WORLD VIEW:The 'Beijing consensus' is set to compete with Washington's for a long time to come, writes PAUL GILLESPIE
A FLURRY of news stories this week drew attention to changing relations between the United States and China. Google’s decision to withdraw its search engine to Hong Kong continued to cause waves; there was tension in Washington over China’s allegedly overvalued currency and the delayed rise in its domestic demand; and continuing disputes about trade in tyres, steel and other goods.
But as if to offset talk of a deteriorating relationship, China announced it will co-operate at the United Nations in formulating sanctions against Iran, and President Hu Jintao will attend a nuclear security summit in Washington this month. Yesterday, he said that as two major powers in the world, the United States and China face common challenges and share major responsibilities in many areas, including promoting global economic recovery, dealing with international and regional issues, and maintaining world peace. He spoke following a meeting with US president Barack Obama.
Hu’s endorsement of the countries’ interdependence is in sharp contrast to suggestions that China and the US may now be decoupling economically and politically. Obama also had soothing words when he welcomed the new Chinese ambassador in Washington this week, following recent tension over US arms sales to Taiwan and his meeting with the Dalai Lama. Congressional, business and trade union leaders are urging the administration to say China is manipulating its currency contrary to WTO rules. The US mid-term elections next November could put the issue centre stage politically.
The decoupling argument is put forward by the global risk analyst Ian Bremmer in the current Prospect magazine. He says the Chinese leadership no longer believes US power is as indispensable as it once was for the country’s economic expansion or the Communist party’s political survival. Nor is access to US capital and commercial expertise so important for the next stage of its development. That will depend more on its own resources than on US consumers.
Bremmer argues that this unfolding conflict “is in many ways more dangerous than the cold war”. It heralds an emerging authoritarian state capitalism in which China inspires other parts of the world to take a similar path, contradicting expectations that modernisation and liberal democratisation are organically linked. Those assumptions may not be correct. In the longer term, a “Beijing consensus” is set to compete with the Washington one so dominant for the last 30 years of globalisation. Sovereign wealth funds, state-owned companies and strategic alliances with emergent regimes are the economic hallmarks of this alternative model. Politically, it is illiberal, state-centred and hostile to competitive party politics.
China’s new capitalist class and huge middle class are intimately connected to the ruling party, and do not have the same incentive to overthrow the regime as 19th century European bourgeoisies had in casting aside aristocratic rule. Hence the growing appeal of this model in parts of Africa, the Middle East and Asia, reinforced increasingly by favourable trade and investment deals, without the conditions imposed by the established western one.
China’s ability to weather the world financial and economic crisis has bolstered its appeal and hastened this transition. But managing it is no easy task. China is a developing state where most of the population is still on the land, notwithstanding the colossal migrations to urban centres. The case for greater social protection coincides with that for greater economic self-reliance and stimulation of domestic demand made by those who underline the global economic imbalances between Chinese exports and US consumer imports.
But the structures laid down since the 1980s are difficult to change, as there are powerful interest groups at play. China has a dual economy, divided between state-owned enterprises and foreign-owned exporting firms. Some 60 per cent of the exports to the US come from foreign firms, for example, and 25 per cent of the trade surplus with the US is traceable to US multinationals which have outsourced manufacturing.
In all these circumstances the question of whether the China-US relationship becomes more conflictual or not has many implications for global security. A lurch towards protectionism would be difficult to undo and would probably have worldwide political and military consequences. Realist analysts in the US believe this is probably inevitable, since at some stage China’s interests will demand a decoupling from a declining US. China should therefore be contained. Liberal internationalists disagree, saying those interests will require an open Chinese engagement with the most developed states for a long time, along with a gradual socialisation into responsibility for stability and security in a setting of multi-polar regions under continuing US hegemony.
If the latter position is to prevail, Bremmer and other commentators argue that the US must remain indispensable for China’s development. This will mean upgrading US investment there, more partnerships helping it leap towards advanced technologies to overcome its social security and environmental challenges, and resisting populist temptations towards trade wars. The Chinese must decide whether these challenges are indeed common, rather than a passing stage of their development.
