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China and reappraisal of global capitalism required makes some very important points:

  • For the West, the era in question started with the end of the Cold War, as old enemies became “emerging markets.” China had already started opening its markets to foreign investment since 1978 under Deng Xiaoping’s reforms. But only in the 1990s did the private sector take off there, and Western firms promptly rushed in to profit from the breakneck speed of Chinese economic growth.

  • But this apolitical approach was premised on the assumption, inherited from the Cold War, that democracy and capitalism go hand in hand, and that the extension of free markets would bring global convergence to the Western economic model, as the Washington Consensus predicted. Confidence in globalization saw massive amounts of Western capital and intellectual property flow to emerging markets, above all to China. But few in the West registered the geopolitical significance of this at the time. Instead, they praised the economic growth story.

  • It’s now abundantly clear that despite the pious neoliberal belief in the transformative power of free markets to encourage “reform,” China is headed toward more, not less autocracy. Indeed, it might not be an exaggeration to say that China has broken a path toward a new form of totalitarianism in which one man will sit atop a police state with access to ubiquitous data gathered about citizens by social media and online shopping platforms and a vast human and electronic surveillance apparatus to track their every move.

  • The geopolitical consequences of this realization could be very profound indeed. .... the link between capitalism and democracy was always tenuous, not least given the reality that many of the West’s allies were not democratic. But now, if it was ever in doubt, we know for sure that capitalism and democracy don’t have to go together: Capitalism is up for grabs, and you don’t even need to support the Pax Americana to plug into it. Capitalism is up for grabs, and you don’t even need to support the Pax Americana to plug into it.

  • But the more important point is that Western states and their citizens are becoming increasingly alert to the need fundamentally to reappraise the value of the integrated global capitalism they have more or less promoted since the early 1990s. .... this reappraisal concerns the inconvenient truth, which surely now is undeniable, that the West’s own economic policy has encouraged, if unwittingly, the rise of deeply illiberal regimes in much of the former communist world.

  • What practical effect this produces in the foreign and economic policies of the West depends, on the one hand, on the extent to which the West is prepared to sacrifice material wealth in support of its public values; and, on the other hand, on the extent to which authoritarian states, above all Russia and China, attempt to export their values abroad. One could list any number of areas where this dilemma will play out, but the most important near-term litmus test will be whether the West responds to China’s Belt and Road Initiative as a benign economic project, or as a geopolitical threat.

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