Adrian Hamilton: China has money, America has guns

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China's rise to overtake Japan as the world's second-largest economy has released the usual burst of Gibbonian pronouncements on the rise and fall of nations and the passage of power to the East. Interestingly enough it has prompted little comment in China itself. Wisely, I think.

It reminds one of nothing so much as the great Il Sorpasso moment of 1987, when Italy overtook Britain as the world's fourth-largest economy, an achievement which it has just repeated this year. Great then was the rejoicing in the streets of Rome, and heavy was the sense of failure in London. It didn't last long. As soon as the UK's recession at the time was over, the positions were reversed. By the turn of the century, with the boom in finance and a higher currency, Britain's GDP was a third higher than Italy's, only to fall back again in this recession.

It wasn't a complete nonsense. Il Sorpasso did reflect a reality that, with a rising European Community, Britain was becoming less important economically. But it was far from finished as it switched from manufacturing to services. Italy's growth did not necessarily entail the UK's decline, any more than China's rise inevitably presages the US's fall.

GDP statistics are perverted by currency exchange and the accuracy of official figures. Nor do GDP figures of themselves reflect weight in the world. There is now a whole division of previously named "developing countries" who are recording growth rates which might be described as "industrial take-off". They include not just China and India – the main object of commentary veneration at the moment – but Brazil, Russia, Turkey and even Canada and Australia.

But you can't really look on them all in the same terms. Predictions of the future performance of nations such as Russia, Australia and Canada are largely based on their assets in resources rather than any balanced growth in their economies. The global strength of India and China reflects as much their population size as their output. In terms of income per head of population, China stands at nearly 100th in the global list, way below the UK, Germany and France, bunched at around 20, let alone the US in the top 10.

Of course China's explosion of growth is one of the most striking features of our time. But it is important partly because it represents a reassertion of a place China has traditionally held within the region and outside. In purely commercial terms, Japan performed the same feat, and moved up the league in the same way, in the 1970s and 1980s. But its economic revival was never accompanied – for good reason after its history in the war – by a political one.

On a straightforward economic reading, India's growth is as important as China's and could be even more influential if it develops its trade as importer as well as exporter. Yet in terms of political influence, it lags well behind China, not least because it remains so introverted in its politics and so hamstrung by continued confrontation with Pakistan.

The US remains world leader partly because it is committed to doing so, and has the resources and outreach to achieve this. Its pre-eminence is expressed above all in its continued dominance as a military power. Its military expenditure last year, at a whopping $680bn (£440bn), dwarfed every other country and accounted for 46.5 per cent of total world military spending. China's expenditure, although huge by its budgetary standards, was only a seventh of that, while Britain and France, at around £60bn, were less than a tenth.

If economic size doesn't necessarily equate to international power, however, do we really want it expressed in military terms? What is truly shocking is not just how much the US spends to stay ahead, but what proportion much smaller countries expend of their GDP. For both China and the US, it is around 4 per cent. For the UK and France, around 2.5 per cent. Burundi and Mauritania spend more than 5 per cent. And how can you explain the fact that Greece devotes more than 4 per cent of its GDP on the military and that one of the biggest single factors behind its leap into debt in the last five years has been its import of arms? It wasn't just the banks who profited from its excesses, it was the arms suppliers among its allies as well.

Economics may be a distorting window on the world of competing power but it's a far more civilised one than military might, as we and the Americans are beginning to find out.

Stalemate Down Under

It's going to take weeks, if not months, for the Australians to sort out their next government, which seems to disconcert them not a bit. The political reporters find it endlessly fascinating, of course. The public is simply turned off. Which has its ironic side. For, just as in Britain and in many parts of Europe at the moment, the Australian vote for a hung parliament was essentially a popular vote against politicians of both main parties, if not despair with politics itself. Yet the result is a political stalemate that has the politicians even more divorced from the electorate than ever as they wheel and deal in the corridors of position and patronage.

The result has also been a politics and governance that is even less transparent and idealistically driven than before. In Australia, as in Britain, the election itself was taken over by the backroom political professionals advising on just how and where to seek the marginal vote. And after the election – to an extent that is still not properly understood or reported over here – government and policy-making is being taken over by the officials.

A vote in Australia, decided in the suburban marginals, has led to power being handed to a few MPs from the backwoods. The only thing that can be said of Australia is that you can't blame it on its Alternative Voting System or compulsory voting – both of which they've had for decades of stable administrations.

a.hamilton@independent.co.uk

For further reading

CIA World Factbook: www.cia.gov/library/publications/the-world-factbook

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