The Myth Behind China’s Miracle
George J. Gilboy
The phantom menace
China’s sudden rise as a global trading power has been greeted with a curious mixture of both admiration and fear. Irrational exuberance about the country’s economic future has prompted investors to gobble up shares of Chinese firms with little understanding of how these companies actually operate. Meanwhile, overestimates of China’s achievements and potential are fueling fears that the country will inevitably tilt global trade and technology balances in its favor, ultimately becoming an economic, technological, and military threat to the United States. These reactions, however, are equally mistaken: they overlook both important weaknesses in China’s economic “miracle” and the strategic benefits the United States is reaping from the particular way in which China has joined the global economy. Such misjudgments could drive Washington to adopt protectionist policies that would reverse recent improvements in U.S.-China relations, further alienate Washington from its allies, and diminish U.S. influence in Asia.
In fact, the United States and China are developing precisely the type of economic relationship that U.S. strategy has long sought to create. China now has a stake in the liberal, rules-based global economic system that the United States worked to establish over the past half-century. Beijing has opened its economy to foreign direct investment (fdi), welcomed large-scale imports, and joined the World Trade Organization (WTO), spurring prosperity and liberalization within China and across the region.
China’s own choices along the road to global economic integration have reinforced trends that favor the continued industrial and technological preeminence of the United States and other advanced industrialized democracies. In its forced march to the market, Beijing has let political and social reforms lag behind, with at least two critical — and unexpected — consequences. First, to forestall the rise of a politically independent private sector, the Chinese government has implemented economic reforms that strongly favor state-owned enterprises (soes), granting them preferential access to capital, technology, and markets. But reforms have also favored foreign investment, which has allowed foreign firms to claim the lion’s share of China’s industrial exports and secure strong positions in its domestic markets. As a result, Chinese industry is left with inefficient but still-powerful soes, increasingly dominant foreign firms, and a private sector as yet unable to compete with either on equal terms.
Second, the business risks inherent in China’s unreformed political system have bred a response among many Chinese managers — an “industrial strategic culture” — that encourages them to seek short-term profits, local autonomy, and excessive diversification. With a few exceptions, Chinese firms focus on developing privileged relations with officials in the Chinese Communist Party (ccp) hierarchy, spurn horizontal association and broad networking with each other, and forgo investment in long-term technology development and diffusion. Chinese firms continue to rely heavily on imported foreign technology and components — severely limiting the country’s ability to wield technological or trading power for unilateral gains.
China, in other words, has joined the global economy on terms that reinforce its dependence on foreign technology and investment and restrict its ability to become an industrial and technological threat to advanced industrialized democracies. China’s best hope for overcoming its technological and economic weaknesses lies in a renewed focus on domestic political reform. Thus, rather than lapse into shortsighted trade protectionism that could undermine current favorable trends, Washington should pursue a policy of “strategic engagement.” Not simply engagement for its own sake, strategic engagement would explicitly acknowledge the advantages of U.S. technological, economic, and military leadership and seek to reinforce them, in exchange for increased prosperity and more security for China — the more so now that China has a compelling economic interest in domestic political reform.
open and opening
Recent debates about U.S-China trade overlook the fact that the U.S. economic relationship with China is largely favorable and that it is conducted largely on U.S. terms. In particular, the focus on China’s currency as a source of unfair trade advantage is misplaced, as economists Jonathan Anderson of ubs and Nicholas Lardy and Morris Goldstein of the Institute for International Economics have shown. Even a moderate appreciation of the yuan would make little difference to most U.S. firms and workers. Meanwhile, the currency issue obscures the significant economic and strategic benefits the United States now enjoys in its relations with China.
According to Morgan Stanley, low-cost Chinese imports (mainly textiles, shoes, toys, and household goods) have saved U.S. consumers (mostly middle- and low-income families) about $100 billion dollars since China’s reforms began in 1978. (Cheaper baby clothes from China helped U.S. families with children save about $400 million between 1998 and 2003.) U.S. industrial firms such as Boeing, Ford, General Motors, ibm, Intel, and Motorola also save hundreds of millions of dollars each year by buying parts from lower-cost countries such as China, increasing their global competitiveness and allowing them to undertake new high-value activities in the United States. In an effort to save 30 percent on its total global sourcing costs, Ford imported about $500 million in parts from China last year. General Motors has cut the cost of car radios by 40 percent by building them from Chinese parts. And although global sourcing can cause painful employment adjustments, the process can also benefit U.S. workers and companies. A recent independent study sponsored by the Information Technology Association of America found that outsourcing to countries such as China and India created a net 90,000 new U.S. jobs in information technology in 2003 and estimated that outsourcing will create a net 317,000 new U.S. jobs by 2008.
China is not just an exporter; it imports more than any other state in northeastern Asia. Although it had a $124 billion trade surplus with the United States in 2003, it had significant trade deficits with many other countries: $15 billion with Japan, $23 billion with South Korea, $40 billion with Taiwan, and $16 billion with the members of the Association of Southeast Asian Nations (asean). Most significantly, China is a large and growing market for domestically consumed imports (ordinary trade that excludes imported goods that are processed and reexported). Chinese imports for domestic consumption rose to $187 billion in 2003, from $40 billion in the mid-1990s. Discounting the processing and reexport trade, China ran a $5 billion trade deficit in 2003, compared to a $20 billion surplus just five years earlier. In industries it classifies as “high tech,” including electronic goods, components, and manufacturing equipment, China has averaged a $12 billion annual deficit for the last decade.
Unlike other U.S. trading partners in Asia, such as Japan and South Korea, which spurned U.S. imports and investment for decades, China is also a large, open market for U.S. products. Although total U.S. exports have stagnated in recent years, U.S. exports to China have tripled in the last decade. They increased by 28 percent last year alone (whereas overall U.S. exports went up by only 5 percent). In particular, China has become a staple market for advanced U.S. technology products. According to U.S. government data, U.S. aerospace exports to China were valued at more than $2 billion in 2003 — about 5 percent of total U.S. aerospace exports and nearly as much as comparable exports to Germany. U.S. firms exported $500 million of advanced manufacturing equipment to China in 2003, more than they exported to France. And U.S. chip makers exported $2.4 billion of semiconductors to China in 2003, the same amount they exported to Japan.
Furthermore, China allows foreign firms to invest in its domestic market on a scale unprecedented in Asia. Since it launched reforms in 1978, China has taken in $500 billion in fdi, ten times the total stock of fdi Japan accumulated between 1945 and 2000. According to China’s Ministry of Commerce, U.S. firms have invested more than $40 billion in more than 40,000 projects in China. Given its openness to fdi, China cannot maintain its domestic market as a protected bastion for domestic firms, something both Japan and South Korea did during their periods of rapid growth. Instead, it has allowed U.S. and other foreign firms to develop new markets for their goods and services, especially high-value-added products such as aircraft, software, industrial design, advanced machinery, and components such as semiconductors and integrated circuits.
