President Hu and Negotiations

American and European political rights are intrinsically linked with economic rights. Capitalism arose amid democratic revolution in the late 1700s. Americans, committed to a rule of law rooted in a recognition of individual rights, are inclined to doubt China's commitment to capitalism and to see China's economic growth as relying on instrumentalist policies to achieve short-term domestic economic benefit at the risk of long-term market viability. On the other hand, Chinese leaders seek to deny most political freedoms while slowly opening the door for economic rights that will spur growth.

Differences between the Western and the Chinese points of view oftentimes create misunderstandings that will likely permeate press reports of President Hu's state visit with President Obama this week. Different media sources will argue that China should be feared; others will suggest that we don't need détente and relationships with the country's leaders. It's most important to understand the Chinese mindset before arguing for what our political leaders should or should not do. The "Beijing Consensus" is the foundation for this understanding.


Joshua Cooper Ramo coined the term "Beijing Consensus" in 2004 in his 60-page Foreign Policy Centre article as he described China's approach to new development. He states, "it is defined by a ruthless willingness to innovate and experiment, by a lively defense of national borders and interests, and by the increasingly thoughtful accumulation of tools of asymmetric power projection." The Consensus addresses both the global balance of power and domestic issues such as quality of life and social and economic change. Ramo analyzed the process of change in China through more than 100 off-the-record discussions with leading thinkers in Chinese universities, think tanks, and government. Many of his axioms of Chinese development are paradoxical and depend on the lens used to observe behavior and attitude. Ramo offers three main theorems that nations need to understand in competing with the Chinese in business and in working with them politically. To summarize briefly:

The first theorem involves Chinese leaders who want to keep options open and preserve flexibility or a "commitment to innovation and constant experimentation." Ramo argues that China is less ideologically committed than the West. Eschewing the pursuit of any ideal, it does not seek a perfect solution. The only true path to success is one that is dynamic and responsive; no single plan works for every situation.

The second theorem of Chinese behavior "demands a development model where [sic] sustainability and equality become first considerations, not luxuries." Ramos asserts that managing chaos is more realistic than trying to prevent chaos. China needs to grow GDP per capita, but also measures the spread of wealth and the quality of life. Sometimes this goal appears chimera to westerners, as Chinese leaders aspire to an improved quality of life, but continue to exploit fossil fuels despite the cost to human lives and the environment resulting from their use.

The third theorem argues that China's leaders want a peaceful rise by using economic leverage to keep the U.S. in check and assure China's own financial sovereignty. This strategy includes not only financial self-determination, but also a shift to the most effective military strategy, which Ramo suggests is more likely to be an asymmetric strategy rather than one that seeks direct confrontation. Ramo argues -- particularly in the Chinese context -- that geo-politics and geo-economics are fundamentally linked.


The Beijing Consensus provides a framework for dealing with China. One of my key arguments in Shaking the Globe is that inter-cultural understanding must precede international trade. China already rivals the U.S. in several important areas. The shift in global power did not happen overnight, but there are key milestones that illuminate why China now is the force with which we must reckon. Allow me to share a handful of these inflection points of shifting power.

First, in 2007, China contributed more to the global GDP growth than did the U.S. China grew by $333 billion; the U.S. grew by $298 billion. Second, in 2008, U.S. food exports to China surpassed those sent to the European Union for the first time ever. The Chinese need to feed the increasing middle class who demand meat and more grains. In the middle of 2010, the International Energy Agency reported that China surpassed the U.S. as the largest energy consumer.

I believe the water supply will be the next inflection point. Today, the water available to each person in China is one-fourth the global average. China needs water and is diverting water from the Qiughai-Tibetan plateau to its needs. This drains resources from across its borders. Political tensions resulting from the consumption of natural resources will build, unless the government and business leaders work toward solutions.

On January 15, 2011, the Washington Post observed that "President Obama is planning to refocus attention on China's record of suppressing free speech and political freedom in the coming weeks, despite the risk of further destabilizing an important relationship after a contentious year." I find this amazing, knowing what power shifts have occurred. In this, President Obama epitomizes the western perspective that capitalism depends upon securing political and economic rights through law. It imposes our judgment for that of a more communitarian-minded eastern nation. It favors idealism over pragmatism and views capitalism as a fulfillment of natural economic laws rather than as an instrument for commercial progress. For those of us who strive to develop stronger inter-connected ties between cultures, reaching out to Beijing's leaders about issues that are fundamental to them, such as GDP growth, stability, and security would improve the chances of progress on issues people of both countries care about.