how the asian colossus is changing our...

How the Asian colossusis changing our world.

F P S P E C I A L R E P O R T

ESSAYS BY: Jonathan Spence • Martin Wolf •

Ashley Tellis • Homi Kharas • Minxin PeiPlus, a debate between

Zbigniew Brzezinski &John Mearsheimer

44 Foreign Policy

The Once And Future ChinaWhat of China’s past could be a harbinger for its future? | By Jonathan D. Spence

quietude. But “rise” can also meanthat a change is being made at some-one else’s expense. Must a fall alwaysaccompany a rise? If so, then a conflictwill occur almost by definition. Theseare difficult questions made all themore so by the fact that a country asvast and complex as China makes upat least half of the equation.

One arena, however, in whichChina’s past can serve as a useful pro-logue to the present, can be found inlooking at how its territorial extenthas evolved over time. This approachcan show both how China has cometo be the size it is, and perhaps—although this is a more contentiousarea—how China might change againin the future.

The China of today can be recog-nizably traced back to the late 16thcentury and the waning years of theMing dynasty. One harbinger of whatwas to come was China’s earlier Kore-an War—in 1592. It was then that thewildly ambitious Japanese militarycommander Hideyoshi sent a power-ful fleet and ground forces to invadeKorea, hoping to consume the coun-try and force a passage into China, thegreatest prize of all. Despite the inep-titude and factionalism of the Ming

Our appreciation of China’s eco-nomic growth will veer erratically,depending on whether we concen-trate on specie and banking, the for-mation of cities, the creation of tradehubs, or advances in transportationand communication. Our current fas-cination with high-tech dynamismcould be tied to an equally wide rangeof variants, designed to give Chinaan aura of either preeminence or stag-nation. Rarely has China been soweak as when the emperor’s ill-equipped army did battle with Britishforces during the Opium Wars in themid-19th century. And yet, the sophis-tication of the Song dynasty’s metal-lurgy or the imposing power of theMing dynasty’s fleets made China apotential global leader long beforethe competition among states wasconsidered in these terms.

But today, relations among statesare discussed very much like a compe-tition or race, and few have run it aswell as China in the modern era.Indeed, the prospect of China’s risehas become a source of endless spec-ulation and debate. To speak ofChina’s “rise” is to suggest its reemer-gence. It can also imply a recoveryfrom some kind of slump or period of

espiteits incredible pace of change, Chinacontinues to carry echoes of itspast. And yet, the difficulty ofdrawing any direct links betweenits past and present is demonstrat-ed by the fact that any topic canshift in perspective depending onwhere you enter China’s vastchronology. What constitutes polit-ical stability, for example, has var-ied dramatically across almost fourmillennia, and in different periodsit has been defined in relation tothe greatness of leaders, the peace-fulness of imperial successions, thesuppression of peasant rebellions,and the handling of foreign incur-sions—whether religions, technolo-gies, or troops.

DJonathan D. Spence is Sterling professor of

history at Yale University. ILLU

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January | February 2005 45


court, the Chinese responded pow-erfully, sending a strong expeditionaryforce to check the Japanese advanceand shore up the Korean king. Theyordered major fleets from south Chinato sail north with reinforcements andsupplies, and to interdict the Japanesesupply routes. After numerous costlyengagements on land and sea, andvast numbers of both civilian and mil-itary casualties, the Sino-Koreanforces prevailed, and in late 1598, theJapanese withdrew.

So did the Chinese, and that wasone important marker for the future:China itself would not try to conquerKorea, but China would react againstanother power if it interfered in theKorean peninsula, even at great cost.Such interventions by China occurreda second time in the face of renewedJapanese aggression in 1894, and onceagain in the face of the presumedthreat of the U.N. forces sent to checkthe North Korean invasion of SouthKorea in 1950. Few probably realizethat China’s current diplomatic role inthe six-party talks regarding theNorth’s nuclear programs has a histor-ical lineage more than 400 years old.

By the same token, a number ofChina’s most complex domestic griev-ances are rooted in conquests made byChinese rulers during the 17th and18th centuries. From 1644 onward,the vast region of Manchuria toChina’s northeast became part of thecountry’s central concept of its power.In 1683, the Qing emperor orderednaval forces from Fujian province tooust renegade Chinese forces fromseveral islands off the country’s south-eastern coast. The emperor’s forcesdispatched the rebels in a crisp cam-paign and, in the process, added thefertile island of Taiwan to the growingorbit of the Qing empire. Likewise,unrest on China’s frontier led the Qingdynasty to send military forces to Tibetaround 1720, and subsequently toincorporate border areas of north and

eastern Tibet into the Qing administra-tive structure, a process that was wellunderway by the 1750s. It was also inthe mid-18th century that Qing expe-ditionary forces penetrated deep intothe Altishahr regions of Central Asia,and to Kashgar, Urumqi, and Ili, lead-ing to Chinese occupation of the vast,mainly Muslim regions of what isnow called Xinjiang.

