The Chinese century

As world power tilts from West to East, policy makers must accept the increasingly dominant role of China.

By Kishore Mahbubani

We are entering a new era of world history marked by two distinct features. First, after 200 years, we will see the end of Western domination of world history (but not, of course, the end of the West). Second, we will see the return of Asia. From the year 1 to 1820, China and India were consistently the two largest economies of the world. Hence, by 2050 or earlier, when they once again become the two largest economies of the world, we will return to the historic norm of the past 2000 years. And, in history, it is easier to return to historical norms than to deviate from them.

The end of Western domination of world history means that we have to drop our Western cultural lenses to understand this new era. However, this would require re-tooling the most influential Western minds in the world–in governments, think-tanks, media and academies. These thousands of Western pundits have a disproportionate influence on the global discourse on the state of our world. And because their minds are filled with distorted perspectives, they generate false understandings. Since this is a very strong claim to make, I will support it by providing three examples of distorted Western perspectives on China.

The first fundamental flaw in Western assumptions about China is that eventually, like all the other successful developed economies, China too will join the great Western project and become ‘just like us’. The assumption that there is only one destination in world history is deeply rooted in Western minds. And this assumption became fully exposed in all corners of the West—from North America to Europe, Australia to Canada—with the publication of Francis Fukuyama’s famous essay, “The End of History”. The celebration of this essay showed that Western minds believed that there was only one peak of human civilisation: Western civilisation. The West had climbed to the peak. Now, all it had to do was to wait for the rest of humanity to join it. The West did not have to struggle any more. But the rest of humanity still had to struggle to reach the peak of civilisation.

Twenty years later, we know that Fukuyama’s belief was a delusion. Yet, it is vital to emphasise that this assumption has not been scrubbed out of Western minds. The leading Western minds cannot even conceive of the possibility that there may not be just one road in history. Hence, even though a few explore the possibility, they still believe that China’s present communist party-run government cannot survive. It will only be a matter of time before a ‘rose’ or ‘orange’ revolution surfaces in China. The Tiananmen Square protests of 1989 are interpreted as an early tremour and a foretaste of what would eventually happen in China: the overthrow of the communist party state and the arrival of a Western-style liberal democracy.

The combined population of the West is about 860 million. The population of China is about 1.3 billion. It takes historical arrogance to assume that Western civilisation is large enough to absorb Chinese civilisation. The simple truth is that China has such a strong and distinctive culture of its own that it will not be absorbed by the West. Nor will it join the Western project. This does not mean that China will reject all aspects of Western civilisation. As I explain in my book, The New Asian Hemisphere: the Irresistible Shift of Global Power to the East, China and the rest of Asia are rising now because they have finally understood, absorbed and started implementing seven pillars of Western wisdom: free market economics, mastery of science and technology, meritocracy, pragmatism, a culture of peace, rule of law and education. However, I also explain how the modernisation of China is also accompanied by de-Westernisation. This, too, is a radical departure from recent history. In the Western mind, modernisation means Westernisation. The idea that we could have one without the other is inconceivable to Western minds. But de-Westernisation is one of the largest processes unfolding in China (and indeed throughout Asia). As a result, we will move from a world dominated by Western civilisation to a world in which we will see many different successful civilisations.

The second fundamental flaw in Western assumptions about China is the belief that if China does not become a Western-style liberal democracy, it will collapse and break down, as it has in the past. The collapse of the Soviet Union and all the other communist regimes in Eastern Europe, therefore, provided an early indicator of the fate that presumably awaits the communist party in China. This deep Western desire to believe that the Chinese regime is about to collapse was revealed most clearly at the height of the financial crisis of 2008–09. I could not keep track of the number of Western media stories which reported how the collapse of Chinese economic growth (which they ascribed only to China's ability to export to affluent Western economies) had led to over "40,000" protests, and predicted that these would eventually escalate and bring down the regime.

Virtually no Western analyst pointed out the obvious flaw in the belief that the Chinese regime would collapse: it was based on the assumption that the Chinese people would be stupid enough to overthrow a regime that had given them 30 years of some of the world's fastest growth because of one year of bad economic performance. Even more strikingly illustrating the West's self-absorption, the consensus among most Western economists was that China's economy could only collapse if the Western economies collapsed.

