What Does the New China Think?

In 2008, Mark Leonard published What Does China Think?, a book that attempted to give the lay reader an overview of contemporary Chinese intellectual life and debates. In late 2012, he edited a volume of translations of articles and essays by prominent Chinese thinkers in a range of fields. Titled China 3.0 it was published as a free PDF by the European Council on Foreign Relations (ECFR), the first pan-European think-tank. Mark Leonard is a co-founder and Director of ECFR.

China 3.0 book brings together a range of Chinese thinkers and excerpts are selected with an eye to introducing non-Chinese language readers to various ways in which certain members of China’s leading thinking elites see the country and in what many call the ‘post-reform and opening-up era’.

China 3.0 is an important compliment to the efforts of the editors of The China Story to introduce Chinese elite thinkers to an international audience. For portraits of some of these figures, see the Thinking China section of this site. Our China Story Yearbook also engages with contemporary Chinese public policy, cultural, political and intellectual debates. It provides some further context to understanding better the writers and the ideas featured in China 3.0.

Mark Leonard’s introduction to the volume is reproduced here with the author’s kind permission. Individual authors retain copyright over the material in the volume, listed in the Table of Contents below. Jeremy Goldkorn of CIW-Danwei interviewed Mark Leonard for the Sinica Podcast series on 14 December 2012. Minor changes have been made to the introduction in accordance with the in-house style of The China Story Project.—The Editors

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What Does the New China Think?
Introduction to China 3.0

Mark Leonard

It was a bloodbath. A methanol tanker crashed into a bus, killing thirty-six people and injuring more near the Chinese city of Xi’an, on 26 August this year. But, as so often in China, farce came hot on the heels of tragedy. Soon after the accident, a photograph appeared online of Yang Dacai, the local official in charge of road safety, smirking at the scene of the crash, prompting a damburst of internet anger. The focus of netizens’ comments soon moved from his composure to the value of his watch, and bloggers managed to unearth pictures of him wearing 11 different luxury watches worth many times his official salary. A few weeks later the Chinese media reported that he had been sacked after an investigation into corruption.

This is just one of countless scandals that flare up every year in China. But it illustrates why many Chinese intellectuals think that China is on the cusp of a new phase in its development. The focus on Yang Dacai’s expensive watch shows that it is the ill-gotten wealth of the Chinese superclass rather than the poverty of the masses that is causing the most tension in today’s China. The fact that there was a crackdown on the official rather than the bloggers who exposed him shows that China’s traditional approach to stability is being revisited in the age of social media. And finally, the fact that the misdeeds of a relatively junior local official are being reported in the international media shows that China has hit global primetime and is struggling to keep a low profile.

The world has got used to a Chinese juggernaut defined by export-based state capitalism and political repression. But China’s intellectuals suggest it may be time to prepare for a very different China. 2012 began with a series of powerful signals of change: in January, a village in Guangdong was allowed to hold an election to oust corrupt officials suspected of selling off communal land at artificially low prices; in February, the World Bank and the National Development and Reform Commission released a report on China in 2030 calling for a new wave of market reforms; and in March the ‘princeling’ Bo Xilai was ousted from his Chongqing power base with a warning against returning to the Cultural Revolution.[1] While there have also been signals of a return to the past – tensions with Japan; the show trial of Bo and Gu Kailai; the temporary disappearance of Xi Jinping; and the sidelining of charismatic leaders – there is a widespread sense in Beijing that China has reached the end of an era. People are not just expecting new leaders but the end of a model of development that started with Deng Xiaoping’s ‘opening and reform’ in 1979.

The Chinese like to think of history progressing in thirty-year cycles.[2] They think of China 1.0 as the years of Mao Zedong, which lasted from 1949 to 1978, when China had a planned economy, a Leninist political system, and a foreign policy of spreading global revolution. China 2.0 was the China that began with Deng Xiaoping in 1978 and spanned a generation until the financial crisis of 2008. Deng’s economic policy – launched under the label of ‘socialism with Chinese characteristics’ – was defined by export-led growth backed up by ‘financial repression’. Deng’s political agenda was characterised by the quest for stability and elite consensus in the wake of the Tiananmen massacre. And his foreign-policy outlook was about creating a peaceful environment for China’s development by quietly amassing power and keeping a low profile.

