What does China want?

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By Fareed Zakaria
Monday, June 7, 2010

BEIJING

Over the past few months, foreign diplomats have privately groused to me about a world power's arrogant foreign policy. Except that they're talking about China, not the United States. A senior official from a developing country said, on background, so as not to anger Beijing: "Chinese officials used to meet with us with a great sense of solidarity and warmth. Now they read us a list of demands." Diplomats in Beijing report that Chinese officials now treat them differently than they did just a few years ago. One complained that even getting meetings with senior officials had become difficult. "People I used to see routinely now refuse to give me an appointment," one said to me in Beijing last week.

Some of this is understandable. Success breeds confidence, as Americans well know. And China has been very successful. By common consent, the country has come out on top after the global economic crisis. Its massive fiscal stimulus is building a new generation of infrastructure; its banks are stable; its consumers have high savings rates; and the government keeps piling up reserves, which now total almost $2.5 trillion. But in discussions with people in and out of the Chinese government last week, I was struck less by arrogance than by the doubt, uncertainty and apprehension that seemed to be plaguing the Chinese.

My interlocutors remained confident about the regime's technical ability to handle the economy. While Wall Street frets about an overheating China, most people here seemed sure that the government would be able to adjust to keep growth steady -- as it has in the past. Worried about a frothy real estate market in Beijing? Well, banks have been ordered to stop giving mortgages, and property taxes are set to be raised. Beijingers cannot buy more than one apartment per family. Once the froth subsides, the rules will, in all likelihood, be revoked.

But deeper changes are also underway. China has had dramatic labor protests in recent weeks, from strikes at a Honda factory to grim accounts of suicide at the vast Foxconn complex, where iPhones are assembled. One scholar calls this "the end of the world-factory model," under which China would be the globe's low-wage manufacturer. "Our economy can't keep squeezing labor benefits because workers are unwilling to accept it," says Chang Kai, director of the Renmin University's Labor Institute.

This is a far cry from the government's attitude only a few years ago, when officials warned that if Chinese workers asked for pay raises, businesses would move to Vietnam and Cambodia. In 2003 Zhang Zhixiong, deputy chairman of the labor union for Hyundai in Beijing, said, "Strikes in China jeopardize the country's reputation," and promised there would be none. Now Lee Chang-hee, at Beijing's International Labor Organization, predicts that unions and collective bargaining are inevitably going to become part of China's landscape, driving up wages.

The quotations in the paragraphs above all come from China Daily, an English-language newspaper published by the government. Nothing like this would have appeared in any language five years ago in China, and the debate gets even more honest in private. A Chinese businessman said to me over lunch in Beijing, "In many ways the financial crisis and the discrediting of the American model has been bad for us. You see, we don't really have an ideology anymore. We don't know what we believe in. We used to think it was some version of the American Dream -- liberalize, open up, grow. But then you had your crisis. We can say, it proves we're strong. But where do we go now?"

The angst is being exacerbated by China's ongoing political transition, in which the top leadership will be replaced in two years, and in which for the first time, the new president and premier will have no personal connection with or blessing from Deng Xiaoping, the architect of modern China. This has broader consequences. China knows it is now a great power and demands that it be respected and listened to. But short of protecting its narrow interests, the regime still doesn't seem sure what it wants internationally. What are its broader foreign policy goals? Is it an ally or a rival of the United States? What kind of a world does it hope to shape?

China is entering a new era but seems ideologically and operationally ill prepared for it. That might explain why Beijing has been hesitant and halting in its attitudes on nuclear proliferation, North Korea and Iran. It is less arrogant than ambivalent, something the United States also knows well from its own early history as a great power.

Fareed Zakaria is editor of Newsweek International. His e-mail address is comments@fareedzakaria.com.


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