Stefan Halper, The Beijing Consensus : How China’s Authoritarian Model will Dominate the Twenty-First Century,New York, Basic Books, 2010.

When Stephen Halper began to consider China’s development, he shared the widespread view that the country’s adoption of a market economy would lead towards democratisation. But he became less and less convinced that the story ofChina’s convergence on the “West” was descriptive of what was going on. AdoptingMinxinPei’s argument that the CCP is trapped between its economic strategy to escape the fate of the Soviet Union, and its political strategy tokeep power at all costs, he develops an interesting argument thatChina’s domestic weaknesses are the source of its international assertiveness.

That may sound odd to ears accustomed to hear howChina’s leadership goes from one success to another. But it is convincing for all that. The only way that the Politburo could conceive in 1990 of China’s not becoming the next communist domino to fall was to go for growth, open the doors to inward direct investment, shake out the state and township enterprise sectors, promote private entrepreneurship, shrivel Mao’s welfare system, and enter a compact with the Chinese people as the guide to selective prosperity and political stability. The result is visible in the intense pride that Chinese citizens take in their country’s emergence as a major player on the global scene, but it is also evident in the prevalent chauvinism which has become so visible over the last year. As China’s Foreign Minister Jang Jiechi is reported as saying at a meeting with his country’s smaller Asia Pacific neighbours: “ We are big, and you are small”.

The price of growth, as Halper records, has been high, and is accounted for in terms of soaring inequalities, growth disparities between regions, major pollution of water and air, endemic corruption throughout the party-state, or overdependence on exports to sustain the manufacturing sector. Ever in the forefront of CCP concerns is the prospect of having to manage the transition from a mainly rural to a predominantly urban society over the next two to three decades. Up to one billion people still live in rural areas, on $2 a day, without access to adequate schooling, medical treatment or fresh water.

Making sure that the growth machinekeeps running is the source ofChina’s assertive stance on the world stage, he points out. That entails keeping a competitive exchange rate, amassing $2 trillion dollars worth of foreign exchange reserves,  ensuring oil flows from the likes of Iran, Sudan or Venezuela, dragging its feet in curbing nuclear proliferation,  undercutting World Bankconditionalities attached to loans for African countries, hobnobbing with Fidel Castro, granting a doctorate to Robert Mugabe, friendly support for the junta in Myanmar, not to speakof replacing the United States as Brazil’s number one trade partner and providing development finance for Argentina.

In short,China earns its surplus funds on the developed markets of Europe and theUnited States, and recycles them to other developing countries, in exchange for access to land, minerals and fossil fuels. The rest, he may have added, is placed in the US T-bond market, and invested on global markets by state funds—both at very considerable risk.

As Halper rightly argues, what makesChinaso attractive to developing countries leaderships is its combination of market economics and authoritarian government. To African and Latin American countries, which have lingered in low to negative growth since the early 1980s, whenChinawas in the first stages of its Open Door policy, the record speaks for itself. Negotiating a policy package with the Chinese leadership takes a fraction of the time that it does with the western institutions, and there are no question asked—other than polite requests, please to vote for China’s cause in the UN General Assembly, cut off ties withTaiwanand not mentionTibet.

At root, our author seesChinaas challenging western ideals of human rights, democracy, the rule of law and free markets. Too much of the debate on China within the Washington Beltway focuses, he writes, on China’s not inconsiderable military and naval build-up, or on its trade, industrial and technology  policies, and not enough on the larger picture ofChinaas offering an alternative development path to that offered by “the West”. Western appeal is shrinking because state capitalism not free markets is what much of the world experiences, and because governments from Russia to Iran orVenezuela pay at most lip-service to the ballot box.

His proposal is for theUSto adopt a more multilateral approach in dealing withChinathat plays on what he sees as the leadership’s dual fear of isolation and criticism. “The secret of any success, he writes, is exploitingChina’s intense desire to be included in the top-table discourse of major powers whether it’s on financial stability, energy security, non-proliferation, climate change or pandemic disease”. Along with this is its susceptibility to criticism in the world press over its treatment of Tibet, its simmering unpopularity in Africa, and the fear its engenders among its neighbours, including Russia, India, Japan, South Korea and the countries of South-East Asia. And he combines this with a set of sound proposals to meet the challenge at home, such as raising domestic savings, getting the federal deficit under control, investing in R&D, and encouraging more corporate investment inAmerica.

China’s greatest fear, Halpern argues, are “American ideas” “that represent a basic agreement, resting on the consent of the governed and committing government to ensure the rights of speech, belief, assembly and political expression”. “They also represent akind of political hammer, which isAmerica’s to use andChina’s to fear in equal measure”. No peaceful emergence here.

The one flaw in the book, and it is a significant one, is Halpern’s use of the noun “the Enlightenment”, as if it were one solid block. He could have benefitted by reading Gertrude Himmelfarb’s The Roads to Modernity: The British, French and American Enlightenments”((New York, Alfred Knopf, 2004).  As the title indicates, there were many enlightenments, with as many progenies—nationalism, racialism, utilitarianism, liberalism, and Burkean conservatism.

What the bookmisses is thatChina’s modernisation since the nineteenth century makesChinapart of “the West”. Paradoxically, the “West” that China adopted in the late 1970s was Burkean conservatism in that the leadership had learnt the hard way that Mao’s French revolutionary quest for modernity downplayed the salient political law that unintended consequences always prevail. The EU and theUSby contrast adopted a facile mélange of utilitarian- liberalism, dressed up as market-democracy, which its minions proceeded to preach and impose on the rest of the world.Chinarejected these ideas at home, and also abroad.

Halpern suggests thatChinashould accommodate “the West’s ideas. An alternative proposal would suggest a bit of house cleaning in “the Western” intellectual attic.

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About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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