Since the global financial meltdown of 2008, China has been facing a crisis of success as each of the three goals of Deng’s era – affluence, stability, and power – is seen as the source of new problems. François Godement has characterised it as a success trap: the incredible achievements of the past have built up a powerful constituency for each of the policies of the Deng era but sticking to them now runs the risk of being self-defeating. Incredible as it might seem, some intellectuals have started to talk of the Hu–Wen era, which delivered an average of 10 percent annual growth, as a ‘lost decade’ because much-needed reforms were not made.[4] China 3.0 will be defined by a quest for solutions to these three crises. Many predict changes as radical as the onset of communism in 1949 or the embrace of the market in 1979. But unlike during those earlier periods, today’s reformers do not have international models to guide them. It is not just the Beijing consensus that is broken; the models of the West are also discredited. The intellectuals of China 3.0 find themselves in uncharted territory.

Last year, this debate about China’s future briefly burst out of the academy into the usually staid realm of Communist Party politics. The battle of ideas was embodied by the two regions of Chongqing and Guangdong, which became competing archetypes for China 3.0. Guangdong, a prosperous coastal region, stood for a quest to move up the value chain economically while using a free media, civil society, and political openness to quell social tensions. Chongqing, by contrast, was about turning a backward inland province into a laboratory for egalitarian social policies and domestic consumption. Bo dramatically fell from political grace earlier this year and Guangdong party leader Wang Yang has adopted a low profile since then. But the debate beyond the party continues.

This collection aims to give Western readers a sense of this debate among China’s elite. In particular, we have tried to capture the new intellectual fault lines in China. In the economic realm, the main divide is between a social Darwinist New Right that wants to unlock entrepreneurial energy by privatising all the state-owned companies and an egalitarian New Left that believes the next wave of growth will be stimulated by clever state planning. In the political realm, the main divide is between political liberals who want to place limits on the power of the state, either through elections, the rule of law, or public participation, and neo-authoritarians who fear these measures will lead to a bureaucratised collective government that is unable to take tough decisions or challenge the vested interests of the corrupt, crony capitalist class. In the foreign-policy realm, the main divide is between defensive internationalists who want to play a role in the existing institutions of global governance or emphasise prudence and nationalists who want China to assert itself on the global stage. The table below illustrates the different groups and where the authors in this book fit into the battle of ideas about China’s three crises: affluence, stability, and power.

SCHOOLS OF THOUGHT IN THE CHINESE ELITE

ECONOMICS

Escaping from the affluence trap

New Left
Cui Zhiyuan
Wang Shaoguang
Wang Hui

Free market egalitarians
Yu Yongding

New Right
Zhang Weiying
Hu Shuli
Justin Yifu Lin

POLITICS

Escaping from the stability trap

POLITICAL SOURCE OF LEGITIMACY

Neoconservatives
Pan Wei

Neo-Maoist
Wang Shaoguang
Wang Hui

LIMITED GOVERNMENT

Liberals
Sun Liping
Ma Jun
Xiao Bin
Michael Anti

FOREIGN POLICY

Escaping from the power trap

INTERNATIONALISTS

Globalists
Wang Yizhou

Defensive realists
Wang Jisi

NATIONALISTS

Neo-Comms
Yan Xuetong

 

China’s Affluence Crisis

For most of the last thirty years, China’s leaders have been kept awake at night worrying about their country’s poverty and the problems of a socialist economy. But today it is China’s affluence and the problems of the market that are causing sleepless nights. The background to today’s situation is that Deng’s 1979 declaration that the goal of China’s modernisation was the creation of a ‘xiaokang (moderately well-off) society’, in which citizens would be comfortable enough to lift their eyes above the daily struggles of subsistence. For more than a decade, Chinese people have been living a version of this once-utopian concept. And, since the financial crisis, the government has been terrified of the consequences for its legitimacy of this newly enriched bourgeoisie losing its wealth.

In 2008, prosperous areas such as Guangdong were immediately plunged into chaos as the West’s demand for imports from China fell off a cliff. This came on top of a growing sense that the traditional foundations of growth were eroding as labour costs, the price of land, and exchange rates all went up. China’s massive stimulus package helped in the short term but exacerbated the longer-term imbalances. Some, such as the economist Justin Yifu Lin, who dramatically defected from Taiwan to China in 1979 by swimming ashore during a military training exercise, think that China is backward enough to continue growing in the traditional way for another two decades. Others think he is hopelessly over-optimistic, although they would probably have said the same thing if he had told them in 1979 that the country would grow in double digits for the next three decades. Yu Yongding, meanwhile, argues that while the short-term situation is much more benign than many analysts claim, China’s longer-term outlook is much more challenging. Unlike Lin, Yu is old enough to remember China declining as well as growing. His defining experience was seeing his world turned upside down by the Cultural Revolution: one minute he was in a prestigious school, the next he was working in a heavy-metals factory.

