China’s Win-Win Globalization

Since the early 1990s, China has been making a concerted effort to integrate itself into the world economy and cultivate relations with its Asian neighbors, as well as the U.S., in order to promote stability and prosperity in the region. Michael Yahuda, professor of international relations at the London School of Economics and Political Science, explains how China's stance towards globalization has changed over the past century, and how its recent embrace of globalization has led to a greater commitment to East Asian security. - YaleGlobal

China's Win-Win Globalization

For China, embracing globalization means a greater commitment to regional security in East Asia
Michael Yahuda
Wednesday, February 19, 2003
Fast food in Beijing, rapid integration with the world economy. (Copyright: Nayan Chanda, YaleGlobal)

LONDON: The impact of globalization has on the whole served to enhance rather than to weaken security in East Asia, but as elsewhere, it has also added new dimensions to the nature of security that have greatly complicated the situation. As the rising power of East Asia, China may be said to have benefited in the post Cold War period from both American primacy and from the effects of globalization. The former provided the peaceful international environment and the international public goods that have enabled the Chinese to focus on an export-led strategy of rapid economic development and the latter has facilitated China's integration into the regional and international economies. As a result, China has become less of a challenger to the status-quo in East Asia and more of a net contributor to regional order - at least in the short to medium term.


The term 'globalization' has been used in many ways to outline changes in social, political and military spheres, but these are derived from economic change where the basis of production and of finance are said to have shifted from the confines of national boundaries to encompass the world as a whole. How new this is may be disputed. Studies of economic transactions in the late 19th century suggest that globalization then was quantitatively more extensive than it is now. It was also in that century that social analysts - most notably Karl Marx - began investigating how capitalism was displacing traditional modes of production and forms of political organisation. Moreover, the spread throughout the world of nationalism and of the European model of statehood that was completed in the anti-colonial struggles of the 20th century may be seen as political manifestations of globalization. Nevertheless, few would dispute that something new has been going-on since the last few decades of the 20th century. The process of change has speeded-up and, as a result of the transformation in information technology, the world is now "wired-up" and we are all aware of major events in "real time". With the demise of communism as a possible alternative, the spread of capitalism and the institutional mechanisms that enable it to flourish has gained increased momentum across the world. That momentum is driven both by the international forces of multinational companies and trade and by the demands of local populations everywhere for greater prosperity in the hope of reaching the standards of living they see projected in the advertisements, programmes, and films of the Western dominated international media.


In the case of China, the really disruptive effects of globalization occurred in the 19th century and in the first half of the 20th century. It was then that the Chinese traditional Confucian system broke down in the face of the pressures of globalization as these were forcibly brought to bear upon China by the Western powers and Japan. In many respects the communist takeover in 1949 and the character of the Maoist regime that lasted until the mid-1970s was shaped by a nationalist reaction to this experience. However the 'New China' was caught up in a contradiction by which it sought to fashion its own approach to achieving communist modernity while simultaneously participating in the industrial revolution as exemplified by the Soviet Union and by the West. The Maoist approach emphasised self-reliance and keeping external influences to a minimum. It was based on the assumption that China could attain its destiny only by internal renewal and cleansing. External influences were seen in the final analysis as polluting, but to be tolerated only in so far as they could be shown to serve this internally generated process of self-renewal. This approach that was fundamentally antagonistic to globalization culminated in the destructive, internally generated chaos of the Cultural Revolution.


Whether it was necessary first to pursue this approach to exhaustion before it became possible to embrace the interactive interdependencies with the outside world - as subsequently pursued under the leadership of Deng Xiaoping - will be debated for a long time to come. But it is important to note that it was only after Deng Xiaoping established his ascendancy in late 1978 that China began to embrace modernity and globalization in earnest. Demanding openness and economic reform, Deng gradually led his country out of what was regarded as self-defeating isolation. The transition from Mao's legacy of a command socialist economy towards a more market-oriented economy was highly contentious throughout the 1980s - contention which culminated in the Tiananmen tragedy of June 4th 1989. Nonetheless, it should be noted that China's absorption into the World Bank and IMF system was accepted almost without resistance. Indeed, China rapidly became a World Bank poster child for successful globalization and the most favourite customer. In other words, the Chinese accommodated some of the truly controversial institutions of the globalization enterprise without fuss or major dispute.

Perhaps the most telling signal that China would embrace globalization is found in the reactions to Tiananmen and to the collapse of communism in Eastern Europe. The initial Chinese reaction to the dismantling of the USSR was to retreat into their own fortress, complaining of an alleged Western scheme to destroy communist party rule - through an insidious process of "peaceful evolution." The logic of this response would have been to curtail the opening to globalization encouraged by previous policies. Most of China's leaders, including Jiang Zemin, were prepared to go along with this. It took the final assertion of the personal authority of the then 87-year-old Deng Xiaoping to reverse this trend in his famous "southern tour" of 1992. It was then that he set the guidelines that his successors have followed ever since of requiring further openness and economic reform as a necessary condition for maintaining high levels of economic growth. His principal argument was that rapid economic growth alone would ensure the survival of communist party rule. Sustained economic growth alone could justify the party's claim that "social stability" (i.e., its continued authoritarian rule) was the prerequisite for economic development. It was on this basis that Deng argued that China had to attract more foreign investment and integrate itself more deeply into the international economy. This meant that China also had to cultivate good relations with neighbours and minimize conflict with the United States.