Thanks to this appetite for imports, powerful domestic coalitions, particularly China’s growing ranks of urban consumers and its most competitive firms, will continue to favor trade openness. Chinese consumers pride themselves on driving foreign-brand cars and using mobile phones and computers with circuits that were designed and manufactured abroad. Many Chinese firms resist protectionism, because they need to import critical components for their domestic operations and fear retaliation against their exports. For example, in the 1990s, China’s machine tool and aircraft industries failed to secure effective state protection in the face of opposition from domestic firms that preferred imports, and they suffered significant decline as a result.
As an open economy and a large importing country, China could be an ally of the United States in many areas of global trade and finance. Already, Beijing has displayed a willingness to play by WTO rules. It has charged Japan and South Korea with unfair trade practices — markets the United States has also long sought to crack open. China initiated 10 antidumping investigations in 2002 on products with import value of more than $7 billion, and another 20 investigations in 2003. China is now a leading promoter of regional trade and investment regimes, including a free trade zone with asean and a bilateral free trade agreement with Australia, one of the United States’ closest allies in the Pacific region. Already, Beijing’s proposals on regional economic cooperation seem far more relevant to most Asian nations than do Washington’s.
The final benefit the United States enjoys from China’s global economic integration is in the long-term, patient battle to promote liberalism in Asia. Foreign trade and development have spurred advancements in Chinese commercial law, greater regulatory consultation with Chinese consumers, slimmed-down bureaucracies, and adherence to international safety and environmental standards. Although it is still limited, the people’s freedom to debate economic and social issues has increased, especially in the robust financial media. This process of liberalization is incomplete and uneven, but it is in the interest of both China and the United States to see it continue.
outside in
Despite these benefits, business and political leaders in the United States now fear that China’s growing share of world exports, especially of high technology and industrial goods, signals the rise of yet another mercantilist economic superpower in northeastern Asia. But these concerns are unwarranted, for three reasons. First, China’s high-tech and industrial exports are dominated by foreign, not Chinese, firms. Second, Chinese industrial firms are deeply dependent on designs, critical components, and manufacturing equipment they import from the United States and other advanced industrialized democracies. Third, Chinese firms are taking few effective steps to absorb the technology they import and diffuse it throughout the local economy, making it unlikely that they will rapidly emerge as global industrial competitors.
A close look at the breakdown of China’s exports by type of producing firm puts China’s economic rise in perspective. Foreign-funded enterprises (ffes) accounted for 55 percent of China’s exports last year. In this respect, China diverges from the typical Asian success story. According to Huang Yasheng of the Massachusetts Institute of Technology, ffes accounted for only 20 percent of Taiwan’s manufactured exports in the mid-1970s and only 25 percent of South Korea’s manufactured exports between 1974 and 1978. In Thailand, the ffes’ share dropped from 18 percent in the 1970s to 6 percent by the mid-1980s.
As shown in the figure on the next page, the dominance of foreign firms in China is even more apparent in advanced industrial exports. While exports of industrial machinery grew twentyfold in real terms over the last decade (to $83 billion last year), the share of those exports produced by ffes grew from 35 percent to 79 percent. Exports of computer equipment shot from $716 million in 1993 to $41 billion in 2003, with the ffes’ share rising from 74 percent to 92 percent. Likewise, China’s electronics and telecom exports have grown sevenfold since 1993 (to $89 billion last year), with the ffes’ share of those exports growing from 45 percent to 74 percent over the same period. This pattern repeats itself in almost every advanced industrial sector in China.
The data featured in the figure highlight another trend that reinforces China’s dependence on foreign investment and the growing gap between ffes and domestic Chinese companies. In the 1990s, Beijing permitted a new fdi trend to develop: a shift away from joint ventures and toward wholly owned foreign enterprises (wofes). Today, wofes account for 65 percent of new fdi in China, and they dominate high-tech exports. But they are much less inclined to transfer technology to Chinese firms than are joint ventures. Unlike joint ventures, they are not contractually required to share knowledge with local partners. And they have strong incentives to protect their technology from both domestic and other foreign firms, in order to capture a greater share of China’s domestic markets. As a result, according to the most recent Chinese government statistics for high-tech industries (pharmaceuticals, aircraft and aerospace, electronics, telecommunications, computers, and medical equipment), ffes increased their total share of high-tech exports from 74 percent to 85 percent between 1998 and 2002. But perhaps more significant, in the same period, they increased their share of total domestic high-tech sales from 32 percent to 45 percent, while the share of that market held by China’s most competitive industrial firms, soes, fell from 47 percent to 42 percent.
Finally, the data in the figure reveal that China’s private firms are not yet significant global players. Despite more than two decades of economic reform, China’s leading domestic industrial and technology companies are still primarily soes. Although they remain inefficient and dependent on government-subsidized loans, they account for the bulk of advanced industrial production in China, boast the country’s best research and development (R&D) capability, and spend the most resources to develop and import technology. Their preferential access to markets and resources has blocked the rise of private industrial firms. Likewise, collective firms owned by provincial and local governments have failed to emerge as major players in China’s advanced industrial and technology sectors.
particular and exceptional
One of the key reasons that state, collective, and private firms in China lag behind ffes is that they have failed to invest in the type of long-term technological capabilities that their Japanese, South Korean, and Taiwanese predecessors built during the 1970s and 1980s.
Developing technology is a difficult and uncertain process. Neither large capital investments nor a significant stock of existing science and engineering capability can guarantee success. To create commercially viable products and services, firms must monitor and access new forms of knowledge, understand evolving market trends, and respond rapidly to changing customer demand. Firms that can develop strong links to research institutions, financiers, partners, suppliers, and customers have an advantage in acquiring, modifying, and then commercializing new technology. Such horizontal networks are essential conduits for knowledge, capital, products, and talent.
Yet China’s unreformed political system suppresses such independent social organization and horizontal networking and instead reinforces vertical relationships. China remains a fragmented federal system, its fractious regions unified by a single political party. The ccp controls all aspects of organized life, including industry associations, leaving few avenues for firms to work together for legitimate common interests. This structure drives business leaders to focus on building relationships through ccp officials and the bureaucracy. Although market reforms have brought more rules to the Chinese economy, without institutional checks and balances or direct supervision, ccp officials still exercise wide discretion in defining and implementing those rules, especially at the local level. They can, and often do, manipulate economic policies to pursue particular local goals. Some engage in this “particularism” because they are corrupt, others because they directly own or operate firms. Most, however, do it because the political elite encourages them to: understanding that local economic growth promotes social and political order, the ccp tolerates, and even rewards, officials who use any means to produce local investment and employment. But this often results in fragmented national industries and wasteful overlapping investment.
