How to Deal With Xi's China? Engage, but Be Wary

Apr 3, 2018

Since its rise to global economic prominence in the wake of reforms initiated by Deng Xiaoping in the late 1970s, foreign policy commentators have fiercely debated the question of how the rest of the world ought to engage with China. Though certainly the number of complex questions on how best to consider the world's largest country by population have persisted since at least the beginning of the People's Republic of China in 1949, the more recent position of China in the global economy has made it impossible to ignore. Consider, for instance, that it was not until the early 1980s that the majority of the world actually recognized the PRC as the legitimate representative of China within global institutions over the Taiwan-based Republic of China. Cold War anti-communism had much to do with the decision to not recognize the PRC, of course, but this was only possible on a practical level due to the relative isolation and underperformance of China's economy under Maoist rule. The economic liberalization initiated by Deng Xiaoping has done a great many things, both positive and negative, for both the population of the PRC itself and the broader global community. The China of today is most certainly richer, with less extreme poverty and impressive (if contested) levels of economic growth, and it has been able to use this new-found wealth to project power and influence across the world in a manner whose full implications are only slowly becoming apparent.

At the same time, China suffers from a number of structural problems which are familiar to countries experiencing rapid growth: widespread environmental degradation, gaping income inequalities, problematic demographic imbalances, and a lack of a real plan to navigate the switch from a high-investment to a high-consumption economy. Specialists in analysis of China tend to be divided into those who are "bullish" and "bearish" on the nation's long-term prospects. The former generally believe that the governing powers will find a way to resolve these contradictions as they have previous ones, with growth perhaps dipping from its recent rates but not experiencing anything resembling a "crash." The latter believe the challenges will prove too much to take on at once, ending with either stagnation or, in the extreme case, the collapse of the current governmental system altogether.

Whichever prediction one takes to be the more accurate, it is clear that, in the here and now, China is most certainly making a set of moves for an enhanced global presence, from Africa to the Arctic, which do necessitate a strategy in response. What, exactly, this strategy ought to look like depends both on what the end goals for any relationship with China are and on what one believes about the intentions coming from the leadership in Beijing themselves. With the recent moves aimed at consolidating power within the presidency of Xi Jinping, a new era may be beginning in terms of how China both runs its internal politics and engages with the rest of the world. Whether this new world can be one which brings a degree of mutual benefits, rather than increased instability, depends just as much on how other nations react to the moves of the Chinese leadership as those moves themselves.

When the PRC was initially beginning diplomatic and economic engagement with the Western world many believed, following a pseudo-libertarian line of thinking, that "free markets will bring free people": that the best way to encourage internal democratization and responsible international behavior was simply to trade with China on roughly equal terms. The thinking went that, if economic growth and foreign investment created a sizeable enough middle class, these newly-empowered citizens would start to demand civil liberties and political representation from the country's governing class. Such thinking was, in part, behind the decision to admit the PRC to the World Trade Organization and for the United States to grant it permanent normal trade relations status in the late 1990s. Though such thinking appears wildly optimistic in retrospect, it should be noted that it was not entirely fanciful, but rather drew on experiences of sequential economic development and democratization from Taiwan and South Korea, amongst others. What such thinking did fail to account for, though, was both how the changing nature of geopolitics in the post-Cold War era affected the internal politics of democratization and the unique nature of the governing system that China had developed after Mao's death. It could be argued that the collapse of the Taiwanese and South Korean dictatorships was, in part, to do with their anti-communist bona fides no longer being necessary after the end of the Cold War and an attendant lack of interest on the part of the United States in continuing to prop up unsavory partners for the sake of wider geopolitical interests. This is not to downplay internal dynamics which drove changes within those nations, of course, or to say that those countries did not remain strongly anti-communist in their general political outlook, but rather to say that the changes in global politics created a particular context in which the democratization took place which would not be replicated with the PRC. The perception of the United States on the part of Taiwan and South Korea, as well as other regional allies, was also substantially modified following the U.S. defeat in Vietnam and its decision to recognize the People's Republic of China over the RoC. Perception, in this sense, was and remains a two-way street, as the United States does still engage in substantial trade of weapons with Taiwan and partners with South Korea to contain threats coming from the North. Perhaps more importantly for the purposes of China, though, post-Mao rulers were interested in stability and growth above almost all other considerations, and devised a system of limited pluralism, combined with formalized rotational leadership at all levels. A combination of fiscal and economic decentralization with continued political centralization was meant to allow for local experimentation as long as it delivered concrete results, regardless of whether it was ideologically at odds with the party line, while the term limits on officials were designed to prevent Mao-like cults of personality from developing.