Having gained these territoriesin the corners of the kingdom, Chinahas been loath to ever let them go.Even when the Qing dynasty fell in1912, the Republican government,despite its fragility as an administra-

tive entity, sought to hold on to thefullest extent of the empire. Aftertheir victory in 1949, the Commu-nists did the same. Today, Muslimunrest and Tibetan nationalism arenear-constant sources of tension forChina’s leadership. And Taiwan, lostfirst to the Japanese in 1895, andthen to the Chinese Nationalists in1949, is one of Asia’s most dangerouspotential flash points.

Although relations between Chinaand the United States may be of vitalimportance to both, from the Chi-nese perspective, the relationship hasbeen extremely brief. Indeed, there

46 Foreign Policy

wasn’t even a United States for Chinato have relations with until late intothe reign of the Chinese EmperorQianlong, arguably one of the great-est leaders of the last Chinese dynasty.When relations were established,Americans sometimes behavedadmirably. Other times, they were anuisance, or worse, a menace. Again,it depends who you are and whereyou settle your gaze. You can see theUnited States as benevolent in itsdevelopment of Chinese hospitals andmodern medicine. You can see it asdestructive in its dissemination of par-

tisan religious tracts by Americanevangelists to such people as theleader of the Taiping Rebellion. Or,you can see it as thoroughly ambigu-ous in the 1900s, when U.S. leadersurged the Chinese toward a morerepublican form of government,which quickly descended into war-lordism. To be sure, the Chinese havethese images, and many more, inmind when they think about theirrelations with the United States.

These are the memories and theterritorial histories that China has tojuggle as it embarks on its myriad

new challenges and opportunities: asthe defender of an apparently irrele-vant revolutionary ideology, as a newkind of regional powerhouse, as theambiguous heart of a global diaspo-ra, as one of the world’s major newcompetitors for shrinking supplies offossil fuels, and as the presentguardian of an unprecedented amountof foreign exchange and investment.Some of these phenomena can also betracked through the historian’s lens,but some are, I believe, genuinely new.Just why that should be is itself partof the story.

Clash of the TitansIs China more interested in money than missiles? Will the United States seek to containChina as it once contained the Soviet Union? Zbigniew Brzezinski and John Mearsheimergo head-to-head on whether these two great powers are destined to fight it out.

T oday in East Asia, China isrising—peacefully so far. Forunderstandable reasons,

China harbors resentment and evenhumiliation about some chapters of itshistory. Nationalism is an importantforce, and there are serious grievancesregarding external issues, notably Tai-wan. But conflict is not inevitable oreven likely. China’s leadership is notinclined to challenge the United Statesmilitarily, and its focus remains on

economic development and winningacceptance as a great power.

China is preoccupied, and almostfascinated, with the trajectory of itsown ascent. When I met with the topleadership not long ago, what struckme was the frequency with which Iwas asked for predictions about thenext 15 or 20 years. Not long ago,the Chinese Politburo invited twodistinguished, Western-trained pro-fessors to a special meeting. Theirtask was to analyze nine major pow-ers since the 15th century to see whythey rose and fell. It’s an interesting

exercise for the top leadership of amassive and complex country.

This focus on the experience ofpast great powers could lead to theconclusion that the iron laws of polit-ical theory and history point to someinevitable collision or conflict. Butthere are other political realities. In thenext five years, China will host sever-al events that will restrain the conductof its foreign policy. The 2008Olympic Games is the most impor-tant, of course. The scale of the eco-nomic and psychological investmentin the Beijing games is staggering. My

Zbigniew Brzezinski is a counselor at the

Center for Strategic and International Studies.

Make Money, Not WarBy Zbigniew Brzezinski

DEBATE



expectation is that they will be mag-nificently organized. And make nomistake, China intends to win at theOlympics. A second date is 2010,when China will hold the World Expoin Shanghai. Successfully organizingthese international gatherings isimportant to China and suggests thata cautious foreign policy will prevail.

More broadly, China is deter-mined to sustain its economic growth.A confrontational foreign policy coulddisrupt that growth, harm hundredsof millions of Chinese, and threatenthe Communist Party’s hold onpower. China’s leadership appearsrational, calculating, and consciousnot only of China’s rise but also of itscontinued weakness.

There will be inevitable frictions asChina’s regional role increases and asa Chinese “sphere of influence” devel-ops. U.S. power may recede gradual-ly in the coming years, and theunavoidable decline in Japan’s influ-ence will heighten the sense of China’sregional preeminence. But to have areal collision, China needs a militarythat is capable of going toe-to-toe withthe United States. At the strategic level,China maintains a posture of mini-

mum deterrence. Forty years afteracquiring nuclear-weapons technolo-gy, China has just 24 ballistic missilescapable of hitting the United States.

Even beyond the realm of strategicwarfare, a country must have thecapacity to attain its political objectivesbefore it will engage in limited war. Itis hard to envisage how China couldpromote its objectives when it is acute-ly vulnerable to a blockade and isola-tion enforced by the United States. Ina conflict, Chinese maritime tradewould stop entirely. The flow of oilwould cease, and the Chinese econo-my would be paralyzed.

