COLUMN-China is the elephant in the situation room

Dec 24 (Reuters) - Earlier this month the U.S. National

Intelligence Council released its Global Trends 2030:

Alternative Worlds report - a document that comes out once per

presidential administration - mapping out likely geopolitical

trends over the next two decades or so. As usual, it's a

must-read, offering comprehensive analysis of the disparate

factors that will drive global politics through 2030.

Further, the NIC took bold steps to correct some previous

weaknesses in past reports. In the past the report nailed the

"what" more often than the "when." That is particularly the case

with its treatment of the United States, for which "past works

assumed U.S. centrality." This time around the NIC sets an

increasingly "multi-polar world" - which I call the G-Zero - as

the backdrop of its report, acknowledging that the lack of

global leadership has accelerated in the wake of the global

financial crisis of 2008-09. America's status as a "hegemonic

power" is eroding, and no country is likely to take its place.

This multipolar world is the foundation for the rest of the

NIC's predictions. The report is organized around subsections

that range in probability: There are the megatrends that are

sure to have an effect, the game-changers that could go a number

of ways, and the four potential worlds of 2030.

In my opinion, when it comes to probabilities for the future

global order, the single biggest variable - both in terms of its

importance and its potential variance - is China's rise or lack

thereof. If there are twin "gigatrends" that supersede all else,

they are China's trajectory and the multipolar world in which it

is playing out.

China is mentioned more than 300 times in the report, and

the NIC's assertion that "the US-China relationship is perhaps

the most important bilateral tie shaping the future" is dead on

(though I'd cut the word "perhaps"). But despite China's

implicit impact on the report, the NIC doesn't establish it as

the twin pillar alongside the multipolar world it vividly

describes. Nor do we get a full sense of how a host of negative

China surprises could fundamentally alter the world of 2030 as

we imagine it.

A look at each subsection of the NIC report demonstrates

just how critical China's development is - or should be - in its

calculus.

Megatrends

1. Individual empowerment: Reduced poverty, growing middle

classes and new communications and technologies will empower

individuals around the world.

Individual empowerment is, on balance, a positive global

trend. But in China, it is moving along two tracks. There is the

increasingly affluent, coastal, urban China, where citizens have

access to the Internet and increasingly demand the protections

that come with the rule of law, respect for intellectual

property rights and tougher environmental standards from their

government. In an authoritarian, state capitalist nation, where

the central government's priority is to maintain its grip on

power, empowered citizens are a wild card. An increasingly

affluent population that is demanding more transparency and

accountability poses a challenge to regime stability.

On the other hand, there is the half of China that is rural,

mainly inland, impoverished and uninformed. Should this group

fall further behind, China might face unrest and volatility from

the other side of the spectrum. China's two-speed individual

empowerment is a more destabilizing dynamic than it may appear.

2. Diffusion of Power: Without a hegemon, power will shift

to "coalitions in a multipolar world."

This is spot on. But if power is shifting away from the

United States and its allies, where is the bulk of it shifting

to? According to the NIC report, China will provide one-third of

global growth by 2025, even if its growth rate should slow

considerably. As the United States scales back its role on the

global stage, the needs of China's economy are tying its leaders

ever more tightly to the world's conflict zones.

3. Demographic patterns: We'll see more aging, urbanization

and migration.

China is ground zero for all three of these critical

demographic trends and the interplay between them. According to

some studies, the ratio of Chinese workers per retiree could

drop from 8 to 1 today to 2 to 1 by 2040. That's a product of a

rapidly aging population - and a one-child policy that will keep

the labor force from growing fast enough to keep pace. With "two

Chinas," one urban and empowered, the other impoverished and

rural, urbanization and migration will cause significant

turbulence in China's social and economic fabric.

4. Food, water, energy nexus: "Demand for these resources

will grow substantially "

For the most part, demand from the developing world - mainly

China and India - for these resources will drive conflict

surrounding them. Today, China and India are home to 37 percent

of the world's population - and just 10.8 percent of its fresh

water. Their share of the population will grow - as will demand

for water as their middle classes grow.

Food is a similar story. Consider meat, which is

particularly grain-intensive (and so requires a lot of water).

In 1978, China's overall meat consumption was one-third that of

the United States'; today, it's double. China now eats

one-quarter of the global supply of meat, or 71 million tons a

year. But per capita, it still only consumes one-quarter as much

meat as the United States. Expect the gap to close-with dramatic

ramifications for global food supplies - as China's middle class

grows through 2030.

Game-changers

1, 2, 3. Crisis-prone global economy, governance gap,

potential for increased conflict: Will multipolarity lead to a

collapse or a greater resilience in the global economy? Will a

governance gap between countries' leadership capacities and

changing realities overwhelm governments? Will we see more

conflict?