Chinese thinkers such as Wang Shaoguang and Sun Liping are looking in interesting places to understand the crisis. Rather than studying the experience of other post-communist states, they have rediscovered J.K. Galbraith’s classic work on the ‘affluent society’ and are adapting his critique of mid twentieth century America’s spiralling inequality and ravaging consumption to China. Wang claims that Galbraith would have no difficulty recognising the symptoms of his affluent society in today’s China. He argues that China’s leadership has spent a generation obsessively focusing on economic growth at the expense of all else. Inequality has run rampant as socialist China has destroyed the ‘iron rice bowl’ of social protection. China has gone from being one of the most equal countries in the world to a nation with a bigger gap between rich and poor than the United States. Moreover, a surge of conspicuous private consumption and vanity projects has come at the expense of investment in public goods such as pensions or affordable healthcare or public education.

China’s supply of cheap exports was made possible by a deep well of migrant labour guaranteed by the hukou system, which ties the social rights of peasants to their birthplace, and puts them at a disadvantage in the cities to which they migrate for work. The result is that a city such as Guangzhou (formerly known as Canton), the largest in Guangdong, has become like Saudi Arabia: it has a GDP per capita on a par with a middle-income country, but thirteen academics estimate that only three million of the fifteen million people who work in Guangzhou every day are officially registered inhabitants. The rest have had no rights to housing, education, or healthcare and live on subsistence wages. In Saudi Arabia the cheap migrant labourers are attracted by the oil wealth; but in Guangdong the labourers are the sources as well as the byproduct of the wealth. Reform of these conditions is painfully slow.

An absence of protection for most workers helps solidify the other leg on which China’s growth stands: cheap capital for investment in domestic infrastructure. Without state-backed pensions, healthcare, or education, citizens save almost half their incomes as a hedge against personal misfortune. But the state-owned banks give them an artificially low interest rate. This makes vast amounts of capital available to crony capitalists at cheap rates for speculative investments, which have swelled the GDP and strewn the Chinese landscape with white elephants like palatial municipal buildings, factories that stand still, and empty hotels.

On one side of the debate about how to escape from the affluence trap are economists such as Zhang Weiying who form the core of the pro-market New Right. They pioneered the gradualist economic reforms of the 1980s and 1990s and now want the state to finish the job and privatise the rest of the economy. Zhang, a neoliberal economist who trained in Thatcher’s Britain, argues that the solution to the crisis is to restart the interrupted privatisation of the state sector; to liberalise the financial system, particularly give the private sector equal rights to do finance; and to privatise the land and end collective ownership. In an interesting inversion of Proudhon’s famous saying about property, he presents public rather than private ownership as theft. Similarly, the crusading journalist Hu Shuli implores China’s leaders to ignore the vested interests that could stop these reforms being adopted. Their concerns have their champions within the Chinese system: last year, Vice-Premier Li Keqiang wrote the foreword to a 468-page report on China in 2030, published by the World Bank and the National Development and Reform Commission, which called for a ‘fundamental shift’ towards marketisation in China’s development model.

On the other side of the debate are New Left thinkers such as Wang Hui, Cui Zhiyuan and Wang Shaoguang, who have been calling for a different model of development since the 1990s. They think that China’s thirst for growth and affluence has created a bubble economy and trapped millions in poverty, and that the solution lies in planning rather than privatising. Since the early 1990s, they have been setting out ideas that have challenged the orthodoxy of neoliberal economics and called for a return of the state. This grouping is ‘new’ because, unlike Maoist refuseniks, it embraces the market as part of a mixed economy; it is leftwing because it worries about inequality. At the top of their list for reforming China’s economic development model is boosting wages, ending the artificial subsidies for exports, providing access to social services, reforming the hukou system, and ending the ‘financial repression’ of artificially low interest rates. They talk about low-price healthcare; about socialised capital and reforming property rights to give workers a say over the companies for which they work; and about green development.