The economic dimension of Deng's legacy proved easier to follow than the foreign policy aspects. Interestingly, China's leaders have not depicted globalization as a threat to national independence in the way that many others, even in the West, have done. Jiang Zemin characterized the post cold War agenda as "economic globalization and political multipolarity". In other words, the potentially explosive dimensions of globalization that required China to change many of its existing practices in running the economy that were hitherto regarded as the hallmark of socialism were diffused. They were in effect de-politicised. These changes were seen as unavoidable if China were to meet its goal of not dropping below 7% annual economic growth. Thus there was hardly any objection within China on the grounds of sovereignty when the World Trade Organization (WTO) demanded that China change much of its domestic legal and economic system to meet the conditions of entry. If there was a clash it was on the issue of nationalism or patriotism, when the US was accused of trying to undermine communist rule (regarded as the core of Chinese patriotism) by promoting human rights in a confrontational way, and more particularly when the US was said to be keeping China down by preventing the completion of unification through American support for Taiwan.


Later in the 1990s, China's leaders had also come to see the virtues of multilateralism in the promotion of China's broader national interests, including those of security. It was China that took the initiative in forming the Shanghai Cooperation Organization that pledged China, Russia, and four Central Asian states to work together to enhance economic relations and to oppose "Islamic extremism," terror, and separatism. In Southeast Asia, China's leaders recognized the significance of cultivating better relations with neighbours and played down their maritime sovereign claims in the South China Sea. Although China's neighbours are still distrustful of the rising giant they accept that they have no alternative but to accommodate China. At the same time they seek reassurance from the continued security presence of the United States.


Arguably globalization has served China's communist rulers well. Far from it undermining the basis of communist party rule, it has contributed to its survival by fuelling the rapid economic growth and the transformation of the economy without revolutionary implications - at least so far. The communist party has shown surprising resilience in the face of rapid social change, huge problems of economic and regional inequalities, endemic corruption, large scale unemployment, rural migration, growing budget deficits, a collapsing health system, under-funded education and so on. It has accomplished three significant generational changes of leadership - from the heroic founding fathers, to the technocratic Soviet-educated engineers of the generation of Jiang Zemin and Li Peng, and now to the next technocratic generation, headed by Hu Jintao. Contrary to the expectations in the West, the Party is still strong even as the problems of governance deepen every year. Globalization and the internet have not given rise to the spread of liberal influence as the Party has proved capable of suppressing any organised dissent.


Although some Chinese took pleasure in the spectacle of the first major attack on the mainland of the United States in 200 years, China's rulers did not. Jiang Zemin was one of the first foreign leaders to declare his support for Bush's stance against terrorism. This not only erased any remaining unpleasantness from the EP3 surveillance plane incidence of that April, but it also paved the way for establishing a new understanding with the US as fellow partners in the struggle against terror. The two have also found common ground in trying to circumvent North Korea's nuclear challenge. The Taiwan issue has acquired less prominence in Beijing as its leaders have pledged to place greatest priority on rapid economic development by cultivating relations with the United States, Japan and the European Union.

What some have seen as a growing maturity in Chinese foreign relations may be traced to domestic political changes within China that have accompanied the seemingly smooth embrace of globalisation. As bureaucrats, engineers and technocrats have replaced the founding fathers who have "gone to see Marx", the transformation of the Chinese Communist Party from a revolutionary party into a ruling party has been made complete. A process of institutionalisation has taken place whereby political power is less a product of the intrinsic standing of the person as a heroic figure than it is of the institution to which the person belongs. The party is increasingly prepared to accept a greater legality as an instrument of its rule, if not as a means for checking its power.

The order provided by the party has not proved to be a barrier to attracting vast amounts of foreign investment. For several years China has been second only to the US as a recipient of FDI. China's rulers also appreciate that the enormous problems of governance that they face at home cannot be addressed without the cushion provided by the external economic relationship associated with globalization. For that reason at the recently concluded 16th Party Congress China's leaders confirmed their priority of cultivating relations with the US, Japan and the EU. They are also pledged to work more cooperatively with their neighbours for whom China is rapidly becoming a pivotal economy. Thus whatever might be thought about the longer-term challenges that globalization may yet pose to China's domestic order - or about what might be needed to accommodate a rising China in the future - there can be little doubt that at least in the short term China has successfully managed globalization to bring unprecedented prosperity and thereby strengthen its one-party rule. Continued success may mean China would be unlikely to challenge the fundamentals of the security arrangements of East Asia.

Michael Yahuda is professor of International Relations at the London School of Economics and Political Science.

© Copyright 2003 Yale Center for the Study of Globalization