I have the sense that the Chineseare cautious about Taiwan, their fiercetalk notwithstanding. Last March, a

Communist Party magazine noted that“we have basically contained the overtthreat of Taiwanese independencesince [President] Chen [Shuibian] tookoffice, avoiding a worst-case scenarioand maintaining the status of Taiwanas part of China.” A public opinionpoll taken in Beijing at the same timefound that 58 percent thought militaryaction was unnecessary. Only 15 per-cent supported military action to “lib-erate” Taiwan.

Of course, stability today does notensure peace tomorrow. If China wereto succumb to internal violence, forexample, all bets are off. If sociopolit-ical tensions or social inequalitybecomes unmanageable, the leader-ship might be tempted to exploitnationalist passions. But the small pos-sibility of this type of catastrophe doesnot weaken my belief that we canavoid the negative consequences thatoften accompany the rise of new pow-ers. China is clearly assimilating intothe international system. Its leader-ship appears to realize that attemptingto dislodge the United States would befutile, and that the cautious spread ofChinese influence is the surest path toglobal preeminence.

China cannot rise peacefully,and if it continues its dramat-ic economic growth over the

next few decades, the United Statesand China are likely to engage in anintense security competition with con-siderable potential for war. Most ofChina’s neighbors, including India,Japan, Singapore, South Korea, Russia,and Vietnam, will likely join with theUnited States to contain China’s power.

To predict the future in Asia,one needs a theory that explainshow rising powers are likely to actand how other states will react tothem. My theory of internationalpolitics says that the mightiest statesattempt to establish hegemony intheir own region while making surethat no rival great power dominatesanother region. The ultimate goalof every great power is to maximizeits share of world power and even-tually dominate the system.

The international system has sev-

eral defining characteristics. The mainactors are states that operate in anar-chy—which simply means that thereis no higher authority above them. Allgreat powers have some offensivemilitary capability, which means thatthey can hurt each other. Finally, nostate can know the future intentionsof other states with certainty. Thebest way to survive in such a systemis to be as powerful as possible, rel-ative to potential rivals. The mighti-er a state is, the less likely it is thatanother state will attack it.

John J. Mearsheimer is professor of polit-

ical science at the University of Chicago.

Better to Be Godzilla than BambiBy John J. Mearsheimer

48 Foreign Policy

The great powers do not merelystrive to be the strongest great power,although that is a welcome outcome.Their ultimate aim is to be the hege-mon—the only great power in thesystem. But it is almost impossiblefor any state to achieve global hege-mony in the modern world, becauseit is too hard to project and sustainpower around the globe.Even the United States is aregional but not a globalhegemon. The best out-come that a state canhope for is to dominateits own backyard.

States that gainregional hegemony have afurther aim: to preventother geographical areasfrom being dominated byother great powers.Regional hegemons, in other words,do not want peer competitors.Instead, they want to keep otherregions divided among several greatpowers so that these states will com-pete with each other. In 1991, short-ly after the Cold War ended, the firstBush administration boldly statedthat the United States was now themost powerful state in the worldand planned to remain so. Thatsame message appeared in thefamous National Security Strategyissued by the second Bush adminis-tration in September 2002. This doc-ument’s stance on preemptive wargenerated harsh criticism, but hard-ly a word of protest greeted the

assertion that the United Statesshould check rising powers andmaintain its commanding position inthe global balance of power.

China is likely to try to dominateAsia the way the United States dom-inates the Western Hemisphere.Specifically, China will strive to max-imize the power gap between itself

and its neighbors, especially Japanand Russia, and to ensure that nostate in Asia can threaten it. It isunlikely that China will go on a ram-page and conquer other Asian coun-tries. Instead, China will want to dic-tate the boundaries of acceptablebehavior to neighboring countries,much the way the United States doesin the Americas. An increasinglypowerful China is also likely to try topush the United States out of Asia,much the way the United Statespushed the European great powersout of the Western Hemisphere. Notincidentally, gaining regional hege-mony is probably the only way thatChina will get back Taiwan.

Why should we expect China toact differently than the United States?U.S. policymakers, after all, reactharshly when other great powers sendmilitary forces into the Western Hemi-sphere. These foreign forces are invari-ably seen as a potential threat toAmerican security. Are the Chinesemore principled, more ethical, less

nationalistic, or less con-cerned about their survivalthan Westerners? They arenone of these things, whichis why China is likely to imi-tate the United States andattempt to become a region-al hegemon. China’s lead-ership and people remem-ber what happened in thelast century, when Japanwas powerful and Chinawas weak. In the anarchic

world of international politics, it isbetter to be Godzilla than Bambi.

It is clear from the historicalrecord how American policymakerswill react if China attempts to domi-nate Asia. The United States does nottolerate peer competitors. As itdemonstrated in the 20th century, it isdetermined to remain the world’s onlyregional hegemon. Therefore, theUnited States will seek to containChina and ultimately weaken it tothe point where it is no longer capa-ble of dominating Asia. In essence,the United States is likely to behavetoward China much the way itbehaved toward the Soviet Union dur-ing the Cold War.

As an occasional scholar, I amimpressed by the power of theory.But theory—at least in internation-al relations—is essentially retrospec-tive. When something happens that

does not fit the theory, it getsrevised. And I suspect that will hap-pen in the U.S.-China relationship.