Equally, virtually no Western analyst could even conceive of the possibility that the Chinese government might prove to be far more competent than its Western counterparts in managing an economic crisis. A brief comparison of the US and Chinese economic stimulus packages would show why China performed better. The US stimulus package was hijacked by several special interest groups who were more interested in feathering their own nests than rescuing the national economy. Hence, the US stimulus package had relatively little impact. By contrast, the Chinese stimulus package has worked brilliantly.

It is amazing that there has been so little reflection on the West's colossal failures in judgement. For example, in 2009, when so many Western analysts expected the Chinese regime to either be shaken by large public demonstrations or to collapse, Edward Chancellor, a financial journalist and author said, "The Chinese economy is dangerously unbalanced and very likely to come unhinged in the next few quarters, surprising the pants off investors." How then did China end up outperforming every other government in the world? Doesn't such misjudgement reveal that there are some fundamental flaws in Western analyses of China that need to be exposed and examined?

The third fundamental flaw in the Western assumptions about China is the belief that China cannot rise peacefully. One of the most common refrains I have heard in many Western fora is this: "Europe's past is Asia's future." Just as the rise of new powers in Europe in the 19th century led to war and conflict, the same would happen as new powers rose in Asia in the 21st century. Few Western analysts will admit that their analysis is conditioned by Western interests. There is no doubt that Western interests would be better served by rivalries between, say, China and Japan or, say, China and India. A peaceful rising Asia will mean a diminishing Western influence. Conflicts and rivalries between Asian powers would give useful geopolitical opportunities for Western mischief. As Henry Kissinger once famously remarked about the Iran-Iraq war, "It's a pity they [Iran and Iraq] both can't lose."

The real stress test for any region comes when an economic crisis occurs. It was the Great Depression of the 1930s that contributed significantly to the outbreak of World War II. And the Great Recession of 2008–09 was the biggest economic crisis that the world had experienced since the 1930s. If the Asian region already had a volatile cocktail of geopolitical rivalries ready to explode, the recent financial crisis should have triggered an eruption one way or another. Instead, nothing happened. Why? The simple answer is that while there are undoubtedly some geopolitical rivalries in Asia, there is also a larger and deeper political consensus among the Asian countries that they would be giving up their best opportunity to develop their countries if they got involved in zero-sum games of geopolitical rivalries. Hence, while there are indeed rivalries between, say, China and India and China and Japan, all the parties involved have learnt how to manage these rivalries. Hence, China's peaceful rise represents neither a fluke nor a temporary phenomenon. It is a result of superior geopolitical management by the Chinese leadership.

While this essay has spoken about 'Western' assumptions about China, it is also essential to point out for accuracy's sake that there are some significant differences between the United States and Europe, the two leading Western entities. It would be natural for the US, the leading superpower, to feel threatened by the rise of China, the only power capable of developing a bigger economy than it in the next decade. Europe, by contrast, has given up most of its hegemonic ambitions. Hence, as Daniel Gros, Director of the Centre for European Policy Studies, wrote, "The EU should have no ideological problem in recognising the emerging power of China since it is not a major power itself (beyond the area of economics), so the rise of China should not create any particular friction within the EU."

By contrast, many American policy intellectuals and policymakers fret about the consequences of China's rise. To be fair, there can be no doubt that both the Clinton and Bush administrations (for different reasons) pursued policies of engaging, rather than containing, China. And the Obama Administration came into office with the same commitment to engage. But the steady rise of differences between the US and China in early 2010, over issues like the Dalai Lama and arms sales to Taiwan or the value of the renminbi and the Google episode, show clearly that the potential for friction between the US and China is much greater. And, whenever any dispute breaks out, America's moralising instincts surface immediately. In the Google versus China episode, all the American press coverage suggested that it was a classic case of the white knight (Google) fighting the dark forces of oppression. Virtually no US commentator tried to understand or even describe China's point of view. After suffering over 130 years of political instability from the opium war of 1842 to the launch of Deng's era in 1978, the last 30 years have been among the most stable. Maintaining strong political authority at the centre is essential for China to hold together. This is why censorship is sometimes required. All Americans assume (because of their deeply imbedded ideological assumptions) that removal of censorship naturally produces public good. But what if the Chinese leaders are right in believing that removing censorship could unleash the instability that China has fought successfully for three decades? For example, when the anti-Japanese riots broke out in 2005 over the approval of a Japanese history textbook and the proposal that Japan be granted a permanent seat on the United Nations Security Council, did the Chinese government do the right thing or wrong thing by censoring information on these riots to retain political stability in China?

As a result of their distorted cultural lenses, few Western commentators understand the real challenges that China faces. Despite its spectacular economic growth record, China does face many real challenges, challenges that many in the Chinese leadership are aware of.

