How China Sees The World

Liu mingfu likes to think he is the oracle of a new era. A retired colonel with the ramrod bearing of a career soldier, he has never been to the U.S. but is a self-proclaimed expert on Sino-American relations: he lectured on the subject at the National Defense University in Beijing, the training ground for the People’s Liberation Army (PLA). Three years ago, Liu wrote a best-selling book called China Dream: Great Power Thinking and Strategic Positioning of China in the Post-American Age. In his hawkish tome, Liu explained that China needed a strong, martial leader and offered advice for his resurgent nation: “When China is threatened, it has no choice but to use war to protect its right to rise, to break through America’s military containment.”

In March, Xi Jinping, the broad-shouldered son of a Communist Party revolutionary, completed a power transition that will see him guide China for the next decade. Liu is delighted. Since Xi’s ascension–he assumed the leadership of the Chinese Communist Party in November and became President three months ago–he has talked tough on territorial disputes and predicted that China will become the chief military power in the Asia-Pacific region by 2049. The 59-year-old leader, who is meeting with U.S. President Barack Obama on June 7-8 in a rare two-day summit in California, warned that the PLA should be “prepared for war” and has toured a seemingly endless number of domestic military installations. Most tellingly, he has adopted “China Dream”–Liu’s catchphrase–as his motto, pledging that “we must achieve the great revival of the Chinese nation, and we must ensure there is unity between a prosperous country and a strong military.”

Those words were delivered in December as Xi inspected a guided-missile destroyer that cruises the South China Sea, a waterway that China claims as mostly its own, much to the fury of other Asian nations. The new Chinese President’s vigorous public persona contrasts with that of his bland predecessor, Hu Jintao, who chose as his leadership slogans “peaceful development” and “harmonious society”–pleasant enough goals, perhaps, but hardly the proclamation of an emerging superpower. “Xi has used very tough language,” says China scholar David Shambaugh, whose recent book China Goes Global: The Partial Power examines the country’s global footprint. “This is very concerning and illustrates a much harder type of nationalism than that of his predecessor Hu.”

For decades, China’s outlook on how East met West was simple: a proud, ancient civilization was brought to its knees by foreign gunboats, British opium and Japanese wartime oppression. Whenever the People’s Republic dealt with the world, it did so with a chip on its shoulder, and Xi’s forerunners larded their speeches with accusatory references to “a century of humiliation” at foreign hands. The West was regarded as arrogant overlord, democratic foe and subversive instigator rolled into one. That sense of historic injustice festered even as China’s growing economic power might have been expected to sweep away such insecurities. But the ascension of President Xi–he of the patriotic swagger, political pedigree and photogenic PLA-folksinger wife–heralds a new era of China’s interaction with the international community. Instead of simply positioning China as a vanquished, aggrieved inferior, Xi and his China Dream envision a mighty nation reclaiming its rightful place in the world, not just economically but politically and culturally too.

To that end, the Xi-Obama confab, which comes at what the Chinese leader calls “a critical juncture” and could, he says, signal “a new type of great-power relationship,” is being regarded in China as a meeting of equals. From the Chinese perspective, the Middle Kingdom dominated the globe for all but a few unfortunate centuries. Why shouldn’t the 21st century bring a return to the planet’s natural state of affairs? “Xi Jinping is the perfect embodiment of the China Dream,” says Liu. “He will help China compete with the West and advance to its former glory as the most powerful and civilized country on earth.”

China’s renaissance is by now a familiar narrative, but the story of its astonishing trajectory bears repeating. A nation that half a century ago counted Albania as one of its few trading partners is now the world’s second largest economy–and could eclipse the U.S. as the biggest within five years. The Chinese Communist Party has engineered the fastest and greatest expansion of wealth that any country has ever experienced, lifting 300 million people out of absolute poverty. China’s trove of superlatives carries global weight: the country’s 83 million overseas travelers are the world’s biggest spenders; its banks hold the most foreign-exchange reserves; its factories, power plants and vehicles produce the most greenhouse gases; its consumers rank as the No. 1 buyer of luxury goods–even though China’s per capita GDP, calculated on a purchasing-power-parity basis, still rates below those of Cuba, Serbia and Tunisia.

