The West misjudged Russia. It shouldn’t repeat that mistake with China

Here's another nightmare to add to a lengthening list: The current economic war between the West and Russia may simply be the first act of a much bigger economic war between the West and China. Not only can China inflict much greater damage than Vladimir Putin's ailing petro-state — and Russia is inflicting considerable damage on the global economy — but a war with both China and Russia (and their client states) could mean a long-term, prosperity-destroying division of the world into two hostile blocks.

Nothing can excuse Putin's barbaric invasion of Ukraine. Yet the West also must recognize the significant strategic mistakes in its handling of Russia, mistakes that have lowered our collective defenses and infuriated the Putin regime. The West turned a deaf ear to Russia's long-standing complaints about encirclement and cultural imperialism.

The U.S. and its allies did so because their policy rested on three naive assumptions: that integration into the global economy would eventually lead to westernization; that the Putin regime is a mere deviation on the road to liberal democracy, Russia's long tradition of autocracy be damned; and that cultural nationalism counts for little against the charms of western cosmopolitanism.

A new book by Aaron L. Friedberg,  a political scientist at Princeton University, makes chilling reading in the light of events in the Ukraine. "Getting China Wrong" argues that Western policy toward China has been driven by the same three flawed assumptions. Friedberg notes in his introduction that policymakers in the United States are belatedly recognizing China's real nature. But Europeans remain much more naïve, or at least they did before Putin's wake-up call. And many leading thinkers continue to regard President Xi Jinping's hard-line position as either a temporary aberration or as just one side of a "frenemy" relationship. Friedberg demonstrates in convincing detail that the Chinese stance has deep roots.

The West's embrace of China was based on the idea that China would reciprocate by embracing the West's economic norms and cultural values. The Chinese leadership would abandon Marxism-Leninism in favor of market capitalism while simultaneously accommodating itself to the rules and rituals of the Western-led economic order rather like a grateful nouveau riche accommodating himself to the rules and rituals of the Knickerbocker Club. And economic liberalization would give rise to political liberalization as the new middle class demanded democratic rights along with their freedom to choose 15 different types of lattes.

In fact, the opposite has happened. Over the past 20 years the Chinese Communist Party (CCP) has turned the West's weapons against itself in order to reinforce its power. Capitalism has been forged into state capitalism with an array of state companies and state banks that are dominated by party functionaries and instructed to dance to the party's tune. The computer-and-internet revolution has been used to transform the country into a surveillance state. China has produced a system of "indigenous innovation" that is pulling it ahead, notably in 5G and artificial intelligence. There is even talk in Xi's circles of a "dash for dominance."

China is now pursuing a two-pronged campaign to increase its global clout:  to "remake international order from the inside out" by increasing its influence on established institutions such as the World Bank while simultaneously creating Chinese-controlled institutions such as the Asian Infrastructure Investment Bank. At the same time, it is demonstrating its flagrant contempt for liberal norms by imprisoning more than a million Muslim Uyghurs in forced labor and concentration camps and by trampling on Hong Kong's freedoms. "China today is more repressive than at any time since the 1989 Tiananmen Square massacre," says Friedberg, "and arguably since the Cultural Revolution in the 1960s."

What went wrong with the liberal vision? The easiest thing to do is to blame Xi Jinping, who assumed power at the end of 2012. China had always been a battleground between the old guard and liberal reformers, the argument goes; Xi, much like Putin, has strangled liberalism by reasserting the power of the party, removing limits on his time in office, cracking down on dissidents and centralizing power in his own hands in the guise of fighting corruption. Friedberg argues, by contrast, that President Xi is himself the product of two much deeper forces.

The first is Leninism. The CCP may have abandoned Marxism in favor of the market — or its version of the market — but it has never abandoned Leninism: the belief that an elite cadre of party members should wield ultimate power on behalf of the people. The CCP's rule has borne all the classic features of Leninism ever since the great opening up under Deng Xiaoping: relentlessness, cunning and secrecy; military-style discipline, utter ruthlessness and a refusal to distinguish between the public and the private. Every element in society was to be bent to the party's purpose and every corner monitored for signs of deviation. The party didn't hesitate to use violence to preserve its power, most notably in Tiananmen Square. It sang a sweet song of privatization while, in fact, "letting go of the small" only to "grasp the big" more tightly. In 2017, Xi had one of his favorite slogans, borrowed from Mao, inscribed on the party constitution: "Party, government, army, society, and education. East, West, South, North. The Party leads everything."  

