this might diminish U.S. relations with China . However, there is a substantial and growing minority (40% up from 31% in 2010) holding the opposite view. • PEW 18 September 2012, US public deeply concerned about China's economic power. Few, except the young, see China as trustworthy. Though most want to share leadership with China, a majority feels that the US remaining the leading superpower would make the world more stable, with the experts believing that a strong relationship with China is important. 7
Multiple “crises” demand a China 3.0 European Council for Foreign Relations (ECFR), Mark Leonard (ed.), November, 2012 8
“Affluence crisis” New Right – “”Marketization” New Left – bridging the wealth gap • Harvard economist • 1958 best seller • Growth at expense of poverty • Public goods neglect • 2.7 m millionaires (Hurun, 2013) v 170 m < $1.25 @day 9
“Stability crisis” Wang Qishan’s favourite read ? • Extractive institutions Checks and balance • Crony capitalism • Princelings 10
“Power Crisis” Geopolitics 11
Shambaugh’s 4 conundrums China to remain a “ Partial Power ” despite consensus on reforms of (a) economic model (b) government monopoly (c) inequality (d) rule of law (e) ethnic harmony (f) political liberalization within One-Party state (g) accommodating foreign policy Path Dependency Soviet shadow Vested interests Aggrieved nationalism 12
Determinants of global power Size of economy Share of global trade Global dependency Trading hub Military strength Currency internationalization 2nd , 3 rd , 4 th , 6 th , 7 th , 8 th top container ports 13
Pendulum swinging to the East 14
China’s emerging Renaissance • Largest economy by 2020’s WB, Goldman Sachs, PWC, EIU; largest trader to 126 nations v 76 for US; 6/8 top ports • Largest consumer by 2016 ¼ global sales by 2022, EIU; upper middle class to grow from 14% (2012) to 54% (2022) • RMB to become a leading currency Eclipse – Subramanian, 2011; RMB to become fully convertible by 2 020 • Weight matters Macao’s GDP $77,079 - 3 rd highest • Third Plenum Market-decisive, One Child Policy changed, Rural land reform, Financial liberalisation, Green economy, Social equity, Governance • Sustainability Environment – green energies, eco-cities, air pollution action plan; One Party state 15
Largest and fastest urbanization in history McKinsey Global Institute – • 54% of urban GDP in 900 smaller cities by 2025, to • 1 b in cities by 2030 house 70% population • 221 new cities @1 m v 35 in Europe • 170 mass transit systems will be built • China’s GDP will have multiplied 5 times • 50,000 skyscrapers = 10 NY Cites • 350 m more urbanites > whole of US, by 2025 16
RMB eclipsing the dollar as “reference currency” " Eclipse: Living in the Shadow of China’s Economic Dominance ", Arvind Subramanian, Senior Fellow, Peterson Institute for International Economics, Washington DC, 10/2012 • Currency movement coefficient (CMC) • East Asia already a RMB bloc - 7 currencies out of 10 co-move 40% greater than for the dollar. • With China’s expanding global trade , a larger RMB bloc could emerge in the mid-2030s • Directly convertible now with greenback, yen and now Australian dollar. • RMB internationalization quickening ; $, yen, Australian dollar (5% currency reserve), GBP? HK leading offshore centre (offshore RMB interbank rate-fixing (to be aided by Qianhai) with London, Singapore , Taiwan and others vying for a share 17
Turkish Connection • Early Toba tribe of Turkish-Mongol extraction helped found China’s Northern Wei Dynasty (A.D. 386) reuniting China across the northern steppes, the Tarim basin and the North China Plain • Sino-Turkish families prominent amongst imperial elite during Tang Dynasty (A.D. 618-906). • 2B.C. to 15AD , ancient Silk Road carried busy trade between Xi’an and Constantinople, eastern capital of Christian world; exchanges of Buddism and Islam and of technology e.g. paper and glass • common ground between Sufism and Daoism = willingness to deny pre-conceived notions, a kind of heuristic constructivism, and a yin-yang correlativity in which the importance of identities and understanding is stressed, including interaction with other countries and cultures 18
Strategic bottleneck for Eurasian energy transit 19
Rising economic power 20
Turkey’s 2023 Ambitions Financial Centre Centenary Renaissance - within the world’s top ten economies by 2023 Infrastructure - Energy diversification Defense and Aerospace Aviation Ship Building Eurasian Tunnel 2013 21
Politics and Diplomacy • Support + Differences - Support for One China Policy; Uighur riots in Xinjiang in July 2009, “near genocide” condemnation - Post-USSR - Turkey’s de facto guardianship of Turkic peoples in Caucasus and Central Asia; Syria - China sides with Russia, while Turkey with NATO and US • High-level visits : President Gul’s 2-day visit to Xi'an, June, 2009; Premier Wen 3-day official visit to Turkey, October, 2010; Davutoglu to China from October 28 to November 4, 2010; Xi’s visit to Turkey, February 2012 and Erdoğan visited China April 2012, the first by Turkish PM in 27 years. • Cultural exchanges - “Year of China” in Turkey 2012 and “Year of Turkey” in China from March, 2013 • Projects - China Railway Construction Corporation (CRSS) constructing high-speed rail link between Ankara and Istanbul • Military exchanges - PLAAF in a NATO aerial military exercise, code named “ Anatolian Eagle ” in Konya, Sept-Oct 2010 22
New Silk Road through Central Asia • Energy Security - pipeline network linking Central Asia (Kazakhstan and Turkmenistan) and in southwest Asia (Pakistan and Myanmar); potential for Afghanistan • Shanghai Cooperation Organization - Central Asian states + India, Pakistan, Iran, Afghanistan, and Mongolia (Observers); Turkey, Belarus, and Sri Lanka (Dialogue Members); and ASEAN, CIS and Turkmenistan (Guest Attendees) • Eurasian rail network - First Eurasian Land Bridge - Russia’s Trans-Siberian Railway across 13,000 km. Second Eurasian Land Bridge - 10,900 km including 4100 km in China, ancient Silk Road routes, linking Kazakhstan; onwards via Russia and Belarus over Poland to rest of EU 23
Future China-partnership opportunities • Third Eurasian Land Bridge - SZ to Kunming; to Myanmar, Bangladesh, India, Pakistan and Iran, across Turkey to Rotterdam. Crossing 20 countries in Asia and Europe; 15,000 km = 3,000 to 6,000 km < sea via Indian Ocean through Malacca Straits; Branch line from Turkey, to Syria, Palestine, and Egypt, connecting China to Africa. • Port of Bosphorus • Customs Union of Belarus, Kazakhstan, and Russia effective January 1, 2010. Infrastructural and logistical investments along 5,000- km highway through Kazakhstan linking China to Europe. ( Putin’s Eurasian Union dream ) • Resources – Kazakhstan (oil and precious metals); Uzbekistan (agriculture, gold and natural gas (1% of global reserve); Tajikistan (massive water resources - 4% of the world’s hydroelectric potential plus abundance of minerals : antimony, mercury, zinc, silver and rock salt) • Istanbul as a regional financial centre - RMB internationalization • Africa - BRICS development bank, SEZs • Tourism 24
Andrew Leung International Consultants Ltd Thank you Andrew K P Leung, SBS, FRSA www.andrewleunginternationalconsultants.com 25
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