China may well become the world’s largest consumer market by 2015. Already it is the largest exporter on the planet and one of the top five sellers of weapons. How China sees the world matters because Chinese aspirations, tastes and fears will shape the lives of billions of people across the globe. Indeed, after a couple of centuries of lying dormant, China–and its worldview–may once again dictate the narrative of our age. Great powers write history, and if Xi’s China Dream comes to pass, this century will belong to the nation that millennia ago named itself the Middle Kingdom.

Yet China’s ascendancy on the world stage can’t mask some uncomfortable realities. Despite pouring billions of dollars into a soft-power push that encompasses everything from building roads and hospitals in the developing world to sponsoring Mandarin lessons in the West, China’s international image languishes. A 21-country poll by the BBC World Service released last month found that negative attitudes toward China had increased by 8 points to 39% over the past year. Even in parts of Africa, Latin America and Asia that depend on Beijing’s aid and investment, China Inc.’s reputation is that of a voracious extractor of natural resources. The country’s military expansion and assertive maritime claims in the South and East China Seas are spooking its neighbors, not to mention the alleged state-sponsored cyberattacks and pilfering of U.S. industrial and military secrets that Obama is sure to raise with Xi when they meet at Sunnylands, a private estate in Southern California. Among Beijing’s few real allies–and even that term can be applied only loosely–are North Korea, Russia and Pakistan.

Far from taking a leading role in international affairs commensurate with its economic weight, China remains a foreign policy laggard, often shying away when it could use its influence to promote regional stability and howling when it comes to territorial flash points with smaller countries like Vietnam or the Philippines. “China says it wants respect from the rest of the world,” says Zheng Yongnian, director of the East Asian Institute at the National University of Singapore. “But it does very little to earn real respect.” Indeed, Chinese from both the government and the business community are often genuinely surprised when they discover that their lavish foreign aid and trading partnerships are undercut in the world’s mind by escalating territorial disputes and the martial drumbeat emanating from Beijing.

China’s assertiveness abroad also belies growing insecurities at home. While the inexorable rise of China may be a given in the West, Chinese people are not so sure of their future supremacy. The world’s greatest economic expansion cannot continue forever. China must wean itself off a dependence on low-tech exports, but transitioning to a knowledge- and service-based economy will require massive investment and a revamping of the nation’s education system to promote creativity. Meanwhile, income inequality is widening, and corruption chokes the Communist Party. “Back in 2010, when China escaped the worldwide recession, there was a sense of superiority about the Chinese economic model,” says Dali Yang, a political-science professor at the University of Chicago. “But that euphoria is gone, and now we are entering an era of some doubt and anxiety in China.”

Some of the seamier side effects of China’s three decades of spectacular economic growth–toxic air, poisoned soil, dirty water–are spurring civil unrest. Each day brings dozens of small-scale protests related to environmental degradation, landgrabs by corrupt officials and government repression of ethnic minorities. Those who can are voting with their feet: in ever larger numbers, rich Chinese are fleeing the land where they made their fortunes, taking their children and money with them. In 2011, the latest year for which statistics are available, 150,000 Chinese secured permanent residency abroad. “When a nation’s elite is ready to bolt at a moment’s notice, it says much about the regime’s lack of legitimacy and staying power,” says Shambaugh.

Battle for the Pacific

The U.S.S. freedom pulled into Singapore’s harbor on April 18, its hull decorated in gray camouflage, as if no one might notice the first of four American littoral-combat ships to be hosted by the Southeast Asian city-state. The warship, which will roam the contested South China Sea, is the latest evidence of the U.S.’s so-called pivot to Asia, which will see 60% of American naval vessels deployed in the region by 2020, up from 50%. Back in November 2011, when Obama first announced that he would rebalance military forces to Asia, he said this was not meant to contain China. Nobody bought that, least of all China.

Beijing’s military buildup–its defense spending has more than doubled since 2006, and its armed forces now include nearly 1.5 million service members, according to Chinese officials–is driven by a sense that it needs to prepare for a possible showdown in the Pacific with the world’s remaining superpower. A Chinese defense white paper released in April noted that “China’s overall national strength has grown dramatically” while “some country has strengthened its Asia-Pacific military alliances, expanded its military presence in the region and frequently makes the situation there tenser.” That the “some country” remained unnamed was camouflage no more effective than the U.S.S. Freedom’s gray paint.