Chinese business leaders at both public and private firms recognize that an economy dominated by particularism is a risky business environment. Markets are fragmented; rules constantly shift under manipulation by government officials; and political obstacles prevent firms from associating, sharing risk, and taking collective action. To cope with these uncertainties, Chinese business has developed a distinctive industrial strategic culture over the past two decades — a set of values or guidelines about what strategies “work” in this environment. First, in response to the “particular” application of policy, Chinese firms routinely focus on obtaining “exceptional” treatment from key officials: special access to markets or resources, exemptions from rules and regulations, or protection against predation by other officials. Second, to maximize these exceptional benefits, as well as to avoid entanglements with other firms and their patrons, many Chinese companies shun collaboration within their industry, especially if such collaboration crosses regional or bureaucratic boundaries. Third, they generally favor short-term gains over long-term investments. Finally, Chinese firms tend to engage in excessive diversification in order to mitigate the potential damage of fratricidal price competition created by excess production capacity and overlapping investments.
nodes without roads
This industrial strategic culture is rational and effective given the current structure of politics and business environment in China. (These features echo patterns of interaction between authoritarian officialdom and merchant enterprise that were established in China’s first period of industrialization in the Qing dynasty 150 years ago.) But China’s industrial strategic culture weakens the competitiveness of Chinese firms and it may have damaging economic repercussions down the road. Most Chinese industrial firms focus on short-term gains and, despite increasing operational efficiency, sales revenues, and profits, have not increased their commitment to developing new technologies. Their total spending on R&D as a percentage of sales revenue has remained below one percent for more than a decade. R&D intensity (R&D expenditure as a percentage of value added) at China’s industrial firms is only about one percent, seven times less than the average in countries of the Organization for Economic Cooperation and Development (oecd).
Focusing on short-term returns has also guided China’s imports of industrial technology. Chinese firms tend to import technology by purchasing foreign manufacturing equipment, often in complete sets such as assembly lines. Throughout the 1980s and 1990s, hardware accounted for more than 80 percent of China’s technology imports, whereas licensing, “know-how” services, and consulting accounted for about 9 percent, 5 percent, and 3 percent, respectively.
Although China has recently begun importing more “soft technology” — mainly in the form of licenses for the use of imported equipment — the knowledge embodied in it must be absorbed and mastered (or, in technology parlance, “indigenized”) before it can become an effective basis for domestic innovation. Chinese firms remain weak in this regard. Over the last decade, large and medium-sized Chinese industrial firms have spent less than 10 percent of the total cost of imported equipment on indigenizing technology. Indigenization spending at state firms in the sectors in which China is most often cited as a rising power (telecom equipment, electronics, and industrial machinery) is also low (at 8 percent, 6 percent, and 2 percent of the cost of imported equipment, respectively). This is far lower than the average for industrial firms in oecd countries, which amounts to about one-third of total technology import spending. The practice of Chinese firms also stands in contrast to spending patterns in Asian countries such as South Korea and Japan in the 1970s and 1980s, when they were trying to catch up with the West. Industrial firms in those countries spent between two and three times the purchase price of foreign equipment on absorbing and indigenizing the technology embodied in the hardware.
Chinese firms have also failed to develop strong domestic technology supply networks. In 2002, Chinese firms devoted less than one percent of their total science and technology budgets (which include technology imports, renovation of existing equipment, and R&D) to purchasing domestic technology. China’s best firms are among the least connected to domestic suppliers: for every $100 that state-owned electronics and telecom firms spend on technology imports, they spend only $1.20 on similar domestic goods. Thus Chinese technology suppliers do not enjoy a strong “demand pull” from the best domestic firms to stimulate their own innovative capabilities; they are relegated primarily to serving rural enterprises and less competitive state-owned enterprises. And because ffes use their investments in China as technology “snakeheads” (a Chinese term for portals), through which they bring product designs, advanced manufacturing equipment, and high-value components from foreign firms or their China subsidiaries, they too are poorly linked to Chinese domestic technology markets.
Industrial collaboration and horizontal networking are also rare, prompting Chinese firms to run their R&D projects in relative isolation. In the most recent national R&D census in 2000, Chinese industrial firms reported that they spent 93 percent of their $2.7 billion total R&D outlay in-house, but only 2 percent on collaborative activities with universities and less than 1 percent on projects with other domestic firms. China’s research institutes are increasingly insular, too, especially since market reforms have forced them to commercialize their operations. In 2000, only 38 of China’s 292 national industrial research institutes devoted more than one-third of total activities to collaborative projects, even though these institutes are specifically tasked with diffusing technology. Instead, many are becoming competitors of the firms they are supposed to serve. A 2003 World Bank report found that many Chinese engineering research centers have been mass-producing and marketing the products of their research for their own financial gain, rather than diffusing these technologies through patents.
Failed collaborations have also plagued China’s attempts to commercialize domestic innovations. Julong Technologies, the firm that developed China’s first digital telecom switching equipment, is no longer a major telecom-equipment player due to conflicts among its research, production, and marketing arms, which came under the influence of competing political officials. China’s homegrown mobile telephone standard, td-scdma, has received central government support, but thus far none of China’s major telecommunications operators have agreed to commit to it, preferring a foreign standard, wcdma, instead.
Given the political perils of challenging competitors and their local patrons, few Chinese firms develop alliances with or invest in companies in other provinces. One recent survey of 800 companies that have conducted domestic mergers and acquisitions found that 86 percent of them invested in firms within their own city and 91 percent invested in firms within their own province. Strong local political ties tend to isolate a region from the rest of the economy, which helps explain why Chinese firms are often small and the country’s industries fragmented. For example, a recent study performed for the State Council (China’s cabinet) revealed that Chinese managers regard the country’s two most politically powerful technology and industrial hubs, Beijing and Shanghai, as leading centers of local protectionism in China. Among the industries most affected by such protectionism were pharmaceuticals, electrical machinery, electronics goods, and transport equipment. Soes and private firms suffered the most, ffes the least — which suggests that the burden of particularism falls most heavily on Chinese firms.
To avoid the difficulties of developing interregional supply chains while securing short-term profits, Chinese firms tend to engage in excessive diversification — also with damaging results. Many of China’s most famous firms have made unsuccessful forays into ancillary businesses: Haier (from household appliances into computers, mobile phones, and televisions), Fangzheng (from computers into tea, steel, software, and financial services), and Shougang (from steel into banking, auto assembly, and semiconductors). Huawei, China’s best technology firm and maker of network equipment, has recently made a questionable entry into the mobile-handset market, where sales prices and margins have fallen dramatically for the last five years and 37 licensed vendors produced excess inventories of 20 million phones last year.