The first real test for China is whether it can sustain its remarkable record of good governance. In terms of results, it is hard for any government in the world to match China's record. China has increased the size of its GDP from RMB 362.4 billion in 1978 to RMB 30 trillion in 2008, an almost 100-fold increase. It has increased the per capita income of urban residents from RMB 343.4 in 1978 to RMB 13,785.8 in 2008, increased its foreign reserves from near zero in 1978 to USD 2.4 trillion at the end of 2009 and, most importantly, reduced the number of people living on less than a dollar a day from about 800 million in 1978 to about 200 million in 2008.

In recent history, it is hard to find any large society that has done as spectacular a job as China has done. Larry Summers, the Director of the White House's National Economic Council for President Barack Obama, has observed that what is happening today in Asia is essentially a replication of what happened in the Western Industrial Revolution. However, in the Western Industrial Revolution living standards improved by 50 per cent in one lifetime. In Asia today they are improving by 10,000 per cent.

Since Asia's performance, especially China's, is way outside the historical norm, it is indeed legitimate to ask whether the Chinese government can sustain this remarkable record for long. In the early years of growth, the Chinese economy could grow fast by welcoming foreign investment, unleashing its low-wage pool and exporting its way to prosperity. But export-led growth is increasingly unlikely. China will have to generate internal demand. Chinese Premier Wen Jiabao has acknowledged this. At the National Peoples Congress meeting in March, he said, "Many destabilising factors and uncertainties remain in our external environment. China now must curb inflation and lay the foundations for stronger internal consumer demand." He also announced increased social security and rural area investment spending–an indication of the need to stimulate internal demand in China. But as its economy becomes even more sophisticated, China will face a much more complex task in generating growth. Equally dangerous, as the fast-growing Chinese economy spawns a huge amount of personal wealth, it has to deal with the growing challenge of corruption. In short, there is no question that China faces real internal challenges. Continued success is not guaranteed.

The second challenge that China will face is acceptance by all of its neighbours. So far, there can be no doubt that China has done a brilliant job of sharing its prosperity with its neighbours. As is well known, China made an enormous contribution to helping ASEAN weather the Asian Financial Crisis of 1997–98. More importantly, China stunned both the world and Asia by offering a free trade agreement (FTA) to ASEAN in 2001. Hence, overall, with the possible exception of its relationship with India (which has had more than its fair share of hiccups), China has managed to improve significantly its relations with all of its neighbours, including neighbors with whom it has had a difficult history like Japan, Russia and Vietnam.

But it is also clear that China will face increasing challenges vis-à-vis its neighbours. In any neighbourhood where one house progressively became bigger and bigger and showed no sign of diminishing its pace of growth, it would be only a matter of time before the neighbours began to get alarmed. Deng Xiaoping sensed that China's rapid growth would raise concerns. Hence he wisely counselled China to take a low profile, both regionally and globally. His advice was expressed in 28 characters that still guide China's policies, even though Deng is long gone. They state: lengjing guancha—observe and analyse (developments) calmly; chenzhuo yingfu—deal (with changes) patiently and confidently; wenzhu zhenjiao—secure (our own) position; taoguang yanghui—conceal (our) capabilities and avoid the limelight; shanyu shouzhuo—be good at keeping a low profile; juebu dangtou—never become a leader; and yousuo zuowei—strive to make achievements.

However, it is not clear that the majority of the younger generation of modern and well-educated Chinese share Deng's views that China should keep a low profile. Indeed, many believe that China should demand greater respect from its neighbours. Statements such as "China deserves respect from anyone in this world" and "The Chinese themselves have done a lot for mankind, so deserve respect" can be found on blogging sites of the younger generation Chinese.

The response of Chinese youth to recent international developments suggests another flaw in US assumptions about China. Many Americans would like to believe that as the Chinese youth become more educated and more exposed to the world, they will begin to support the same cause as liberal and well-educated young Americans. Instead, the opposite has happened. In the build-up to the Beijing Olympics, when protests were organised in several Western capitals against the Olympics torch rally, the most vociferous defenders of the Chinese government were young Chinese students studying in Western universities. When Western youth were holding rallies against Chinese policies on Darfur, Chinese youth responded with the 'love China' campaign. In one day, more than 2 million Chinese MSN messenger users (mainly young white-collar professionals in major cities) adopted a red heart with the word China as their MSN signature.

