Keep Watching China, but Don’t Listen to the Talk

If last year was the year of Japan--will it or won’t it get its economy moving again?--this year is likely to be the year of China. Its economic direction is a huge question of considerable interest and enormous consequence not just to the Chinese but to the rest of the world. An unstable or deteriorating China can keep all of Asia awake at night. And it could have dramatic effects on U.S. foreign policy and the 2000 presidential campaign.

China today has a great many problems, not all of them evident to the West. In rural China alone, unemployment is said to reach 100 million. Many millions of workers have already been laid off from government jobs and many others receive reduced or no wages at all. A wave of recent bombing attacks--probably reflecting across-the-board frustration as well as some ethnic unrest in the provinces--punctuate the reality that China is going through yet another period of turmoil.

China’s leaders are well aware that reform policies that too quickly mandate economic efficiency and government downsizing produce angry, pink-slipped ex-government workers who could brew another Tiananmen-type uprising.

Though China announced an alleged 7.8% growth rate last year, it has notably avoided proclaiming an official growth target for this year. In fact, Beijing should be happy just to get through 1999 without any further economic backsliding. The government believes that a rising economic tide reduces the credibility of would-be dissident leaders with the masses. But for now, more repression seems likely.

On an intellectual level, China’s new leaders accept that globalization is a worldwide done deal--an unstoppable force that cannot be avoided. Putting aside the pretensions of communist ideology, they accept the need for a market-based economy, although one well short of wide-open free trade. They also surely see that economic reform may eventually loosen up their polity in ways that edge China closer to the Taiwan model of today than to the China of Mao’s yesterday. But they also feel that too-rapid change could unleash forces of domestic instability whose manifestations would unnerve not only Westerners but also the people inside China, especially those who endured the unspeakable Cultural Revolution.

China’s leaders, notably Premier Zhu Rongji, who is scheduled to visit Washington this year, know that while reform is unavoidable, they’re not sure how to shed the society’s communist vestments without becoming the emperor with no clothes. Hong Kong billionaire and philanthropist Ronnie Chan puts it well: “China is struggling with the problem that a planned economy is like a scrambled egg. Nobody knows how to unscramble it. But they know they had better change fast.” Well, not too fast. The party and government will let no one lead the long march besides themselves. As the final report from a recent joint Sino-U.S. study, published by the Pacific Council on International Policy, noted, Chinese officials will always stress “the primacy of the ‘collective good’ over ‘individual rights,’ with the current emphasis on rapid economic development and a premium on stability. Hence, a strong state is necessary.”

The government will permit economic reform to proceed only at a speed it can control. One tactical possibility is that Beijing will keep its 1.3 billion people in line by playing a nationalistic, we-Chinese-against-them card around the region. If it does go this unsavory route, regional neighbors Japan, South Korea and the Philippines will begin to feel the heat. All have outstanding territorial disputes with China. But Princeton University scholars Erica Strecker Downs and Phillip C. Saunders, in a balanced essay in the current issue of International Security, advise the West to under-react if and when harsh rhetorical ice storms break out. “Their use of nationalistic rhetoric is aimed primarily at a domestic audience and is intended to shore up the regime’s legitimacy,” they write. In their view, all combative rhetoric notwithstanding, China is unlikely to launch aggressive moves against neighbors because that “would interfere with economic performance, which requires expanded access to the international economy.”

Alas, America’s capacity to under-react if Beijing rounds up more dissidents to keep a lid on its street scene or launches verbal Scud attacks on neighbors is less than boundless. But that is precisely the challenge that must be met: to keep America cool as China heats up. Positive change in China (indeed, a transformation of the society into a better, more open, more successful world partner) will require an almost saintly, pragmatic, trust-but-verify policy and posture from the West, not an ideologically brittle one. Asia cannot be stable if China is not; and China’s road to progress will be rocky unless--indeed, even if--the West proffers it at least a businesslike, nonconfrontational relationship.

What are the chances of this happening? Not great, I fear. America--with the presidential campaign getting into gear and the domestic forces of economic protectionism and anti-globalization growing--is unlikely to show tolerance toward China when it reverts to repression to maintain order. One easily anticipates yet another tortured “most-favored nation” (as it used to be called) trade debate in America later this year.

China is facing a pivotally difficult year, and a lack of understanding by the West may help push it in the wrong direction.