FOR THE FIRST in history, a communist country is in a position to bring down global capitalism. The Chinese Communist Party, if it were to sell the $763 billion in US Treasury bonds it holds, would trigger a massive devaluation in those bonds and the value of the American dollar, thereby bringing the world economy to its knees. This situation occurs only twenty years after sledgehammers broke down the Berlin Wall, supposedly heralding the triumph of liberal democracy; and only a decade after the Asian financial crisis, which supposedly proved the superiority of western models of capitalism.
Of course, China's Communism Version 2.0 will do nothing of the sort. The health of China's economy, and ultimately the ability of the Chinese Communist Party to stay in power, depends on the health of global capitalism. In September 2008, as Japan reduced its exposure to US Treasury bonds by $12 billion, China increased its exposure by $43.6 billion. In the meantime, Chinese leaders have plaintively urged the American government to bolster the US economy and safeguard the value of China's investments. As the American budget deficit rattles towards a trillion dollars, it is China's two trillion dollars in foreign-exchange reserves that are seen as the salvation for the world economy. An often-repeated verse in China these days observes:
In 1921, only socialism could save China.
In 1978, only capitalism could save China.
In 1991, only China could save socialism.
In 2009, only China can save capitalism.
Some suggest that China's self-interest in saving global capitalism represents the ultimate triumph of capitalism, a tumbling of the final domino of communist command economies. A closer look reveals far fewer reasons for confidence. While market reform has advanced in China, the state's control over exchange rates, the capital account, investment and infrastructure, energy pricing and development planning reveals an economy that is a long way from being capitalist. There is much evidence that the new administration of Hu Jintao and Wen Jiabao has halted and even reversed some pro-market reforms. And listening to the thinkers within the Chinese Communist Party inspires even less confidence that the country is rushing headlong into the arms of capitalism. The party is in little doubt that history is on the side of socialism; Marxist thinkers predicted globalisation and their reading of its contradictions and convolutions has been borne out.
WITH NO APPARENT sense of irony or self-consciousness, those who two years ago were urging China to be a ‘responsible stakeholder' in world affairs are now proposing it play a leadership role in rescuing and reforming the global economy. Luminaries such as the economist Fred Bergsten and the former US national security adviser Zbigniew Bryzenski have proposed a ‘G2' structure of collaboration between China and the US to tackle a range of global issues. Many had expected that China – fresh from a dominating performance in the Beijing Olympics, increasingly comfortable as a Security Council powerbroker, and with a newly authoritative voice on global and regional matters – would transition easily into the elite ranks of powers that have controlled world politics for generations. Many thought that being elevated to parity with the US would be China's dream come true.
But Beijing was quick to reject such notions. At a China-European Union Summit in May, Premier Wen Jiabao said, ‘It is impossible for a couple of countries or a group of big powers to resolve all global issues...Some say that world affairs will be managed solely by China and the United States. I think that view is baseless and wrong.'
A handful of democracies – the US, the UK, France, Germany, Japan, Canada – has since the end of World War II constituted an oligarchy that controls world affairs: global institutions, trade, finance. Now an autocratic state is insisting on the ‘democratisation' of international relations, the provision of an equal and respected voice to all countries on global affairs, the greater use of multilateral co-operation and the right of all countries to order their affairs as they wish.
China has used its greater prominence during the global economic crisis not to assert global leadership, but to continue to build its relationships with a range of developing and developed countries. China has been finalising collaboration agreements almost non-stop since October 2008, and its dance card doesn't meet most conceptions of the global popularity parade: Pakistan, Singapore, Vietnam, Russia, Indonesia, Kazakhstan, Peru, Malawi, Malaysia, Egypt, Saudi Arabia, Tanzania, Thailand, Argentina, Myanmar, Iran, Turkey, Kuwait, Cuba. It is striking how often, and how earnestly, Chinese leaders continue to stress the same solidarity with developing countries that Mao did in the 1950s.
For all its economic might and international prestige, China still is a developing country. Even now, as its economy steams up the world rankings in terms of overall size, China's per-capita income is in the same league as Egypt's and El Salvador's. If all goes well for China and India, they will become great powers, but they will be the poorest great powers in history. The shift in power position will not be accompanied by a shift in mindset, from have-nots to haves.
THE GULF BETWEEN power and mindset is already apparent. The new developing economic powers – China, India, Brazil – have little incentive or inclination to join the few wealthy economies that attempt to structure world trade and investment to their advantage. In November, Chinese President Hu called for a new world order that is ‘fair, just, inclusive and orderly'. Brazilian President Lula da Silva concurred: ‘We need to have other countries and other continents for more democratic, more plural decisions.' The poor powerhouses have opposed the stitching-up of tidy global trade deals. No longer do they need to rely on moral appeals to a New International Economic Order, against the global oligopolists; now all they need is absolute economic clout. And, as always, muscle is proving much more potent than morality.
A major part of China's solidarity with other developing countries is its insistence that there is no one valid or superior path to economic development. Each to its own, depending on its specific national circumstances, the wishes of its people and solidarity with other developing countries. This, of course, is an extension of China's insistence that no other country or organisation has the right to lecture it on its internal affairs. Let the country without a blemish on its human-rights record cast the first vote in Geneva.
Still, the sub-prime crisis presented an opportunity to lecture the Americans that was too good to pass up. During a visit to Mexico in February, Vice-President Xi Jinping hit back at American accusations about the value of the Chinese currency: ‘There are some foreigners who have eaten their heart's content and have nothing better to do than point their fingers at our affairs. China does not, first, export revolution; second, export poverty or hunger; or third, cause unnecessary trouble for you. What else is there to say?' The same month, at Davos, Premier Wen blamed the global crisis on the ‘inappropriate macroeconomic policies of some economies and their unsustainable model of development, characterised by prolonged low savings and high consumption'.
But beneath the bluster, Beijing is obviously worried about its image abroad. It is trying to reduce recourse to the death penalty, improve energy efficiency and minimise greenhouse emissions, stamp out corruption and reduce the spread of HIV. But in doing so it confronts huge complexities, contradictions and feedback loops. The need to maintain high production confounds environmental targets; the need for affordable energy creates pollution and bottlenecks; the need to contain China's growing drug problem means death sentences continue to be common.
China, and its role in the world around it, defies simple categorisation. To look closely at the country is to realise how little you really comprehend it, in all its complexity and contradictions. It is of a vastness and singularity that defies casual understanding, that repels those who want to fit China into their world view, but don't have time to grapple with its complexities. And China itself makes it hard: it is changing faster than any society ever before; it is deliberately opaque; it is increasingly a society of many, furiously discordant voices. This is why the ‘China debate' in the West has been characterised by one observer as ‘the sprinkling of a few easily gleaned facts on deeply held prejudices'.
Europeans and North Americans may be able to get away with such economy of effort. But not Australia. The time has come to take China seriously, to learn to listen to what it is really saying and to learn to think about what this means. Because one little-noted Chinese export is complexity and contradiction. And the costs of getting China wrong could be very high.