Together, China’s institutions and the industrial choices of local firms have restricted the ability of Chinese firms to develop new products and services. The share of total sales revenues accounted for by new products at Chinese industrial firms was flat, at about 10 percent, throughout the 1990s. (In contrast, new products account for 35 percent to 40 percent of sales revenue for industrial firms in oecd countries. Chinese firms lag behind firms in other developing countries as well: in 2000, for example, new products accounted for about 40 percent of total sales revenues in Brazil’s electrical machinery industry.) And because of overlapping investments, fragmentation, and the weakness of industry associations, even those firms in China that make new products often find themselves engaged in vicious price competition, which prevents them from reaping high returns from their innovations.
Rather than thinking of China as yet another Asian technological and economic “giant,” it may be more useful to regard it, like Brazil or India, as a “normal” emerging industrial power. Thanks to the interaction of political structure and industrial culture, China’s twenty-first-century technological and economic landscape looks like a pattern of “nodes without roads” — a few poorly connected centers of technological success. Burdened by these peculiarities, China has yet to lay the domestic institutional foundations for becoming a technological and economic superpower. Without structural political reforms, its ability to indigenize, develop, and diffuse technology will remain limited. And most of its industrial firms will struggle to realize exiguous margins at the lower reaches of global industrial production chains.
strategic engagement
Given these limits on China’s potential to threaten the global balance of economic power, the United States should resist the false promise of protectionism, whether in the form adopted by the Bush administration (rhetorical jabs at the Chinese currency peg) or that recommended by the afl-cio labor federation (calls for tariff protection in the guise of better rights for Chinese workers).
Rather, recognizing both the challenges and the opportunities presented by China’s industrial landscape, Washington should pursue a policy of strategic engagement with Beijing. The purpose of this policy would be to bolster U.S. technological, economic, and political leadership, while helping China become more prosperous, stable, and integrated into global economic networks. Pursuing it will require simultaneously strengthening the basis for U.S. technological and manufacturing mastery in the United States and promoting U.S. exports, investment, and liberal values abroad.
The United States should revitalize manufacturing at home, for example. Tax cuts are no panacea; the United States needs focused policies to strengthen R&D, reduce legal and health care costs, and improve education. Innovation is critical to growth, but R&D spending in the United States has declined in relative terms from 60 percent of world R&D in the 1960s to 30 percent today. Meanwhile, although U.S. manufacturing productivity has risen by 27 percent in the last five years, health care premiums have risen by 34 percent and litigation costs by about 33 percent, according to the National Association of Manufacturers.
To maintain its lead abroad, the United States should push its products into the portal opened by its investment “snakeheads” in developing markets. It currently lags behind competitors in doing so: while Japan and the EU exported $79 billion and $49 billion in goods to China last year, the United States exported only $37 billion. Both the U.S. government and U.S. industry must do more to help small and medium-sized U.S. firms reach out to China’s markets.
The United States must accept that China is a work in progress and cannot yet meet all of the standards common in advanced industrialized economies. But focused bilateral sanctions, WTO complaints, and multilateral diplomacy should be vigorously pursued if China undertakes unfair trade practices that challenge core U.S. interests. The United States should prioritize carefully, however, focusing on the issues that pose the greatest threats and present the greatest opportunities. These include China’s recent attempts to impose technical standards on foreign firms in China, such as for dvd players, wireless communications, and mobile telephones, or to tax imported goods such as integrated circuits (a policy tantamount to a domestic subsidy and prohibited by WTO rules). Washington should also urge Beijing to curb investments in excess manufacturing capacity, as they could threaten key industries such as automobiles and semiconductors.
Continued engagement of this kind will help the United States consolidate the benefits it already reaps from the current relationship, ensure China’s continued prosperity and stability, and encourage China to play by global rules. Working with its allies to further incorporate China’s economy in international trade and industrial networks, the United States can reinforce the technological leadership of the advanced industrialized democracies, while diminishing the scope for Chinese technological and economic mercantilism.
The paradox of China’s technological and economic power is that China must implement structural political reforms, not simply freer markets or greater investment, before it can unlock its potential as a global competitor. But if it were to undertake such reforms, it would likely discover even greater common interests with the United States and other industrialized democracies. Pursuing strategic engagement is thus a way for the United States to hedge its bets: to preserve its competitive edge while encouraging China to continue developing its economy and liberalizing its politics. Chinese political reform is in the long-term interest of both Beijing and Washington. Unfortunately, the burden of a long history of fragmentation and authoritarian rule weighs heavily against China’s successfully completing this final modernization.
George J. Gilboy is a senior manager at a major multinational firm in Beijing, where he has been working since 1995, and a research affiliate at the Center for International Studies at the Massachusetts Institute of Technology.
George J. Gilboy. Foreign Affairs. New York: Jul/Aug 2004.Vol.83, Iss. 4; pg. 33
China’s Hidden Democratic Legacy
China’s Hidden Democratic Legacy
Orville Schell
a starting point for reform
Ever since Deng Xiaoping began to undercut Mao Zedong’s revolution in late 1978, halting and then attenuated political reform has been the hallmark of China’s ruling Communist Party. Notwithstanding the tectonic events of 1989, this high-wire act between too much and too little political and economic reform has kept China relatively stable for almost a quarter of a century. But it has also left the People’s Republic of China (prc) in a state of extreme contradiction, its newly adopted market economy straining against a political structure borrowed from Stalin’s Russia. Whether the prc will be able to continue straddling the widening divide between its economic system and its anachronistic political system is the most crucial question that China faces — especially if the current boom turns to a bust.
No one knows where, in its very energetic way, China is expecting to go. But it is becoming more and more difficult to imagine that it can continue to transform itself into a more stable, cosmopolitan, and global country without a clearer sense of its ultimate political destination. The Chinese Communist Party has so far prevented the sort of directed, public discussion that could lead to such a vision. As Beijing University professor Jiao Guobiao said recently, “[Chinese intellectuals] are supposed to act like children who never talk back to their parents.” But China’s leaders cannot forestall debate forever.
When the time for national discussion does finally arrive, what process might the Chinese people use to decide how it should advance and what it should become? Where should contemporary Chinese intellectuals, politicians, and leaders turn for ideas and potential models? In short, how should China go about the task of politically reinventing itself? Fortunately, China is able look to its own past for ideas, if not answers.
the first (and last) liberal age
All too many discussions of democracy in China have foundered precisely because they were viewed as overly U.S.- or Eurocentric. Indeed, when it has come to the prospect of importing political ideas directly from the West in the recent past, China has frequently evinced something akin to a tissue-rejection mechanism. (Ironically, the one “ism” that did successfully seduce the Chinese — Marxism-Leninism — was imported from the West.) This sensitivity toward “foreign borrowing” means that, to be successful, Chinese democrats are advised first to draw on indigenous wellsprings of democratic thought.
