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China and the West - Robert Skidelsky



  1. Introduction

In the Cold War era the historical diversity of politics, culture, and economics was subsumed into the binary division between capitalism and communism. There were just two systems. With the end of the Cold War older patterns re-emerged. At first it seemed as if the binary divide would be succeeded by a 'single world' civilization. Globalization in economics, democracy in domestic politics, westernisation in culture, 'unipolarity' in power. And this might have happened had it not been for the unexpected survival of communist rule in China, and China's 'peaceful rise', through the machinery of globalization, to economic superpower status. China has become a 'pole of attraction' for all those who chafe at some or other aspect of western, especially American, domination. The global economic collapse of 2008-9 has weakened the claim of western-style capitalism, based on markets and democracy, to be the only way forward.

I will look here at two aspects of China's system, its 'business model' and its 'political model' and consider how far these are compatible with the western-led system of economics and politics.

  1. China's Business Model

In a fascinating book, 1the HK based economist Chi Lo, argues that China's development model based on export-led growth through an undervalued exchange rate and investment in loss-making state-owned enterprises has reached the end of the road.

The Chinese economy needs to be rebalanced towards serving domestic consumer needs. But the deep structural reforms needed to achieve this threaten standards of living based on the previous model, and thus the legitimacy of Communist rule.

The project of the New Silk Road (One Belt, One Road) offers an intermediate solution. Expenditure switching from investment to consumption is inherently liable to cause economic contraction. So investment can't be allowed to fall too quickly, otherwise 'the negative shock will crush growth before consumption can catch up to become a growth driver'. OBOR can help rebalancing by preventing investment falling during the period of structural reform.

Internationally, OBOR, supported by potential financial resources of US $ 200bn., will unleash a regional infrastructure boom by connecting China with Asia, Europe and Africa by land and sea. Domestically it will help export China's excess capacity.

Politically it will secure foreign trade relationships in response to major US-led foreign trade pacts which have excluded China, especially the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Since 2010 the US has been working on its 'pivot' to Asia policy with South Korea, Japan, Taiwan, the Philippines, Australia and India. This is widely viewed in China as 'encirclement'.

Chi Lo writes: 'By building closer economic ties with the regional economies along the 'New Silk Road' Beijing is aiming to tie these regions' prosperity to their relationship with China, hence laying the foundations of an economic empire centred on China'. 2

Map 1 – the New Silk Road

Map 2 - China's regions under the OBOR framework

There is already some institutional muscle behind these maps. The Shanghai Cooperation Organisation (SCO) linking China and Russia and a number of other Eurasian states was set up in 2001. There is a Silk Road Fund, the Asia Infrastructure Investment Bank, and the New Development Bank all with substantial capital resources. And the BRICS (China, Russia, Brazil, India, South Africa) have set up a regional monetary fund and bank.

A key to the future of OBOR is the attitude of Russia. Russia, too, has an economic motive for developing Eurasia. It has failed to modernize and diversify its economy. As a result, it remains predominantly an exporter of petroleum products and an importer of manufactured goods. China offers a secure and expanding market for its energy exports. And Russia needs Chinese investment in the big transport and construction projects needed to realize Eurasia’s economic potential.

This year Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan have joined together in a Eurasian Economic Union (EEU), a customs union with a defence component. The EEU is seen by its advocates as a step toward re-establishing the old Soviet frontiers in the form of a voluntary economic and political union, modelled on the EU – a project to take the sting out of the West’s “victory” in the Cold War.

Official Russian opinion looks forward to “the interpenetration and integration of the EEU and the Silk Road Economic Belt” into a “Greater Eurasia,” which will afford a “steady developing safe common neighbourhood of Russia and China.” On May 8, Putin and Xi signed an agreement in Moscow that envisages the establishment of coordinating political institutions, investment funds, development banks, currency regimes, and financial systems – all to serve a vast free-trade area linking China with Europe, the Middle East, and Africa.

Putin, meanwhile, has ratcheted up his much more explicit anti-American rhetoric since the Ukraine crisis, which he sees as a prime example of Western interference in Russia’s domestic affairs. Boosting trade flows between Russia and China, and strengthening political and security coordination, will reduce their joint vulnerability to outside interference and signal the emergence of a new centre of world power.

The huge issue is whether OBOR is a further step towards global integration or a stage in the breakup of a single world economy. It is a response to exclusion, actual, or potential, from world markets and power structures. One can see it as either a bargaining lever to break into western-controlled structures, or as a benign 'outward looking regionalism', or as an alternative to globalization.

