China: Where Do We All Go From Here?

Beijing, China (NEO) – China has transformed from a backwater which produced cheap goods into one of the great economic powers in a very short time. Commentators have often compared its rise to that of Singapore, but have done so by stressing the very different political traditions and outlooks of these countries.

The implication of this is that countries not regarded as “Western” cannot be economically successful. This mindset began as the product of ignorance, but is now the product of fear. It is that fear, as much as anything, which is allowing China’s rise to go unchallenged.

Once detatched from Malaysia in 1965 Singapore was forced to fend for itself, as just another third world country, under the leadership of the recently departed Lee Kuan Yew, its first Prime Minister, who hailed from Canton in China and was of Hakka Chinese origin. Fledgling Singapore became a multi-racial Asian Dragon built on a Chinese work ethic, despite not having natural resources. By doing so it developed a new economic model for the region, which as ever was embraced by others without regard to local factors.

Eventually even Communist China acknowledged that Singapore was a suitable role model. It also understood that Chinese cultural influence, rather than Western orientation, had been the main driver of Singapore’s rise. As China could use the same methods, rather than import a different cultural ethic, it has made them work on a grand scale.

So no one should be surprised that China is changing the rules of the game on the broader international stage, as set down by the powers to be, and especially the United States. What is causing concern is that the existing order doesn’t know how to respond to this, because it doesn’t know its opponent. It can’t see the end and therefore can’t see the present, except in negative terms.

Bricks and BRICS

China is literally one Big Brick in the Great Wall of a new economic and political system that is developing rapidly. Everyone was fond of this change when it represented previously hostile China joining the “club” of established world leaders, who all did things the accepted way. Now US attempts to impose currency controls and other illegal trade restrictions on China testify how much concern it is causing.

The Panda, China's national animal. Image source: "Giant Panda 2004-03-2" by Jeff Kubina

The Panda, China’s national animal.
Image source: “Giant Panda 2004-03-2” by Jeff Kubina

When China produced cheap electronic, plastic and paper goods the West had a vested interest in a strong Chinese economy – provided it remained a dependent one and the proceeds weren’t used to develop weapons. Now China’s strength is imposing the same economic dependency on its neighbours, and greater political leverage is going hand in hand with that.

Soon China won’t need Western approval for anything, if it still does now. It will no longer be a Western partner in the international system but create a new one, based around the BRICS forum (Brazil, Russia, India, China and South Africa), and understandably the West doesn’t want to have to adjust to that.

It has almost been forgotten that China is still a Communist dictatorship. The problem here is not the discredited ideology behind such countries but the fact that they insist on doing things differently. China has realised, ideology or not, that it must listen to the needs of its population as well as staying competitive on world markets. This contradicts Western thinking, in which domestic prosperity is only possible after competitiveness has been achieved.

In the West, when economies are struggling the classic remedy is to cut public spending and social welfare, thus reducing the capacity of the population to participate in the economy. China has taken the opposite approach, reacting to each downturn by spending more to create jobs, develop infrastructure and create a sounder base from which to reverse the decline, believing that prosperity breeds prosperity.

A Western economist advocating such measures would be driven out of the profession by the very intolerant academics who run it, and a politician with such ideas would never gain the credibility to implement them. In China they have worked, and the West can’t just copy China due to this cultural difference.

So China will enjoy the same benefits of its success the West always has, and lead a new world order in which the West is at a perpetual disadvantage. Few Westerners can speak or read Chinese, or have any real knowledge of its cultural norms and expectations. Therefore fear of losing control is being magnified by that greatest fear of all – fear of the unknown. You can’t fight an unknown enemy, and that is why China has got away with it so far, and will probably continue to do so until fighting would be futile.

From Achilles heel to jugular

In 1982 China’s GDP was $200 billion. Now it is $9 trillion. Since it joined the WTO its trade turnover has grown from about $100 billion to, again, approximately $9 trillion. Foreign direct investment has risen from about $380 million to more than $110 billion a year.

China has achieved this by doing another Western no-no: devaluing its currency. This continues to make its exports cheaper than the competition, and enables China to compete for vital raw materials, sourced from the same countries, with developed nations.

This rapid growth has been accompanied by the usual social and environmental problems, as Western commentators have been quick to point out. Human indicators have improved but are still acute, especially in the regions. The water and air are so polluted that they affect the quality of the food and water supply.

But the West’s problem here is that it has already addressed these issues. Never again will the hideous conditions associated with nineteenth-century industrialisation be found in the West because the public will not tolerate them now. The Chinese may not have freedom of opinion but they still freely put up with these conditions for what they can get out of them, in the same way generations of Westerners once did. China has every right to say that it will abide by modern Western standards as soon as the West compensates the victims of its own breaches of them.