In theory, the communist party government can afford to ignore Chinese public sentiment since it does not have to stand for elections. In practice, the communist party cannot afford to do so. Public opinion is increasingly playing an important role in China, especially with the spread of the internet. No Chinese government can afford to be seen to be soft on issues considered vital to China's interests. Hence, when Obama meets the Dalai Lama or sells arms to Taiwan, the Chinese government is obliged to respond strongly, even though in private many Chinese leaders know that Obama has been careful and restrained in all his moves. Bill Clinton once lamented the fact that he failed to arrange a meeting between Jiang Zemin and the Dalai Lama, even though he thought he came close. But it would have been far more suicidal for Jiang Zemin to meet the Dalai Lama than for Bill Clinton to meet Fidel Castro and Bill Clinton never came close to doing that. The reality of the new China is that public opinion will play a bigger role.

This could well create complications in China's relations with its neighbours. In the event of a territorial dispute with Japan over the Diaoyutai Islands or competing claims for resources in the South China Sea, previous Chinese governments could afford to take a gentler and more compromising stance for the sake of larger geopolitical calculations. However, if public opinion began to play a bigger role in Chinese society we can expect to see a less compromising government. And this may, over time, exacerbate tensions between China and its neighbours. This is why China needs to move its engagement with its neighbours beyond the formal government-to-government links which have been its preferred mechanism for state-to-state relations. It now has to encourage deeper people-to-people engagement to sensitise its population to the views of its neighbours. China could learn a lesson or two from the disastrous US record in Latin America. Since the US population has been largely ignorant of its nation's role in Latin America, it was also not aware that the heavy impact of American power on Latin America had generated deep reservoirs of ill-will towards the US, reservoirs that have not dissipated yet. Similarly, as the influence of Chinese power on its neighbours grows, China will have to learn how to moderate the effects of that power. This is a serious challenge for China.

The third great challenge that China faces is in the field of global governance. Since it abandoned the centrally planned communist economic system, liberalised its economy and joined the WTO, China has become, in some ways, the biggest beneficiary of the 1945 rules-based order that the US and Europe set up after World War II. Both the US and Europe were happy to be custodians of this order because they assumed that they would always remain its beneficiaries. Now the populations of the US and Europe, especially after the latest financial crisis, no longer believe that they will be the primary beneficiaries. Instead, they believe that China and India will benefit the most if the open multilateral trading system is liberalised further.

Logically, therefore, China and India should begin to assume greater responsibility for maintaining this liberal economic order. For complex political reasons, neither China nor India is ready or willing to assume that responsibility. With the US and Europe refusing to do more and with both China and India remaining unwilling to provide global leadership, there is a real danger that the open multilateral system could suffer a setback. And if this were to happen, China and India would end up the biggest losers just as they stand poised to become the biggest beneficiaries of this liberal trading order. This is why China and India should seriously consider providing leadership in reviving the Doha Round.

To be fair, there is one sound geopolitical reason why China is reluctant to take global leadership. China is acutely aware that it is not in its best interest to alarm the United States as it keeps rising. This is why Deng Xiaoping wisely counselled the Chinese leaders to take a low profile internationally. Deng did not refer to the United States by name in his advice. But one constant geopolitical reality that has been true for all time is that the most important geopolitical relationship is always the one between the greatest power of the day (which today is the United States) and the greatest emerging power (which today is China). Traditionally, the relations between the established power and the emerging power have always been tense. One reason for there having been so little geopolitical tension between the US and China is that the latter has made a careful and deliberate decision not to challenge American leadership (unlike the Soviet Union, which constantly tried to do so). So far, China's low profile policy has worked well.

However, in recent years, China has discovered that it cannot remain silent if it wants to protect its vital interests. At the height of the financial crisis, it had to speak out and express its concerns over the declining value of the US dollar. In Copenhagen, it had to join forces with India to protect its interest in not having to bear a disproportionate burden in reducing greenhouse gas emissions.

In short, the world has changed dramatically. All the new challenges are fundamentally global challenges: financial crises, climate change, pandemics, terrorism, to name a few. China can no longer be just a free rider on existing procedures and institutions of global governance. It has to speak loudly to both defend its short-term interests and to share its long-term visions of how the global order needs to be restructured to accommodate the rise of new Asian powers. All this will require deep reflection among the key policymakers and opinion makers in Beijing. And the world needs to pay careful attention as China formulates its views. This is why the West needs to urgently drop its distorted lenses and begin to understand China on its own terms.