One must not overlook the difficulties inherent in 3. Putative members of a 'Eurasian bloc' not only have conflicts of interest among themselves, but also multiple ties to other regions. So in economic terms, it is probably best seen as a bargaining chip to improve its members' place in the global system, rather than as a coherent alternative to it.

But we must now add the political dimension.

  1. China's Political Model

The survival of Communist Party rule in China (as well as the defeat of democratic forces in Russia) has challenged Fukuyama-type optimism about the inevitable spread of democracy. The expectation still is that China will evolve towards some recognisable form of democracy; that the Communist dictatorship was a solution to particular exigencies of Chinese history, destined to wither away. However, this expectation has been challenged by a principled defence of the Chinese system of rule, which derives from Confucianism. Known as 'political meritocracy', a leading exponent is the American sinologist Daniel A Bell.3

Bell distinguishes meritocracy and democracy as way of selecting leaders. What should be standards of progress and regress in politics? Is it possible to reconcile best of meritocratic and democratic values? Can political meritocracy be made to seem legitimate?

He contrasts the meteoric rise of President Obama from almost nowhere with President Xi Jinping's decades' long ascent to the pinnacle, through successive layers of bureaucracy and administration, with rigorous and ultra-competitive evaluations at each stage meant to test the capacity for political leadership.

Societies need to be governed by their best people. Hence political theorists from Confucius, Plato, and Zhu Xi to JS Mill, Sun Yat-sen, and Walter |Lippmann have tried to find ways of selecting the best possible leaders.

In China this discussion stopped with Maoism; in the west with the intellectual hegemony of electoral democracy. As Bell says, 'A democracy demands only that the people select their leaders; it is up to the voters to judge the merits of the candidates'.

The debate over meritocracy was revived in Singapore, but it didn't gain traction. Its current revival is due to (a) a crisis of democracy in the west, (b) the failure of democracy to take root in many non-western countries, and (c) the rise of China under meritocratic government. In the West the meritocratic principle is subordinate to democracy: experts are accountable to voters. In China, meritocratically selected leaders exercise power, with no clear distinction between civil servants and political leaders.

The issue is whether such a model can be made legitimate. This is a deep and profoundly interesting question, on which I would make just two observations. First, there is no universal model of legitimacy: practices illegitimate in one society may be legitimate in others, and there is no universally accepted criterion for deciding between them. Second, it is probably the case that effectiveness of government in producing contentment contributes to legitimacy everywhere, so the question is which type of rule is more conducive to citizen contentment. This encompasses both material and moral goods, and may also vary between different societies. For example 'Harmony' seems to be more highly valued, and individualism less, in Chines than in Western countries.

Bell shows that post-Mao political development has been guided by the concept of 'democracy at the bottom, experimentation in the middle, and meritocracy at the top'. Can the model be exported? Not wholesale, but China can promote different planks for selective adoption.

We don't have to argue that the Chinese one-party system is better than others, simply that it is viable. A western assumption is that all people want democracy: the 'flame of freedom' as President George Bush Junior, remarked 'burns in every breast'. Is this true? What do Chinese people actually want? Bell's book includes two appendices. First is a Harmony Index which aims to measure how well the Chinese political model does in promoting peaceful order and respect for diversity. It can be considered as a standard to judge performance of political officials for purposes of promotion or demotion. Second appendix, a 'A conversation between a Confucian and a Communist' is real political dialogue which he has carried out in person and via email with a political official in the CCP.

  1. Reconciliation

If we set China's dream of OBOR and meritocratic rule against the Western dream of globalization and democracy we can see that there is large scope for conflict but also for dialogue. One impediment to the latter is the western belief that western values are superior to all others, and that the west will not be secure unless its values are universalised. The dialogue must start from the recognition that there is no single way, in either economics or politics, and that history is not a linear progress towards universal truth but flows through many different channels to an unknown future. It reveals plentiful opportunities for cross-cultural learning and peaceful coexistence. Whether we can seize them is another matter.

 

1 China's Impossible Trinity: The Structural Challenges to the 'Chinese Dream', Palgrave Macmillan 2015

 

2 Chi Lo,'One Belt one Road: One Stone kills Three Birds, BNP Paribas Investment Partners

 

3 Daniel A Bell, The China Model: Political Meritocracy, Princeton University Press, 2015

 

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