China in the global business system: Wrecker or stakeholder?


In the western debate about China’s emergence, two contending, contrasting views of China may be heard. One holds that China is a threat to the global polity, ruthlessly pursuing its mercantilist and nationalist agenda. The other holds that China is in transition to market democracy and irrevocably caught in the web of global interdependence. The argument here is that these descriptions of China domestic and external policies are complementary, and not exclusive, but that it is the condition of interdependence with the rest of the world which predominates in the minds and the behaviour of the leadership. This may sound surprising in the light of Beijing’s refusal to revalue the yuan, its opting for a non-binding accord at the Copenhagen Global Warming summit, or its reluctance to go along with the western powers over Iran’s nuclear power ambitions. But as exemplified in its membership in the WTO and its role in the G-20, China is irrevocably embedded in global interdependence. What China’s leadership has done is to enter the global system with their own ideas and aspirations. But there is no exit, and there is no going back. The communist party-state is in charge, and has little option other than to supervise the country’s transformation to a market society. China’s trade surpluses have grown to record sizes, not least because of high domestic savings and a managed exchange rate, thereby making the country’s economy maximally vulnerable to slowdown in its major markets of the US and the EU. Yet there can be no doubt that the leadership has no intent to wreck the global system on which its future depends. China requires a peaceful world to be able to focus on its internal development. That will remain the agenda for decades to come. For the rich powers of the developed world, the choice is between putting up the barriers against China, as the anti-globalisation forces at work in their societies want, or treating China as a pillar of the global system, and agreeing on a gradualist policy of transition to a fully fledged market-democracy.

For the full article in pdf, published by Brussels Institute of Contemporary China Studies, paste


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) ( 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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