David Shambaugh says China still doesn't have the influence to shape the world. Liu Zhe / China Daily

Nation thrust into global role because of unexpected economic success of 30 years

For David Shambaugh, China is not the global force that many now seem to automatically presume.

Despite being the world's second-largest economy, he insists it still doesn't have the sort of influence the United States, and the West generally, has to shape the world.

"Is China a global power or not? A major power has influence over any domain. If you have influence, you are setting standards, shaping events and shaping the actions of others. By all of these measures I find China a partial power at best," he says.

Shambaugh, professor of political science and international affairs at George Washington University and a leading Sinologist, was speaking in the late evening sun of the courtyard Holiday Inn Express in Dongzhimen.

He was in Beijing to promote his new book, China Goes Global: The Partial Power, one of the major books on China this year.

While the popular perception might be that China has had the deep pockets to keep the world afloat since the financial crisis and that its companies are making acquisitions around the world, the reality, according to Shambaugh, is somewhat different.

"China's ODI was $77.2 billion last year. That ranked China, the world's second-largest economy, at No 5 in the world. The Netherlands exports more capital than China does. If you look at the destinations of China's ODI, four of the top five locations are tax havens. It is money that is being parked abroad," he says.

Shambaugh says that few Chinese companies - apart from telecommunications giant Huawei, electronics goods maker Haier, computer company Lenovo and state-owned oil companies CNOOC and Sinopec - have had much impact in overseas markets.

He points out that of the 71 Chinese companies in this year's Fortune 500, only three make more than 50 percent of their revenues outside of China.

"They are not really multinational corporations. They are Chinese companies which make most of their money in China."

Shambaugh, who speaks fluent Chinese which he sometimes intersperses with English, has taken five years to write the book, including one year at the Academy of Social Sciences Institute of World Economics and Politics, part of the Chinese Academy of Social Sciences (CASS), the Chinese government think tank.

A leading commentator on China, he has been to the country every year since 1979, for 34 consecutive years.

"It is now unrecognizable compared with the first time I came here, everything about it. It has certainly surprised me, especially the level of development that has taken place," he says.

He doesn't deny that China is now an economic force by the sheer size of its economy.

"China has a significant economic role in the world. That's a general phenomenon. I've argued that if you look at the economics, being the world's second-largest economy is a measure of significance: foreign exchange reserves of $3.9 trillion, that is a measure of significance. But it is more about quality than quantity, that is what I am arguing.

"China is not cutting edge, it is not setting the standards of innovation or creativity in hardly any product lines and in other fields either."

He has no doubt that China will go on to overtake the United States to become the world's largest economy, predicting 2025 as to when this will happen in the book, but doesn't see it as that significant an event.

"If you read Goldman Sachs and others, they now say it could be 2020 but right now the Chinese economy is slowing down and the American economy is picking up. So that could push it back. You will always have to ask the qualitative question, however. Which country is setting the standard of innovation, creating the ideas and coming up with the technological ideas? Is it the United States or China?"

In the 400 pages of his tightly argued book, Shambaugh leaves the reader in no doubt as to the answer to that question.

He clearly appears to be taking the polar opposite position to that of Martin Jacques, who in his best-selling book When China Rules The World: The End of the Western World and the Birth of a New Global Order, argued that China could represent modernity in the 21st century and not the US.

"I don't think we are all going to be driving round in Chinese automobiles, filling up our Chery cars at Sinopec stations and going to the cinema in the evening and seeing Chinese films and turning on our car radios and listening to CRI (China Radio International) on the way home from Chinese lessons at a Confucius Institute. I don't think the world is going in that direction."

Shambaugh insists his views are not as far apart from Jacques as may at first appear.

"I actually had a nice long chat with him in Hampstead (northwest London) in February about it. If you read his book, it doesn't quite make the argument of the title. We differ on some things but not about everything," he says.

Shambaugh, a high-profile Sinologist who is a regular on TV screens, began studying Chinese as an undergraduate in 1975.

He has studied at Nankai, Fudan and Peking universities in China and has been a visiting fellow at four Chinese academic institutions.

Before his current post in Washington, he was reader at the School of Oriental & African Studies in London and was editor of The China Quarterly, the respected academic journal.

He says that China has to some extent been thrust into having to take a global role because of its unexpected economic success of the past 30 years.

"The rise has come much more quickly than even the Chinese expected, not to mention the rest of the world. They don't have experience in being a global actor or a global power.

"They are kind of feeling their way in those areas. There is a learning curve that is pretty steep."

One area where China has had the most global impact has been Africa with trade between China and the continent now around $200 billion.

"They are helping African countries in ways that Western countries, the IMF and the World Bank won't plus they are building hard infrastructure," he says.

He says the positive public opinion about the China-Africa relationship within Africa itself that he recorded in the book about 18 months ago has suffered a bit of a reverse recently.

"I think in the Democratic Republic of the Congo, West Africa, Nigeria and Senegal the image has deteriorated slightly with some frustrations over natural resource extraction, and the flooding in of Chinese goods."

In the wider commercial field, China's Shuanghui International's $4.7 billion bid to take over Smithfield Foods of the US or last year's purchase by Bright Food of a controlling stake in UK breakfast cereals maker Weetabix hit the headlines but Shambaugh says Chinese companies are still not adept at operating globally.

"Chinese companies do not tend to have sensitivities to local environments. They only have a sensitivity to one local environment - China itself," he says. "Trying to take the Chinese operating style abroad doesn't work."

Shambaugh says the key challenge for Chinese companies is to become innovators, the only way he believes the economy will be able to advance to the next stage.

"If China is going to escape the so-called middle-income trap, which it is in now, it is going to have to innovate its way out of it, as did South Korea, Japan and (the economy of) Taiwan," he says.

He insists that China may yet break through some of these barriers.

"I am not saying that Chinese companies will never get over the hump and meet these challenges. They are very adaptive. I am sure some of them will start doing better abroad than so far. But so far the record is not very impressive," he says.

Shambaugh says one of China's weaknesses is in "soft power", the ability according to Harvard University's Joseph Nye, the creator of the term, to draw others to you as a magnet as the US perhaps does with Hollywood films.

"The Chinese tend to throw money at it like it is an infrastructure project and think it is going to grow. And then when it doesn't, they scratch their heads and say that they are not getting a return on their investment," he says.

The American academic also believes that in diplomacy, China has to take on board the wider interests of the world and not just those of its own to be more than a partial power.

"We are not talking about middle powers here, we are talking about global power. If you are going to be a global power, you have to step out of your own interests."

andrewmoody@chinadaily.com.cn

(China Daily European Weekly 08/09/2013 page8)