GPI Global Policy Institute

How We Will Win Against China

Paolo von Schirach

July 07th, 2021

WASHINGTON – In America and more broadly in the West we have come (belatedly) to the realization that China is not going to become “more like us”. We are now in the early stages of a new Cold War, this time with China. This being the case, as we are now engaged in a new ideological, economic and geopolitical confrontation with a country that is not just a competitor, but an existential threat, how are we going to deal with this threat? Very simple.

Western values will beat autocracy

The West, with America in the lead, ultimately shall prevail because of the strength of our beliefs in freedom, democracy and free enterprise. Our core western values will generate the necessary energy and the resources –political, intellectual, scientific, industrial, and military– to counter another existential threat coming from arrogant autocrats who believe we are a spent force and their moment has come. This is what the Soviets believed. This is what the leaders of the Chinese Communist Party, CCP, believe. if America can succeed in harnessing the grossly under estimated resources of the Western Countries, we shall prove them wrong.

The Cold War with the Soviet Union

The Cold War that began in the late 1940s was a geopolitical conflict featuring two countries –the US and the USSR– that embodied and promoted mutually exclusive values and consequently mutually exclusive perspectives on what kind of world most people should want to live in. America rose to defend itself and the West, mostly Western Europe and a few other countries across the world that had embraced western values, from the dangerous encroachments of the Soviet Union, a country created and run by aggressive millenarian ideologues. They believed in the historic superiority of communism and in the political imperative to fight capitalism all over the world, until its ultimate and inevitable demise.

Communism is unworkable

At the beginning of the 1990s we all celebrated the end of the Cold War. We won. They (the Soviets) lost. And it is critical to note that we won not because of our military superiority, although a strong NATO-led military deterrent mattered, quite a bit. Ultimately we won because Soviet-style communism in the end proved to be disastrously unworkable. The Soviet Union and its satellite states in Eastern Europe literally fell apart.

Indeed George Kennan had been prescient when he prophesized, back in the late 1940s, the end of communism. The Soviet Union would eventually collapse, Kennan predicted, not because of a war with the West the Soviet Union would lose; but because the communist ideology was and is antithetical to the most elementary human aspirations regarding basic freedoms.

Our values won the Cold War

Which is to say that the West in the end prevailed in the long and complicated Cod War confrontation, in part because it managed to deter the Soviets via NATO and other security arrangements led by the United States, but in larger part because of the inherent superiority of our “Western Values” and the strength and resilience of institutions and alliances created to protect them.

Democracy, property rights, free markets, freedom of expression, and an independent judiciary that would uphold the rule of law were the West most significant “weapons” in the ideological and geopolitical confrontation with Moscow. These “weapons” –the values underpinning our societies– delivered our innovation, economic growth, and greater prosperity.

Freedom and markets for all?

For all these reasons, after the demise of the USSR, in the early 1990s it seemed that, beyond prevailing in the global geopolitical confrontation against the Soviet Union, the West had also won the ultimate philosophical and moral debate as to which political and legal system is better suited to promote human freedom, societal development and greater prosperity.

Contemplating the total wreckage of what once was the mighty Soviet Empire, most countries would be finally convinced that the values America and its Western Allies uphold were and are infinitely better suited to foster human and societal development than communism. Communism had been finally exposed as forced pseudo-egalitarianism violently imposed on reluctant societies by authoritarian states managed by self-appointed leaders who stayed in control only via the power of intimidation, coercion and state terror.

All told, it seemed that with the implosion of the Soviet Union and its satellite states the West had won a final, historic “battle of values”. With the manifest abject failure of Communism, all countries –not just the former communist states– would appreciate that their future wellbeing and prosperity would depend on a genuine embrace of democracy and free market capitalism.

Democracy does not work well everywhere

Well, not really. Sadly it did not happen exactly that way –far from it.

True, some former communist countries successfully made the transition. They did shed state managed economies while embracing democracy and markets. But not all of them, and certainly not the entire world. What the West did not appreciate in the early 1990s, and probably still fails to fully understand today, is that many societies are unable to properly conceive and then effectively manage a truly functioning democracy.

You can create democratic institutions. However, unless democratic values are strongly rooted and widely embraced by the members of any given society, democracy can easily turn into dysfunction, if not utter chaos. And prolonged dysfunction creates a political opening for those who promise order and stability via strong law and order remedies that often morph into autocratic regimes.

Here is the thing. Democracy cannot be willed into place. The tree of democracy needs fertile soil to grow. The fertile soil is the mature understanding within any given society on how to guarantee the enjoyment of individual rights within a system of free institutions that cannot survive without fairness, tolerance, equal justice for all, moderation, and self-restraint. It turns out that it is easy to like democracy. Much more difficult to practice it properly, so that it does not get smothered by its messy members.