The global financial crisis was initially a shot in arm for the New Left, whose star seemed to be on the rise steadily until it fell again with Bo Xilai’s implosion. Back in the 1990s, when the neoliberal economists ruled the roost, the New Left struggled to find any major political figures who supported their ideas; the best they could do was to find village leaders who still embraced collectivisation. Thus, in 1996, Cui Zhiyuan edited a breathless book about a backward village called Nanjie, which had embraced collectivisation and was outperforming its rivals, as a model for a non-neoliberal Chinese future. But, by 2011, the political mood had shifted to the left. Rather than scouring the countryside for neo-Maoist villages, the New Left could point to Chongqing – a city the size of a country, responsible directly to the State Council and led by the most high-profile and charismatic politician in China.

In his essay in this collection, which was revised after the arrest of Bo, Cui still argues that if Shenzhen was the model for the 1990s and Pudong for the 2000s, it is Chongqing that is setting the pace for China’s future development. He claims that others should copy Chongqing’s innovative measures to reduce the gulf between urban and rural development through its reform of the iniquitous hukou system and its land exchange scheme that gives peasants access to capital. Most important for Cui’s vision of a mixed economy that depends on domestic consumption is his description of the public–private mix in the economy.

The problem for the approaches of both the left and the right – stimulating demand on the one hand and supply-side reforms on the other – is that they run into the massive vested interests that have grown during the dizzying two decades in which crony capitalism has taken off. The sociologist Sun Liping – who was Xi Jinping’s PhD supervisor and led a study at Tsinghua University last year which explained how the state’s role in the economy has 15 created new interest groups that are hostile to reform – shows how groups have come to dominate land, mining, financial resources, basic infrastructure nationwide, urban development, public-works projects, and the development of rural water projects as well as energy, electrical power, telecommunications, manufacturing, and other important industries.[5] These groups have benefitted from the rise of a massive grey economy and ubiquitous corruption. Thus the greatest opponents of the New Left and the New Right are not each other but the beneficiaries of the system that has evolved. How to break that is increasingly a question that impinges on politics.

China’s Stability Crisis

Before 1989, the majority of Chinese intellectuals believed that the country would have to move towards Western political models and embrace multiparty elections, the separation of the party from the state, and the division of powers. But, after the Tiananmen Square massacre and the collapse of the Soviet Union, China eschewed these sorts of political reforms for fear that they could lead to the dissolution of the country. But Sun Liping’s Tsinghua report argued that China’s obsession with stability is becoming self-defeating: ‘The ultimate outcome of the rigid thinking of stability preservation and the massive stability preservation project is in fact the intensification of social tensions.’

For the first time in two decades, there is an urgent discussion about political reform and legitimacy in the light of this stability trap. A surprising number of intellectuals talk privately about the threat of revolution or, at the very least, much more dramatic scenarios of democratic transition. Pei Minxin, an American-based Chinese academic, has written what a lot of his fellow thinkers believe but cannot write: that the conditions for ‘another Tiananmen’ are there.[6] Other intellectuals wonder how the new leaders will gain enough legitimacy to take on vested interests – and, more challengingly, how they will maintain this legitimacy at a time when growth is slowing. The biggest gulf is between thinkers who believe in institutional sources of legitimacy and those
who believe in political ones.

One group of Chinese intellectuals thinks that the way out of the stability trap is to find ways of institutionalising Chinese politics. The New Right, which does not believe in removing the roots of inequality, wants to use politics to make it more legitimate. It is conscious that the country is becoming more complex and more restive as an epidemic of riots is spreading across the country. Back in 1995, people were shocked when the Public Security Bureaus (China’s domestic intelligence service) revealed that there were almost nine thousand ‘mass incidents’ a year (defined as a violent demonstration). But since then the number of riots has grown even faster than the Chinese economy: state-backed studies estimated that the number had risen to 180,000 by 2011. That means that there is now more than one major riot every two minutes. How can the system channel this anger so that it does not threaten to overturn the system?

The place where these issues have come the most to the fore is Guangdong, which has become a model of flexible authoritarianism that gives greater voice to the concerns of citizens on the internet and allows civil society and NGOs to voice concerns. In the village of Wukan in Guangdong in January 2012, a battle between peasants whose land had been confiscated and the corrupt local authorities was resolved with an election. The dispute captured national attention – and became the most radical example of the potential of a ‘Guangdong model’. Before Wukan, elections had more or less disappeared from the menu of systemic reforms. They were introduced at a village level in the 1990s, but although some scholars such as Yu Keping – who wrote an influential book called Democracy is a Good Thing – have argued for incremental democracy within the party, few people saw them as a real solution. But then Wukan happened, and Guangdong’s boss Wang Yang saw it as an experiment for dealing with social unrest – a very radical departure from past practice, as Sun Liping explains in his essay.

