05/26/2014 07:03 pm ET Updated May 27, 2014

9 Ways China Could Blow It

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SHANGHAI -- China’s officials and technocrats -- the latter in their 40s, with degrees from schools such as Stanford, Berkeley and Harvard -- exude an impatient confidence about their country’s future.

They see China becoming the world’s dominant economy at a time when the reigning “hegemon” – the United States -- is losing steam economically and trapped by its divisive politics. According leaders here, the next two decades will bring a period of chaos and conflict -- manageable, they hope, without war -- after which China will be in charge, by default if not by grand design. It's not in China's DNA to want to run the world, but the country's ravenous need for resources, labor and markets may draw it in that direction.

But in between here and there -- if there is going to be a there -- China faces an array of challenges and risks. Since nine is the imperial number, it's appropriate for a list of them:


The Chinese leadership class is forever telling Americans that they need to be “humble,” and, given the faults of our system and our society, to stop lecturing other countries about morality, democracy and human rights. But as China grows in economic might -- and political clout -- the attitude has gained a bit of an aggressive edge. On a weeklong reporting trip, I was struck by the legacy of anger that remains for some about China's last "two bad centuries," and a sense of righting old wrongs and climbing to the top of not just the Asian global mountain that still pervades. The risk here is fear -- and collective opposition -- worldwide.


Despite a claim to a history so long it gives them a unique calm and patience on the world stage, China's leaders today are responding tit-for-tat in an escalating war of words with the U.S. over everything from trade to naval exercises to industrial espionage. The U.S. may be as guilty as China when it comes to playing hardball on all counts, but the aggressive sense of grievance on conspicuous display in Beijing feels like overkill. Leaders mentioned things like President Barack Obama's visit with the Japanese emperor, U.S. support for the Dalai Lama, and what they insist are unfounded charges of cyber espionage. The Chinese boast that they know much more about America than we do about China, but that really isn't saying much. And if China is headed to hegemony, its educated leaders need to calm down.


The challenge closer at hand for China is to continue investing in and trading with the rest of Asia, without creating resentment and violent backlash. Riots recently exploded in Vietnam over a Chinese oil-drilling rig in the South China Sea, and the Chinese are resented and feared in places like Cambodia -- even though China feels it's doing the locals there a favor with its participation in the economy. As for Japan, the Chinese government is licensing -- and promoting -- a sweeping domestic propaganda campaign that taps into deep-seated hatred of the Japanese. The risk: a hot naval war with Japan that could involve the U.S.


The foul, dangerous and impenetrable air that usually hangs over Beijing, Shanghai and other cities isn’t just an environmental and medical threat, it is also a political one. Populist resentment of all kinds is real and growing in China, and some of it is caused by and aimed at environmental privilege. In Beijing, talk is rife of well-connected officials and business big shots who manage to get their kids into schools with domed outdoor playing fields. The better-paid managers get to work in offices and buildings with special air purification systems. Not everyone can afford it, and those who can't could someday do what the Politburo most fears: become a public protest crowd, and head for Tiananmen Square.


Technocrats here dismiss the notion that China is vulnerable to Thomas Piketty-type attacks, on the theory that even though the income gap is growing, income growth at the bottom is rising (just not as quickly). That may be true, but perceptions matter, especially in a society obsessed with social rank. That's why President Xi Jinping began his term with a loud and effective attack on the most visible signs of official corruption -- things like lavish, expense account-enabled "gifting exchanges" (I’ll give you a Rolex if you give me a Piaget”), meals at French restaurants and lavish lakeside private parties. There have been warnings to cool it -- even to Xi's family. But having launched his crusade, he can't stop now. The deeper he goes, the more entrenched interests and resentful foes he attacks.


China's planners are confident, with good reason, that even if the nation doesn’t grow at double-digit rates, it will maintain its steady upward path by turning to a service economy enabled by ITC, e-commence and social media. They are probably right, but they are also dealing with a revolution of rising expectations: The “90s generation,” iPhones wired to their ears, expect more -- maybe more than the country can provide. And China still needs physical resources and cheap labor, both of which are becoming scarcer. China will be moving increasingly out into the world to fulfill the needs of further growth. The world will want the business; China, which recently bought the United States' largest pork producer, is literally eating our lunch. But when does serious resentment and fear set in? The answer: In the United States, it already has.


For the first time in recent memory, locals say, members of the People's Liberation Army showed up on prominent street corners in Shanghai last week, with rifles at the ready as they surveyed the crowds. The reason, apparently, was concern over terrorists far to the west in the autonomous Xinjiang region, where attackers in the capital of Urumqi killed 31 and injured more than 90 when they drove through a busy market while throwing explosives. The government has launched a huge "crackdown" in the wake of the attack, and it seems to have the backing of the average citizens. The measures are expected to be harsh. But with the response comes a risk: China could turn into something it so far has avoided becoming -- a serious Al Qaeda target.


Proudly (though somewhat defensively at times), Chinese intellectuals and officials alike say that American-style democracy is neither a personal right nor a system that would work in China. Indeed, they insist that their top-down system of unelected Socialist control overseeing a thriving market economy is showing itself to be superior when it comes to producing on-the-ground results. But at the same time, these people counsel patience, saying that in a decade or two China will be much freer, more open and more democratic. In other words, critics have a point. China's never going to be a Jeffersonian society, but the skyrocketing growth of the Internet has created a new generation that is used to being able to find information -- real information -- anywhere and at any time. Can the country's leadership balance a Confucianism "know thy place" ethos with the "anything goes" mentality of net-baed consumerism and expanded political expression? It's not clear.


For thousands of years, China has been content to define itself with its written language, its court-based Confucianism, and an inward-looking faith that the Middle Kingdom was the only world the Chinese needed to know. They felt no need to explain themselves to anyone -- even, often, themselves. China just WAS, and it was beyond the ken of leaders and people there that others didn't see its superiority. Today, China can no longer take that attitude. It needs to explain itself to the world if it is to play the global leadership role that may be its destiny. But to do that, the Chinese have to decide who they are in the 21st century. What is their message to and for the planet, other than the clear virtue of an engine of material progress that has lifted hundreds of millions out of poverty? Speaking from its heart to the world has never been China's strength, but it must now, for the sake of everyone Under Heaven.



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