Since 1949, the prc has been an authoritarian state that has, aside from a few spasmodic moments, systematically limited free and open discussion. It is important to remember, however, that China’s modern political history did not begin with the victory of communism in 1949. In fact, in the first decades of the twentieth century — when, after the fall of the last imperial dynasty in 1911, the Chinese last found themselves searching for a new political beginning — China was a fermentation vat of free thinking, political inquiry, open discussion, self-criticism, research, and writing. Then as now, China found itself in a period of profound transition. The national conversation that began in the final years of the Qing dynasty during the 1890s and lasted until the Japanese occupation in the early 1930s has clear relevance for the challenges of China’s current need for political self-reinvention.
This “Chinese Enlightenment” was started by the likes of Kang Youwei, Yan Fu, and Liang Qichao, three classically trained scholars. In searching for ways to reform their country’s imperial systems of education and governance — to bring back China’s fuqiang, or wealth and power — they turned outward, breaking with Confucianism’s tradition of insularity. They became the first generation in China to embrace foreign ideas and institutions, including the notions of constitutional monarchy, republicanism, and democracy, which where considered every bit as unorthodox and heretical by the imperial establishment as they are by the Communist Party establishment today.
In the face of new ideas challenging Confucian traditionalism and accompanying calls for reform and revolution, the Qing dynasty fell, plunging China into a period of chaotic change. Intellectuals began to search urgently for new cultural and political answers, creating an environment charged with inquiry, iconoclasm, and intellectual vigor. Listening to some of these century-old voices, it becomes clear not only that China has a legacy of vibrant discussions that focused on reinventing its system of governance, but also that many of the leaders and thinkers who led those discussions were of towering intellect and sophistication, which are all of enormous relevance to China’s current predicament.
In criticizing the emperor’s unilateral power at the end of the Qing dynasty, reformer Kang Youwei called for complete reform. He was one of the first Chinese thinkers of consequence to declare that change was the most basic and dynamic force in history and that China would perish if it did not find a way to break the embrace of traditional thinking that clung to the past as the only model for the future. In addressing the young emperor Guang Xu in 1898, Kang boldly proclaimed, “Today it is really imperative that we reform. It is not because we have not talked about reform, but because it was only slight reform, not a complete one. We change the first thing, but do not change the second, and then we get everything so confused as to incur failure, and eventually there will be no success. … The prerequisites of reform are that all laws and the political system and social systems be changed and decided anew, before it can be called reform.” Still speaking to the emperor’s face, Kang added, “Most of the high ministers are very old and conservative, and they do not understand matters concerning foreign countries. If Your Majesty wishes to rely on them for reform, it will be like climbing a tree to seek fish.”
When Emperor Guang Xu was deposed, Kang paid for his boldness with exile, like many contemporary Chinese dissidents who languish abroad. His advocacy of constitutional monarchy had threatened the whole autocratic system of imperial rule by challenging the idea of tianming — the mandate of heaven, the notion that imperial rule was sanctioned by cosmic forces, just as the monarchs of Europe were once believed to be sanctioned by the “divine right of kings.” Kang’s clarion call for a new kind of polity was radically different from anything that Chinese had heard for millennia, as bold as today’s calls for democracy are in confronting China’s Marxist-Leninist political system. “It was like a cold shower for me, or a blow right to the head with the Zen master’s staff, suddenly depriving me of my defenses, leaving me dazzled without knowing what to do,” wrote another reformer, Liang Qichao, after meeting Kang. Liang was left feeling “shocked and delighted, embittered and remorseful, frightened and uncertain.”
In his turn, Liang, a classical scholar who had become interested in foreign ideas while traveling in Japan and the United States, soon also became convinced that the Chinese government’s relationship to its citizenry was in need of a radical reformulation. “Treat the people as slaves, guard against them as against brigands, and they will regard themselves as slaves and brigands,” he wrote darkly of the Confucian political hierarchy, which demanded obedience of inferiors to superiors.
At first, such iconoclastic voices went mostly unheard, especially by a mass audience. But as this intellectual ferment grew, China’s mass media also started to come of age. In the six months following the May 4th Movement (the 1919 populist movement in favor of “science and democracy”), some 400 new publications, with names such as The New Atmosphere and The New Learning, were started to spread the gospel of reform. As Columbia University scholar Andrew Nathan has noted, “the new political press soon surpassed the commercial press in numbers, circulation and liveliness.” Liang and his activist colleagues welcomed this fluorescence. “Government is entrusted by the people, is the people’s servant,” wrote Liang. “So a newspaper regards the government the way a father or elder brother regards a son or younger brother — teaching him when he does not understand, and reprimanding him when he gets something wrong.”
In trying to formulate the proper relationship between China’s incipient new press and a new form of government, Liang hoped that the beginning of the twentieth century would prove a time when “as many doctrines of the world as possible” could be freely brought into China as a way of “jolting it into modernity.” In his 1899 introduction to his Notes on Freedom, Liang quoted John Stuart Mill: “In the progress of mankind, there is nothing more important than freedom of thought, speech, and of the press.”
It was through free speech, an idea that was just being introduced to China, that Liang hoped to educate “a new citizenry” for China’s new republican future. He wrote, “A free society and a republican nation demand only that the individual have the power of free choice and that he bear the responsibility for his own conduct and actions. If this is not the case, then he does not possess the ability to create his own independent character. And if society and the nation do not possess independent character, they are like wine without yeast, bread without leaven, the human body without nerves. Such a society has absolutely no hope of improvement or progress.” Genuflecting to the American Revolution, Liang even opened one chapter of an essay with Patrick Henry’s well-known cri de coeur: “Give me liberty or give me death!” He went on to proclaim elsewhere that “liberty is a universal principle, a necessary condition of life, and is applicable everywhere.”
But, like Kang and many other classical scholars who became enamored of reform, Liang was also deeply fearful of abandoning the entire corpus of traditional thought, culture, and political institutions — lest China lose its bearings and its sense of self and become lost and unstable. Indeed, it is a familiar Chinese story: reformers who understand that the future requires bold new thinking and action but that moving too quickly risks uncertainty and chaos. There thus was, and still is, a deeply conservative strain in most Chinese political reform movements.
merging east and west
What distinguished these pre-Marxist Chinese intellectuals was their interest in combining foreign ideas with Chinese elements to develop a new synthesis. At heart, they were pragmatists, not idealists. Although they were drawn to the French philosophes and the experiment launched by the American Founders, they also read the English and Scottish utilitarians. Liang and his counterparts struggled to synthesize these strands: the imperatives of individualism, freedom, and democracy and the need for a strong state that could restore Chinese unity and pride. (Of course, a similar tension was present at the U.S. Founding between John Adams, the Federalist, and Thomas Jefferson, the Republican idealist.)
