Asia's New Superpower May Not Be Ready

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, whose economy is roughly the same size. 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.

In many ways, the whole idea of a No. 1 is becoming passé. Some experts argue that Asians remain wedded to the idea because Confucian tradition emphasizes respect for hierarchy and order. But look at how Singapore is exploiting the growing importance of information technology to command a global role out of proportion to its tiny size. Or at how global trade and the Internet make it increasingly tough for Beijing to maintain order at home. The global age does not respect Confucian hierarchies.

Foreign-policy realists like to point out that the region has never before known a period when both China and Japan were strong at the same time. They worry that this development could lead to conflict, and fret that China's naval forces, which could be bottled up by the Japanese island chain in a conflict, have already taken to probing Japan's defenses. Meanwhile Tokyo has been beefing up its Coast Guard forces around disputed islands and staging surveillance flights over Chinese drilling rigs. Princeton political scientist Aaron Friedberg compares modern Asia to Europe in the 19th century, with great powers still jockeying for control.

Yet this point underlines just how far China is from regional supremacy. No single nation was able to dominate 19th-century Europe. Similarly, it's not clear China would win even a small conflict with Japan, much less a larger one that drew in Japan's main ally. Consider: despite years of double-digit increases in China's defense budget, it will be at least a decade before Beijing launches its first aircraft carrier—the mark of a serious navy able to project power. (The United States has 11.)

Of course, China disavows any desire for military supremacy or economic tribute, and perhaps it should be taken at its word. Much has been made of how China and the U.S. are now fatefully tied to one another as creditor-to-debtor and seller-to-buyer. But the same is true of China and Japan. China surpassed the United States as Japan's No. 1 trading partner back in 2007. An aging Japan benefits from low-wage Chinese workers, while those factories in the Pearl River Delta often rely on machine tools and technology made in Japan. Global and regional cooperation are very much in both countries' self-interest.

That doesn't mean there's no reason for neighbors to prepare for a more aggressive China. Efforts to create a regional self-defense organization have been stymied by differences in wealth and ideology and by fear of provoking Beijing. But there are ways to promote an Asia of many powers. The Obama administration seems to get this: when Hillary Clinton visited Asia in February, she made a point of hitting Japan first and then Seoul, urging them to work together. Then came Indonesia, a big new democracy. Only then did she stop in Beijing, where she called on the Chinese and Japanese to work together on climate change. That's just the kind of transnational issue that demands cooperation, not great-power jockeying—the kind of increasingly common problem that pays no attention to who's on top.

CORRECTION (July 21, 2010): This story originally stated that Japan's economy was 10 times the size of China's; in fact, they are now roughly the same size. NEWSWEEK regrets the error.