New Delhi: Martin Jacques is the author of the global best-seller When China Rules the World: The End of the Western World and the Birth of a New Global Order, first published in 2009. In India to promote the second edition of the book, Jacques spoke in an interview about how China’s growth story owes its success to its oft-questioned form of government, the “Chinisation” of the world as it develops further and relations with India.

The first edition of your book came out in 2009. What are the changes you’ve noticed in China since 2009? And could you also explain the title that you have chosen?

China has carried on growing quite quickly, I’d imagine about 9% a year since then. It looks more prosperous, feels more prosperous, the economy has grown by 40% and, of course, internationally due to the Western crisis it’s been catapulted into greater prominence. While the Western economies have been stationary, China is in many ways shaping the global economy more than the US through trade because there is a huge footprint through trade; you know many countries around the world count China among their biggest trading partner—in Africa, in Latin America, in Chile, in Brazil, Egypt, South Africa, India.

And secondly, because China has been running a balance of payments, people save a lot, government is also in surplus, its got big resources, especially in a world that is so indebted. China’s development bank and China’s Export-Import Bank have become the bigger lenders to developing countries in 2009-10. Another big change is the decision to allow the renminbi (RMB) to play a trading role and that is gaining momentum and quite quickly, I think, the RMB will begin to displace the dollar in certain sorts of trade and in certain regions, most notably, I think in East Asia. The title wasn’t my idea. Way back, when I was working on the book, I was talking to my editor and he said, tell me something about the book and I told him and he said sort of “Oh When China rules the world” as a flippant remark. I thought about this for several months and came round to the view that it was a striking title. The problem is that I have to tell people I don’t mean this literally, but what I mean is what the world will be like when China is the world’s predominant power.

How far do you think, the opacity of the governance system, the arbitrariness of the government, the fact that people don’t have a voice —how far do these inhibit or hinder its emergence as a great power?

I don’t think that has hindered China so far. I would put it the other way around and say how do you explain China’s rise? They are getting something right and unquestionably the Chinese government must take credit for the economic management of the country, they are brilliant I think. So, I think the governing system in China has been extremely appropriate for this stage of their development. I think, the Chinese state is a remarkable institution. People always say: “Oh you know the problem is that China is not democratic.” But democracy is not the beginning and the end of the quality of governance. You can have a democratic country and not a very good quality of governance. You don’t have a very good quality of governance here (in India), I think. Britain’s got democracy, but does it have good governance, I honestly don’t think so. China poses a lot of questions for other countries. I am not arguing against democracy, I am arguing that democracy is not the beginning and end of everything and that we can learn things from the Chinese government. For a developing country, they are very efficient; things work, and the state works—the state is extremely competent. Obviously, they are getting certain things right and that is no reason to believe that won’t necessarily carry on, but as the economy becomes more sophisticated, more complex, people’s needs, demands, possibilities, they acquire voice in a way that in the past 30 years they haven’t had. In that period, voice isn’t the key because there ain’t much voice in economic take-off, there’s never been much voice in economic take-off, it is a pretty authoritarian process anyway, not just the politics of it, the actual economics of it.

That’s one of the things you do in your book—turn conventional arguments specially about democracy on its head.

It is a reasonable argument, isn’t it? The trouble is we all become prey to the orthodoxy of the times, we all parrot the same phrases and we—you in India and we in Britain absolutely for certain—have a certain way of seeing things, which is, you know, the US hegemony of ideas, Washington consensus, neo liberalism and so on. So these become the new common sense and then something explodes them like the financial crisis, explodes the wisdom of ideas like the markets are always the best, a smaller state is the best way to do things.

What about the unresolved issue of Tibet? Will this affect China’s rise?

I don’t think it’s seriously going to deflect the process. The impact of this on China itself is very low. That’s because Tibet has a very small population, it’s stuck out there in the middle of the country. Of course, there is this question of how the Tibet question plays out and has played out globally. It is definitely one of those things that doesn’t cast China in such a good light, and its resolution would remove a negative feature off China.

In your book, you talk about China as a civilization state as opposed to the Western concept of a nation state.

This is a fact that China, the whole sense of the Chinese identity is derived from civilizational roots rather than being a nation state. Whereas Western countries are constituted on the basis of nation. The reason why the Chinese are so positive towards the state, they regard the state to be like a member of their family. That is such a different attitude to Western countries or India. So, I think this is just part of the Chinese reality. Unless they engage in a huge piece of social engineering , it will be very difficult to change that.

You also refer to the “Chinisation of the world” as it develops.

