China’s divided route to dominance

By Ian Inkster  / 

Tue, Jun 26, 2012 - Page 8

From April to last month, news media were obsessed with the case of Chinese dissident Chen Guangcheng (陳光誠). China’s failure to compromise or explain the issue allowed the US to once more set off a human rights bomb, make the Chinese authorities look heartless and further isolate China. Similar violations of human rights all over the globe (including those in the US) were forgotten in the flurry of negative reportage. China’s failure to even attempt any sort of ameliorative diplomacy or soft-power persuasion prompts the simple question: Is China stupid?

However, this query is set in a much wider context, that of China’s complete failure to capitalize on a series of opportunities to increase its status and soft-power at a global level. At the onset of the global recession in 2008, China established a stimulus plan worth US$586 billion, approximately 15 percent of its GDP. This artificial stimulation of Chinese demand was clearly a good thing for the US and all other major economies, and it undoubtedly ameliorated many deflationary elements within the global economy. Yet China failed in its press relations and diplomacy to connect this massive expenditure with the global good. From the position of either international political economy or soft-power analysis, this seems stupid.

There are seven contemporary processes that China could — under a sensible regime — develop into the sinews of its drive for soft-power. First, the failure of the European economy and the euro debacle last year were key opportunities for the development of Chinese soft power. However, early possibilities of a joint IMF-China bailout soon shrank into non-existence just months into the crisis.

Second, IMF funding for future bailouts is a clear opportunity for China to increase its global presence, but so far Beijing has been tight-fisted on this issue as well — the most recent estimate from the IMF is that Spain will need a bailout of about 40 billion euros (US$50 billion), a huge sum that would be peanuts to China, if it were to help.

Third, as the US debt crisis continues to smolder, as yet invisibly because of the sheer size of the US economy, China has the opportunity to purchase bonds and other financial instruments to help, staving off financial catastrophe in the US, which has not yet been able to solve its multiple US$1 trillion debt problem.

Fourth, late last year the UK opened up a new element when the Tory government made overtures to Chinese investors to put money into British transport, energy and utility projects, at a time when Beijing was seeking positive returns from its massive investment surpluses. This is significant because of its emphasis on private sector initiatives rather than official lending or bond purchases and because it has been sold as distinct from any problems related to euro-bailouts.

Fifth, the need for a closer alliance with Japan is absolutely clear and still wide-open to possible soft-power initiatives on trade, investment, technological purchases or even territorial negotiations. It will become more crucial whenever the notion of a general Confucian Renaissance reasserts itself across the region.

Sixth, despite territorial disputes with India, China’s membership in the BRIC group of nations — Brazil, Russia, India and China — could have been more properly exploited in the last couple of years, both to increase Chinese influence among smaller or poorer states (for instance in Africa, where oil looms large), and also to act as a negotiation and funding resource for the IMF, the euro and other issues.

Finally, China could have exploited the world’s major political hot spots — North Korea, Iran, Syria and the Sudans — as highly visible sites to demonstrate global sympathies as well as commercial concerns. This would fit well into US — especially US Secretary of State Hillary Rosham Clinton’s — vision for global diplomacy.

In summary, if we believe that many of the tensions between Taiwan and China, or indeed between most of the world and China, can be boiled down to the worry over an imminent contradiction within China between economic growth and political stagnation, then a relatively speedy and lucrative turn of the political screw could be earned by China through wiser attention to each and all of the above seven issues. This would cost money, but the expense would be justifiable in terms of long-term economic growth.

I am one of those who believe that China is not stupid. There are several factors causing the present global stand-off, or delaying Chinese political responsiveness to the outside world.

In a tight analytical approach that incorporates a great variety of foreign policy issues in China, my colleague at Wenzao Ursuline College in Greater Kaohsiung, Mark Lai (賴文儀), has concluded that Chinese behavior that appears irrational or illogical on the surface has emerged not from stupidity, but from “the rising sense of frustration, the combination of over-confidence and self-doubt, which makes foreign policy choices reflect national interests at some times and not at other times.”

What factors contributed to such a combination of frustration, ultra-confidence and self-doubt and how might we optimistically expect some transition away from them?

First, the recession began to bite strongly in China from the middle of 2008 and led to a series of economic measures that went well beyond the conservative financial strategies of today’s eurozone. China reacted with a combination of restrictions and massive infrastructure and social expenditure. The complexity of this response, which was triggered by the failure of Western financial systems, may well have slowed down a potentially faster move toward a more liberal political economy. If true, this would mean that the US and others have actually inhibited Chinese political responsiveness.

Second, senior Chinese politicians are divided and there are factions that do not have a consensus on the internal political economy, nor what I have labeled the seven sinews of soft power. These factions are all post-Mao Zedong (毛澤東), in that, with a few exceptions, individual members of the factions are not directly linked to Maoist struggle or dominance. Of course, in some cases they are the children of those key players in the Maoist struggle, the so-called princelings, but this does not make them Maoist. Until these factions can come to a consensus, greater coherence on foreign policy will be elusive.

Third, there is much reason to put faith in the political changes forged by a growing middle class. Not only is the Chinese middle class now very large (between 250 million and 300 million, depending how the group is defined), but its social and institutional characteristics are already on a par with those of developing and transitional non-communist systems, and even matches rich capitalist nations on some international measures. In time, this middle class will have a great impact on internal Chinese politics.

Fourth, there is no serious forecast of a Chinese downturn, despite the repeated warnings of China’s many critics. However, there are some very negative imperatives piling up — deteriorating urban environments and harsh working conditions; a shortage of labor meaning more migrant workers from inland China and a host of welfare and political problems; major pollution of rural areas and large rivers; a slowdown in the applicability of foreign technologies and thus a need for more advanced home-grown technology; an ageing population and the need to secure safe energy supplies. Each one of these issues is a serious problem for China and solutions can only be found in a safe alliance with external economies, including those of the US, Europe and Japan, as well as high-tech, small-population economies such as Canada and Australia.

For these reasons, China cannot isolate itself or ignore the need for political change. However, these are also the forces that increase China’s sense of vulnerability. This must lead to confusion and frustration. China is not stupid. When the inherent problems of China’s internal economy begin to assert themselves more strongly over the next 10 years, then the short-term political disarray should hopefully resolve itself into a more liberal, outward-looking political system. If it does not, then China is stupid.

Ian Inkster is a professor of international history at Nottingham Trent University and professor of global history at Wenzao Ursuline College.