As China’s shadow has loomed larger, other Asian nations–including those with past grudges against the U.S., like Vietnam–have urged America to keep the peace in regional waters. In addition, treaty obligations require the U.S. to defend the security of Japan–and of Taiwan, which Beijing considers part of its sovereign territory. Over the past few months, Chinese patrol vessels have swarmed the East China Sea near a disputed scattering of islets called the Diaoyu in Chinese and the Senkaku in Japanese. The uninhabited rocks are administered by Japan, but China claims historical ties to the area, which is rich in natural gas and fishing resources.

China is also embroiled in maritime conflicts in the South China Sea, pitting it against four other Asian rivals that share the vast waterway: Vietnam, Malaysia, Brunei and the Philippines. (Taiwan also maintains claims.) Beijing says that it has long considered roughly 80% of the sea its own but that it was bogged down in the past century with the enormous task of rebuilding the nation and had little time to dedicate to such matters. Now China’s behavior has grown more muscular. This year China fired on a Vietnamese ship in contested waters. Last year, dozens of armed Chinese vessels pushed Filipino fishermen out of a disputed shoal. Xi has taken the helm of a task force that deals with maritime issues, unusual micromanagement by a Chinese leader. “There is a unitary message from Xi that any territory is a core national interest and that China is not going to cede any ground,” says the University of Chicago’s Yang. “This is an extremely dangerous game.”

China’s behavior is alienating even nations that aren’t involved in territorial disputes with it. Take Singapore, the tidy city-state whose population is majority ethnic Chinese. Its founding leader, Lee Kuan Yew, assiduously cultivated ties with Beijing. Yet last year his son, Prime Minister Lee Hsien Loong, sent a warning when he visited the Central Party School in Beijing, the ideological heart of the Chinese Communist Party, which Xi headed until last year. Lee delivered a spirited defense of the U.S., which he cautioned was “not a nation in decline,” as some Chinese have been crowing. “The U.S. is an enormously resilient and creative society,” said Lee, “which attracts and absorbs talent from all over the world, including many from China and the rest of Asia.”

The Great Escape

Mr. Guan wants out. the Beijing property magnate doesn’t know where he will go yet, perhaps to a farm in Australia or a ranch in the American West. All he knows is that the place that made him a multimillionaire no longer commands his loyalty. “Frankly speaking, I have lost confidence in this country,” he says, noting that most of his wealthy friends now have foreign permanent residency if not passports. “All the economic reforms we’ve had will be useless if there’s no political reform. If I can’t change this country, then the best thing is to leave.”

On a smoggy Saturday in Beijing, Guan, who asked that his full name not be used, spends his afternoon exploring exit strategies. In an ornate room gilded with Louis XIV curlicues and a U.S. flag, Guan and dozens of others listen to a pitch by Li Zhaohui, the founder of Cansine, a Chinese emigration agency. Guan is presented with an array of options for gaining permanent residency abroad: a €300,000 property deal in Cyprus, a €500,000 villa in Portugal or even a $500,000 stake in a future Kimpton hotel in Milwaukee, a city Li describes as “famous for its high unemployment rate.” (In 2012, 70% of applicants for the U.S. EB-5 investor-visa program, which requires a minimum outlay of $500,000, were Chinese.) Cansine’s own fee? At least $15,000.

Chinese emigration used to mean an escape from war and famine, railroad workers flooding Gold Rush California or wok stirrers crowding New York City tenements. But most Chinese emigrants today are, like Guan, wealthy. In 2011, about 80,000 Chinese received U.S. green cards. (Beijing does not allow dual nationality, so some Chinese prefer permanent residency to foreign citizenship.) “I wanted a better life, and I wasn’t going to get that in China,” says Li Yanan, a Chinese businesswoman who arrived in Singapore in 2002. “So many deals back home are done under the table, and I got tired of that.”

The exodus from China has only increased since then. Rich Chinese, after all, have to breathe the same air as everyone else, and smog in urban centers spiked to record levels earlier this year, with pollution surpassing that of a smokers’ lounge. Food-safety scandals, ranging from a river full of dead pigs to babies poisoned by fake formula, make the simple act of eating hazardous. There’s also a concern that one of Xi’s central campaigns, a crackdown on corruption, could jeopardize fortunes made in fast-and-loose ways. Corrupt Chinese officials have a habit of fleeing abroad. In 2011, according to U.S. watchdog Global Financial Integrity, China hemorrhaged more than $600 billion in illegal capital flight.

