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Video Interviews
Note: The opinions presented are not necessarily those of the Government of Canada.
(Video players are available here: QuickTime | Windows Media)
Transcript:
The Emergence of China
In my book I predict that China will overtake the United States as the world’s largest economy, in purchasing power terms, around 2025. This is a bit earlier than many other observers have predicted. There are people who say “so what, it is a line in the sand;” but I think that it is a very, very important line because the United States has been the world’s major economic power since about 1870, 1875. So if it is going to happen around 2025, you are looking at the end of about a 150-year reign. This is very symbolic and very important, because if you look at modern history this is not only about economic power—this is about military power, this is about geopolitical influence, this is about who is having an impact on what.
The Chinese see a couple of things in terms of the way they look at the world. First of all, China was already the world’s number one economy, if you go back about 1,000 years. In many respects it was the most advanced civilization, it had the most developed administration, and it was responsible for some of the major inventions in human history. So basically the Chinese are looking at restoring a leadership position. But at the same time, they very much resent the fact that there is a single power. They look at it as overbearing and unhealthy. So someone needs to provide a counterbalance, and they see themselves as playing a major role in that.
China and the United States
I called it the “new” new world order because what I think China will bring about is a shift away from what many people, certainly people in the United States, want to see as a single-power “prism” and a single-power game. It’s going to be back to more of a balance, and the Chinese definitely want to be the counterbalance to the United States.
I believe that you already are seeing the beginning of this. There is a lot of concern and feeling of threat about China. There is a lot of discussion of military prowess, all the military expenditure, but you are also looking at the economy—the two are closely intertwined nowadays. Many Americans don’t like it, they feel threatened by it. And maybe it’s natural that they would feel threatened.
If you go back in history, you will notice that the British, at least initially, didn’t take this rebellious colony very seriously. They said that they started the Industrial Revolution and “the Americans can make cheap garments for us, but that’s about it.” They later shifted to panic mode because the Americans were doing things better, they were taking over, and this wasn’t how the British thought it was supposed to be.
One approach might be to invest even more in the military so that it will hold its own. The U.S. is going to try to do things geopolitically in terms of building coalitions and so forth. But China has a major edge, which is the fact that China is willing to do business with anyone, and the United States is not.
Demographic Issues Facing China
Because of the one child policy, you end up with a very small working population that will need to support a huge aging population. This is the sort of shift that is happening in much of the world, but there are a couple of differences. It is much more acute in China, because of this one child policy. So you have this one pampered grandchild who has four grandparents, which sounds like a great thing (you get gifts from everybody), until you realize that this grandchild will have four grandparents to support in their retirement. Second, there is no money, because traditionally as part of the communist regime until the reforms started, all the social security was provided by the enterprise, not by the state. So there is no money to support retirement. They have started to collect money in recent years, but there is not nearly enough. By the way, this is one reason why the Chinese save a lot: it is due not only to culture and tradition, but also the realization that they will have to pay for their retirement and for health care. This is one demographic issue.
There is another demographic issue, which has to do with the countryside versus the city, with the huge shift of people from the countryside to the cities. Many people have no housing and are working temporary jobs. If the economy were to slow, you’d have the equivalent of the rebellious peasantry that brought down the imperial dynasties. This is the equivalent that I see, so that is another problem.
The population will shrink in size, but it will still be very large. But it is not only about the number of people. What will happen between now and then is that per capita income will grow. Productivity will also grow a lot. One million people will produce much more than 1.3 billion produce today.
China and Canada
Canada is very attractive to the Chinese. There are a lot of things that they like about Canada, beginning with the fact that Canada established diplomatic relations early on and recognized the regime before it became imperative to do so. They also like the fact that Canada is non-threatening. Canada has modest ambitions; it is not trying to be the major power in the world, but just one more player. The Chinese like this a lot. They also like the fact that Canada has a lot of raw materials and energy—the Chinese need this very much.
I also think that they look at Canada as a (and I use this term in the hope that nobody will be insulted) kind of pied-à-terre in America. They look at it as a way of entering the Americas without facing a lot of the problems and issues that you have when you enter the United States—opposition to acquisitions, or a lot of political resentment. You can get into Canada as a major stepping-stone into the Americas. You establish a base in Canada and perhaps register a company and then you enter the United States and Latin America and so forth.
One thing that Canada needs to be worried about is that if your major claim to fame is providing raw materials, at some point they may not be needed any more. They will be depleted, or the Chinese will find other sources, or new technology will lower the need for energy. Do you want to be completely dependent on that? I think that there is an overall danger to Canada now and it is coming not only from China. The problem is not as sharp as you would find in places such as Saudi Arabia, where they are completely dependent, where they really have nothing else to offer the world. What is happening now, with high energy prices, is that you see a lot of resources, including human resources, moving into the energy field. And if this goes bust, what do you do then? So this is one major problem, and China is definitely one of the forces that is driving this run-up in energy demand and energy prices
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The Emergence of China