China is here to stay – and America isn’t going away

When China overtakes the United States as the biggest economy in the world, as it will do in the next few years, that will be just one milestone. With the country’s growth likely to continue at a relatively fast pace for the next generation, it will soon become by far the largest economy in the world. China’s rapidly expanding influence on the world stage – and its assertiveness in pursuing its strategic interests – will become ever greater.

But America is not about to leave that stage. Don’t be deceived by the dysfunctional short-termism of Washington politics: the system was set up to be gridlocked. Yet the incredible inventiveness and dynamism of a country where economic Darwinism is a way of life will ensure that it remains the counteracting force China has to reckon with for as far ahead as any of us can foresee. And the US is more and more ready to define China as a threat to its own interests. (It’s not just President Trump; this is the mood across the board in the Washington establishment.)

What does this mean for the rest of us? For those of us who share the Eurasian landmass with China, for the Africans whose demographic trends will ensure that their weight will finally count in the next century, and even for the Latin Americans who are used to living in the American vortex, we will increasingly find ourselves in the uncomfortable position of being pressed to take sides.

This is not a replay of the Cold War contest with the Soviet Union. Nor is this a conflict between two world orders – one of them democratic, open and multilateral, the other state-directed and determined to create a new intergovernmental framework. Neither China nor America has a deep commitment to any multilateral global order that might supersede their own interests. This rivalry will be much more like a game of chess between two grandmasters, where moves and countermoves have consequences several moves later.

Virtually every country and every business in the world will, directly or indirectly, be impacted by this geopolitical chess game. And for both countries and businesses, the right policy is one of engagement – with both China and America. Engagement doesn’t have to be naïve; in both cases it is surely wise to discern the strategic reflexes and vested interests that colour attitudes and influence behaviours. And engagement does not mean abandoning moral discourse.

The natural partners of the US – the Europeans, Latin Americans, and others who have thought of themselves at least in some sense as part of the “West” – mostly know America better than they know China. But even they often fail to see how very different America’s socio-economic culture is from their own. In the case of China, the differences are all the more obvious.

So engagement, if it is to be well founded and durable, needs to based on a readiness to learn. In particular, we need to learn more about the Chinese thought world. We need to understand more about its historical and cultural hinterland. We need to recognize the deep-seated instincts that underlie the self-awareness of China.

To start, we need to recognise that the Chinese government is not Communist – not in the sense that Marx, Lenin or Mao would have understood that term. Notwithstanding the developments of recent years, it is still the case that the economy is driven primarily driven by the private sector, while the society is highly colourful and pluralistic – as anyone who has been to a traditional street market or a glitzy new shopping mall in one of China’s great cities can attest.

What China is governed by is a motherland party. The sense of patriotism and national pride that underpins its rule is palpable to anyone who has spent any time there. Dull conformity is not the mood. Nor is dour submissiveness; voluble protest on matters such as urban pollution has been a continuing feature of internet chatter in recent years.

It is sometimes said that communism is skin deep but Confucianism is the bedrock of the Chinese consciousness. Yes, and no. China has a long history of metaphysical exploration, with origins as old as that of classical Greece and as continuously evolving as the equivalent European odyssey. China’s “Confucianism” is actually a blend of the original Confucian classics with both Daoist and Buddhist themes. And, crucially, there has always been a tendency to swing between the voluntarism of Confucian ethics (with its emphasis on self-improvement within an accepted social order) and a much more top-down, controlling ethos embodied in China’s “legalist’” philosophical tradition. This owes its classical expression to a statesman from the third century BCE, Han Fei, whose writings on statecraft have an obvious European echo many centuries later, in Machiavelli. The pendulum may have swung in this direction in recent years. But a pendulum is what it is.

The point is that the more we are ready to learn, the more we will be able to cope with life in the age of this power duopoly – and the more we will learn about ourselves too. We live in the century of the two geopolitical behemoths. Neither is going to fade away. Both have extraordinarily rich cultural traditions. The human odyssey will have its twists and turns and will be fraught with risk. But it is also a great journey – the great journey – of self-discovery for us all.

Lord Green of Hurstpierpoint is a former minister of state for Trade and Investment, and chairman and chief executive of HSBC Holdings. This column summarizes views he presented to a recent online gathering of the Oliver Wyman Forum.