CHINA AND THE REST

CHINA'S RISE CALLS FOR COOL HEADS

Malcolm Turnbull

The Sydney Morning Herald, October 6, 2011

The rise of China and, following it, India is a massive realignment of economic and, in due course, political and strategic power at an unprecedented speed and scale.

By any measure China's growth has been extraordinary - from 1980 to 2010 its economy grew 18-fold, an annual average of 10 per cent. China has been the world's second largest economy since 2002 and according to the IMF's forecasts will overtake the US in 2016.

India's reforms started after those in China and its re-emergence as a global economic power has been more gradual. Still, from 1980 to 2010 India's GDP increased six-fold, an annual average of 6 per cent. In 1990 western Europe and North America produced 49 per cent of world GDP, but by 2030 their share will almost halve to 26 per cent, according to Willem Buiter at Citigroup.

Emerging Asia - excluding Japan - produced 14 per cent of world GDP in 1990, but will more than triple its share to 44 per cent in 2030 according to Buiter. Those are much bigger shifts in the location of global production than were recorded after the Industrial Revolution, and they are occurring over much shorter time frames.

More than almost any other country, Chinese leaders draw strength and guidance from history. Deng Xiaoping reached back to the trade and exploration of Admiral Zheng He in the 15th century when, in 1979, he began to open China to foreign trade. He reminded the hardliners that when China had engaged with the world it had been strong. When in the 16th century it closed off the world, this began a decline that ended with 150 years of humiliating invasion, colonisation and exploitation by stronger nations.

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