China should listen to Kissinger: You're on top now, start leading
China has surpassed the US as the world's largest creditor. Beijing must now take on the accompanying leadership role. Instead of a 'Marshall Plan,' why not a 'Hu Jintao plan' that recycles some of China's surplus to benefit the whole global system?
When the now 88-year-old Henry Kissinger sat down with Chairman Mao to discuss opening up China back in the 1970s, America was at the peak of its power. It surely never entered Mr. Kissingerâ€™s mind at the time that less than half a century later, as the Communist Party of China confidently celebrates its 90th anniversary, he would be back in Beijing passing the baton of global leadership on to his hosts.
Opening a conference of Chinaâ€™s most important think tank on globalization last Saturday, the great statesman compared China today to the US in 1947.
After the Napoleonic Wars, Kissinger observed, Britain emerged as the top world power and stayed that way for over a century. But by 1947, Ernest Bevin, foreign secretary in the waning days of the empire, felt compelled to tell his American counterpart that, â€śas the largest creditor, the US must now take the lead in shaping the new order.â€ť Hence the Marshall Plan launched by the Americans to rebuild after the war, the dominant role of the dollar, and Americaâ€™s ascendant path for the rest of the 20th century.
As the worldâ€™s largest creditor, China is now where America was in 1947, on the cusp of the next world order. Kissinger told his hosts that while this transition from one system to another will likely take another 30 years, Chinaâ€™s role will only grow because it is obliged by its own self-interest to shape the global system that has shifted away from its â€śNorth Atlantic poleâ€ť toward China and the emerging economies.
In Kissingerâ€™s view, China will be drafted into leadership at an accelerating pace because of the ongoing paralysis in the West. America, he put it politely, â€śis absorbed in a debate over the role of government and the sources of vitality in the United States; over how much government we should have and who should pay for it.â€ť Europe is gripped by both â€śa financial and conceptual crisis, suspended between a national framework and its substitute.â€ť
â€śA sense of cooperation is critical,â€ť said Kissinger, â€śbecause we have entered a new era of complexity and are looking for an overriding framework. We have to adjust to the entry of a whole series of new playersâ€ť on the global scene. For Kissinger, the â€śprincipal instrument of adjustment is the G-20,â€ť where each country must fit its national aspirations into an international arrangement â€śthat avoids a zero sum competition for economic growth.â€ť
A shifting world order
Kissinger is right. In the past two centuries, Britain and then the United States were the hegemonic powers that imposed the â€śglobal public goodsâ€ť of security, financial stability, a major reserve currency, and open trade. Today, the US and the G-7 advanced economies are increasingly unable to provide them. Yet, the emerging economies, led by China, are not yet able to do so.
For this reason, the G-20, which combines both the advanced and emerging economies, must collectively provide these global public goods. In a truly multi-polar world, even one in which China will be the largest economy by 2050, this will be the â€śnew normalâ€ť for the foreseeable future.
The challenge is whether global governance can be established without one dominant power or set of interests calling the shots. One path forward has been suggested by Zheng Bijian, the former vice chair of the Central Party School, author of Chinaâ€™s â€śpeaceful riseâ€ť doctrine and confidant of the countryâ€™s leaders. China can only reach its goals of â€śqualitatively improving the life of the ordinary Chineseâ€ť and moving up the middle-income ladder â€śin the context of interdependence,â€ť Mr. Zheng says.
Thus, Zheng says, China must move beyond the â€śpeaceful riseâ€ť idea to â€śexpand and deepen a convergence of interests with others globally. When there is an accumulation of converging interests, there will be a solid foundation for common interests.â€ť
Global interests need China's leadership
Those â€śconvergent interestsâ€ť amount to the global public goods of the 21st century. Zheng specifically mentions fighting climate change, and joint initiatives on low-carbon growth, especially with the United States.
There are others that the G-20 must take up, such as global financial stability, the phasing in of a multi-currency global reserve basket (including the RMB) to replace the dollar, a new governance structure for the International Monetary Fund that reflects the power of the emerging economies, and a revived or reconfigured Doha trade round.
One area where China, as the worldâ€™s largest creditor, could play a critical role is in helping to stabilize the Middle East and North Africa (MENA) through economic development â€“ something in the interest of the whole world, not least for energy security. After all, China is already playing a significant role in Europe through buying the bonds of the most troubled countries.
In the wake of the Arab revolutions, there was much talk of a â€śMarshall Planâ€ť for the MENA countries. At the G-8 meeting in Deauville recently, French President Nicolas Sarkozy managed to raise a pledge of $20 billion for this purpose. That seems a largely hollow commitment since the advanced economies are drowning in deficits and mired in a sovereign debt crisis.
Instead of a â€śMarshall Plan,â€ť why not a â€śHu Jintao planâ€ť sponsored by the G-20 in which China recycles some of its massive reserve surplus, along with the Gulf states, in a way that benefits the whole global system?
As Kissinger suggested, just as the Marshall Plan merged a rising Americaâ€™s obligations and self-interest in shaping the world order of the last half of the 20th century, might now be the right time for China to take up its new role in such a way? The Americans were right to listen to Ernest Bevin. The Chinese would be right to listen to Henry Kissinger.
Nathan Gardels is editor-in-chief of the Global Viewpoint Network/Tribune Media and NPQ. He is also a senior advisor to the Berggruen Institute.