We live in a very differentworld than the one in which hege-

monic powers could go to warwithout erasing each other as soci-eties. The nuclear age has alteredpower politics in a way that wasalready evident in the U.S.-Soviet

Apowerful China is likelyto try to push the UnitedStates out of Asia, much

the way the United States pushedthe European great powers out ofthe Western Hemisphere.

Nukes Change EverythingZbigniew Brzezinski responds.



The dichotomy that you raisedbetween theory and political real-ity is an important one. The reasonthat we have to privilege theoryover political reality is that wecannot know what political reali-ty is going to look like in the year2025. You mentioned that youtraveled to China recently andtalked to Chinese leaders whoappear to be much more prudentabout Taiwan than the conven-tional wisdom has it. That may betrue, but it’s largely irrelevant. Thekey issue is, What are the Chineseleaders and people going to thinkabout Taiwan in 2025? We haveno way of knowing. So today’spolitical realities get washed out ofthe equation, and what really mat-

ters is the theory that one employsto predict the future.

You also argue that China’sdesire for continued economicgrowth makes conflict with theUnited States unlikely. One of theprincipal reasons that China hasbeen so successful economicallyover the past 20 years is that it hasnot picked a fight with the UnitedStates. But that logic should haveapplied to Germany before WorldWar i and to Germany and Japanbefore World War ii. By 1939, theGerman economy was growingstrongly, yet Hitler started WorldWar ii. Japan started conflict inAsia despite its impressive econom-ic growth. Clearly there are factorsthat sometimes override economic

considerations and cause great pow-ers to start wars—even when ithurts them economically.

It is also true that China does nothave the military wherewithal to takeon the United States. That’s absolute-ly correct—for now. But again, whatwe are talking about is the situationin 2025 or 2030, when China hasthe military muscle to take on theUnited States. What happens then,when China has a much larger grossnational product and a much moreformidable military than it has today?The history of great powers offers astraightforward answer: China willtry to push the Americans out of Asiaand dominate the region. And if itsucceeds, it will be in an ideal situationto deal with Taiwan.

Showing the United States the DoorJohn J. Mearsheimer responds.

competition. The avoidance ofdirect conflict in that standoffowed much to weaponry thatmakes the total elimination of soci-eties part of the escalating dynam-ic of war. It tells you somethingthat the Chinese are not trying toacquire the military capabilities totake on the United States.

How great powers behave isnot predetermined. If the Germansand the Japanese had not conduct-ed themselves the way they did,their regimes might not have beendestroyed. Germany was notrequired to adopt the policy it didin 1914 (indeed, German Chan-cellor Otto von Bismarck followed

a very different path). The Japan-ese in 1941 could have directedtheir expansionism toward Russiarather than Britain and the UnitedStates. For its part, the Chineseleadership appears much moreflexible and sophisticated thanmany previous aspirants to greatpower status.

How can China push the UnitedStates out of East Asia? Or, morepointedly, how can China push theUnited States out of Japan? And ifthe United States were somehowpushed out of Japan or decided toleave on its own, what would theJapanese do? Japan has an impres-sive military program and, in amatter of months, it could have a

significant nuclear deterrent.Frankly, I doubt that China couldpush the United States out of Asia.But even if it could, I don’t think itwould want to live with the conse-quences: a powerful, nationalistic,and nuclear-armed Japan.

Of course, tensions over Tai-wan are the most worrisome strate-gic danger. But any Chinese military

planner has to take into accountthe likelihood that even if Chinacould overrun Taiwan, the UnitedStates would enter the conflict.That prospect vitiates any politicalcalculus justifying a military oper-ation until and unless the UnitedStates is out of the picture. And theUnited States will not be out of thepicture for a long, long time.

America’s Staying PowerZbigniew Brzezinski responds.

50 Foreign Policy

Why Is China Growing so Slowly?For all its success, China is still not living up to its potential. | By Martin Wolf

When people discussChina’s economic growth,it’s usually with awe. But

these assessments of the country’seconomic performance almostalways end with one question: Howlong can China’s rapid growth con-tinue? It’s an obvious, even banalquestion. Yet it is not the right one.Because asking it suggests that therehas been something extraordinaryabout the growth of the Asian colos-sus over the past 25 years. What isremarkable is not how quickly

China’s economy has grown, butrather how slowly it has done so.

It may seem an odd thing to sayof the world’s fastest growing econ-omy. But, given where the countrystood when economic reforms wereintroduced in 1978, China shouldhave grown even faster. This, inturn, suggests that, with the rightmix of policies, China’s economyshould not maintain its current rateof growth: It should accelerate.

China’s growing gross domesticproduct (gdp) is Exhibit A for thosewho laud the country’s economicsuccess. Between 1978 and 2003,China’s per capita gdp grew at acompound rate of 6.1 percent a year,

which amounted to a 337 percentincrease a quarter of a century later.It’s an impressive performance, butit’s not record-breaking. Japan’s percapita gdp, for example, topped490 percent between 1950 and1973. South Korea outpaced Chinawith 7.6 percent compound growtha year between 1962 and 1990, andTaiwan achieved annual growth of6.3 percent between 1958 and 1990.