As postimperial China disintegrated, Liang focused much of his thought on how to create a new kind of effective government power without hobbling it with too much democracy. Ultimately, in his brand of syncretic liberalism, societal and state interests almost always ended up triumphing over those of the individual. Human rights were viewed not so much as “natural” (much less as “God-given,” as the philosophes and Jefferson had believed) but as something that an intelligent government would want to confer on its citizens in order to motivate them to constructive action.
Liang’s intellectual framework, especially as it developed in his later years, came to form something of a template for “liberal” political thought in China. In fact, one of those influenced by Liang’s thinking was the Cantonese medical doctor Sun Yat-sen, a nationalist dedicated to curing China’s humiliation by forming a new government that was both strong and essentially republican.
Although Sun lived abroad for many of his formative years, his ideas for remaking China came to play an important role in the debate about how China would be governed without an emperor. He disparaged China as a semicolonized “heap of loose sand,” “one of the poorest and weakest nations in the world,” and in danger of “being lost or destroyed” by foreign domination. If his fellow Chinese wished “to avert this catastrophe,” he admonished, they must “espouse nationalism and bring this national spirit to the salvation of the country.” Sun was an advocate of outright revolution against the Qing dynasty rather than piecemeal reform leading toward a constitutional monarchy. He envisioned Chinese republicanism developing in three progressive stages, by a process he called “guided democracy,” which he spelled out in his classic, The Three Principles of the People.
But although Sun believed that China’s salvation would come from greater democracy, it was “the liberty of the nation,” not individual liberty, that he most ardently sought. Indeed, he feared that too much individualism and democracy would only exacerbate China’s plight. So it was not surprising that he, too, called for strong executive leadership, a provisional constitution, and training of the people in local self-government during a period of authoritarian “tutelage.” Like Liang, he was hardly an advocate of unrestrained (much less “inalienable”) individual rights. He wanted a process that would lead to a strong China, one that could defend itself and stand up to the predatory powers that sought to dismember it. He was a democrat (and went on to become president of the short-lived Chinese republic), but democracy, for him, was a tool for helping China cast off the bonds of foreign imperialism, not a goal in itself.
The Chinese intellectual most profoundly influenced by the Enlightenment and Jeffersonian ideals was the U.S.-educated scholar Hu Shih. He venerated Liang and, like him, tried to determine what aspects of the Western liberalism he had come to know while studying in the United States in 1910-17 were congruent with the salvageable parts of traditional Chinese culture. Hu came out of the New Culture and May 4th Movements animated by the writings of Liang and Kang. Such movements were fed by the the eruption of popular sentiment against foreign domination that was triggered by the Treaty of Versailles and that had generated among intellectuals the belief that China’s survival as a nation demanded both political and cultural reformation. But during this period of growing Chinese nationalism, Hu remained deeply enamored of the American political experience and championed the ideas of freedom, democracy, science, progress, the sanctity of individual rights, and the need for a system of law to protect those rights. “The rights of man cannot be guaranteed, and a system of law established, by an ambiguous mandate,” he wrote. “Government by law means that no action of government officials shall go beyond the law.” Even after China’s republican experiment collapsed into warlordism, Hu urged his country not to give up on democracy. Unlike Sun, he held that democracy was not something that should come only after the citizenry had been prepared for it in a period of authoritarian rule; rather, he proclaimed, “The only way to have democracy is to have democracy.”
At the same time, Hu steadfastly rejected the idea of total revolution espoused by those enamored of Marxism and Leninism. He came down instead in favor of a gradualist process, driven by foreign borrowing when needed, a commitment to individual rights, and a belief in the need for a strong constitution to protect those rights. But this commitment to gradualism did not mean that Hu thought it possible for China to reform itself through what he called “lazy evolution.” He advocated “conscious reform,” which presupposed clear analysis, well defined goals, and an Enlightenment belief in the universality and inherent quality of individual rights (rather than only in their utilitarian value as a tonic for national weakness). This belief soon divided him from many of his fellow intellectuals, who were seduced by Marxism.
What strikes one about Hu’s elegant prose today is not only his intellectual curiosity, erudition, and honesty, but also that he wrestled with many of the same questions that face the current generation of Chinese reformers, who, unlike him, have been denied the latitude to discuss them publicly. Hu confronted these questions head-on, ignoring the straitjacket of orthodoxy while disparaging the notion that China might be incapable of facing the challenge of reform. He was a rarity in China: an independent intellectual who was also an idealist and a democrat.
contemporary echoes
Dipping back into the intellectual ferment that marked the first half of the twentieth century and comparing it to the stilled public dialogue today, it is easy to feel wistful for a time in China when debate was common, ideas and discussions mattered, and thinkers were open to the world and able to speak freely. Kang Yuowei, Liang Qichao, Hu Shih, and Sun Yat-sen were only a few of scores of well-known, politically engaged intellectuals who peopled China’s first and last “liberal age.” As they absorbed foreign ideas of every kind and tried to graft them onto China’s own past traditions, they wrestled with almost every political question imaginable, especially how to reformulate the relationship of citizen to state.
A more recent Chinese “democrat” in this tradition is the astrophysicist Fang Lizhi, vice-president of the Institute of Science and Technology of China during the late 1980s (just before the student demonstrations of 1989), the most politically open and intellectually vibrant period since the May 4th Movement 60 years earlier. Fang rose to prominence in 1986, as he traveled from university to university fearlessly speaking out about the bankruptcy of China’s one-party political system and its need for scientific rationalism, freedom of expression, political tolerance, human rights, democracy, and openness to the outside world. Calling for a new program of intellectual and political reform, he launched a comprehensive critique of Communist Party rule.
Fang’s uncensored speeches electrified students. Soon, they were passing dog-eared copies of hand-transcriptions around the country. But Fang’s meteoric rise as China’s first “establishment dissident” alarmed leaders in Beijing to the point where they sacked him from his job, expelled him from the Communist Party, and then sent him into exile. Like other banished reformers, he is now relegated to the margins of China’s political discourse and largely ignored.
But as China grapples to find alternatives to the prc’s Marxist-Leninist-Maoist legacy — as one day soon it must — intellectuals and political leaders should be encouraged to remember that China has another legacy to draw on: a cadre of founding father-like intellectuals who envisioned a path to openness and democracy and even articulated it in their native language. Their forgotten speeches and writings lie in Chinese libraries and archives awaiting rediscovery, just as the classics of Greek and Latin antiquity lay sequestered in medieval monasteries awaiting the Renaissance.
Orville Schell is Dean of the Graduate School of Journalism at the University of California, Berkeley, and the author of many books on China.
Orville Schell. Foreign Affairs. New York: Jul/Aug 2004.Vol.83, Iss. 4; pg. 116
A Global Power Shift in the Making;
A Global Power Shift in the Making
Is the United States Ready?
James F. Hoge, Jr.
