Oct 24th 2017

Is China a Poor Cousin or a Global Leader

by Daniel Wagner

Daniel Wagner is CEO of Country Risk Solutions, a Connecticut-based cross-border risk advisory firm and author of the book Managing Country Risk. CRS provides a range of services related to the management of cross-border risk. He is also Senior Advisor with Gnarus Advisors.


President Xi’s speech at the opening ceremony of the Communist Party’s 19th Congress was certainly bold and impressive, stressing the country’s many achievements, and his belief that China is on the precipice of becoming a ‘great’ global power. Mr. Xi made clear he no longer considers China to be a poor country, but of course, that has not been the case for some time. China lifted the vast majority of its citizens out of poverty decades ago, it has for decades amassed a staggering compilation of foreign exchange, and has become the world’s second largest economy (soon to be the largest). That being the case, Xi’s declaration that China is not a poor country should have surprised no one.

That said, the desire to claim China’s emerging status as a great power raises a whole host of questions that Mr. Xi and the Chinese Communist Party must address. For example, when will China (and the multilateral development banks) stop perpetuating the country’s status as a recipient of development assistance? That the MDBs continue to lend to China makes absolutely no sense since China has more than sufficient financial resources to take care of its own needs. Its failure to do so takes much needed funding away from genuinely poor countries that truly need the money. By virtue of its global economic ranking, China should be a lender to (not a borrower of) precious development resources, and a country with China’s financial depth should also be devoting substantially more resources to foreign assistance than it does.

These issues are exemplary of China’s chosen ‘dual’ role as both a developed country seeking to claim its rightful place among the world’s leading nations, and a developing nation that will continue to require more resources from other nations in order to become fully developed. In this regard, China can rightly be accused of wanting to have its cake and eat it, too - it wants to have the benefits of receiving the multilateral development assistance normally afforded to ‘developing’ countries, while at the same time wanting to be able to flex its muscles in international fiscal and monetary affairs.

China has exhibited a similar dual role in global politics, pulling its weight at the UN and other international organizations and forming meaningful alliances with a plethora of countries. But it has done so largely by playing by its own set of rules, at times forming relationships with unsavory regimes and exhibiting little concern for human rights along the way. In a sense, China has had the best of both worlds, being at once a back room deal maker while at the same time being a friend to countries that have few if any allies, or are international pariahs (such as North Korea).

Clearly, China cannot have it both ways indefinitely. Mr. Xi should be given credit for recognizing this. But Beijing would be well advised to decide to fully embrace its ‘destiny’ as a global superpower while discarding its ‘poor cousin’ image, because it cannot be all things to all countries. Will it be a champion of international laws and norms, or a power that prefers to get things done its own way - adhering to those standards only when it is convenient? China is naturally capable of getting to its desired finish line any way it desires to do so, but, ultimately, it would be far preferable if it were to become the global power that it strives to be as a full member of the global community of nations that demonstrates that it acknowledges and plays by internationally accepted rules.

Mr. Xi obviously desires to craft a bold and definitive path into the future for China. It is the right time, and he is just the right man to do it. The question is whether he will seek to emulate the well- worn path of playing a poor cousin while simultaneously striving to cement a global leadership role for Beijing. Given that Xi has fully consolidated his power and is the strongest leader China has seen since Mao, his moment of truth has come. Five years from now, it is likelier than not that China will indeed be leading the world in a variety of areas. It will do so more quickly and effectively if it sheds its poor cousin persona and decides to play by the same rules everyone else plays by at the same time.

 

*Daniel Wagner is the founder of Country Risk Solutions, Managing Director of Risk Cooperative, and author of the new book “Virtual Terror”.

 

This article first appeared in the South China Morning Post.

 


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