Russia turned into an autocracy

Today’s Russia is exhibit one of a brief and unsuccessful attempt to switch from totalitarianism to democracy. Sure enough, the Soviet Union is gone, for good. But Russia, after some gyrations, reverted to a de facto autocracy, although thinly disguised as a democratic republic. Whatever else we may say about what Russia is today, we can agree at least on this: The supposedly irresistible human aspiration to create free societies where basic individual rights are protected did not find a fertile soil in Russia. Vladimir Putin managed to assert himself as Russia’s unchallenged supreme leader in part because his dictatorial aspirations were not met by any meaningful resistance.

What happened in China?

If we move over to China, the picture is a lot more complicated and frankly much more dangerous for the West. And this is because today it is clear that China is not just an authoritarian state, like Putin’s Russia. Unlike Russia, China is a very prosperous authoritarian state. It has been capable of sustaining impressive economic growth, (at least until now). Its leaders are convinced that their moral superiority entitles them to become world hegemons. Xi Jinping, China’s de facto supreme leader, harbors the open intent to replace America as the leading world power on the strength of the supposed superiority of the system created by the Chinese Communist Party, CCP, he leads. The official Beijing narrative tells us that western style democracies are messy, disorderly, unproductive, unjust and decadent. China instead is well organized, harmonious and self-confident. And this is because the Chinese party-state is run by dedicated professionals who truly govern in the interest of all the people.

Not just a competitor

Taking all this into account, let us be clear on the nature of China’s challenge. China is not just a competitor, a rising economic power that will at some point become bigger than the United States. This was the case when the US economy, about a century ago, became larger than the British economy. While it probably was unpleasant for the British elites to see another country overtaking them, there was no sense that America’s rise would translate into a direct threat to the way of life of ordinary Britons. And this was because both countries subscribed to the same values.

The rise of China is a completely different story. China has the ambition of using its impressive economic might in order to create a new China-centric political and economic system with Beijing as the undisputed hegemon and other countries in the role of obsequious tributaries. Should that happen, this would be the end of the international norms and institutions created with the goal of maintaining the post WWII world order founded on principles of equal sovereignty, the promotion of free trade, respect for treaties and peaceful resolution of disputes. After 1945, America, as the leading world economic and military power, was instrumental in fostering the creation of this system.

China is now eager to replace this complex construct with its own model. There is a fair chance that this will come to pass, unless the countries that gave life to the international rules based system we built and benefited from since 1945 will do their best to re-energize it and make it stronger and more vibrant.

How did we get here?

What happened in China? How come that the CCP, notwithstanding the obvious failures of the communist ideology that is supposedly at its foundations, is still very much in charge? We know that at the time of the implosion of the Soviet system, China, like the Soviet Union a country created by a communist revolution and ruled by a totalitarian communist party, under the direction of reformist leader Deng Xiaoping was already experimenting with some pragmatic economic policy changes. These reforms ushered greater economic growth and probably pre-empted a Soviet-style economic collapse. Indeed, oddly enough, market oriented reforms that made some Chinese citizens a bit better off economically became the tools that guaranteed the survival and later on the strengthening of the Chinese Communist Party.

We know that, beginning in the early 1980s, that is well before the collapse of the Soviet Empire, guided by Deng, in a canny, pragmatic way the Chinese Communist Party had gradually began to allow Chinese citizens to hold some private property rights. This was the foundation for what later on became a massive, private sector-led manufacturing system –created with the blessings of the CCP. For some China observers in the West, these significant reforms were a promising indication that China would eventually embrace a market economy model.

No political reforms

That said, economic reforms notwithstanding, the Chinese Communist Party stayed firmly in control. It never announced let alone enacted meaningful political reforms leading to any semblance of freedom of speech and pluralism in China. When the Tiananmen Square open pro-democracy rebellion erupted in Beijing in April 1989, the same pragmatic Chinese Communists, led by economic reformer Deng Xiaoping, after some internal debate, concluded that the out of control mass street protest was a frontal political assault on their monopoly of power. In early June, at the direction of the party, the Chinese Army intervened, and the unarmed demonstrators were massacred. Thousands were killed. Many survivors went to prison.

And that was the last word on any idea of political change in China. China’s economic policies would continue to change in order to take advantage of China’s new integration into the global economy. But the Chinese Communist Party was and would continue to be in total control of the country.

Wishful thinking in the West

Prisoner of an unforgivable degree of wishful thinking, the West, while initially shocked by the violent Tiananmen repression, quickly decided that “eventually” China would see the light and start the political reforms process leading, if not to a real democracy, most likely to a somewhat more liberal and tolerant society that might one day turn into a real democracy.

Hence the decision, after a short pause, to continue to engage China economically. Over a few decades, this engagement led to the transferring of a substantial percentage of Western manufacturing capacity to China. And the reason for this gigantic transformation was rather simple. One party state, authoritarian China offered very appealing outsourcing and subcontracting deals to its newly found western corporate partners. China could offer very low prices for manufactured goods because of its extremely low labor costs and efficient, brand new logistical networks. These outsourcing deals meant significant cost reductions for US and other Western manufacturers willing to transfer their production to China, and consequently very affordable imported Chinese goods for the average American consumer shopping at Target or Walmart. In so doing, however, the West began a process of de-industrialization.

