Before 9/11 only Tajikistan, unfortunate for having Afghanistan as its southern neighbour, had a Russian military base. In the aftermath of the attacks Kyrgyzstan opened up for the Gansi military airbase of coalition armies. Anxious about more than 3000-strong mostly American military presence in Kyrgyzstan, Russia hurriedly set up its own base near the capital city of Bishkek. Supposedly, the base should enforce common security of the CIS’ southern frontiers. Today the Kyrgyz political establishment is flooded with rumours that China, not to be outdone, is considering installing its own base. What can explain the presence of such a military crowd in a country that has had no war for centuries if not its weakness in front of somebody's geopolitical ambitions?
Another, very eloquent, sign of the increasing influence of China on Kyrgyzstan: the state-owned information agency, Kabar, used to have a “far-abroad” news department on its web site just three months ago. In 2003 it was replaced completely by “News from China” section with news by the Chinese Sinhua agency. The Chinese presence is already tangible in the Kyrgyz shops and markets, where not only Chinese goods are sold en masse, but the Chinese merchants themselves trade their plain but cheap staff.
China is notorious for neglecting its minor neighbour’s interests. Rich ecosystem and millions of people living by downstream Mekong, the Southeast Asia’s greatest river, are threatened by rampant development and massive hydroelectric dams built upstream. China already has three dams and plans to build a dozen more in the near future to secure energy for its growing Yunnan province. Downplaying Laos, Thailand, Cambodia and Vietnam’s apprehension about deforestation, wildlife destruction and displacement of tens of thousands of people living along the river, Chinese authorities insist the dams actually benefit downstream countries by “evening out” the river’s flow. In the meantime, China has blown river’s rocky rapids and threatening Laos to dynamite the rocks on the Laotian side to free the flow for its large ships. According to a Chinese environmentalist, China is not inclined to change its developmental policies on account of a negative impact beyond its border.
Currently China is after several grand projects more: a fresh water pipeline from south to the northern China and the world’s highest railway to Tibet. In part it has to do with the people at the reins: six of the seven Politburo members were educated as engineers. Therefore, in a country where the authorities are so awed and dreaded, the retirement of Jiang Zemin and taking over the reins by his heir, Hu Jintao, seen as a liberal reformist, is a welcome development in China. In contrast to the previous Chinese leaders he is known to be pro-American and more open to outer world. It shouldn’t be forgotten that China owes to the liberalization of the 80s for its current economic boom.
Today China has come to such a point in its economic development that it threatens to replace whole industries in the neighbour countries, even as sound economically as Japan. In mid-80s manufacturers of Japan city of Tsubame used to be global suppliers of all kinds of pans and tableware. A decade later Chinese tableware exports exceeded $10 million and in 2000 Japanese bought more than $60 million worth of them from China. Now the Japanese producers have lost a huge part of the global share to their Chinese rivals and close to 1000 factories in Tsubame have shut down.
The threat is shared across the region, as Taiwanese chipmakers and Philippines apparel-makers view China’s economic rise in consternation. What is curious about China’s growth is that it diverges from the way Asians states performed their economic “miracles”. First Japan, then Asian “tigers” used to hand over “worn-out” industries to less developed neighbours as they progressed on the technology ladder. Thus, Japan passed such declining sectors as steel, petrochemicals and shipbuilding to South Korea and Taiwan, which in turn, transferred labour-intensive industries and obsolete technologies to Indonesia, Malaysia and the Philippines.
China became the goose that broke from the flock. After the liberalization movement unfolded in 1980s, a tide of investment money poured into the thirsty economy and enabled China to prevail almost in all niches from textile sweatshops to complicated chip factories. Western technologies combined with genuinely cheap but educated labour make the prices of everything “made in China” unbeatable. That is why both low-cost Cambodia and hi-tech Japan find it equally difficult to compete with China.
I would explain the Chinese phenomenon by several factors. First, it is the case when the saying “size matters” hits the mark. Abundance of manpower, along with affluent raw materials in the vast stretches of China allows keeping production costs low. Once hired, a Chinese employee will do his/her best to keep the job and please the employer, because he/she is well aware that there is a billion-strong pool of candidates to choose from. In terms of physics, the Brown’s movement keeps the steam hot.
Second, before liberalization China was a strictly planned economy with shortage of technical equipment and factories and undeveloped industries. Therefore, it is not surprising that after a flood of investment in the mid 80s, Chinese economy just took off. It is logical that someday China’s economic growth will slow down and come to halt eventually. Surely, that is a far prospect. Some economists predict that by 2020 China will reach the level of GNP USA has today. Yet, per capita income will be about 4 times lower than that in US, so there will be a large room for growth, still.
The China we will face a decade later will be a serious power, equalling America in its economy, political influence and military power. Already China has become the low-cost manufacturing center of the world. The Asian countries should take advantage of being close to such a strong neighbour instead of feeling doomed to misery. Already many Japanese and Korean businesses have shifted their manufacturing facilities to the mainland and concentrated on hi-end services and hi-tech research. Other countries in the Eastern Asia should find their own niches and supply China with other services or simply sell raw materials.
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