Nation 'not as powerful as some believe'

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, in China's capital.

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 deep enough 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(overseas direct investment) 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 that 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 Technologies Co Ltd, electronics goods maker Haier Group, computer company Lenovo Group Ltd and State-owned enterprise oil companies China National Offshore Oil Corp and China Petroleum & Chemical Corp, 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 China.

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

Shambaugh, who speaks fluent Chinese with 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, the Chinese government think tank.

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

"It is now unrecognizable compared with the first time I came here - everything about it. It has certainly surprised me 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.

"Well 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 US 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 US or China?"

In the 400 pages of his tightly argued book, Shambaugh leaves you 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 a 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," he says.