Is the pendulum of history shifting? Has China moved from emerging power to emerged?

It is difficult not to conclude that China seems to have eaten its Wheaties: whether it is their swagger at the Copenhagen Climate meeting last December, the recent  cyber-flap with Google, or its unusually vitriolic reaction to not unexpected recent U.S. moves (e.g. arms sales to Taiwan, meeting with the Dali Lama) to which it has always responded with some degree of resentment.

Whatever happened to the China that was being “integrated” into the international system?

What is striking about recent Chinese behavior is how far it seems from the strategic dictum of Deng Tsiao-Peng  that has guided China’s approach to the world for the past three decades: “hide your capabilities, bide your time.”   What’s going on here?

The big idea driving U.S. policy toward China, the dominant narrative that has had bipartisan support since Nixon’s Opening has been the notion of integrating Beijing into the international system. The logic was that as China continued its economic reform, it would be woven into the tapestry of international institutions and its international behavior would comport with global norms. China would become a “stakeholder” in the international system. Internally, the argument goes, as its economy took off and a middle class emerged, China, as has been the pattern in East Asia over the past quarter-century, would move toward more political openness and democratization.

Careful What You Wish For

China has indeed become integrated into the alphabet soup of global institutions: IMF, World Bank, WTO, UN, you name it.  Beijing has the largest number of peacekeepers deployed around the world. With some $2.5 trillion in two-way trade, China has become the world’s trading state and amassed the world largest foreign reserves.

China’s economic boom, a quarter-century of more than 9% growth has lifted some 200 million out of absolute poverty, and boosted its per capita income to about $3600. Indeed China’s economic performance is viewed by many as the basis for the legitimacy of the ruling Communist Party.

But the major assumptions behind Western engagement with China seem increasingly to being called into question. Certainly, as the recent Google episode underscored, Bejing’s authoritarian regime shows few signs of liberalizing.

It is not just the use of the undervalued Yuan to boost its exports that has many businesses and governments in the West (and in Asia and Latin America, for that matter)  concerned. China’s state-centered capitalism and use of its resources to provide cheap capital to Chinese firms acquiring foreign companies and its economic nationalism — pushing national champions and relentlessly seeking to acquire technology — has many companies in the US and Europe rethinking the mythic promise of the China market. One example that will become more apparent over time is China’s aggressive industrial policy on clean energy. It is subsidizing solar, wind, and electric vehicles heavily and appears to be positioning itself to be a leading producer of solar panels, wind turbines and electric cars.

Why Now?

Until very recently China has tended to pursue a sophisticated diplomacy aimed at fostering the broad perception of its “peaceful rise” in Asia and around the world. Its economic dynamism has driven growth in much of and increasingly integrated Asia. Beijing has become more active in global institutions such as the IMF, and particularly sought to shape regional groupings from the Shanghai Cooperation Organization in Central Asia to the ASEAN+3 grouping and its growing trade and financial cooperation.

One eyebrow-raising example of Chinese thinking is a popular, if controversial recent book, China’s Dream: Major Power Thinking and Strategic Posture in a Post-American Era, written by Senior Colonel Liu Mingfu, a professor at the PLA’s National Defense University. It calls for China to replace the U.S. as the leading military power. Released earlier this year by a major Chinese commercial publisher (China Friendship Publishing Company), the book argues that the U.S. will resist China’s rise and that an inevitable contest for global leadership promises to be “the battle of the century.”

As Phillip Saunders, an American China hand, says in a thoughtful assessment ("Will China’s Dream turn into America’s Nightmare?") for the Jamestown Foundation’s "China Brief," Liu "argues that Chinese cultural and racial superiority will allow it to outpace the United States economically." As Saunders points out, Liu sees the threat of mutual destruction as preventing a military clash with the U.S. , but argues that China must achieve military dominance to avoid being attacked by the U.S. The book argues that “to save itself, to save the world China must prepare to become the [world’s] helmsman.” While not official policy, the book’s popularity suggests it is acceptable political discourse among China’s elite.

China’s Foreign Minister Yang Jiechi put a more defensive spin on it at a news conference last month, arguing that critics who label Beijing as "more and more tough" don’t recognize it is just defending its sovereignty, security and development interests.  "Sticking to one’s principles and being ‘tough’ or not, are two completely different matters," he contends.

Even if China has the most benign intent, its sheer size and growing footprint in the world gives pause to many of its partners and complicates global institutions Beijing is part of. After all, it is hardly only American business smarting from the undervalued RMB: Exporters in Europe, Indonesia,Vietnam and elsewhere are taking hits.     

Complicating Factors

Many observers consider Chinese nationalism, which has increasingly become what remains of ideology in China, as a factor.  The very nationalism that makes tough Chinese moves on Tibet and Taiwan popular at home can also put pressure on Beijing to be tough when it is perceived that its interests – be it the RMB, Taiwan or disputed sovereignty claims in the South China Sea – are challenged. And with the Chinese elite already jockeying for power in 2012, when Hu Jintao will step down, no prospective leader wants to appear “weak.”

China’s assertiveness may also be a product of the Great Recession, an economic meltdown that has tainted U.S. free market ideology and resulted in an ascendant state-centered capitalism around the world. The financial crisis seemed to thrust China forward into global prominence much faster than it sought or was prepared for. China may be concerned that its overconfident posture might be generating a backlash.

In any case, of late, things seem to have quieted down. A lengthy phone call from President Obama to Hu earlier this month seemed to pull both sides back and to look again at areas where interests overlap. One suspects that Hu’s visit next week to attend Obama’s nuclear safety summit will feature a more cooperative demeanor.

Domestic pressures in both Washington and Beijing are likely to make US-China relations a continuing rollercoaster ride, with cooperation punctuated by tension and elements of competition. It appears that the bilateral relationship has entered a new phase, perhaps with fewer illusions and no small amount of speed bumps ahead. But regardless, the recent higher profile for China suggests we have have seen a sneak preview of the future.

Robert Manning is a senior advisor to the Atlantic Council.  The views expressed here are solely his own, not those of any U.S. government agency. Photo credit: Reuters Pictures.

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