It may not seem fair to compareChina to these smaller economies.That’s true. China should have out-performed them all. The speed withwhich a country can grow is a func-tion of how far it is lagging behindthe productivity levels of the world’s

Martin Wolf is associate editor and chief

economics commentator at the FinancialTimes in London.

It’s Not a Pretty PictureJohn J. Mearsheimer responds.

If the Chinese are smart, they will notpick a fight over Taiwan now. Thisis not the time. What they shoulddo is concentrate on building theireconomy to the point where it is big-ger than the U.S. economy. Thenthey can translate that economicstrength into military might and cre-ate a situation where they are in aposition to dictate terms to states inthe region and to give the UnitedStates all sorts of trouble.

From China’s point of view, itwould be ideal to dominate Asia, andfor Brazil, Argentina, or Mexico tobecame a great power and force theUnited States to concentrate on itsown region. The great advantage theUnited States has at the moment isthat no state in the Western Hemi-sphere can threaten its survival orsecurity interests. So the United Statesis free to roam the world causing trou-ble in other people’s backyards. Other

states, including China of course, havea vested interest in causing trouble inthe United States’ backyard to keep itfocused there. The picture I havepainted is not a pretty one. I wish Icould tell a more optimistic storyabout the future, but internationalpolitics is a nasty and dangerous busi-ness. No amount of good will canameliorate the intense security compe-tition that will set in as an aspiringhegemon appears in Asia.



most advanced economies. That iswhy each generation of catch-upeconomies has tended to grow fasterthan the previous one. When China’ssurge began, its per capita gdp wasonly a twentieth of that of the Unit-ed States. Even now, after 25 yearsof growth, China’s per capita outputis only 15 percent of that of theUnited States. Japan’s was a fifth ofthat of the United States in 1950,even before its record-breakinggrowth surge began.

To be fair, many developingcountries haven’t caught up to theleaders as quickly as they shouldhave. But most of them lack the fun-damental ingredients for suc-cess. China can’t claimthat excuse. It, likeJapan, SouthKorea, and Tai-wan before

it, possesses a hardwork-ing, cheap labor force; the ability totransfer huge numbers of workersfrom low-productivity agriculture tohigher-productivity manufacturing;political stability; and an effective,development-oriented government.

And China possesses somethingelse few ever do: an extraordinarilyhigh rate of investment. At morethan 40 percent of its gdp, thecountry’s fixed investment is proba-bly the highest ever achieved in alarge economy. Nor has any country

ever been awash in so much capitalat this stage of its development. Forexample, China’s per capita gdp (atpurchasing power parity, or interna-tionally comparable prices) is rough-ly the same today as South Korea’swas in 1982, Taiwan’s in 1976, andJapan’s in 1961. But, in those years,Japan’s investment rate was justabove 30 percent of gdp, and SouthKorea’s and Taiwan’s were bothbelow 30 percent. None ofthose countries invested asmuch capital at comparablestages in their developmentas China does today.

So why hasn’t Beijing done abetter job? Because, China’s econo-my is still highly inefficient. Thevoracious maw of China’s state-owned enterprises accounts formuch of this drag. Between 1993and 2000, more than 60 percent ofall loans went to these state-ownedbehemoths. The country’s notori-ously high level of bad loans tellsyou how good an investment theyhave been: The Standard & Poor’srating agency currently estimates

that China’s banks have issued about$650 billion in bad loans, or about40 percent of outstanding loans. Ifan economy growing at close to 10percent a year generates bad loanson this scale, the misallocation ofcapital has to be gigantic. Althoughcountries such as South Korea orTaiwan may not have had as muchcapital, they obtained considerably

more growth for theirinvestment buck. Thesame was true ofJapan in its high-growth phase. Thesame is true ofIndia today.

Those whoobject to the idea

that China couldhave grown faster willargue that a countryof China’s scalerequired far greater

investment than itsneighbors to build its

infrastructure. And theywill suggest that ineffi-

ciency should beexpected in a

country stilltrying tothrow offthe trap-

pings ofits socialist

past. These points,though valid, do not reverse the ver-dict: Given China’s ample oppor-tunities and investment, it shouldhave raised its living standards evenfaster than it did.

The bottom line is clear. Do notthink China’s rapid growth is eitherextraordinary or a flash in the pan.It is neither. The social and politicalobstacles to China’s rapid growthare considerable. But the opportuni-ty remains enormous. China’s eco-nomic boom could well be in itsmiddle, not its end.

I n 2003, Chinese President HuJintao’s advisors hatched a newtheory. Dubbed China’s “peace-

ful rise,” it held that, in contrast tothe warlike behavior of ascendinggreat powers in the past, the eco-nomic ties between China and itstrading partners not only made warunthinkable but would actuallyallow all sides to rise together. The

theory’s name didn’t survive powerstruggles within the CommunistParty, but the general idea lives onin new and updated formulationssuch as “peaceful development”and “peaceful coexistence.”Regardless of the label Chineseapparatchiks ultimately agree on,one thing is clear: China spends agreat deal of time worrying aboutwhat other countries think about it.