Roughly 300,000 Chinese per year now study overseas, and a large portion pay full freight. Even as select Chinese schools have grabbed top marks in the Organisation for Economic Co-operation and Development’s rankings of math, reading and science performance among 15-year-olds, many parents worry about the merits of an education system based on rote memorization. Virtually every member of China’s Standing Committee, the seven men who rule the nation, has extended family who studied abroad. Even Xi sent his daughter to Harvard. The state of Chinese education is especially relevant as China must push its economy beyond churning out cheap exports. So far its universities have done a poor job at breeding innovation. As Singapore’s Lee noted last year, all eight ethnic-Chinese Nobel laureates in science were or later became Americans. “Our government cannot provide good education, welfare and a sense of security,” says Fesy Li, marketing manager of Globe Visa, another Chinese emigration agency, which is peddling options in St. Kitts and Nevis, Latvia and Vanuatu. “Chinese believe they can find these things in other countries.”

A Dream Deferred

With Mounting Unease on the home front, Xi is relying on flag-waving to unite the masses against a common foe, be it the U.S., Japan or even the Philippines. Primed by patriotic education, Chinese youth expect their leaders to stand up to the outside world. But this spring, an online forum linked to the People’s Daily, the government’s mouthpiece, asked people whether they agreed with Xi’s rhetoric, including elements of the China Dream. Thousands of people responded, and at least 70% said they disagreed with their new leader’s principles. The poll was soon pulled off the Web.

Xi’s China Dream is designed to address some of the country’s pressing social problems. But his ultimate concern may be the longevity of a party that has ruled for more than six decades. In his first trip as China’s leader, Xi traveled to the country’s south, the capitalist laboratory where three decades ago Deng Xiaoping unleashed the market reforms that have remade the nation. But Xi made no bold initiatives. Instead, in an internal speech that was later leaked, he warned against betraying China’s communist heritage. “Why did the Soviet Union disintegrate?” he asked, according to the leaked account. “An important reason was that their ideals and beliefs had been shaken. It’s a profound lesson for us. To dismiss the history of the Soviet Union … is to engage in historic nihilism, and it confuses our thoughts and undermines the party’s organizations.”

That obsession with avoiding the Soviet Union’s fate could well prevent the Communist Party from carrying out reforms that will make the nation stronger and improve its image abroad. In April–even as state newspapers heralded Xi’s antigraft efforts, which include a much hyped crackdown on extravagant banquets and expensive cars for government officials–activists in Beijing were detained after holding a banner that read: UNLESS WE PUT AN END TO CORRUPT OFFICIALS, THE CHINA DREAM WILL REMAIN A DAYDREAM. Investigations by foreign media into the fortunes of Chinese leaders’ families are scrubbed from the Internet. Efforts to clean the air are foiled by competing directives to maintain growth at all costs. “The average urban Chinese can’t say life is better now than it was five years ago,” says Bo Zhiyue, a senior research fellow at the National University of Singapore. “People are realizing that GDP growth isn’t as important as quality of life.”

Such contradictions proliferated as the ancient Chinese dynasties waned. Of course, China watchers have predicted the demise of the People’s Republic for half a century only to be proved wrong. In a nation that boasts five millennia of civilization, any number of lessons can be plucked from the past. But here’s one from the Tang dynasty (618-907), when China could rightly call itself Zhongguo, or the Middle Kingdom. Tang innovators introduced the planet to gunpowder and woodblock printing. The best and brightest of the world came to China, and the imperial capital, Chang’an (modern-day Xi’an), was a polyglot place where up to one-third of the population was foreign: Persian merchants, Japanese monks, Turkish chefs.

Today, Beijing’s foreign population is less than 1% of the total. (In New York City, some 35% of the population is foreign born.) Add to that the brain drain of Chinese elite. “There are always capital outflows from any country,” says Wang Huiyao, who runs the Center for China and Globalization in Beijing. “But China doesn’t have inflows of talent. We have a huge deficit, and that will make it harder for us to rise in the future.” How the world views China, then, may matter just as much as how China sees the world.