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The Deal With China

China's deal-making with the world's tyrants has thwarted Western efforts on development, human rights, and proliferation.

By From the May 2010 issue

The Beijing Consensus: How China's Authoritarian Model Will Dominate the Twenty-First Century
By Stefan Halper
(Basic Books, 296 pages, $28.95)

In his new book, The Beijing Consensus, international relations expert Stefan Halper argues that the mass appeal of China's "market-authoritarianism" is undermining the West. What Halper calls the "China model," which provides "rapid growth, stability, and the promise of a better life for its citizens," is an attractive alternative to Western models of growth. By offering a path toward prosperity that does not involve the messiness of democratic politics, he writes, China is undercutting the appeal of the "Western model" and thereby "shrinking the West." In other words, the embrace of the "China model" by millions in the developing world is rendering the West less powerful and influential.

Thus, according to Halper, those who worry about China's rise are worried about the wrong things. China's challenge to America, Halper argues, is not necessarily in the realm of military power. Rather, Beijing is offering the world a different set of governing ideas that produces "rapid economic growth, stability, and security -- but not freedom in the public square." With its successful development model, China is diminishing the so-called "Washington consensus" model of economic development, which is built around free markets, free societies, and open investment and trade. Ultimately, the damage done to these ideas will constrain America's ability to set the international agenda.

Halper persuasively backs up this part of his argument. He marshals strong evidence to show that China is capitalizing on its newfound clout to secure the votes of the developing world in the United Nations General Assembly on issues China cares about. It is now almost impossible for the West to condemn China's human rights record at the UN or for Taiwan to gain entry into any UN body.

Halper also highlights other deleterious consequences of China's influence. Beijing has helped block attempts to stop Iran from acquiring nuclear weapons; helped countries such as Angola, Cambodia, and Burma to block attempts by the West to demand political reform in return for economic aid; provided succor for the likes of Venezuela's Hugo Chavez; and protected the Sudanese government from the consequences of its genocidal policies.

But according to Halper, the problem is not just that China has more cash in its coffers to grant "no strings attached" loans and close deals with the world's dictators. Of equal concern is that Beijing's "state-directed capitalism" actually provides China with a competitive edge over the West's more laissez-faire capitalist system. State subsidies to Chinese industries mean they can outbid their competitors by paying more, for example, for African resources. An authoritarian government means Chinese authorities do not have to contend with competing domestic interests to get deals done.

In essence Halper is making three arguments. First, growing economic resources provide China with more geopolitical clout, which it has used to undermine American influence. Second, the "China model" has mass appeal and thus threatens the governing ideas of the West. Third, state capitalism has a competitive edge over market capitalism.

Is he right? Only the first claim, in my opinion, stands up to scrutiny. Without a doubt, as Halper illustrates, China's deal-making with the world's tyrants has thwarted Western efforts on development, human rights, and proliferation. As Halper illustrates, China provided Islam Karimov of Uzbekistan with protection against Western disapprobation for his mass killings. China has impeded Western efforts to stop Iran's drive for nuclear weapons. Chavez is more confident now that China has his back. And China has managed to form a reliable bloc of UN member votes to shield it from criticism of its own human rights abuses.

But the second claim -- that the China model has mass appeal -- is more suspect. The China model certainly appeals to dictators who want to stay in power. But what about the people over whom the dictators rule? I know of no evidence which suggests that people would readily choose to surrender their freedoms and live under a Chinese-style system. On the other hand, I do know of evidence that the China model is unattractive: it has little appeal within China itself.

According to Halper, "middle-class Chinese are more likely to worry about keeping their children in private school....than they are about running into the square and building Statue of Liberty models..." I am not so sure that is true. Take, for example, the Charter 08 movement, which has called upon the Chinese government to adopt a new constitution that looks very similar to our own. The regime acted predictably, detaining movement participants and sending its leader to jail.

