The End of the 'Peaceful Rise'?

Even China's elites don't know where it's headed.

For all the breathless headlines, there is no real clarity as to what kind of global power China will become over the next critical decade. But if the international community is in the dark about China's 21st-century trajectory, it is likely because there is no real consensus among the Chinese themselves.

Throughout the first decades of the reform era, China under Deng Xiaoping quietly and gradually sought to join a wide range of international organizations and regimes. Top policy advisors such as economist Wu Jinglian -- who eventually earned the moniker "Mr. Market" -- openly favored market reform and integration with the global economy. At the same time, Deng retained earlier elements of Chinese strategy, such as the "Four Modernizations" (agriculture, industry, national defense, and science and technology) aimed at transforming China into a self-reliant power by the early 21st century; and military strategists like Adm. Liu Huaqing, who led the Chinese navy during the 1980s, were laying out a vision for a seafaring force that would be the equal of the United States by the mid-21st century.

The result of Deng's blending of old and new was the emergence of a global power that nonetheless maintained a low political and military profile. Chinese foreign policy hewed closely to one of Deng's guiding principles -- "hide brightness and cherish obscurity."

Yet the consensus of the Deng era began to fray over the past decade. As China's economy continued to grow and the country's presence overseas expanded deep into Southeast Asia, Latin America, and Africa, Deng's dictum became out of sync with reality. With some outsiders beginning to envision a newly empowered China posing a threat to the West, senior Communist Party official Zheng Bijian sought to explain China's growing power and influence to the rest of the world. Arriving at the notion of "peaceful rise," which he started using in 2003 and popularized in a 2005 Foreign Affairs article, Zheng argued that unlike other former great powers, China's rise would not be based on the exploitation of others. Rather, the theory -- some might say marketing slogan -- stressed that China's rise would benefit the Chinese people and the rest of the world.

Most of China's top leaders quickly came out in support of the motto. But the debate over it was instructive: Some Chinese scholars worried that the word "rise" was too provocative for foreigners, while others didn't like the word "peace," arguing it wouldn't allow for China to be aggressive if the need arose, for instance should Taiwan suddenly declare independence. As Yan Xuetong, a professor at Tsinghua University, argued at the time, "All peace strategies that would prevent China's rise must be excluded." In official circles, the term soon morphed into the more soporific "peaceful development."

Today, without Beijing's clear guidance, a great debate has arisen among China's intelligentsia over the country's role in the world. Some are clearly ready to see China assert itself as a global power. At the height of the financial crisis, for example, China's central bank governor Zhou Xiaochuan suggested the time was ripe for the world to move away from the dollar as the reserve currency. International relations scholars such as Fudan University's Shen Dingli openly tout China's right to establish military bases to protect its overseas interests. But other Chinese officials and thinkers just as clearly sense danger in such boldness. "I don't think China should become another U.S. in global politics, and it couldn't even if it wanted to," scholar Wang Jisi has opined.

This debate about how China can advance its interests in the world is not simply a choice between seizing the moment and staying the course. Some Chinese officials have called on their government to shoulder more international responsibilities. Premier Wen Jiabao, for example, said in an April speech that China would step up its contributions to international efforts in such areas as education, medical care, and debt reduction because it is "the aspiration of the international community and in China's own interest, too." Others, such as reporter Wang Di, have written of the need for large Chinese companies operating abroad to consider corporate social responsibility, lest they be labeled forces of "arrogant capital expansion."

Perhaps the most profound challenge, as several Chinese thinkers now articulate, is not any external threat, but rather the changing political culture inside China. "Three decades of reform have led to a rapid increase of wealth in China, and this in turn has also made the Chinese people arrogant," Ye Hailin, research fellow with the Chinese Academy of Social Sciences, wrote in a stinging critique of current Chinese sensibilities. "The Chinese people are no longer tolerant of criticisms." 

How this debate will shape China's future remains an open question. But perhaps the most important point is that it is taking place at all -- not simply behind the famously closed doors of Zhongnanhai, but before the Chinese people and the rest of the world.