And for good reason: WhileChina’s economic growth over the

last 20 years has generated tremen-dous wealth at home, it has alsostirred apprehension abroad. Bei-jing knows that the United Statesand countries throughout Asia arecasting a wary eye in its direction,worried that China could ultimate-ly become a regional hegemon thatthreatens their security. It hasbecome obvious to Beijing that anew Chinese grand strategy isrequired—one that would allow itto continue its economic growth,

Ashley J. Tellis is senior associate at the

CarnegieEndowmentforInternationalPeace.

A GrandChessboardBeijing seeks to reassure the world that it is a gentle giant. | By Ashley J. Tellis


technological modernization, andmilitary buildup without provok-ing other countries into a costlyrivalry. The China we see stridingon the world stage today is cutfrom the cloth of that new grandstrategy.

Beijing began by mak-ing nice in its own neigh-borhood. It has sought todevelop friendly relationswith the major states onits periphery—Russia,Japan, India, and the Cen-tral and Southeast Asianstates—that are potentialbalancing partners in any futureU.S.-led, anti-Chinese coalition.This good neighbor approach isdramatically different from itsbehavior of the 1990s. Instead ofinvoking Chinese claims in terri-torial and maritime disputes as itdid during that decade, Beijing

today has made a special effort toassure other states that it has thebest intentions. China agreed tocodes of conduct where territorialdisputes have economic conse-quences, such as the South ChinaSea. It began to resolve border

disputes with important neighbors,such as India. It started to take itsnonproliferation obligations muchmore seriously than before, includingefforts to tighten export controls ofpotentially dangerous dual-use tech-nologies. And it expressed a will-ingness to shelve political disputes

that cannot be reconciled immedi-ately, so long as none of the otherparties (such as Taiwan) disruptsthe status quo. In 1994, duringWashington’s nuclear standoff withPyongyang, Beijing’s role wasminor. Today, it is the driving force

behind the complex six-party talks on NorthKorea’s nuclear arsenal.

No relationship fac-tors more into this diplo-matic about-face thanChina’s relationship withthe United States. Beijinghas gone out of its way to

mollify Washington, trying todemonstrate that it has neither theintention nor the capability of chal-lenging U.S. leadership in Asia—even as it seeks to promote aregional environment where a U.S.political-military presence willeventually become unnecessary.

Beijing knows that theUnited States is casting awary eye in its direction.

54 Foreign Policy

China’s economic juggernauthas forced the world tomake room. For rich

nations, it’s just a matter of adjust-ing their economic strategies. Buthow is China’s rise affecting poorercountries? Governments in Asia,Latin America, and Central andEastern Europe watch the Chineseexport machine and worry aboutkeeping their manufacturing jobs athome. The anxiety is understand-

able, but a closer look suggests thatChina’s success will help, not hurt,most developing countries. Thepower of its economy—and thepower of its example—will advancethe fight against poverty.

Today, China has a lock on alarge portion of the export market inNorth America, Europe, and else-where—markets that poor countriescovet. This situation would spelltrouble for many, but for the factthat China has also become one ofthe developing world’s best cus-tomers. Forty-five percent of China’s$400 billion in annual imports

comes from developing countries,and these imports rose by $55 bil-lion in 2003. Indeed, China runs atrade deficit with the developingworld. Chinese demand for basiccommodities (produced primarily inpoorer countries) is so strong that ithas pushed up prices for food staplesand industrial raw materials suchas aluminum, steel, copper, cotton,and rubber. For the millions of farm-ers around the world who dependon revenue from these products, theglobal price boom has come at justthe right time, reversing decades ofslumping prices.

Homi Kharas is chief economist for East

Asia and the Pacific region at the

World Bank.

Toward this end, Beijing has usedthe war on terror to position itselfas a U.S. partner. Yet, it has alsosought to preempt a potential U.S.-led coalition by deepening econom-ic ties with American allies suchas Japan, South Korea, Taiwan,and Australia. These countrieswould pay a steep economic priceif they were to support any U.S.-led, anti-Chinese policies in thefuture. And China has adroitlyexploited every manifestation ofregional dissatisfaction with Amer-ica’s obsessive and overbearing waron terror, seeking to cast itself as afriendly, noninterfering alternativeto U.S. might in the region. It iseven proposing new institutionalarrangements wherein China canexercise a leadership role thatexcludes the United States, such asthe East Asian Economic Zone.

China has sought to make itspresence felt outside of Asia, too.Much of China’s diplomatic globe-trotting has been driven by theneed to secure stable energysources to fuel its gigantic econom-ic machine. China is now routine-ly sending trade missions not onlyto Central Asia and the PersianGulf but also to Africa and LatinAmerica. And, as if giving notice ofits full arrival as a great power onthe world stage, China has becomea much more robust player in theUnited Nations, the World TradeOrganization, and other interna-tional bodies. More interesting,China has become acutely con-scious of the need to promote itsculture abroad, partly because itrecognizes the benefits of “softpower,” but also because it believesthat a genuine appreciation of Con-

fucian rectitude will go a long wayin mitigating suspicions about howBeijing might exercise its futurepower.

