China Still Isn’t Ready to Be a True Global Leader

China’s economic miracle over the past 35 years is well documented. It has emerged as the world’s largest economy, although it’s still lagging well behind in world-class per capita GDP. While working in China over the past five years, we increasingly encountered senior government officials and business executives who confidently explained to us that the United States is a fading superpower whose best days are behind it and that the global leader for the 21st century will be China. Buttressed with a certain kind of evidence, this is a beguiling story. It is also a very complex one – and ultimately it is not clear, in our judgment, that it will play out this way.

We see substantial barriers to progress on the short- and medium-term horizons that collectively suggest that while China has done easy economic repositioning work, there are increasingly substantial obstacles standing in the way of further progress.

Economic dynamism is necessary for global leadership, but it’s not enough. Although China’s growth has been extraordinary, and its short-term prospects continue to be bright even in these turbulent times, deep challenges lie ahead. They range from brain drain to civil unease over pollution and corruption to hundreds of millions of migrant workers, who, without hukou, or formal residency status, constitute an alienated army of second-class citizens in every major Chinese city.

Perhaps a greater sign of challenge is to be found in the actions of China’s elites. What does it mean when a country’s leading citizens send their wealth and children abroad? What does it mean when family and company funds are parked in American, Canadian, and British real estate? What does it mean when Canada has had so many rich Chinese apply for citizenship that it has recently attempted to limit their immigration?

A global leader’s most successful citizens should not as a first preference seek to educate their children outside the country. Today, at least 275,000 Chinese young adults are studying in American universities, and another some 160,000 are studying in Europe. Leading secondary schools in these countries faces long waiting lists of Chinese applicants. In response to these trends, international secondary and tertiary education institutions seek to replicate their campuses in China (sometimes, like London’s Harrow School, lending their name to the effort). Although around 300,000 international students now study in China, the influence is more regional than global, with the majority numbers from Korea, Vietnam, and Japan. Chinese universities are rising in world rankings, yet none is in the top 40 by any measure. In short, in education there is a long way to go.

Chinese universities face real barriers as they attempt to compete on a global level. Two years ago, President Xi Jinping visited Tsinghua University and Beijing University (the two leading Chinese universities) and made clear that a central role for both was to train future Party leaders, and that the Party should have more, not less, influence on higher education. More recently, faculty in Chinese universities have faced strict limitations as to what they could talk about both in classrooms and in individual meetings with students. The concept of the “7 Nos” – a list of topics to steer clear of discussing with students – was articulated. This meant faculty could not talk about any past failures of the Communist Party, either in a classroom or with students. They could not talk about the advantages of separation between the judicial and executive arms of government. They could not talk about universal human rights. They could not talk about freedom of press, nor of “civil society.” They even were prohibited from discussing whether or not the Chinese Communist Party was subject to the “constitutional rule” of China’s constitution, which the Party wrote in 1982. As we write, it is hard to overstate the impact of these strictures on campus discourse and the learning environment.

What are other measures of global leadership? In our view, one cannot lead if one’s currency is blocked from the rest of the world and is not convertible. (This is perhaps the easiest of the problems to address and indeed progress is already being made in this realm.)

It is also hard to lead when there is intense surveillance on the internet, and, by implication, intensive distrust of one’s own citizens. This monitoring and censorship can be circumvented, but the apparent insecurity of the government is not a cause for confidence in a global leader.

Finally, a leader needs to have a moral message to communicate to the world. In the Maoist era, China had ambitions to lead the so-called “Third World” on a path that would be different from that of the United States or the former Soviet Union. There is no such message in China today. Getting gloriously rich is a soulless statement. The concept of a “Chinese Dream,” rooted largely in material wealth and power, does not appear to offer dreams to others. The official objective of achieving “Socialism with Chinese characteristics” has neatly avoided describing just what a “Chinese” characteristic is, save to imply that it means a continuingly large role for state-owned enterprises.

Addressing these issues will not be easy in the next decade or two. But that doesn’t mean they cannot be addressed. One has only to compare the United States of around 1900 – a place where no women voted, Jim Crow laws prevailed across the South, and food and drugs were largely unregulated – to see what deep changes in values and institutions are possible over long periods of time.

Surely it is possible to visualize something like this happening under the right circumstances in China over the next century. At present, however, debates on China’s future are vibrant, but underground, on the mainland. In Hong Kong and Taiwan, as we have seen in recent months, the debate is public and energized. When such debates become open, public, and even predictable on the Chinese mainland, then – and only then – do we believe that China will have the capacity to truly lead.

HBR

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Posted on January 6, 2015, in Sri Lanka. Bookmark the permalink. Comments Off on China Still Isn’t Ready to Be a True Global Leader.

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