The second is cultural pride — or more precisely a dangerous combination of cultural pride on the one hand, and angry resentment on the other. China is arguably the world's oldest great civilization. Chinese mandarins were selected for power on the basis of their ability to understand Confucius at a time when Europe was ruled by people with names like Erik Bloodaxe. But this great civilization suffered terribly at the hands of the West. Xi has put the "great rejuvenation of the Chinese nation" — the "Chinese Dream" — at the heart of his policy. Whereas Mao focused on getting rid of the past, Xi emphasizes the superiority of "traditional Chinese values" to the "so-called universal values" of the West. And his propaganda machine, extending down to primary school textbooks, harps on about the "century of humiliation" that began with the Opium Wars. Bringing Hong Kong and eventually Taiwan under the control of the mainland will kill two cultural birds with one stone: settling old scores while also snuffing out systems that challenge the regime's claims that "so-called universal values" are in fact western values unsuited to the Chinese people.

The similarities between China and Russia are striking, from the cult of personality surrounding the top man to the deep well of cultural pride-resentment. We have learned to our cost that Putin meant it when he said that Ukraine was part of Mother Russia and that he was willing to suffer serious economic pain in order to reabsorb it. We should recognize that Xi is just as serious about Taiwan.

Xi's China is a far more significant foe than Putin's Russia. China is not only the world's second biggest economy (roughly 10 times the size of Russia's), but has accounted for 25-30% of global economic growth since the 2008 crisis. The CCP is a much more wily organization than Putin's oligarchy: China's party not only survived while Russia's abolished itself — or rather fragmented into a collection of security operatives, technocrats, kleptocrats and criminals — but also revitalized itself during the years of neoliberalism's seeming triumph. The party created what the UCLA scholar Richard Baum dubbed "consultative Leninism" — listening to selected groups of people and even taking regular polling. It also recruited the most able members of the younger generation, particularly entrepreneurs. Far from being the party of the old regime, the party is widely seen as an instrument of upward mobility and modernization.

How should the West respond to the rise of China given the failure of engagement to produce assimilation? Friedberg agues for partial disengagement — "the West and its democratic partners must redraw the perimeters and strengthen the boundaries of a geographically limited liberal international sub-system, falling back to a more defensible position from which they can better promote their interests and protect their common values." But this doesn't tell us how to deal with trade disputes or keep the supply chains functioning. The economic historian Benn Steil suggests that the West might have to give up on the "One World" system in favor of a "Two Worlds Model" that divides the world into liberal and illiberal spheres. But the current turmoil on the markets suggests that that option would be extraordinarily expensive and disruptive.

I would argue for a combination of toughness and flexibility. Lenin advised his disciples to "probe with bayonets. If you encounter mush, proceed. If you encounter steel, withdraw." The West must show some steel — by increasing its expenditure on defense, most obviously, by cracking down on China's habit of cheating and by making clear to Beijing that there are certain lines, such as an invasion of Taiwan, that it cannot cross. Hopefully, the West's solid response to Putin's invasion of the Ukraine will teach the CCP a lesson. But the West also needs to modify its expectations. Don't ride roughshod over a great civilization's sense of cultural pride. And don't expect a powerful political organization like the CCP to put itself out of business. China's cooperation is essential to addressing all our great collective problems, from global growth to climate change.

Hitherto the global economic system has tried to do two things at once: regulate economic activity for the good of all its members while advancing the West's commitment to political liberalism. The West should never give up its commitment to defending fundamental rights, in the right place and the right time. But that is different from crusading for westernization. The West needs to recognize that, absent an unprovoked war, we have a collective interest in reaching agreements with China on economic matters even as we differ with it fundamentally on political ones.

Adrian Wooldridge is the global business columnist for Bloomberg Opinion. He was previously a writer at the Economist. His latest book is "The Aristocracy of Talent: How Meritocracy Made the Modern World."

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.