eLetters

Seminar on China's foreign policy -- hosted by a Tsinghua scholar

Today I went to a seminar given by Prof. Yan Xuetong of Tsinghua University (which, to a very rough approximation, is China’s equivalent of MIT). Prof. Yan is a foreign policy scholar who came to give a lecture on “Chinese Foreign Policy in Hu Jintao’s Second Term.” The lecture was hosted by Harvard’s Fairbank Center: http://www.fas.harvard.edu/~fairbank/events/events.html. Although open to the public, generally only a handful of students and scholars show up to these talks -- which are scheduled regularly through Harvard's Asia Center. This in my view is a shame, because the knowledge that is shared is often breathtaking. 

As to the talk, Prof. Yan outlined the four fundamental principles that will guide Chinese policy at a strategic level over the next five years: 

1. Democracy is not the only path to prosperity. Apparently the Chinese government will become increasingly open in its position on this topic in the coming years. At the NPC this past March, it seems that the top leaders came to consensus that democracy is not requisite to the economic success of a society. 

2. Increased openness is China’s way forward. This is essentially an economic statement – China has come to the conclusion that openness is essential for competition, and competition is essential for a sustainably healthy, prosperous economy. 

3. Politics and economics can be managed separately. Logically, this derives from the same realization as #1. The Chinese leadership has found that socialism is the best form of political system for their country, and that capitalism is the best economic system. Unlike most Western observers, they don’t view these two systems as being in conflict. Instead, Prof. Yan said that in China the politics of socialism and the economics of capitalism “complement each other perfectly.” Going forward this will be China’s stated policy. 

4. Multilateralism “with Chinese characteristics” will define China’s foreign policy. The final maxim asserts that China will take a fundamentally multilateral approach to its relations with other countries. However, Prof. Yan stressed that this will not be Western-style multilateralism such as is standard in the EU. He says that the European form seek to build consensus around shared interests. By contrast, the Chinese form of multilateralism does not seek to build consensus, but rather to negotiate with other parties so that each can achieve their own unique objectives. Thus, multilateral action is possible even if those countries have different incentives for participating. 

After stating these fundamental precepts for the next 5 years of Chinese foreign policy, Prof. Yan went on to describe how they would manifest in terms of specific international issues. In the next few posts, I will regurgitate some of Prof. Yan’s thoughts on these topics.

just like India, China needs economic interdependence

In a recent blog post, my Forrester colleague Navi Radjou argues that India must declare “interderdependence.” To sustain continued tech innovation and economic growth, India needs to connect with the West, not compete with it.

Here’s the comment I left on Navi's blog:

 

Navi, great piece here. I think there is an interesting parallel to China, which like India is a “BRIC” country going through a currently-unfolding “economic miracle.” In China’s case, the story of interdependence factors in strongly -- as a key proximate driver of China’s oft-misunderstood ascendancy as an economic powerhouse.

 

For over a decade, there has been an implicit “Grand Bargain” between the West (especially the US) and China—something of a gentleman’s-agreement-writ-large. It started in the 1980s when Deng Xiaoping’s economic reforms began to transform China internally. Along the way, China began to require Western investment money and technology transfer to successfully bootstrap out of the ashes of an incredibly turbulent 20th century marked by civil war and widespread social unrest. At the same time, the US needed something that complemented China’s needs almost hand-in-glove. Essentially, the US economy needed both cheaper labor and new product “growth markets” to avoid eating its own tail. And so evolved a marvelous case of broad macroeconomic interdependence -- in the 1990s, consumer prices dropped in the US, the economy soared and wealth grew, while in China investment and trade surplus increased, the economy soared, and wealth grew. It was a very strong win-win for both countries.

 

Now, however, times have changed. China’s wages are rising (as they should when the economy soars and wealth grows) and the US is having trouble sustaining indefinitely low prices (which is also to be expected). Thus, the nature of US-China interdependence is morphing, which also is to be expected: to turn an old idiom on its head, “the more things stay the same, the more they change.”

 

For China-US interdependence, I think the trick will be whether both sides can adapt to the reality of these changing circumstances. This will be tricky to say the least, and importantly, it will be very challenging for leaders in both countries. In the US, there are longstanding public outcries against shoddy products (think Mattel), lost jobs overseas, and generally a newly-imagined form of “Red Scare.” In China, there is growing nationalism in the population, and although pride in one’s country is wonderful, Americans know all too well what happens when pride turns into a dangerously arrogant sense of entitlement.

 

For both countries, these attitudes were once useful and understandable. However, today they are increasingly quaint, and more to the point they are becoming actively maladaptive to achieving sustained success and prosperity in the two countries. Unfortunately, public opinion can be very strong and persistent. A mother whose child was poisoned by a China-manufactured doll is not likely to “see the forest for the trees,” nor is the Chinese factory worker who slaved for 18-hour days only to be blamed for shoddy products purchased cheaply by rich American consumers. Unfortunately, when the issues get personal, reason and forbearance can vanish swiftly and sometimes irreversibly.

 

My feeling is that if both the US and China as societies can adapt to these changing times, the interdependence will deepen and great things will happen for the people in both countries. However, if Americans react defensively, and/or China adopts too much braggadocio in its geopolitics, then we’re headed for tumult rather than prosperity. It may take two to tango, but it only takes one to start a fight.

 

I’m eager to read more about the US-India story in your subsequent posts -- I imagine it’s equally fascinating and important as the US-China story.

 

~Chris