Whether a multipolar world makes the global economy more or

less volatile will increasingly depend on China's trajectory and

the role it chooses to play on the global stage. In terms of the

governance gap in China, the NIC notes that there is a chance

that demand for democratization will vastly outstrip Beijing's

progress in that direction. The NIC sees short- to medium-term

volatility arising from rapid democratization-and "a democratic

or collapsed China" in the longer term, with the bright

possibility for huge gains should China's state structure turn

democratic.

Unfortunately, in the case of sweeping democratic change, I

just cannot get past that word "collapse."

Think about the Soviet Union in 1991. Then remember that

China is on pace to become the world's largest economy. In other

words, there are a wide range of possible events in China that

would have a starkly different - and enormous - impact on what

the world looks like in 2030.

4. Wider scope of regional instability: "Will regional

instability, especially in the Middle East and South Asia, spill

over and create global insecurity?"

In this section, East Asia gets an honorable mention, but it

should be front and center. The NIC aptly explains the regional

dynamic: "Regional trends will pull countries in two directions:

toward China economically but toward the U.S. and each other for

security." As China grows, this balancing act will become

unsustainable. And with such an outsized percentage of global

growth slated to come from East Asia, this region's issues are

the world's issues. I don't mean to give prospects for Middle

Eastern and South Asian instability short shrift - they will

have their fair share and more. But China and its neighbors are

at the center of this trend.

5. Impact of new technologies: Can the advent of new

technologies help address global challenges like population

growth and climate change?

Technological innovation is a global positive, but its

potential to negatively impact China is a substantial piece of

the puzzle. Let's focus first on social media and innovation in

information and technology. Any trend that scrambles the status

quo of public perception and could potentially pierce the

Politburo's opacity has the potential to be structurally

destabilizing. An estimated 570 million Chinese are on the

Internet, and approximately 100,000 log in for the first time

each day. Can the government keep pace with the lightning speed

of technological innovation? What happens if it can't?

Another field of cutting-edge technology between now and

2030 will be in 3-D printing for manufacturing and robotics. As

the NIC explains, these technologies could eliminate low- and

middle-wage jobs in developed countries, as has already happened

with outsourcing. But what of their impact on a developing

nation such as China? A similar "outsourcing" from human labor

to a machine equivalent could be hugely disruptive.

Machine-driven economic growth could exacerbate the dichotomy

between the poor rural China and the rich urban one. What

happens when China's most valuable resource - ample cheap labor

- becomes the most serious threat to central political control?

6. Role of the United States: "Will the U.S. be able to work

with new partners to reinvent the economic system?"

The report correctly depicts the role of the United States

as a game-changer, but China could use a parallel section. China

and America's global actions will increasingly be informed by

the other. The report's question would better read, "Will the

U.S. be able to work with countries like China to reinvent the

economic system?" Or, if their bilateral relationship proves

more contentious, tweak as follows: "Will the U.S. be able to

work around China?"

Potential Worlds

In the potential worlds section, we get four distinct global

scenarios for 2030 - and a disclaimer that the real outcome will

likely contain elements from all of them. On one end of the

spectrum, we get a world of Stalled Engines, in which the United

States has pulled inward, globalization has largely ceased and

the powerhouses of global growth have halted. On the other end,

there is Fusion-a world where "China and the U.S. collaborate on

a range of issues, leading to broader global cooperation." There

are two other scenarios that I won't go into here - take a look

at the report itself to read about them.

All the NIC's scenarios are compelling. But China could be

better positioned as a key variable and signpost in determining

how we get from today to 2030. I structure what comes next based

on two simple questions. First, "How collaborative - or hostile

- will the United States and China be?" Second, "How multipolar

will the world really be - that is, will other countries be weak

or powerful in comparison to the U.S. and China?" If the answers

are, respectively, "very collaborative" and "very weak in

comparison," then we'll see a scenario that resembles Fusion,

with a workable U.S.-China G2. If, on the other hand, we see a

weaker, more adverse U.S.-China, a scenario like Stalled Engines

may be more likely. The bottom line: With its vast size and

enormous potential for outsized success or failure, China's

trajectory is the true game-changer between today and 2030.

***

I've only scratched the surface of the NIC report. I highly

recommend you read it for yourself. And be sure to look out for

China - you can't miss it.

( Ian Bremmer is the president of Eurasia Group, the leading

global political risk research and consulting firm. Bremmer

created Wall Street's first global political risk index, and has

authored several books, including the national bestseller, The

End of the Free Market: Who Wins the War Between States and

Corporations?, which details the new global phenomenon of state

capitalism and its geopolitical implications. He has a PhD in

political science from Stanford University (1994), and was the

youngest-ever national fellow at the Hoover Institution. )

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