This strategy of emphasizingpeaceful ascendancy in word anddeed will likely satisfy Chineseinterests until it becomes a truerival of the United States. At thatpoint, China will face anotherstrategic crossroads. Whether aturn toward strident assertivenessor deepened accommodation repre-sents the future of China’s geo-political orientation, only time willtell. But Washington should rec-ognize that if it mishandles its rela-tions with its current or prospectivepartners, it might be faced with anabsence of allies precisely when itneeds them most. China’s currentgrand strategy is focused on mak-ing that scenario a reality.

Lifting All BoatsWhy China’s great leap is good for the world’s poor. | By Homi Kharas



China has also become the centerof a virtuous regional trade cycle thatbenefits Asia’s developing countries.True, China sucks up vast quantitiesof raw materials, but four fifths ofits imports are now manufacturedgoods, including office machines, tele-com equipment, and electricalmachinery. Neighboring countries arefeeding the trade boom by exportingcomponents and machine parts toChina for final assembly. Korea andTaiwan have benefited the most, butthe Philippines, Thailand, and Indone-sia saw their annual exports to Chinashoot up by roughly 30 percent lastyear. Other regional production net-works are developing, notably inautomobiles and garments, so thegains from this trade will probablyendure even if one sector lags.

China’s economic impact is pow-erful. But so too is its example. Thecountry has become a showcase ofwhat open markets can achieve. It isreinvigorating the debate on howtrade can reduce global poverty.China already has a large agricultur-al sector relatively undistorted by thetypes of subsidies and tariffs found inthe United States or Europe. Its free-trade credentials will only grow as itcomplies with increasingly stringentWorld Trade Organization (wto)commitments. Global quotas on tex-tiles and clothing, for example, disap-peared on Jan. 1, 2005. If economicliberalization allowed China to post 9percent growth over three decadesand lift 300 million people frompoverty during that time, then surelyother countries can make significantgains by knocking down barriers.

The standard excuses for poordevelopment performance—anuneven global playing field andexploitation by foreign investors—lose credibility when set againstChina’s record. And there are signsthat the lesson is taking hold.China’s example was likely an

56 Foreign Policy

DangerousDenialsChina’s economy is blinding the world to its political risks. | By Minxin Pei

T here is a Chinese proverbthat says “one spot ofbeauty can conceal a hun-

dred spots of ugliness.” Today, inChina, there are few things asbeautiful as the country’s econom-ic growth. But it is premature to

dismiss the inherent instability inChina’s authoritarian politics. Thecountry’s rapid economic growthmay be blinding us to systemicrisks in Chinese domestic politicsthat, if poorly managed, couldexplode, threatening the survivalof the regime. There is no ques-tion that China’s economy is onthe rise—but so are the risks ofpolitical crisis.

To be fair, some of the dangersChina is facing simply come withthe challenge of being a developingcountry racing toward a marketeconomy. Shaking off socialism isn’teasy for any nation. When you arethe world’s most populous country,the chances for socioeconomic dis-aster are enormous. Income inequal-ity, for example, is to be expected.The period from 1980 to 1997 saw

Minxin Pei is director of the China Pro-

gram at the Carnegie Endowment for

International Peace.

important catalyst in India’s reformsand growth surge during the lastdecade. Latin American countriesare starting to take notice: Chile andChina are contemplating a free tradeagreement, and Mexico and Brazilare sending high-level trade andinvestment missions to China. AsChina engages in free trade agree-ments with neighboringcountries, Southeast Asia islikely to benefit even more.

During its communistheyday, Beijing often cham-pioned the cause of thedeveloping world, at least inits rhetoric. Now, as a large,successful trader, China is ina far better position to put meaningbehind its message, shaping the rulesin the wto and other internationalbodies to address development con-cerns. China is already active in theGroup of 20, a forum in which richcountries and the largest developingcountries exchange views. In manycases, China’s interests coincide withthose of other developing countries,

many of which look to China forsupport. For example, China wantsto promote freer global trade in agri-culture, a key concern of poorercountries. China might also add itsvoice to the chorus of developingcountries that seek safeguards fortheir service sectors.

Of course, China’s rise does come

at a cost for some. Those poor countriesthat rely on commodity imports take ahit as China’s demand pushes up prices.China is such an efficient producer ofgarments that it will likely dominatetextile markets, now that the globalsystem of quotas has disappeared. Thatscenario will hurt garment workers insuch countries as Bangladesh and Cam-bodia, whose jobs and wages depend

on protected markets. Maquiladoraindustries in Central America thatexport to the United States under pref-erential agreements are already exitingthe market, fearing the coming com-petition with China. Similarly, theadvantages conveyed to some of theworld’s poorest countries throughfree-market access agreements with

the United States andEurope will decline, asglobal trade barriers comedown and efficient produc-ers such as China begin tocompete. Still, the benefitsof China’s economic rise,and of a more liberal andfairer global trading sys-

tem, outweigh the costs. Decades ago, Japan, Germany,

and South Korea showed the worldhow to develop with a strategy basedon exporting manufactured goods.China’s rise may offer an equally com-pelling example of how openeconomies can spur rapid growth.For the developing world, it’s some-thing to emulate, not fear.