The present challenge

Fast forward to the present. Right now we have a far more advanced China that went from making toasters, coffee makers and sneakers to designing and making complex electronics, mobile phones infrastructure and now jetliners. China is now an economic superpower, and is much stronger militarily.

China’s truly remarkable economic boom is the result of a pragmatic and clever blending of some elements of free markets capitalism with state supervision of all major economic strategies. In all this, let’s keep in mind that this hybrid economic system is still directed in a top-down fashion by an unreformed Chinese Communist Party that continues to be the self-appointed manager of the soon to become world number one economy.

Political goals

What is worse, as noted above, China’s leadership is not at all satisfied with its impressive rise in the ranks of the leading world economies. No, China, using its strong economic heft and influence as a power foundation, wants to be the dominant world political power. After years in which it claimed that its goal was just “peaceful rise”, now Beijing tells the world that its rise is not due to its discovery of the market economy and its embrace of the rules. No, its rise is due to its superior and far more enlightened system of government created to uphold and enforce its superior values; values that are infinitely better than anything that is believed and practiced in the West.

China as a model

Especially when presented to authoritarian or semi-authoritarian regimes in emerging countries, the Chinese model looks extremely appealing. Imagine this. You are the dictator of an impoverished and hopelessly backward African country. And here come the Chinese emissaries telling you how you can continue to be a dictator for as long as you like, while at the same time –with Beijing’s help– you can unleash economic development and more prosperity in your country. You can still be the dictator. But in a short while you will be the dictator of a more prosperous nation. What’s not to like about this prospect?

What is the West going to do?

Confronted with the systemic challenges posed by this global competitor, arguably made strong by China’s ability to successfully exploit its labor cost advantages and then massively invest in the technologies of the future, what is West going to do in order to preserve the international economic and security system built over more than half a century?

Here is the plan. Assuming that a much diminished and at times disoriented America still retains the credibility and the will to lead, Washington should adopt a two-pronged strategy. First of all, the US should reaffirm through meaningful actions the superiority of the existing international system based on western values. In practice, this means first and foremost re-engaging as soon as possible with all of America’s western partners. The goal should be to build as soon as possible new synergies based on genuine collaboration among free market economies. It means doing away with all or most legal, bureaucratic and administrative impediments to effective transatlantic and transpacific cooperation, this way fostering cross pollination in science and technology, R & D, education, investments and trade. Taken as a group the Western countries are a formidable economic block. The European Union and the US together make the biggest world economy. Add the UK, Canada, Japan, South Korea, Australia, New Zealand, India and others and this is by far the biggest chunk of the world economy.

The free world can outcompete China

The best response to China’s economic imperialist designs is to show that the free world can and will successfully cooperate in order to multiply synergies and win-win solutions with the goal of bringing about more and more widely shared prosperity and sustainable development.

Remember, we won against the Soviet Union because our values created resilient systems that delivered real growth while preserving freedom. Our market economies and our democratic systems are quite imperfect and often very disappointing. Except that there is nothing —I repeat, nothing— better than what we westerners created. The task ahead is to look at what we have, make improvements wherever possible, and proudly uphold this model by showing the world that it actually works quite well.

Challenge Chinese misbehavior

As we are doing all this –and this is the second part of the two-pronged approach– at the same time we should do all we can to collectively oppose China whenever it breaks any of the rules of the system it theoretically joined a few decades ago. And we should also be able to offer to developing countries investment and partnership agreements that are fair, transparent and non-predatory.

If we can plan and execute all this, without wavering, we shall win. If we take the long view, I very much doubt that the top-down Chinese autocracy, despite its remarkable successes to date, will be able to create a self-sustaining economy capable of maintaining the impressive economic edge they have acquired in the last thirty years. It is this startling economic performance that funded stronger military means and Beijing’s ambitious aspirations of global geopolitical dominance.

Freedom begets genuine economic progress

In the long run, it is much more likely that state of the art technologies capable of creating new wealth while improving the human condition will be developed by free people who can freely engage and collaborate in new pursuits, without political commissars supervising and directing their work.

In the end, our political freedom, if judiciously and wisely practiced, will foster and nurture the free spirits willing to push the envelope and explore new fields of knowledge. The willingness and ability to innovate and then bring to the market place commercially viable innovation stem from the invaluable ecosystem created by the protection of individual freedom and a rules based market economy. This intangible ecosystem powers the self-sustaining engine that produces scientific discovery, commercially viable innovation, and ultimately sustained growth. If the West is able to re-energize its confidence in democracy, innovation and markets, the contest with China will end up well.

Freedom will beat autocracy.

The views and opinions expressed in this issue brief are those of the author.

Paolo von Schirach is the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC. He is also the Editor of the Schirach Report.

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