Fall 2017 JPI

order, Chinese “exports and imports in 2004 were both more than twice as large as those just three
years earlier, in 2001.” 10
Without any doubt, the Chinese economy still has its own communist features, such as strong
state-owned enterprises (SOEs) and a planned economy. It does sometimes violate the rule of the
American economic world order when it manipulates currency, intellectual property rights, and trade
subsidies. Take China’s manipulation on currency as an example, “from July 2005 through June 2013,
the RMB appreciated by 34% on a nominal basis against the dollar and by 42% on a real (inflationadjusted)
basis.” 11 With the undervalued currency, China could promote its exports with attractive
lower prices. Another example is related to SOEs. SOEs generate roughly 40 percent of China’s GDP
and have trouble adapting to new market conditions due to their monopolies and oligopolies. 12 If
China is willing to continue to develop its economy, it has to get rid of these Communist-style
drawbacks on its economy. As long as China keeps its economic policy, it will always welcome foreign
investment and advocate trade and globalization, which makes China a strong supporter of the US
economic world order.
With a high growth rate under the American economic system, China has no intention to
challenge the American model of economic development. Even certain realists, who perceive this as
a zero-sum game, acknowledge China’s gain in the American world order by saying that “rarely in
history has a rising power made such prominent gains in the international system largely as a
consequence of the actions and inattentiveness of the dominant power.” 13
Secondly, China’s double-digit increase on military spending has made the world worried
about China’s military ambition. However, its ambition has not created a global security alliance
system. Thus, it is hard to consider China as a challenger to the American global security system. First,
no one could deny that Chinese military growth is an undeniable phenomenon. “Since 1990 China’s
official defense budget has increased in nominal terms by double digits every year except 2010. Its
projected official defense budget in 2014 was 808 billion renminbi (approximately $132 billion), a 12.2
percent increase over 2013.” 14 In addition to the increase in number, Chinese military power spread
geographically. Take the Bay of Bengal as an instance, “China is building up its military existence in
the region in the Gwadar port under the name of China-Pakistan Economic Corridor.” 15 What’s more,
Chinese submarine activities at the Hambantota port and the development of the Colombo port have
made India suspicious. 16
However, the increase in military spending and several global military actions cannot directly
lead to the conclusion that China is a challenger to the US hegemony. The most convincing reason is
that China does not have a security alliance system to counter the power of the American ally system.
North Korea is the only official ally for China, but China considers it a trouble-maker instead of a
useful ally. Beijing admires Pakistan as the only “all-weather strategic partner” though they have not
built a formal alliance relationship. Except for these two countries, China has no more allies all over
the world. On the other side, “the US alliance system comprises some sixty allies, which, if one
10 Lampton, The Three Faces of Chinese Power: Might, Money, and Minds, 88.
11 Morrison and Labonte, China's Currency Policy: An Analysis of the Economic Issues, 2.
12 Denoon, “Where Did China's Economy Go Wrong.”
13 Christensen, The China Challenge: Shaping the Choices of a Rising Power, 90.
14 Liff and Ikenberry, “Racing toward Tragedy? China’s Rise, Military Competition in the Asia Pacific, and the Security Dilemma,” 66.
15 Suryanarayana, India Ocean and the Bay of Bengal: A Strategic Factor in China-South Asia Relations, 12.
16 Suryanarayana, India Ocean and the Bay of Bengal: A Strategic Factor in China-South Asia Relations, 10.
JPI Fall 2017, pg. 46