China has become thecenter of a virtuousregional trade cycle.



a 50-percent rise in inequality inChina. Labor migration is natural.But China is experiencing thelargest movement of rural labor inhistory. In recent years, Chinesecities have absorbed at least 114million rural workers, and they areexpected to see an influx of anoth-er 250 to 300 million in the nextfew decades. Under the circum-stances, it’s hardly surprising that

China’s effort to establish a newsocial safety net has fallen short,especially given its socialist roots.It would be a Herculean task forany government.

But China’s isn’t just any gov-ernment. It is one that rests onfragile political foundations, littlerule of law, and corrupt gover-nance. Worse, it has consistentlyplaced the highest value on eco-

nomic growth and viewed alldemands for curbing its discretionand power as threats to its goal ofrapid modernization. The result?Social deficits in education, publichealth, and environmental protec-tion. But it is hardly surprising,since promoting high growthadvances the careers of govern-ment officials. Thus, China’s elitesdevote most of their resources to

58 Foreign Policy

For authoritative histories of China, readers can turn to Jonathan D. Spence’s The Search for Modern China(New York: Norton, 1990), Chinese Roundabout: Essays in History and Culture (New York: W.W. Nor-ton, 1992), and To Change China: Western Advisers in China, 1620–1960 (Boston: Little, Brown,1969). Michael H. Hunt examines the historical roots of the foreign policy of the People’s Republic in TheGenesis of Chinese Communist Foreign Policy (New York: Columbia University Press, 1996).

Yasheng Huang and Tarun Khanna question whether China’s pursuit of foreign direct investment is thefastest route to economic development in “Can India Overtake China?” (Foreign Policy, July/August2003). Nicholas R. Lardy analyzes the frailties of China’s banking and financial system in China’s Unfin-ished Economic Revolution (Washington: Brookings Institution Press, 1998). For a look at the emergingrelationship between the Chinese Communist Party and the country’s new class of entrepreneurs, check outBruce J. Dickson’s Red Capitalists in China: The Party, Private Entrepreneurs, and Prospects for Politi-cal Change (New York: Cambridge University Press, 2003).

Whether China’s rise will be a source of conflict has sparked many debates. For a pessimistic outlook,see Aaron L. Friedberg’s “Ripe for Rivalry: Prospects for Peace in a Multipolar Asia” (International Secu-rity, Winter 1993–94). Andrew J. Nathan and Robert S. Ross are optimistic about the chances of inte-grating China into the international community in The Great Wall and The Empty Fortress: China’s Searchfor Security (New York: W.W. Norton, 1997). Also, the transcripts from the Carnegie Endowment for Inter-national Peace’s two-day conference “China’s Peaceful Rise?” are available on the endowment’s Web site.

»For links to relevant Web sites, access to the FP Archive, and a comprehensive index of related Foreign Policy articles, go to www.foreignpolicy.com.

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building glitzy shopping malls, fac-tories, and even Formula One rac-ing tracks, while neglecting socialinvestments with long-termreturns. So for those who wonderhow, if China’s political system isso rotten, it can deliver robustgrowth year after year, the answeris that it delivers robust growthyear after year, in part, because itis so rotten.

But the Chinese CommunistParty knows that the people willtolerate only so much rot. Corrup-tion is a rising concern. The party’sinability to police its own officials,many of whom are now engaged inunrestrained looting of publicassets, is one of Beijing’s greatestworries. These regime insiders haveeffectively privatized the power ofthe state and use it to advance per-sonal interests. Their loyalty to the

party is questionable, if it exists atall. The accelerating effect on theparty’s demise resembles that of abank run; more and more insiderscannot wait to cash in their invest-ment in the party.

Of course, the Chinese govern-ment, like other authoritarianregimes, is constantly threatened byinternal power struggles. Again, Bei-jing has not only bucked the naysay-ers, but its ability to weatherinternecine strife appears to haveimproved markedly since the 1989Tiananmen tragedy. The recenttransfer of power from PresidentsJiang Zemin to Hu Jintao turnedout more smoothly than expected,perhaps signifying that the partyhas acquired a higher degree ofinstitutional maturity. But it maystill be too little, too late for anincreasingly pluralistic and assertive

population. Although the govern-ment managed to build an elitistruling alliance of party officials,bureaucrats, intellectuals, and busi-nessmen, the durability of thisalliance is questionable. And, as inother countries, exclusionary poli-tics inevitably breeds alienation,resentment, and anger. This doesnot mean that a social revolution isimminent in China. But should acrisis hit, all bets are off.

Thankfully, all of these risks aremanageable if China confronts themwith bold political reforms ratherthan denial and delay. But this maybe wishful thinking. Beijing has thusfar preferred these risks to the gam-ble of democratic reforms. The onlything certain about China’s politicalrisks is that they are on the rise.And that reality is hardly a thing ofbeauty.

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