The transfer of power from West to East is gathering pace and soon will dramatically change the context for dealing with international challenges — as well as the challenges themselves. Many in the West are already aware of Asia’s growing strength. This awareness, however, has not yet been translated into preparedness. And therein lies a danger: that Western countries will repeat their past mistakes.
Major shifts of power between states, not to mention regions, occur infrequently and are rarely peaceful. In the early twentieth century, the imperial order and the aspiring states of Germany and Japan failed to adjust to each other. The conflict that resulted devastated large parts of the globe. Today, the transformation of the international system will be even bigger and will require the assimilation of markedly different political and cultural traditions. This time, the populous states of Asia are the aspirants seeking to play a greater role. Like Japan and Germany back then, these rising powers are nationalistic, seek redress of past grievances, and want to claim their place in the sun. Asia’s growing economic power is translating into greater political and military power, thus increasing the potential damage of conflicts. Within the region, the flash points for hostilities — Taiwan, the Korean Peninsula, and divided Kashmir — have defied peaceful resolution. Any of them could explode into large-scale warfare that would make the current Middle East confrontations seem like police operations. In short, the stakes in Asia are huge and will challenge the West’s adaptability.
Today, China is the most obvious power on the rise. But it is not alone: India and other Asian states now boast growth rates that could outstrip those of major Western countries for decades to come. China’s economy is growing at more than nine percent annually, India’s at eight percent, and the Southeast Asian “tigers” have recovered from the 1997 financial crisis and resumed their march forward. China’s economy is expected to be double the size of Germany’s by 2010 and to overtake Japan’s, currently the world’s second largest, by 2020. If India sustains a six percent growth rate for 50 years, as some financial analysts think possible, it will equal or overtake China in that time.
Nevertheless, China’s own extraordinary economic rise is likely to continue for several decades — if, that is, it can manage the tremendous disruptions caused by rapid growth, such as internal migration from rural to urban areas, high levels of unemployment, massive bank debt, and pervasive corruption. At the moment, China is facing a crucial test in its transition to a market economy. It is experiencing increased inflation, real-estate bubbles, and growing shortages of key resources such as oil, water, electricity, and steel. Beijing is tightening the money supply and big-bank lending, while continuing efforts to clean up the fragile banking sector. It is also considering raising the value of its dollar-pegged currency, to lower the cost of imports. If such attempts to cool China’s economy — which is much larger and more decentralized than it was ten years ago, when it last overheated — do not work, it could crash.
Even if temporary, such a massive bust would have dire consequences. China is now such a large player in the global economy that its health is inextricably linked to that of the system at large. China has become the engine driving the recovery of other Asian economies from the setbacks of the 1990s. Japan, for example, has become the largest beneficiary of China’s economic growth, and its leading economic indicators, including consumer spending, have improved as a result. The latest official figures indicate that Japan’s real GDP rose at the annual rate of 6.4 percent in the last quarter of 2003, the highest growth of any quarter since 1990. Thanks to China, Japan may finally be emerging from a decade of economic malaise. But that trend might not continue if China crashes.
India also looms large on the radar screen. Despite the halting progress of its economic reforms, India has embarked on a sharp upward trajectory, propelled by its thriving software and business-service industries, which support corporations in the United States and other advanced economies. Regulation remains inefficient, but a quarter-century of partial reforms has allowed a dynamic private sector to emerge. Economic success is also starting to change basic attitudes: after 50 years, many Indians are finally discarding their colonial-era sense of victimization.
Other Southeast Asian states are steadily integrating their economies into a large web through trade and investment treaties. Unlike in the past, however, China — not Japan or the United States — is at the hub.
The members of the Association of Southeast Asian Nations (asean), finally, are seriously considering a monetary union. The result could be an enormous trade bloc, which would account for much of Asia’s — and the world’s — economic growth.
The Strains of Success
Asia’s rise is just beginning, and if the big regional powers can remain stable while improving their policies, rapid growth could continue for decades. Robust success, however, is inevitably accompanied by various stresses.
The first and foremost of these will be relations among the region’s major players. For example, China and Japan have never been powerful at the same time: for centuries, China was strong while Japan was impoverished, whereas for most of the last 200 years, Japan has been powerful and China weak. Having both powerful in the same era will be an unprecedented challenge. Meanwhile, India and China have not resolved their 42-year-old border dispute and still distrust each other. Can these three powers now coexist, or will they butt heads over control of the region, access to energy sources, security of sea lanes, and sovereignty over islands in the South China Sea?
Each of the Asian aspirants is involved in explosive territorial conflicts, and each has varying internal stresses: dislocated populations, rigid political systems, ethnic strife, fragile financial institutions, and extensive corruption. As in the past, domestic crises could provoke international confrontations.
Taiwan is the most dangerous example of this risk. It has now been more than 30 years since the United States coupled recognition of one China with a call for a peaceful resolution of the Taiwan question. Although economic and social ties between the island and the mainland have since grown, political relations have soured. Taiwan, under its current president, seems to be creeping toward outright independence, whereas mainland China continues to seek its isolation and to threaten it by positioning some 500 missiles across the Taiwan Strait. The United States, acting on its commitment to Taiwan’s security, has provided the island with ever more sophisticated military equipment. Despite U.S. warnings to both sides, if Taiwan oversteps the line between provisional autonomy and independence or if China grows impatient, the region could explode.
Kashmir remains divided between nuclear-armed India and Pakistan. Since 1989, the conflict there has taken 40,000 lives, many in clashes along the Line of Control that separates the two belligerents. India and Pakistan have recently softened their hawkish rhetoric toward each other, but neither side appears ready for a mutually acceptable settlement. Economic or political instabilities within Pakistan could easily ignite the conflict once more.
North Korea is another potential flash point. Several recent rounds of six-party talks held under Chinese auspices have so far failed to persuade Kim Jong Il to scrap his nuclear weapons program in exchange for security guarantees and aid to North Korea’s decrepit economy. Instead, the talks have brought recriminations: toward the United States, for offering too little; toward North Korea, for remaining intransigent; and toward China, for applying insufficient pressure on its dependent neighbor. Now recently disclosed evidence suggests that North Korea’s nuclear efforts are even more advanced than was previously believed. As Vice President Dick Cheney warned China’s leaders during an April trip, time may be running out for a negotiated resolution to the crisis.
Shifting Priorities
For more than half a century, the United States has provided stability in the Pacific through its military presence there, its alliances with Japan and South Korea, and its commitment to fostering economic progress. Indeed, in its early days, the Bush administration stressed its intention to strengthen those traditional ties and to treat China more as a strategic competitor than as a prospective partner. Recent events, however — including the attacks of September 11, 2001 — have changed the emphasis of U.S. policy. Today, far less is expected of South Korea than in the past, thanks in part to Seoul’s new leaders, who represent a younger generation of Koreans enamored of China, disaffected with the United States, and unafraid of the North.
