Why Bow to China?

A growing chorus of pundits in Asia and the West is declaring that China's moment has finally arrived. Who can blame them? While the United States is trying to fight a massive economic contraction and to restore an image tarnished by two seemingly endless wars, China is growing and extending its influence. Throughout the Middle Kingdom, the confidence is palpable. Last month at the Boao Forum (Beijing's answer to Davos), a series of Chinese speakers dispensed with their usual modesty and derided Washington for its financial mismanagement, calling for the establishment of a new reserve currency to replace the dollar and demanding more influence in the global economic system. A few days later, on the 60th anniversary of the founding of the Chinese Navy, Beijing debuted two nuclear subs and vowed that its blue-water force would soon project power into the Pacific and beyond.

What's particularly striking about the rise of China is how little anyone questions its purported status as the first nation of Asia. That's true even in Japan, which has an economy 10 times larger. The spectacle of Beijing's playing a lead role at global summits, where Tokyo is generally invisible, has been almost universally greeted as an overdue promotion. More and more, world leaders are quietly bowing to China as the superpower with all the economic momentum. This was the unspoken message when, last month, French President Nicolas Sarkozy apologized to Chinese President Hu Jintao for meeting with the Dalai Lama, or when the U.S. quietly stopped accusing China of manipulating its currency. Newspapers from London to Seoul have begun heralding China's emergence as a global hegemon, and journalist Martin Jacques recently predicted in The Guardian that Shanghai would soon replace New York as "the world financial center." He did not even mention regional rivals like Tokyo, Singapore or Seoul.

Scholars like UCLA's David Kang even argue that the rise of a Sinocentric world order could be a positive, stabilizing development. For much of the past two millennia, he notes, Asians took Chinese dominance as a fact of life. And that dominance was generally benign: while imperial China expected its neighbors to acknowledge its supremacy and pay it tribute, it otherwise mostly left them alone. Chinese hegemony proved remarkably stable and elastic, Kang says: "If you look at history, you may not automatically conclude that the bigger China gets, the more dangerous it is."

Perhaps. But it's worth asking whether China is really ready to call the shots, even regionally. Modern-day Asia is a messy, multipolar place that doesn't lend itself to hierarchies. China is much bigger than its neighbors in terms of the size of its economy, but by other measures—technology, per capita GDP or the strength of its institutions—it's far from supreme. Asia watcher Bill Emmott writes in his recent book, Rivals, that China's growth has been plagued by wasteful investment, massive capital export, bloated foreign-exchange reserves and crippling pollution. China's own prime minister, Wen Jiabao, said recently that structural problems are causing "unsteady, unbalanced, uncoordinated and unsustainable development."

The China model is hardly superior to its rivals for Asian leadership. Japan is far less corrupt and better managed, and holds a vast technological lead. While Japan's export-oriented economy has taken a huge hit from the global slowdown, its cash-rich companies have continued to spend heavily on R&D in everything from electronics to steel. Thus Japan now leads the world in green-car technology, and China is not likely to catch up. Charles Gassenheimer, CEO of the U.S. green-car firm Ener1, says that Japan's total investment in the development of state-of-the-art batteries was 10 times greater than America's every year in the decade after 1998, while China, by contrast, is only just entering the game (albeit at a rapid pace).

Even South Korea—a country that loves to fret over its supposed status as a "shrimp between whales"—has emerged as a force, with one of the world's most dynamic, innovative and high-tech economies. In the recent International Innovation Index, South Korea scored second in the world, while China landed in 27th place. The Korean example suggests that Asia today has multiple leaders in different fields: China excels at producing huge volumes of low-cost products, but Japan and South Korea are tops in innovation and high-tech goods.