However, even Sun – a bold and articulate voice for political liberalisation – fears that the Wukan model cannot be universalised as a solution to social tensions. The problem is, he says, that too many people have already been dispossessed of their land and property across China, and free elections could see the whole system unravel. That is the reason why some of the economic liberals who have written for this collection, such as Zhang Weiying, would prefer strong political leadership to elections. Like many of the intellectuals in this collection, he came of age intellectually during the Cultural Revolution, and fears that mass democracy can rapidly become ‘mob rule’.

Some Chinese thinkers have also been influenced by the collapse of faith in elections in developed democracies that are beset by falling turnouts, the rise of populism, and a crisis in the very idea of representation. Thus, although they want a more institutionalised Chinese system – with term limits, public consultation, and the rule of law – they do not see elections as a panacea. They argue that although the West still has multi-party elections as a central part of the political process, it has supplemented them with new types of deliberation such as referendums, public hearings, opinion surveys, or ‘citizens juries’.

China, according to these new political thinkers, will do things the other way around: using elections in the margins (maybe up to village level) but making public consultations, expert meetings, and surveys a central part of decisionmaking. For example, although Ma Jun himself believes that elections will ultimately be essential in China, his essay in this collection on ‘accountability without elections’ provides a good sketch of some of the measures that the Chinese government has used to turn its regime into a more ‘deliberative dictatorship’.

Another group of Chinese intellectuals think that such institutional innovations are counter-productive. They argue that they are in danger of causing a crisis of Chinese legitimacy by creating an overly bureaucratised and cautious political leadership that is incapable of taking the radical choices that will be needed to legitimate China. These intellectuals think the solution is to look for more political sources of legitimacy. The stereotype outside China is that Chinese politics has remained trapped in aspic even as the economy has been through radical changes. In fact, the country has gone from having a system animated by larger-than-life charismatic figures such as Deng or Mao towards the collective bureaucratic leadership of technocrats who exercise power according to strict term limits and are subject to regular reviews by their peers and constituents. The neo-authoritarians and fans of mass participation think this is a bad thing. They argue that the flaws in China’s political system, including nepotism, corruption, the growing power of new interest groups such as state-owned enterprises, and the widespread contempt for the law mean that it will be impossible to find an institutional fix to China’s problems. Only the charismatic power of a leader – combined with the political organisation of the party – could cut through.

This fear of bureaucratisation is best captured by the neoconservative thinker Pan Wei. In his essay in this collection, Pan argues that although the bureaucratic state is able to make the big decisions, it is 18 the trivial things that lead to social unrest and the fall of political systems. Pan argues that the natural communities that had existed for thousands of years in China have gradually been destroyed, first by Maoism and then by the market – and he lays out a Chinese variant of communitarianism to recreate them.

Pan reads the unrest in Wukan as driven by a lack of respect for the local original clan-communities, which the election of a new leader only amplifies. He sees the development of civil-society organisations in a township called Wuxi, in Sichuan, as an example of a new version of Mao’s ‘mass line’ that puts emphasis on ‘participation’ instead of ‘coverage’. In that regard, Pan shares with some New Left thinkers a view that the institutions of the state are so corrupt and complicit in the existing order that they will be incapable of delivering social justice or correcting the ‘original sin’ that has led to the emergence of a super-rich class alongside the pauperised masses. They are less interested in restricting the power of the executive than they are in empowering the masses, and see a populist democracy as the solution.

Many critics of China’s system argue that China’s repressive political system is incoherent – how, they ask, can you have an information-age economy and a one-party state? In fact, New Left thinkers such as Wang Hui argue that it is the very openness of the economy that made the New Right so reliant on political repression in the 1990s. The only way that the leadership could drive market reforms that made one of the most equal societies in the world into one more unequal than the United States without provoking massive political unrest was to have strong political controls. Wang now wants to have a much more political and democratic type of government to take on the vested interests of capital and develop a more social programme for the masses. But, as his essay in this collection shows, he fears that instead of a new period of mass democracy, the removal of Bo Xilai could see another era in which political repression goes hand in hand with economic liberalisation.