But unlike past democratic movements in China that have been cowed into dissolution, this one is not going anywhere. After the sentencing of one of its leaders, Liu Xiaobo, on trumped-up charges, one of America's top China scholars, Perry Link, wrote:

If the purpose of the harsh sentence was to intimidate others, it has not worked well. Hundreds of signers of Charter 08 have endorsed an additional statement declaring that if Liu Xiaobo is guilty then we are, too. Cui Weiping (a scholar)...spent the days following the announcement of Liu's sentence conducting a telephone survey of more than 100 prominent Chinese intellectuals, including both signers and non-signers of Charter 08, on how they viewed the sentence. Finding almost unanimous disgust, she collected her findings...and published them in a series of twitter feeds that circulated widely in China and abroad.

But perhaps Charter 08 is a singular movement of elites, which shows only that a small (if influential) group is aggrieved enough to take action. What, then, explains the growing number of mass protests in China over everything from corruption to free speech to clean water and air?

According to Minxin Pei, economic growth has indeed "lulled into apathy" the middle class. But with signs of economic trouble in China, that middle class may be waking up. There is also the matter of the 700-800 million in China who are not in the middle class. Pei explains:

[E]conomic policies that favor the rich have already alienated industrial workers and rural peasants, formerly the social base of the party. Event in recent boom years, grass-roots unrest has been high, with close to 90,000 riots, strikes, demonstrations, and collective protests reported annually.

Add to that the increasing challenges facing those who had been benefitting from China's growth, and "it might seem reasonable to expect that challenges from the disaffected urban middle class, frustrated college graduates, and unemployed migrants will constitute the principal threat to the party's rule."

But Pei thinks that a coalition like that is unlikely to emerge for one reason alone: the CCP's vast and very expensive machine of repression:

The CCP has already demonstrated its remarkable ability to contain and suppress chronic social protest and small-scale dissident movements. The regime maintains the People's Armed Police, a well-trained and well-equipped anti-riot force of 250,000. In addition, China's secret police are among the most capable in the world and are augmented by a vast network of informers. And although the Internet may have made control of information more difficult, Chinese censors can still react quickly and thoroughly to end the dissemination of dangerous news.

In a word, China has become the world's most sophisticated police state. There would be no need for an apparatus of repression if the China model was appealing. Instead the government has to divert untold resources to policing the Internet, cracking down on unrest in Tibet and Xinjiang, and censoring the latest technologies that young Chinese use. This adds to my skepticism of Halper's third claim: that China's "state capitalism" offers it a competitive advantage over the West. My skepticism is twofold.

First, it is very expensive to repress a dynamic and technologically savvy society. Second, the CCP holds on to its rule through a corrupt and costly patronage system that may be unviable over the long term. Again, here is Pei:

[T]he real glue that has held the CCP together is a vast patronage system that has been underwritten by a long period of economic growth. The regime has used its financial resources to balance domestic interests, satisfy different constituencies, and purchase the contingent support of China's social elites. But this patronage system is extremely expensive -- administrative expenses alone consume more than 20 percent of China's government budget, and more than 40 percent of China's GDP comes from fixed-asset investments such as factories and warehouses -- a sector that is state-dominated and stuffed with pork.

Add to the patronage system an economic system that imposes capital controls, stifles investment by its citizens, and maintains an undervalued currency that is causing massive imbalances in the economy, and the China model seems not only unattractive, but unsustainable.

Halper is right to criticize the triumphalist argument that China would inevitably become more democratic and aligned with the West once it entered the international economy. It has done neither. He is correct that China is not shy about buying off dictators to obtain natural resources and political support -- efforts that have undercut American policies. And, he is certainly right that America has to do a better job of standing up for the benefits of its system and values in the developing world. If it did so there would be no "values" competition: "market-authoritarianism" has no mass appeal. In fact, the model is increasingly under strain in China itself.

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About the Author

Dan Blumenthal is a resident fellow at the American Enterprise Institute.