China's superpower status is far from being realized and there will be growing pains along the way

Developed countries have struggled to regain growth following the global financial crisis and during the European debt crisis, while China has been widely held up as a potential superpower.

There has been discussion of a G2 world, one in which the US and China are the two superpowers. Recent events have accelerated China's rise in stature in the international system. The events of the past three or four years have been dramatic, one that in times gone by would have occurred over hundreds of years. So it seems premature for China to fully realize its new identity and get prepared economically, institutionally and diplomatically to take on the status of a superpower from a developing world.

Domestically, China is seeking after just 30 years to tread a path that the US had to walk on over 100 years, in changing from an industrialized, manufacturing heavy society to one more focused on technology and labor productivity. This is the overarching goal to be accomplished by switching from the export-led model of growth to a domestic consumption driven one. It is a daunting task, but one that must be done to avoid the middle-income trap. The keys to success are favorable institutional arrangements, improving productivity and the development and transfer of high technology.

Externally, China's rise and transition from different stages of development will mean that the focus for managing foreign affairs will change over time as well. The country's "no intervention" foreign policy for the past decades has appeared increasingly awkward in international affairs because of its rising investments and interests overseas.

Outward direct investment surged from the beginning of the 21st century as the "go-out" policy was given full encouragement, reaching $60.2 billion (49.8 billion euros) in 2010, about 60 times what it was at the turn of the century. The gap in overseas investment with the US is narrowing as China continues to invest outward. With consistently rising foreign exchange reserves of more than $3 trillion, China is looking for investment opportunities abroad. It has special interests in commodity investment, for example, accumulated investment having reached $13.03 billion in Africa and $43.88 billion in Latin America.

It is worth reviewing the evolution of diplomatic policy of the US along with its growing economic power globally. Studying the initial policy of isolation and the subsequent historical evolution of the Monroe Doctrine in the US is a way of understanding how a country's foreign policy changes with levels of economic development and with the quantity of assets overseas during its rise to the level of a superpower.

Before the Monroe Doctrine was introduced in 1823, US foreign policy was based largely on neutrality and isolationism. This was due to both its lack of foreign interests at the time and its weak economy and military. When the policy was introduced, the US was still a fledgling economy. The Monroe Doctrine was an almost purely defensive policy designed to discourage European colonization of North and South America. It was a declaration that any aggression by European powers in the Americas would be perceived as a threat to the US; in essence, expecting the European powers to stay away from the Americas, in exchange for the US not interfering with European politics and existing colonies. This phase of US foreign policy development perhaps reflects China's attitude for the past several decades; with relatively limited foreign interests, the focus was on protecting domestic interests.

At the turn of the 20th century the US was gradually rising to superpower status. At this time, the Monroe Doctrine was amended with the Roosevelt Corollary, articulated by president Theodore Roosevelt in 1904, and which expanded the original meaning of the Monroe Doctrine, stating that the US would have the right to exercise military force to keep Europeans out of Latin America and have the right to intervene in case of "flagrant and chronic wrongdoing" by Latin American countries themselves. This was seen by many as a departure from the previously defensive stance of the US toward a more aggressive declaration of regional hegemony. More importantly, it marked the US shift in foreign policy to actively defend its foreign interests.

At that time, US GDP per capita was estimated to be $4,000-5,000, and it had just completed its transition from an agricultural country to an industrialized one, with a strong manufacturing infrastructure in place. During this time the US also began rapidly increasing the amount of foreign interests that it held around the world. Data from this era is sparse, but economic historians estimate that the US had $2.6 billion in outward direct investment in 1914. As evidenced by the implementation of the Roosevelt Corollary, it became in the interests of the US to shift its foreign policy and act to protect its interests abroad.

Finally, the US became the world's most prominent superpower by the end of the Cold War, with the world's largest economy driven by its high-tech and skilled workforce. When its spheres of influence and foreign interests expanded across the globe, the ideology behind the Monroe Doctrine, in other words, the need to protect its assets and interests led to increasingly aggressive intervention in foreign affairs globally, which remains the case today; the US is often referred to as the world's policeman.

As a rising economic and military power, China is concerned by Western countries, especially the US. President Barack Obama has been pushing to concentrate overseas military policy since taking office. An assessment report on US military interests, Sustaining US Global Leadership: Priorities for 21st Century Defense, was announced in January. In it the US linked its economy and security interests closely to regional development ranging from the western Pacific and eastern Asia to the Indian Ocean and southern Asia. It is evident that the redirection of the US military strategy focuses much more on China than on other powers in this region.

With China's ascendancy as a superpower and increasing interests abroad, together with concerns and fears of both Western and neighbor countries, signs of changes in China's foreign policies have gradually been seen. It has become increasingly important and urgent for it to establish a new foreign affairs strategy taking on the new challenges and opportunities in its new status.

Communications are as important as the new foreign strategy. Tensions in the South China Sea areas and at land borders caused in part by concerns about China's rapid rise have increased recently. Issues range from economic concerns such as currency valuation and trade disputes to politically salient issues such as increased military spending, environmental concerns and international relations.

China needs time to continue to develop and adjust, economically, institutionally, socially and diplomatically before it can truly blossom into a superpower of the highest order. If the growth of a superpower could be described in the same terms one would use to describe human development, China would probably be classed as an adolescent. It is not quite grown yet, and there are likely to be growing pains, but it is well on the path to becoming a bona fide superpower.

On an international scale, China could benefit from improving communication with other countries. In doing so, it might gain more strategic economic partners and alleviate some concerns that other countries have about its rise.

China could also seek to improve ties with Europe. While Europe has been strategically linked to the US, it may seek to develop strategic economic partnerships with emerging economies.

The European sovereign debt crisis may offer an opportunity for China to help Europe in a time of need and strengthen ties for the future; indeed, China recently pledged to invest in the eurozone bailouts, a sign of cooperation and extending a helping hand in a time of need.

All that being said, the most frequently discussed bilateral relationship is of course that of China and the US, and for good reason, as they are the two largest economies in the world. Despite the interdependence between the two, relations are still strained, for a variety of factors; broadening and deepening ties would be beneficial to both.

The author is chief economist at Haitong International Research. The views do not necessarily reflect those of China Daily.

(China Daily 07/27/2012 page8)