It is within this context of the debate between political and institutional sources of legitimacy that we should also view the effect of the internet in China. It has been an article of faith among many Western observers that the inevitable consequence of the internet is to open up societies and defeat autocratic regimes, bringing liberal democracy in its wake. However, the Chinese state has changed the internet as much it has been changed by the internet. In his essay in this collection, Michael Anti shows that the government’s strategy of ‘blocking and cloning’ social-media sites could actually reinforce the one party state rather than weaken it. He argues that the selective opening and blocking of information has actually become an integral part of the party’s governing strategy in a malign form similar to Western spin practices. In particular, central government uses the absence of censorship as a political tool to rein in local government officials.

After a tragic train crash in Wenzhou in 2011, the government allowed million critical messages about the Chinese railway minister – who was the object of ire of even top officials at that point – to be aired on social media over five days. Later there was an even more dramatic and relatively free internet debate about Chongqing party head Bo Xilai from February to April of this year. There is speculation that lurid rumours about Bo and his wife, Gu Kailai, were deliberately encouraged by the party to sap the legitimacy of a very popular leader to the point where he could be purged. Anti’s most dramatic claim is that the electronic crowds being mobilised are playing the same role as the Red Guards in China’s Cultural Revolution.

This arresting image shows how China 3.0 could still be defined by the political tactics of China 1.0. In that sense, social media could actually lengthen the life of the one-party state by giving citizens an outlet for discontent, while allowing the leadership to understand public opinion (and, if necessary, prevent political mobilisation). This could be a practical solution to the stability trap, so long as it does not prevent the reforms that will be necessary for China to continue growing as an economic and political power.

China 3.0
Table of Contents
INTRODUCTION
Mark Leonard: What Does the New China Think?
MODELS
Cui Zhiyuan: The Chongqing experiment: The way forward for China?
Xiao Bin: The Guangdong model in transition
ECONOMY
Yu Yongding: Restructuring over growth
Justin Yifu Lin: China’s potential for sustained dynamic growth
Zhang Weiying: From privilege to rights
Wang Shaoguang: Chinese socialism 3.0
Hu Shuli: China: Staying on track
POLITICS
Sun Liping: The Wukan model and China’s democratic potential
Ma Jun: Accountability without elections
Pan Wei and Shang Ying: A new approach to stability preservation
Wang Hui: Political repression and the resurgence of neoliberalism in China
Michael Anti: The Chinanet and smart censorship
FOREIGN POLICY
Yan Xuetong: The weakening of the unipolar configuration
Wang Jisi: China’s grim international environment
AFTERWORD
Francois Godement and Jonas Parello-Plesner: What will China 3.0 mean for Europe?

China’s Power Crisis

For a generation, China’s foreign policy was guided by Deng Xiaoping’s injunction to ‘tao guang yang hui’, which literally means ‘hide its brightness and nourish obscurity’. Deng meant that China, as a poor and weak country, should keep a low profile, avoid conflicts, and concentrate on economic development. This led to a defensive foreign policy that took little initiative but reacted to Western pressure and subordinated other objectives to the imperative of creating a stable environment for China’s economic development. In the place of the foreign policy of China 1.0 – focused on ensuring the security of the revolutionary state and promoting revolution elsewhere – China accepted a US-dominated international order and tried to extract as much benefit from it as possible by free-riding on American protection of its investments as well as the free markets that the West guaranteed.

Since the global financial crisis, the Deng approach has been under increasing attack. China’s foreign-policy community knows that it is harder to sustain a low profile when your country has the second-biggest economy in the world, your military spending is growing in double-digits, and you have a physical presence in every continent. But there is a big debate about how best to respond. On one side of the debate are those who want to accommodate Western power. They include committed globalists and the defensive realists who argue that it is the very fact that China is now more powerful that makes ‘modesty’ and ‘prudence’ even more important. On the other side are those who argue that China must now pursue a more assertive foreign policy in which it helps to define the rules of foreign policy rather than simply following diktats crafted in Washington and elsewhere. This applies to the question of global governance but even more to China’s neighbourhood, where issues around the South China Sea, the East China Sea, and Japan loom increasingly large.

