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China: A Revisionist Rather than a Revolutionist

By Tu Xinquan, associate director, China Institute for World Trade Organization Studies, University of International Business and Economics
[Chinese]

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The world is pinning its hopes of economic recovery on China, but is the country prepared to become a global leader?

Only a few years ago, some in the West warned of China’s coming collapse. But now, almost all hopes for global economic recovery are pinned on China, the only major economy still enjoying growth during the current global financial crisis. The G20 London Summit in April was seen as the start of a new era in which China would lead the world economy. China has long sought to make others believe that it is one of the greatest countries on the planet. But China is not yet ready to take the leader’s role, as it is a revisionist rather than revolutionary state.

In facing the crisis, China is using its domestic systemic advantage to make vital policy decisions much faster than other big economies, announcing a 4 trillion yuan stimulus package. Since China’s economic downturn is due largely to its own recent policy of contraction, its stimulus has quickly restored investment and consumption. In the second quarter of 2009, China had a 7.9 per cent growth in gross domestic product, much higher than the 6.1 per cent of the first quarter. This showed that China’s goal of 8 per cent growth for 2009 as a whole could be reached.

China’s effective response enhances its image as the saviour of a struggling global economy. Therefore, its proposals for the international economic order have attracted attention. President Hu Jintao became the star of the London Summit. Zhou Xiaochuan, governor of China’s central bank, also won world¬wide fame for his suggested new international reserve currency, managed by the International Monetary Fund (IMF), to replace the US dollar. China’s new offer of a loan to the IMF was also considered a step toward raising its voice in the international financial institutions (IFIs).

However, China still views itself as an emerging power rather than a leader in the world economic system. Although China undoubtedly wields significant economic and political influence, its society contains the fundamental weaknesses of an underdeveloped country. It still has far to go to be a global leader in quantity and quality. With its domestic focus, China’s government does not think it is time to take primary responsibility for global prosperity and stability. But China can still be more active in global governance – and the G20 is an appropriate forum for China to exert its influence on global issues. Unlike the G7, the G20 brings together both systemically important industrialised and emerging economies. This inclusiveness corresponds to China’s expectation and perception of international society. Therefore, China is not reluctant to be visible in the G20, although it is uncomfortable with the concept of a ‘G2’ or ‘Chimerica’.

China’s rising power enhances the effectiveness of the G20 because a stronger China will improve the power balance in the group, as well as its legitimacy. Every country gives top priority to its own recovery. Here there is no need to deny the differences between the advanced and emerging economies. The developed world is always willing to forget how countries became developed. For instance, developed countries claim that developing countries are stealing their intellectual property and that all countries need the strictest regulations to protect their intellectual property, overlooking the fact that they have control of most of it and that they were also imitating and copying during their development process. While developed countries endeavour to level the playing field for their sunset industries by imposing many requirements on competitors from developing economies, they criticise any protection for the infant industries of developing countries. As a developing country, in terms of economic and technological progress, China’s views differ from developed countries’ on what global economic governance should be like. These differences, as well as China’s power, help to ensure that the G20 will be a democratic and balanced forum for countries in various stages of development to revise the existing global economic system.

China has brought forward ideas on the reform of the international institutions. But it is not trying to overturn the existing system and does not yet have its own blueprint for future global governance. It is trying only to reform some deficiencies that conflict with its own interests and values, as it is not yet in a position to take on the responsibility to lead. Moreover, China has enjoyed unprecedented growth under the current system. With regard to global economic governance, it will take into account the interests and requests of developing countries and reduce the control of industrialised countries. China also shares many common interests with the developed world. Cooperation rather than confrontation will help China achieve its goal of revising the international economic order.

At the Pittsburgh Summit, the world will hear a stronger Chinese voice. The London Summit put forward six pledges: to restore confidence, growth and jobs; to repair the financial system; to strengthen financial regulation; to fund and reform the IFIs; to reject protectionism; and to build an inclusive, green and sustainable recovery. For China, the first three tasks have basically been accomplished. The other three must be done collectively by all participants. IFI reform might be the most important issue in the next summit, as G20 members have some common concepts. China’s desire for more voting rights is understandable. The major members of the World Trade Organization (WTO) have agreed to conclude the Doha round of multilateral trade negotiations before the end of 2010. If this deadline is met, trade liberalisation will have made visible progress, serving as the best weapon against the rising protectionism.

Because China has benefited much from its WTO membership, and the economic downturn has demonstrated that the Chinese economy still depends heavily on foreign demand, China needs to take a more aggressive and accommodating stance in the coming negotiations, for instance, by offering more radical market-opening commitments in services and agriculture. On sustainable development, however, China is more defensive. The United States and the

European Union have proposed a carbon tariff, which China strongly opposes. For China, this proposal ignores the differences between developed and developing countries for the historical responsibility of climate change, as well as regarding their present levels of development. Here, China again has a strong sense of identity as a developing country.

Although it is excited by its acceptance as a major world power, China is not yet prepared to take a leading role in assuming responsibility for global prosperity. In terms of its economic and political development, it is still a developing country. China has therefore neither the capability nor the willingness to establish a new international system to replace the existing one. China, rather, uses the current system, while trying to change parts of it to sustain its own interests. This rising China is revisionist rather than revolutionary, and will help the recovery of the global economy and the reform of international economic order.

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