Governance model made in China

In the West, the Chinese model of governance is not seen as an alternative to the Western liberal political order. But as China overtakes the United States to become the largest economy and pulls well ahead over the next two decades, some forecasts predict that it will be twice the size of the United States economy by 2030. Therefore, growing attention will be paid to the Chinese system/model of governance.

The strengths of Chinese governance are threefold, which are identified as its ability to think strategically, its infrastructural prowess and the impressive competence of its government. While the Western tradition emphasizes democracy, the Chinese attach equivalent importance to state competence, which is closely linked to the idea of meritocracy. William Dobson, the American politics and foreign affairs analyst argued that, given that state competence is a major weakness and a seriously neglected issue in the West, it would not be difficult to imagine this aspect of Chinese governance influencing Western thinking in the future.

But with the deep roots of democracy in the West and the absence of it in the Chinese tradition  the overall influence of Chinese governance in the Western world will remain very limited. The situation is, however, rather different in the developing world. There is an underlying affinity between China and the developing world because, unlike the West, they share, in broad terms, a similar stage of development. As George Magnus, an independent economist and an adviser to UBS and other investment banks stated, China is indubitably the outstanding example of a developing country, having grown at around 10% a year for over 30 years and lifted an estimated 600 million out of poverty. These achievements have brought China considerable prestige in the developing world.

Combined with China’s extensive trading and financial ties with many developing countries which are viewed very positively overall this has fostered an increasingly close relationship between China and the developing world. As a consequence, there is great interest in many developing countries in how China is governed, in the competence of its state and what they might learn from it.

For its part, though, China does not see itself as a model for others. Unlike the West, or indeed the Soviet Union in an earlier era, it does not proselytize about its own arrangements or seek to persuade other nations to copy it. The underlying reason for this mentality is that China has for many centuries regarded itself as separate and distinct from others. In view of its deep historical roots, it seems highly unlikely that this attitude will change.

Recent debates about a so-called China model have been conducted largely outsid, rather than inside, China and by foreigners, rather than Chinese. Since the beginning of the reform period in 1978, China’s attitude towards the international system has been shaped by the overwhelming priority it has attached to its own economic growth and the reduction in poverty. To this end, it was seen as essential that China gain access to foreign markets and gain admission to the World Trade Organization.

Adaptation to and acquiescence in the existing international economic order thus informed the Chinese strategy. There has, so far at least, been no substantial change in this underlying approach in the past 35 years. But will this continue to be the case, as China becomes a great global power? As many have observed, the present international system has served China well, having played a crucial and indispensable role in its economic transformation.

And it is still very much a developing country. Around half the population still live in the countryside. China is also acutely aware, given its huge dependence on both exports and imports, of the importance of maintaining good relations with the rest of the world. The Chinese leadership is extremely cautious and not given to acting in a rash fashion. China is the world’s largest exporter and will shortly be the world’s largest importer. In 2009 and 2010, two Chinese banks, the China Development Bank and the China Export-Import Bank, lent more to the developing world than the World Bank.

China is already a financial powerhouse. Within the next two decades, the renminbi will replace the dollar as the world’s major currency. Willy-nilly, this is bound to transform the fundamental architecture of the international economic and financial system. Either the International Monetary Fund adjusts to the reality of Chinese power, together with that of other developing countries like India, by becoming something very different from what it is now or it will in time be replaced. The prospects for the World Bank’s remaining the main source of aid and lending for the developing world are zero.

In short, the present American-inspired international economic system will not survive the relative decline of the United States, even though certain features of it may persist. The Chinese, for their part, will proceed very cautiously and avoid anything that might be seen as provocative or unnecessarily divisive. In all likelihood, they will seek a consensual process of reform. Be that as it may, China’s increasingly dominant economic power will ultimately result in a very different international economic order from the present one. The same can be said of the international system more generally, but that is another story.