This is not to mistake such a system for liberal democracy, even if controls were somewhat loosened from what came before. The desire for stability meant that any dissent needed to come through formalized channels in order to not be considered an existential threat, and government officials, or movements such as Falun Gong, who strayed too far from the existing leadership dictates could find themselves executed or imprisoned. The problem for outside observers of this process, accustomed to viewing political systems on a one-dimensional spectrum from liberal democracy to authoritarianism, was that they could not account for the contradictory character of many of China's reform projects. For instance, Chinese authorities do allow some protests at the local level to proceed, and even grant the demands of such movements on occasion, as long as they can be dealt with relatively easily (such as by removing a local official judged to be corrupt) and do not question the essential nature of the PRC overall. Such moves in fact act to increase the legitimacy of the central government, by making it appear as a benevolent protector of the people against purely localized problems or deviations. In this way, China seemed to be evolving towards a unique hybrid system, which would allow a limited degree of popular input on decision-making, whilst the overall direction of the country would continue to be set out in long-term plans set down from Beijing and not to be questioned. Some reasoned that this turn would not have been possible absent a friendly hand extended from outside in the form of trade and diplomacy, and this may well be true. However, even the most enthusiastic boosters of the "just trade and they'll liberalize" narrative have had to revise that notion substantially over the past two decades. Rather than China becoming more democratic, we seem to be entering a world where the self-described "free world" is becoming less open, and China is following along much the same lines.

When considering the recent amendments to the Chinese constitution, which, amongst other things, abolish term limits on state officials, consolidate great power in the Presidency and enshrine Xi Jinping's thoughts as a specific guiding principle of the Communist Party, it is important to consider the global context in which they arrive. Authoritarian populism, usually spiked with a reactionary nationalism, is on the rise across the world, with the leadership of EU nations such as Hungary and Poland having a shaky relationship with democratic norms, and of course the Trump administration in the United States breaking new ground in both xenophobia and basic governance norm-breaking by the day. The Chinese leadership has also proven itself adept at using nationalism as a political tool, both to distract from its own failures and to drive popular support for foreign policy power plays (such as the various sovereignty disputes in the South China Sea). The more important similarity here though, is that this represents an institutional backwards step from limited pluralism and orderly power transfer, and towards fully-centralized autocracy, in the same manner as the actions of those other governments do. The fact that Beijing would do this openly and without seeming regard to any particular consequences may come off as curious until one takes into account that it is indeed unlikely that there will be much dissent from the global community. Of course, the fact that internal moves to crush dissent and affirm the power of the central government will meet with limited pushback from the global community has been a lesson that the Chinese leadership has taken to heart since the tepid response to its actions in Tiananmen Square in 1989. This has only become truer in the intervening years, given China's greater economic power and global connections. Some nations may raise carefully-worded "concerns" about the moves, but by-and-large the reaction is likely to be silence or even, in the case of the Trump administration, a kind of warped admiration.

Along with these changes to the leadership structure, which seem intended to effectively allow Xi Jinping to rule for the rest of his life, China is also planning a large increase in defense spending, and has recently made several foreign policy doctrine changes (such as declaring itself a "near Arctic state") which seem to signal an increased willingness to challenge established norms. Of course, such tensions have been building for years and it is not necessarily fair to blame China's recent moves on a lack of "global leadership" from the United States in particular. The drive to build up parallel institutions of international governance in response to a perception of exclusion from existing ones (such as the creation of the Asian Infrastructure Investment Bank in 2014, which U.S. allies joined over American objections) precedes the current global context by several years, if not going back to the founding of the Shanghai Cooperation Organization in 2001. At the same time, it is also true that Western states appear increasingly uninterested in foreign affairs and particularly unwilling to engage in the work of forging truly productive and equal relationships with emerging powers. For instance, the Trump administration's budget outlines have repeatedly targeted the U.S. State Department and other diplomatic agencies for large cuts, with democracy promotion and institution-building programs being particularly in the cross-hairs. Whether or not such initiatives were entirely about the kind of democracy promotion they claimed to be is a fair question to ask. Certain efforts such as the National Endowment for Democracy's involvement in the Otpor movement (which ended the Milosevic regime in the former Yugoslavia) have been widely praised. At the same time, many have questioned the involvement of the NED and related institutions in efforts such as support to Contra forces in Nicaragua. With those caveats stated, these severe cuts, along with the continued increases in U.S. defense spending, certainly gives an idea of how the current U.S. leadership perceives the rest of the world. Into this void, China has been increasingly able to make the case for both its specific aid/development projects and its government model as an example to other countries looking to move up in global stature. All of this points to a leadership in Beijing which seems both acutely aware of a lack of competing consolidated powers on the world stage and senses an opening to grab necessary resources for long-term projects such as the One Belt, One Road initiative, whilst resistance to these moves is limited.

