China’s hard power
The detailed and extensive descriptions of Chinese customs, culture, innovations and politics under the new Qing Dynasty from the perspective of a nonconformist and reformist Joseon scholar who advocated silhak, or practical studies, and the “School of Profitable Usage and Benefiting the People” offers many insights applicable even today. The fact that the Joseon court had to send a 74-member delegation with 55 horses to a birthday event for the emperor illustrates how much Korea had to bow down to imperial China. The historical reminder is food for thought on the Korea-China relationship of the future.
Yeonam - Park’s pen name - describes a train of millions of carts filled with gifts and tributes heading toward the palace. Envoys from many countries traveled across seas and mountains to pay their respects to the Chinese emperor. The scene is a reminder of imperial China’s international status in politics and trade.
American statesman Henry Kissinger has pointed out that China before the Opium Wars (1840-1842) was known as the “Middle Kingdom” whose suzerainty came about naturally in the region due to its influence and power in trade and foreign relations. The “Sino-centric” international order and tributary system was sustained for thousands of years. China’s long-held traditions, beliefs and perspective were crushed by the Opium Wars and the arrival of foreign “barbarians.” For the first time, it had to accept a new, humiliating order placing it on an equal footing with other nations in foreign relations.
It is understandable that China wants to revive its past glory and make a new international order through its newfound economic power and confidence. It has already made big strides on the financial front with the yuan’s growing power in global finance and the creation of new international banks - the New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB) - to challenge the international finance order led by American, European and Japanese capital.
Beijing knows it cannot realign the world order in a very short period of time. Its goal of making the yuan a global reserve currency will surely take time. The U.S. dollar replaced the British pound as the predominant reserve currency in mid 1920s, a half century after its economy outpaced the British economy in 1872. Given its persistent and patient nature, however, China won’t likely easily give up on its ambitions.
The Chinese economy will continue to grow and Beijing will use its economic might to influence a realignment in the international order. The World Bank predicts China will outperform the U.S. in gross domestic product (GDP) in terms of purchasing power within this year. Its GDP will also likely outperform that of the U.S. in market-value GDP within a decade or so. If China maintains growth at the current pace of 7 percent to 8 percent, the world’s second largest economy would double its size every nine to 10 years.
What does all this mean for South Korea?
We have no reason to be negative about Beijing’s assertiveness in trying to change the international economic order. In fact, we should support Beijing’s ambitions for the yuan and the creation of a new regional bank. But we must maintain that the Chinese-led currency and financial mechanisms should play a supportive role in the international order - not as challenges or alternatives to existing mechanisms.
At the same time, we should defend ourselves against “Finlandization,” the process of a powerful country wielding strong influence on the policies of smaller neighboring countries. No doubt that would require closer relationships with the U.S., Japan and other allies. In addition, we must beef up our efforts to create a more creative and dynamic economy through liberalization to stay ahead of China down the road. Competitive systems based on free trade and open markets must be prevalent in culture, arts the and education fields to bolster our so-called soft power.
We must strengthen our leverage through soft power, economics and diplomatic sensitivity to China’s mighty hard power.
In the meantime, we must capitalize on our geographical proximity to an economic powerhouse. In that respect, we must urgently revitalize industries such as logistics, finance, tourism, conventions, education, healthcare and medical services to draw Chinese capital.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Sept. 1, Page 32
*The author, a former finance minister, is chairman of the Institute for Global Economics and adviser to the JoongAng Ilbo.
BY Sakong Il