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Eric X. Li's Globalization 2.0

Eric X. Li is one of the most interesting global thinkers to emerge from China in recent years.

He is a Shanghai-based venture capitalist and CEO of Chengwei Capital, which owns YouKu, the Chinese version of YouTube, as well as the publisher of Zheng Wei Wei's "The China Wave," a current best-seller in China.

Here is an article adapted from his presentation to the Berggruen Institute's 21st Century Council that met in Paris last week in advance of the G-20 Summit. Li argues that accepting the co-existence of incommensurate cultures in China and the West is the condition for a sustainable convergence of economic interests. Globalization 2.0 means the interdependence of plural identities instead of the old Western-dominated Globalization 1.0 which assumed the universality of one global culture.

Paris - Once again the West is on the brink, and along with it, the world is holding its breath. So soon after 2008, this time the epicenter is in Europe. One week before the G20 summit in Cannes, European powers are struggling to contain the Greek debt crisis that refuses to go away. Once again, in the wee hours of the morning, a deal was struck by heads of governments and bankers with weary eyes that involves write-downs of which the details are to be worked out, austerity measures to be implemented at future dates, and fire-wall rescue funds for which the money needs to be found. Sound familiar?

President Sarkozy got on the phone with President Hu Jintao to lobby for China's investment in Europe's rescue fund. At the Pre-G20 Summit Forum of the 21st Century Council, world leaders, such as Al Gore, Gerhard Schröder, Gordon Brown, Ernesto Zedillo and Pascal Lamy, gathered to discuss the precarious state of globalization and, again, China was the elephant in the room. Will China, they asked, step up and provide the public goods for globalization that so far the U.S.-led Western order has shouldered the costs? It certainly seems to be China's responsibility to do so, they say, as it has ridden, or free-ridden as many might contend, the Western provided global economic and security infrastructure to become the second largest economy in the world.

China's position is best illustrated by an influential foreign policy advisor to Chinese leaders who requested an edit to the forum's communiqué: the phrase "emergent nations led by China" was to be changed to "emergent nations including China". Or perhaps better yet, don't mention China at all. Rather a focus on convergence of interests leading to a community of interests was proposed.

Ever since the beginning of globalization at the end of the Cold War, the West and China have been operating in parallel universes. Two versions of globalization have been concurrently developing. Globalization 1.0 is globalization as we know it because it is visible and loud. Globalization 2.0, by contrast, has been invisible and quiet.

From George H. W. Bush's "new world order" to Bill Clinton's "moment of miracles", from George W. Bush's "ending tyranny in the world" to Barrack Obama's "single standard for all who hold power", from the WTO to the IMF, from Wall Street to Pennsylvania Avenue, from Iraq to Afghanistan, from Washington to Oslo, the proponents of Globalization 1.0 are convinced of a universal outcome for all of mankind: liberal electoral democracy shall rule every nation, an ever opening Market (with a capital M) for both goods and capital will create a singular world economy with the same rules for everyone, everything, and everywhere, and unifying it all are the almighty individuals endowed with God-given rights who all want to drink Starbucks coffee with non-fat milk.

For twenty years now, they have led this drive for their universal vision, emptying the treasuries earned over many generations by their forefathers, mortgaging their children's future, expending the lives of their young soldiers, hollowing out their countries' industries, with near complete disregard for the integrity of their own cultures and the welfare of their own peoples. For countries in the Globalization 1.0 sphere, the political and commercial elites have reaped the lion's share of the economic and political benefits of globalization while the vast majorities are losing ground.

In the United States, the leading nation of Globalization 1.0, Wall Street, Silicon Valley, and Hollywood form a holy trinity that, through its decisive influence on the political system, is guarding the benefits accrued to them with bailouts and policy paralysis. In Europe, it is the same quagmire. Little wonder that anger and frustrations are being taken to the streets. And now the same elites are on television scratching their heads asking: "why are we bankrupt?". Perhaps what they confront is much more than financial bankruptcy. It is potential moral bankruptcy that is facing their version of globalization. This is Globalization 1.0 - globalization based on universality.

Then there is another version of globalization - Globalization 2.0 - that has been taking place all along. It is quieter without bold proclamations; it is perhaps not so coherent in its narrative; it does not get one's blood boiling or set one's imagination on fire with some utopian end in sight for all mankind. It seems to be operating in the shadow of Globalization 1.0 but stands in fundamental opposition to the meta-narrative of Globalization 1.0. In fact, it is the anti-meta-narrative. In the last twenty years, it has brought hundreds of millions of people out of poverty; it has industrialized in a speed unprecedented in history; it has indeed modernized without subscribing to the religion of modernity.

For countries in the sphere of Globalization 2.0, elites seem to recognize that their responsibility is first and foremost to improve the livelihoods of their own peoples, and the survival and legitimacy of their power depends on their national interests rather than some self-perceived destiny to run the world.

At the core of Globalization 2.0 is the primacy of culture as the basic unit of human civilization: the belief that each culture or civilization is unique and should be seen as such from the very rock bottom. There is nothing more underneath that could somehow unify them and thereby produce something universal. Cultures are fundamentally incommensurate to each other. And only in recognizing and respecting this incommensurateness can the convergence of interests among them be realized, and perhaps a more peaceful world order along with it. This is Globalization 2.0 - globalization based on plurality.

We are at a moment when global problems demand global solutions. The monumental challenges facing human civilization, climate change and the need to re-balance the global economy among them, seem to indicate a necessary convergence of interests between the West and the rest. Why, then, are such global solutions not forthcoming?

It is because we are also at a moment when Globalization 1.0 is in trouble and Globalization 2.0 insists on remaining quiet and invisible. We are stuck in between. But perhaps 2.0 can no longer be so subdued regardless of its intention. China, the leading nation in Globalization 2.0, is becoming a beacon for many to see. Not that any country can emulate China's path, because it is by Globalization 2.0's definition not emulate-able. What is emulate-able, however, is the very idea that there is no emulate-able universal model and each culture must follow its own path.

What political systems are most suitable, what economic models fit their developmental stages, and what fundamental values should constitute their societies are questions with unique answers to different places and peoples. Their choices should be respected. Their voices deserve to be heard, not the least by the very peoples in the sphere of Globalization 1.0 where their political and commercial elites have, in the name of universality, robbed them of their heritages and their futures.

Many voices are calling on China to be a more "responsible" player in the global system. Some have accused China of "free-riding" and not playing a constructive role in helping re-balance a shattered world economic order. The pronounced hesitancy, and even refusal, to be placed into a leadership role by China is either noted with resignation or met with resentment. But this sentiment misses a fundamental question: Is the West truly prepared to accept China as an equal and legitimate player on the world stage? Can the West cooperate with a major civilizational power that stands for fundamentally different and even opposing values and outlooks? Many in the West have hidden behind the self-delusion of Globalization 1.0 that as China develops it will inevitably and eventually adopt Western values that are billed as universal values.

These people need to face the fact: China, rich or poor, powerful or weak, will NEVER become a liberal electoral democracy with market capitalism and the individual as the core unit of its society. The stumbling block to effective convergence of interests and China taking on the much needed leadership role is not China's unwillingness but the lack of consensus in Western societies on that future. Without such consensus, the rhetoric about responsible behavior and constructive cooperation will remain empty talks.

Can globalization continue? Does the world face a future of cooperation or conflicts? The answer lies in whether the world can smoothly switch the operating system of globalization from 1.0 to 2.0. It is not as easy as going from Windows to Mac. The world watches with anxiety.

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