This last point is the key to the Chinese approach, as it resides deep within the Chinese character. China doesn’t try and attack on all fronts. It looks for points where it can gain an advantage by exploiting the inadequacy of Western policy or thinking. If the West can’t do something for ideological reasons, China can turn considerable profit out of doing that very thing, and the West is beaten as soon as that happens because it knows it cannot respond.

As former US Secretary of State Henry Kissinger once wrote, China’s approach to the outside world is best understood through the lens of the Chinese strategist Sun Tzu, who focused on the psychological weaknesses of the adversary. “China seeks its objectives,” Dr. Kissinger says, “by careful study, patience and the accumulation of nuances – only rarely does China risk a winner-take-all showdown.” Allison, Graham and Robert D. Blackwill. “Considering China? It Pays to Listen to Lee.” Financial Times, January 28, 2013.

Unknown but visible

Xi Jinping, the new leader of China, sees the country’s rise as both a dream and a threat. As China gets richer it will get stronger and prouder. He feels that China will be recognised as somebody, a player with a role, but he also doesn’t know what that role will be and how others will try and either counter it or take advantage of it.

The currency wars of the West have been noted. China is hedging its bets by buying gold at an unprecedented rate, and has established an international infrastructure bank to stash some of it in, which gains it not only financial dividend but political advantage in resource-rich countries. China knows that the national growth, foreign policy orientation and national/regional security of many countries in which it has an interest depend on China’s macroeconomic stability and it being a global financial powerhouse.

What is more threatening to the US, particularly as no one knows what the endgame is, is that China is expanding on all fronts, including military ones. China is using its newfound wealth to build a regional and global military capability. This can potentially be used to settle its territorial disputes, such as the long-running dispute with Japan over the Senkaku Islands and the tensions between China, Vietnam, the Philippines, Malaysia, and Brunei over the Spratly and Paracel Islands. After that, who knows what, when no one knows what world role China wants to play or is equipped to play?

The obvious target of any Chinese military aggression is that longstanding US ally, Taiwan. It has always been inevitable that this last bastion of the defeated Nationalists will be reintegrated into the mainland one day. The US has always resisted this outcome, latterly by promoting the One China policy in which Taiwan would preserve its independence, but it knows very well that Chinese gunboat diplomacy will eventually prevail.

The other territorial disputes China is involved in can be dismissed as local issues requiring local solutions. The annexation of Taiwan, or reintegration as China would see it, would be a significant defeat for the Western world as a whole. The West will not intervene to save Taiwan when it is obviously Chinese but will not declare its own longstanding policy false unless events make it irrelevant. Handing Taiwan over to an economically powerful and thrusting China will end up being far more difficult than giving it up in 1979, when China was recognised by Jimmy Carter, would have been.

The US also knows that China’s military buildup is not simply a means of showing the rest of the world how much money it has. China’s stated reason for it is not to regain what it regards as its rightful territory but to counter growing US troop deployment in the region. China has an expanding fleet of nuclear submarines, from which nuclear missiles can be launched at targets the West wishes to defend, and its overall military growth is still many times greater than that of the US and EU, which will make a US presence in the area irrelevant in the long run.

Furthermore, China’s impressive growth may soon cause the US domestic economy to buckle under the pressure. As it is, the US military’s current levels of spending are clearly unsustainable. China spends only 20 percent of the amount the US spends on its military and gets considerably more “bang for its buck”. As long as the US is faced with a choice between ever-increasing military spending and alleviating domestic problems this plays into China’s hands, thus plunging the world into an even deeper unknown.

Conclusion

The way to conquer fear of the unknown is to have a better grasp of what the unknown is than the other side. When you don’t know what it is, you arrive at that understanding by clarifying what it isn’t, and not fighting against what you know isn’t there.

The West does still have space in which to do this, for now. Not even Deng Xiaoping, who opened China up to Western investment to keep the Communist Party in power by buying the population off, would have predicted how rapidly China would become a powerhouse. It is still too busy coming to terms with the present to understand what its future should be. If the West understands that first, it can still shape China’s future in the way it wants.

But for now all either side can see is that a new world order is forming on the back of China’s exploitation of Western weakness. That exploitation has come about by tapping into the native Chinese character, not adopting someone else’s standards. The West can’t cope with that because it understands the Chinese less than the Chinese understand the West, and can’t identify their weak points or use them to its advantage.

The West’s hope is to turn negatives into positives. It should retreat from the positions where it is losing and see them as opportunities to develop a new outlook China will have to catch up with.

Is that likely to happen? If a third party candidate becomes President of the United States, perhaps. If not, the structure of the Western world will see it go the same way as the Ottoman Empire, and be mourned by the same tiny minority.

Seth Ferris, investigative journalist and political scientist, expert on Middle Eastern affairs, exclusively for the online magazine “New Eastern Outlook”.