The American Interest
Analysis by Walter Russell Mead & Staff
China Hands US Another Big Asia Win

China isn’t very good at foreign policy; that is the only way to make sense of the apparent decision by a number of large Chinese banks to boycott the annual meeting of the World Bank and the IMF scheduled for Tokyo next week.

As the WSJ tells us, the decision comes as a result of the latest flare in the long running Japan-China territorial dispute over what Japan calls the Senkaku Islands in the East China Sea. High profile banks with strong links to China’s government and its galaxy of state-owned enterprises have pulled out of both the Tokyo conference and another banking event scheduled for Osaka.

Like a lot of recent Chinese diplomacy, the bank pull out will anger and alarm China’s neighbors without actually changing their policy. Japan and others in the region will have their growing perception of China as a regional bully reinforced. They will fear China and they will mistrust China — but they won’t obey China. Instead, Japan and its neighbors will have even more reason to deepen their defense and economic cooperation with the United States — exactly the outcome that China is hoping to avoid.

What the move really telegraphs is weakness, not strength. China’s diplomats are actually very good at what they do, and few people understand the dynamics of Asia better than Beijing’s best. By allowing such a clumsy and crude maneuver to go forward, the Chinese government is admitting to the world that it doesn’t have the political assurance to ignore counterproductive nationalist agitation at home.

This should be taken as further evidence that China’s technocrats are less and less able to deliver the kind of pragmatic, effective governance that China needs. The justification for China’s form of government is that a kind of neo-Confucian elite of intelligent elders can make the wisest decisions for the good of the country without having to pander to populist passion. The Communist Party proposes itself to the nation as that kind of quasi-Confucian meritocracy, and points to the country’s rapid economic growth as proof that this system works.

That benign picture is undercut both by events like the Bo Xilai affair, which show corruption and skullduggery rather than wisdom and virtue at the peak of China’s system, and by the clear evidence that the technocrats are running scared when it comes to issues like China’s territorial disputes. Many China watchers increasingly believe that the technocrats are also bowing to pressure from powerful special interests when it comes to economic governance as well — that the system is less and less able to focus on abstract policy questions and more and more subject to lobbying and special pleading.

If true, these are signs that the Chinese system is becoming decadent and ineffective even as the pressures within China are rising. China’s neighbors are smart enough to understand this, and the perception of a crisis inside the Chinese governance system is yet another reason why so much of Asia is turning in America’s direction these days.

Published on October 6, 2012 9:27 am