The question, then, circles back to on what terms should the rest of the world deal with China, and what is the balance to be struck between competing economic, ethical, and geostrategic concerns when doing so. Certainly, the position that China simply should not be engaged with due to human rights concerns, though laudable in the abstract, is both practically untenable at this point and would likely make matters worse by removing even limited outside scrutiny on very real matters of internal repression. At the same time, it has become clear in the intervening years that the belief in a natural process of democratic opening coming as a package deal with economic growth is, if it was ever true elsewhere, not applicable to China's particular circumstances. Furthermore, policies which simply accommodate China's worst actions only exacerbate its internal dynamics towards greater authoritarianism. Though it is doubtless hypocritical in many cases for Western powers to complain about China's overseas actions, the reality remains that China has behaved in highly exploitative ways when dealing with overseas partners, particularly in terms of natural resource extraction projects in Africa. Insofar as it should be the job of the international community, which includes not just states but also broad transnational and civil society actors, to develop and enforce ethical norms of behavior, China must at the very least be put on notice for its abuses. At the same time, there are areas, such as the tensions on the Korean Peninsula and, increasingly, the messy politics of the Middle East, where China has a role to play as an interlocutor necessary to creating sustainable peace. This means that, as tempting as reactive measures such as tariffs on Chinese goods are, any movement in that direction must be carefully considered in terms of not only localized costs and benefits, but also how they may affect the ability to deal with China on other issues. In addition, alliances and friendships with countries who may already be dealing with China, or be tempted to, cannot be taken for granted. If there is legitimate concern about how China has engaged with the leadership of other nations in order to advance its own interests, there must also be recognition of why those other nations have chosen to engage and what benefits they see from it. It can no longer be assumed that China's "bad reputation" will keep others from dealing with it, particularly as Western powers in many ways appear no better (and at least China is less hypocritical, the argument goes), and there must be concrete plans for alliance-making where appropriate. Some of this may involve increased development aid or investment, along with a host of other diplomatic tools.

Above all, there needs to be a recognition that, like it or not, China is a global force and is likely to grow in its ability to project that force over the near future, assuming it avoids internal demographic and economic obstacles. It is certainly possible to overestimate the ability of the country to overcome its challenges, or to underrate how much of a threat those challenges pose. One should not assume past performance as necessarily being an indicator of future success, and it is by no means guaranteed that China will continue on its current trajectory. The nation's state-owned-enterprises, for instance, appear to be increasingly unstable and top-heavy, with potential reforms to their operations having been muddled by corruption and vested interests. However, even if a significant slowdown in growth occurs, that still would leave the PRC as a formidable global player with substantial interests in many places. Opportunities need to be found on issues, such as North Korea, where at least the semblance of a win-win scenario can be negotiated, to build trust and the possibility of shared interests. At the same time, global actors feeling threatened by China's rise must also recognize why it has been able to have significant success in negotiations with the developing world, and to begin developing some tactics which would meet with similar success whilst upholding key values they wish to see more balance in terms of foreign involvement there. The recent changes embarked upon by China, the increased defense budget and the creation of man-made islands in the South China Sea, for instance, do signal a more unified, and likely more outwardly aggressive, policy direction. However, such moves will only result in greater actual instability and potential outbreaks of violence if they are not dealt with effectively. Actors interested in seeing that they are must begin to coalesce around something of a shared agenda for China engagement, balanced between the potential gains of engagement and a wariness of potential threats.

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