One of the most dramatic changes to Chinese foreign policy, as Wang Yizhou argues in his essay in this collection, is that China now has to protect the interests and safety of its citizens around the world. If you add the fifty million Chinese citizens living abroad to the eighty million overseas Chinese, you get 130 million citizens. If they were a single country, they would be the tenthbiggest country in the world, with a larger population than Japan’s. Moreover, China’s state-owned companies and citizens tend to be based in some of the world’s most febrile trouble spots. The world sat up and took notice when China airlifted 38,000 citizens out of Libya, but there are millions more Chinese working in places as unstable as Sudan, Afghanistan, Iran, and Angola. Where military planners used to talk about Taiwan to make the case for extra resources, they now talk about the need to acquire a blue-water navy to protect Chinese investments.

It is as a result of these factors that internationalists such as Wang Yizhou now call on the government to replace the low profile with a doctrine of ‘creative involvement’. Wang is one of a small group of globalists in the Chinese academy who are firmly in favour of integrating China into the existing international order. In fact, on the surface, his doctrine has echoes of former World Bank President Robert Zoellick’s 2008 call for China to become a ‘responsible stakeholder’. However, reading between the lines, the objective of ‘creative involvement’ is to find tactical ways of co-operating with international institutions in order to minimise criticism of China.

Most of China’s internationalist foreign-policy community is more cautious than Wang Yizhou about getting entangled in these sorts of global commitments. The essay in this collection by Wang Jisi, a realist who is an expert on the US and a former roommate of President Hu Jintao, shares Wang Yizhou’s concern about maintaining good relations with the West but thinks the solution is to be more modest and prudent. This anguished piece reflects the horror of Chinese foreign-policy professionals at the hubris of China’s recent diplomacy. Wang Jisi points to the paradox that, in spite of a major change in the balance of power in China’s favour, China’s foreign-policy outlook is grimmer than ever. He worries that Chinese assertiveness on the South China Sea, the Yellow Sea, the Senkaku Islands, and the Indian border have helped to create the conditions for a resurgence of American power in Asia. Wang’s cautious but tough-minded pragmatism was reflected in the general tenor of China’s skilful but cautious diplomacy in the 1990s and early years of this century. But, since 2008, it has been increasingly difficult to deliver on a Deng Xiaoping strategy.

The paradox is that, as China becomes ever stronger, the governing power of its state seems to be getting weaker. The foreign ministry – traditionally the most cautious of the bureaucracies – is out-ranked by many companies and domestic departments; provincial governments and big state-owned enterprises are more interested in advancing their profits than in reassuring the world; and the People’s Liberation Army is increasingly restive. Furthermore, there is now so much contact with the rest of the world that the senior leadership tends only to engage with many issues once they become a crisis – with the exception of the relationship with the US.

The popular mood seems to be shifting towards assertive nationalists like Yan Xuetong as a younger generation that has known only China’s rise takes to the internet chat-rooms and the streets. When I first met Yan a decade ago – at a time when everyone was talking about strategic partnership between Europe and China – I asked him what China wanted from Europe. ‘When we go to war with America,’ he said, ‘I would like Europe to remain neutral.’ In recent years, Yan has made a name for himself by refusing to take Western terms as a given and by rediscovering old Chinese concepts and applying them to international relations.

In Yan’s thoughtful essay in this collection, he argues that China needs a comprehensive rethinking of its approach to foreign policy. Instead of talking about creating a multipolar world, as Chinese officials have done in recent years, he proclaims an era of ‘bipolarity’ with China rising in the next ten years to become the only counterpart to the US. In the course of two-thousand words, Yan then challenges some of the most fundamental doctrines of the Deng era: the primacy of economics (he thinks that the economy should be put at the service of Beijing’s political goals), the quest for a multipolar world (he embraces an era of bipolar competition), the principle of non-alignment (he hints that Beijing should develop an alliance with Russia), and the norm of non-intervention (he has argued elsewhere that China will have the same approach to intervention as the US when it is as strong as the US). Yan’s version of ‘responsibility’ is that China should provide its allies not just with economic aid and investment but also with security guarantees. If China 3.0 embarks on a series of interventions to protect Chinese interests, as Yan proposes, the West may come to rue the day when it criticised the passivity of Chinese foreign policy.