Japan, meanwhile, faced with a rising China, a nuclear-armed North Korea, and increasing tension over Taiwan, is feeling insecure. It has thus signed on to develop a missile defense system with U.S. aid and is considering easing constitutional limits on the development and deployment of its military forces.
Such moves have been unsettling to Japan’s neighbors, which would become even more uncomfortable if Japan lost faith in its U.S. security guarantee and opted to build its own nuclear deterrent instead. Even worse, from the American perspective, would be if China and Japan were to seek a strategic alliance between themselves rather than parallel relations with the United States. To forestall this, Washington must avoid, in all its maneuverings with China and the two Koreas, sowing any doubt in Japan about its commitment to the region.
Yet Japan, given its ongoing economic and demographic problems, cannot be the center of any new power arrangement in Asia. Instead, that role will be played by China and, eventually, India. Relations with these two growing giants are thus essential to the future, and engagement must be the order of the day, even though some Bush officials remain convinced that the United States and China will ultimately end up rivals. For them, the strategic reality is one of incompatible vital interests.
Militarily, the United States is hedging its bets with the most extensive realignment of U.S. power in half a century. Part of this realignment is the opening of a second front in Asia. No longer is the United States poised with several large, toehold bases on the Pacific rim of the Asian continent; today, it has made significant moves into the heart of Asia itself, building a network of smaller, jumping-off bases in Central Asia. The ostensible rationale for these bases is the war on terrorism. But Chinese analysts suspect that the unannounced intention behind these new U.S. positions, particularly when coupled with Washington’s newly intensified military cooperation with India, is the soft containment of China.
For its part, China is modernizing its military forces, both to improve its ability to win a conflict over Taiwan and to deter U.S. aggression. Chinese military doctrine now focuses on countering U.S. high-tech capabilities — information networks, stealth aircraft, cruise missiles, and precision-guided bombs.
Suspicious Americans have interpreted larger Chinese military budgets as signs of Beijing’s intention to roll back America’s presence in East Asia. Washington is thus eager to use India, which appears set to grow in economic and military strength, as a counterbalance to China as well as a strong proponent of democracy in its own right. To step into these roles, India needs to quicken the pace of its economic reforms and avoid the Hindu nationalism espoused by the Bharatiya Janata Party (bjp), which suffered a surprising defeat in recent parliamentary elections. Officials of the victorious Congress Party pledged to continue economic reforms while also addressing the needs of the rural poor who voted them back into office. Bullish in victory, Congress spokespersons said that they would push to increase India’s annual growth rate to ten percent from its current eight percent.
Unless Congress follows its secular tradition in governing, it will undercut any utility India might have for the U.S. campaign to counter the influence of radical Islamists. To date, the aberrant religious ideology that opposes all secular government has developed only moderate traction among the large Muslim populations of India and the surrounding states of Central and Southeast Asia. For example, fundamentalist Islamic political parties fared poorly in winter and spring parliamentary elections in Malaysia and Indonesia. In other ways, however, radical Islamists are becoming a serious threat to the region. Weak governments and pervasive corruption there provide fertile ground for back-shop operations: training, recruitment, and equipping of terrorists. Evidence points to a loose network of disparate Southeast Asian terrorist groups that help each other with funds and operations.
Recent public-opinion polls show that sympathy is growing for the anti-American posturing of the radical Islamists, in large part due to U.S. activities in Iraq and U.S. support of the Sharon government in Israel. The full impact of outrage over the mistreatment of Iraqi prisoners is still to be determined. But deep anger is already in place among Muslim communities worldwide over the perceived slighting of Palestinian interests by the Bush administration. A settlement of the Israeli-Palestinian conflict would not end terrorism, and Muslims themselves must lead the ideological battle within Islam. Yet the United States could strengthen the hand of moderates in the Muslim world with a combination of policy changes and effective public diplomacy. The United States must do more than set up radio and television stations to broadcast alternative views of U.S. intentions in the Middle East. It must replenish its diminished public diplomacy resources to recruit more language experts, reopen foreign libraries and cultural centers, and sponsor exchange programs. Given the large number of traditionally tolerant Muslims in Asia, the United States must vigorously assist the creation of attractive alternatives to radical Islamism.
Needed Changes
To accommodate the great power shift now rapidly occurring in Asia, the United States needs vigorous preparation by its executive branch and Congress. The Bush administration’s embrace of engagement with China is an improvement over its initial posture, and the change has been reflected in Washington’s efforts to work with Beijing in the battle against terrorism and negotiations with North Korea. The change has also been reflected in the reluctance to settle trade and currency differences by imposing duties. In other ways, however, Washington has yet to shift its approach. On the ground, the United States appears undermanned. Despite a huge increase in the workload, the work force at the U.S. embassy in China numbers approximately 1,000, which is half the employees envisioned for the new embassy in Iraq. Training in Asian languages for U.S. government officials has been increased only marginally. As for the next generation, only several thousand American students are now studying in China, compared to the more than 50,000 Chinese who are now studying in U.S. schools.
Going forward, the United States must provide the leadership to forge regional security arrangements, along the lines of the pending U.S.-Singapore accord to expand cooperation in the fight against terrorism and the proliferation of weapons of mass destruction. It must also champion open economies or risk being left out of future trade arrangements. The United States must also avoid creating a self-fulfilling prophecy of strategic rivalry with China. Such a rivalry may in fact come to pass, and the United States should be prepared for such a turn of events. But it is not inevitable; cooperation could still produce historic advancements.
At the international level, Asia’s rising powers must be given more representation in key institutions, starting with the un Security Council. This important body should reflect the emerging configuration of global power, not just the victors of World War II. The same can be said
of other key international bodies. A recent Brookings Institution study observed, “There is a fundamental asymmetry between today’s global reality and the existing mechanisms of global governance, with the G-7ffi8 — an exclusive club of industrialized countries that primarily represents Western culture — the prime expression of this anachronism.”
Canadian Prime Minister Paul Martin has embraced the idea of elevating to heads-of-state level the meetings of the g-20 group, which is composed of 10 industrialized countries and 10 emerging market economies. This could incorporate into global economic governance those countries with large populations and growing economies.
The credibility and effectiveness of international bodies depends on such changes; only then will they be able to contribute significantly to peace among nations. Although hardly foolproof, restructuring institutions to reflect the distribution of power holds out more hope than letting them fade into irrelevance and returning to unrestrained and unpredictable balance-of-power politics and free-for-all economic competition.
James F. Hoge, Jr. is Editor of Foreign Affairs. This article is adapted from a lecture given in April at Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies in Washington, D.C.
James F. Hoge, Jr.. Foreign Affairs. New York: Jul/Aug 2004.Vol.83, Iss. 4; pg. 2
