BEIJING -- When the now 88-year-old Henry Kissinger sat down with Chairman Mao to discuss opening up China back in the 1970s, America was at the peak of its power. It surely never entered Kissinger's mind at the time that less than half a century later, as the Communist Party of China confidently celebrates its 90th anniversary, he would be back in Beijing passing the baton of global leadership on to his hosts.
Opening a conference of China's most important think tank on globalization last Saturday, the great statesman compared China today to the U.S. in 1947.
After the Napoleonic Wars, Kissinger observed, Britain emerged as the top world power and stayed that way for over a century. But by 1947, Ernest Bevin, foreign secretary in the waning days of the empire, felt compelled to tell his American counterpart that, "as the largest creditor, the U.S. must now take the lead in shaping the new order." Hence the Marshall Plan launched by the Americans to rebuild after the war, the dominant role of the dollar, and America's ascendant path for the rest of the 20th century.
As the world's largest creditor, China is now where America was in 1947, on the cusp of the next world order. Kissinger told his hosts that while this transition from one system to another will likely take another 30 years, China's role will only grow because it is obliged by its own self-interest to shape the global system that has shifted away from its "North Atlantic pole" toward China and the emerging economies.
In Kissinger's view, China will be drafted into leadership at an accelerating pace because of the ongoing paralysis in the West. America, he put it politely, "is absorbed in a debate over the role of government and the sources of vitality in the United States; over how much government we should have and who should pay for it." Europe is gripped by both "a financial and conceptual crisis, suspended between a national framework and its substitute."
"A sense of cooperation is critical," said Kissinger, "because we have entered a new era of complexity and are looking for an overriding framework. We have to adjust to the entry of a whole series of new players" on the global scene. For Kissinger, the "principal instrument of adjustment is the G-20," where each country must fit its national aspirations into an international arrangement "that avoids a zero sum competition for economic growth."
Kissinger is right. In the past two centuries, Britain and then the United States were the hegemonic powers that imposed the "global public goods" of security, financial stability, a major reserve currency and open trade. Today, the U.S. and the G-7 advanced economies are increasingly unable to provide them. Yet, the emerging economies, led by China, are not yet able to do so.
For this reason, the G-20, which combines both the advanced and emerging economies, must collectively provide these global public goods. In a truly multi-polar world, even one in which China will be the largest economy by 2050, this will be the "new normal" for the foreseeable future.
The challenge is whether global governance can be established without one dominant power or set of interests calling the shots. One path forward has been suggested by Zheng Bijian, the former vice chair of the Central Party School, author of China's "peaceful rise" doctrine and confidant of the country's leaders. China can only reach its goals of "qualitatively improving the life of the ordinary Chinese" and moving up the middle-income ladder "in the context of interdependence," Zheng says.
Thus, Zheng says, China must move beyond the "peaceful rise" idea to "expand and deepen a convergence of interests with others globally. When there is an accumulation of converging interests, there will be a solid foundation for common interests."
Those "convergent interests" amount to the global public goods of the 21st century. Zheng specifically mentions fighting climate change, and joint initiatives on low-carbon growth, especially with the United States.
There are others that the G-20 must take up, such as global financial stability, the phasing in of a multi-currency global reserve basket (including the RMB) to replace the dollar, a new governance structure for the IMF which reflects the power of the emerging economies, and a revived or reconfigured Doha trade round.
One area where China, as the world's largest creditor, could play a critical role is in helping to stabilize the Middle East and North Africa (MENA) through economic development -- something in the interest of the whole world, not least for energy security. After all, China is already playing a significant role in Europe through buying the bonds of the most troubled countries.
In the wake of the Arab revolutions, there was much talk of a "Marshall Plan" for the MENA countries. At the G-8 meeting in Deauville recently, French President Nicolas Sarkozy managed to raise a pledge of $20 billion for this purpose. That seems a largely hollow commitment since the advanced economies are drowning in deficits and mired in a sovereign debt crisis.
Instead of a "Marshall Plan," why not a "Hu Jintao plan" sponsored by the G-20 in which China recycles some its massive reserve surplus, along with the Gulf states, in a way that benefits the whole global system?
As Kissinger suggested, just as the Marshall Plan merged a rising America's obligations and self-interest in shaping the world order of the last half of the 20th century, might now be the right time for China to take up its new role in such a way? The Americans were right to listen to Ernest Bevin. The Chinese would be right to listen to Henry Kissinger.