However, even Yan Xuetong’s assertiveness seems ultra-cautious compared to the mood outside the traditional foreign-policy community. The demonstrations against Japan and the outpourings of anger on the internet about the South China Sea and the East China Sea suggest that many Chinese people expect their leaders to translate their growing economic clout into tougher policies towards their neighbourhood. One illustration of China’s transitional state are the books that are selling well. For example, the bestselling book in China after the 2008 crisis was China is Unhappy, an angry ultra-nationalist rant that called on the government to stop kowtowing to the West and translate its economic might into political and military power. One of its authors, Wang Xiaodong, explained to me ominously that China had a bigger GDP than Britain at the time of the Opium Wars, so China could not rely on economic power alone. Although the Chinese government has tried to suppress it, it has sold over a million official copies and many times that number in pirate versions, and spawned a cottage industry of similar tomes. These books show that on foreign policy, as in other areas, there is a growing tension between the strength of the country and the weakness of the system.

The big question underlying the debate among foreign-policy professionals is whether the new leaders will be able to follow policies that transcend nationalist pressures on the one hand, and the demands of China’s new vested interests on the other. As China enters the global super-league, its strategy promises to be shaped as much by domestic pressure as by grand strategy.

Why China 3.0 Matters

These debates about China 3.0 are of huge importance for the whole world. It is not just that a fifth of humanity lives within China’s borders. It is also clear that the other four-fifths of the world’s population will increasingly be influenced by China’s actions. In the next twenty years, Chinese economists predict that Beijing will have an economy over twice the size of America’s. They think it will be the world’s biggest domestic market and the biggest global source of foreign investment, buying up Western companies, brands, and assets with its savings. But although China’s footprint will become ever more important for the world, the drivers of its internal debates will be increasingly domestic.

In the past, Europeans assumed that as China became wealthier and more developed it would inevitably become more like us. This led to a lack of curiosity about China’s internal debates and an attempt to primitively divide its thinkers and officials into ‘reformers’ who embrace Western ideas and ‘conservatives’ who want to return to China’s Maoist past. As François Godement and Jonas Parello-Plesner show in their afterword, Europeans now need to change their mental maps to deal with a China whose internal structure and structural relationship with the rest of the world has been turned on its head. The starting point must be to abandon the preconceptions of the past and to start engaging with China 3.0.

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The full text of China 3.0 can be downloaded here.

About Mark Leonard

Mark Leonard writes a fortnightly column on European and Global issues for Reuters.com. Previously he worked as Director of Foreign Policy at the Centre for European Reform, and Director of the Foreign Policy Centre, a think-tank he founded under the patronage of former British Prime Minister Tony Blair at the age of twenty-four. In the 1990s, Mark worked for the think-tank Demos where his Britain™ report was credited with launching Cool Britannia. Mark has spent time in Washington as a Transatlantic Fellow at the German Marshall Fund of the United States, and in Beijing as a visiting scholar at the Chinese Academy for Social Sciences. His first book, Why Europe Will Run the 21st Century, was published in 2005 and translated into nineteen languages. Mark’s second book, What Does China Think?, was published in February 2008 and translated into fifteen languages.

You can follow him on Twitter @markhleonard.

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Notes:

[1] This collection of essays and the introduction show many of the arguments between the intellectuals of the establishment. To understand how it relates to the arguments within the hierarchy itself, it should be read alongside François Godement’s brilliant essay ‘China at the Crossroads’, European Council on Foreign Relations, April 2012, available here (hereafter, Godement, ‘China at the Crossroads’).

[2] Pan Wei has talked of ‘the end of the opening and reform era’ and Wang Shaoguang of ‘Socialism 3.0′. The following is an attempt to look beyond the economic and social policy ideas they describe and to think about how China’s entire policy mix could be on the verge of change.

[3] Godement, ‘China at the Crossroads’.

[4] See in particular Deng Yuwen, ‘The Political Legacy of the Hu-Wen Decade’, Caijing, 10, 29 August 2012. [For a translated excerpt from Deng's cri de coeur, see 'The Ten Grave Problems Facing China', on this site.Ed.]

[5] Social Development Task Group of the Sociology Department at Tsinghua University, ‘Research Report Series on Social Progress’, January 2011. A lengthy summary of the report was published in the 9 January edition of China Youth Daily but subsequently removed from the newspaper’s website. However, the summary has been translated and published by the China Media Project at the University of Hong Kong and is available here. For a longer discussion of the Tsinghua report, see Godement, ‘China at the Crossroads’, p.7.

[6] Pei Minxin, ‘Signs of a New Tiananmen in China’, The Diplomat, 4 April 2012, available here.