The African Miracle

How the world's charity case became its best investment opportunity.

Not so long ago, the world lamented its broken continent. "The state of Africa is a scar on the conscience of the world," declared British Prime Minister Tony Blair in 2001 -- and his was a common refrain. Civil war, economic stagnation, and a high disease burden seemed irreversible, condemning the region to perpetual poverty.

A decade later, however, Africa has outgrown the gloom and doom. Far from the misery-stricken place so often portrayed, Africa today is alive with rising urban centers, a growing consumer class, and sizzling business deals. It's a land of opportunity.

Africa, in fact, is now one of the world's fastest-growing economic regions. Between 2000 and 2008, the continent's collective GDP grew at 4.9 percent per year -- twice as fast as in the preceding two decades. By 2008, that put Africa's economic output at $1.6 trillion, roughly on par with Russia and Brazil. Africa was one of only two regions -- Asia being the other -- where GDP rose during 2009's global recession. And revenues from natural resources, the old foundation of Africa's economy, directly accounted for just 24 percent of growth during the last decade; the rest came from other booming sectors, such as finance, retail, agriculture, and telecommunications. Not every country in Africa is resource rich, yet GDP growth accelerated almost everywhere.

Government reforms, greater political stability, improved macroeconomics, and a healthier business environment are now taking hold in a region long dismissed as hopeless. Inflation fell to an average of 8 percent in the 2000s after a decade during which it hovered at 22 percent. African countries have lowered trade barriers, cut taxes, privatized companies, and liberalized many sectors, including banking. Africa now boasts more than 100 domestic companies with revenue greater than $1 billion. And capital flows to the continent increased from just $15 billion in 2000 to $87 billion in 2007. With good reason: Africa offers the highest rate of return on investment of any region in the world.

Pockets of great risk and instability certainly remain, but the long-term trends look good. Global demand for commodities is rising, and Africa is well positioned to profit. The fastest-growing demand for these raw inputs comes from the world's emerging economies, with which sub-Saharan Africa now conducts half its trade. Africa's production of oil, gas, minerals, and other resources is projected to grow at 2 to 4 percent per year for the next 10 years. At current prices, this will raise the value of resource production to $540 billion by 2020 -- and possibly much higher depending on how commodity prices rise.

An even bigger source of growth will be the rise of the urban African consumer. In 1980, just 28 percent of Africans lived in cities. Today, 40 percent of the continent's 1 billion do, a portion close to China's, larger than India's, and likely to keep growing in the coming years. The number of households with discretionary income is projected to grow 50 percent over the next 10 years to 128 million. Already, Africa's household spending tops $860 billion a year, more than that of India or Russia. And consumer spending in Africa is growing two to three times faster than in the wealthy developed countries and could be worth $1.4 trillion in annual revenue within a decade.

Nothing spawns growth like growth, and Africa's urbanization is also increasing demand for new roads, rail systems, clean water, power generation, and other infrastructure. Even agriculture, in which Africa has long lagged, is poised for takeoff. The continent is home to 60 percent of the world's uncultivated arable land. So if farmers brought more of it into use, raised the yields on key crops to 80 percent of the world average, and shifted cultivation to higher-value crops, the continent's famers could increase the value of their annual agricultural output from $280 billion today to around $500 billion by 2020.

Multinational companies have already shifted their mindsets, even if the political world is still used to thinking of Africa as a charity case. Telecom firms have signed up 316 million new African subscribers since 2000, more than the population of the United States. Walmart recently bid $4.6 billion for one of the region's largest retailers, confirmation that global businesses think Africa holds commercial potential on a scale not seen since China opened up more than 20 years ago. Those prospects will only grow as Africa urbanizes; already, the continent is home to 52 cities with populations of at least 1 million, as many as in Western Europe today.

While challenges remain, Africa has a bright future -- you can bet on it, as countless businesses are doing every day.

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