The spread of Mandarin is a good example I think because you would have to say the spread of English is part of the soft power. As countries adapt to the rise of another country, they do certain things, they want to become able to deal with that country. And when the people begin to start studying a country or speaking its language, then they become more attracted to them because they know more about it. They feel they have a slice of the action and I think that is happening all around the world—people are taking up Mandarin, the numbers are still limited, but the growth has been enormous. It’s an example of the way in which Chinese influence is leaving its mark on the world.

There is always a comparison between India and China. Is that justified?

I think it’s inevitable because they are both so huge in population, they are huge developing countries, they come from the wrong side of history and colonization, so it’s natural. The danger is more like mood swings. The Chinese don’t think about India very much, they think more about America and everything else is secondary, also because China tends to look down on India, they are racist. So they don’t think it’s a big factor. I think the problem is that of the Indian mind, the potential negativity of it is that Indians have mood swings—they have this exuberant optimism about overtaking China. India should not assume that just because China has done it, that India is going to do it, in the same way. What people don’t talk enough about is the weaknesses that India has to tackle vis-a-vis China. I think the state is very important and the Indian state is not fit for the purpose compared with the Chinese. I would argue strongly that India needs to sort out the border problem with China as a matter of urgency for itself, get rid of it, and move on and engage in a big way with China on the basis of neutrality. But be focused on the fact that China is really important. It’s not about conflict, it’s not about competition, it’s about getting a slice of the Chinese action. Of course, there is competition and there is the danger of conflict, but not to start with that mentality. India should be sending people to China to see how they have done things, to learn so much from the economic management of China.

Is competition for resources going to be a point of conflict between India and China? There is a lot of talk of how there is competition between India and China in Africa and Latin America over oil and other resources.

The general perception is that as countries with such large populations, there is going to be huge demand for natural resources from both. And that is likely to push up commodity prices. The thing with oil and the energy question is that as the pressure grows for such forms of energy, there will be newer forms coming into play—like shale gas for example. Certainly there will be competition, both will compete with each other—this is an issue to watch.

What is your assessment of the once-in-a-decade leadership change in China that is to happen later this year?

It’s obviously very important —roughly every decade the leadership changes, we have got used to this now because it’s the second time this has happened, that is the sign of change in China. We had this extraordinary situation with Bo Xilai (leading Communist party member in the south-west Chinese city of Chongqing), which was played out in real time. Normally, Chinese crises are played out and we had only known about them afterwards. I think this change is very important because China is going to have make some shifts I think. It’s got these economic problems, which is how to shift the economy from a low-tech, labour-intensive, export-driven economy to a much more innovative economy, so that is one big change, the other is clearly political reform. Contrary to what people think, the state has been reformed and re-reformed as a constant process, a very innovative process ever since Deng Xiaoping. I think now they need to go through an extra change—they are not going to introduce universal suffrage. There is almost zero demand for it. So the question is how do you deal with all these injustices, the arbitrary behaviour towards Chen Guangcheng (a blind Chinese activist at the centre of a diplomatic standoff between the US and China earlier this year). And this is quite widespread across China, how do you deal with the Bo Xilai problem, which is that these guys at the top who ostensibly earn very little, amassing huge sums of money through deals under the table. So, the question is how do you bring this under some sort of legal requirements, a big question in China, because how does one bring the Communist Party of China under the rule of law. That would be a big change if they did that. The third thing I would mention is about foreign policy, which I think is going to become a bit of a problem for China because foreign policy is very much a function of the Deng Xiaoping era, which had two goals—economic growth and the reduction of poverty—and everything else is subordinated to them. The role of foreign policy was to create the right conditions for that process and now China is still poor, but no longer weak, it’s attracting global interest. What sort of foreign policy is appropriate to that? How do they promote those interests? So I think there is a strong case to say that they need a new foreign policy. So there are some big decisions coming up.

What about the challenge the RMB is posing to the dollar?

I think that since 2008, the dollar has come under pressure. It has got a bit stronger because it has been seen as a kind of safe haven when there is nowhere to go for safety. But I think that is a very short-term solution. I agree with the Chinese in principle that the US economy is now not strong enough to sustain the dollar as its domestic currency and the international reserve. I think that has been one of the big reasons for the crisis. So, a natural process in a situation like this is for the RMB—if the Chinese government allows it—to become an increasingly internationalized currency, which is what they are doing for the settlement of trade. They haven’t made it convertible, but in terms of settlement of trade. But the RMB is spreading, particularly for the payment of Chinese imports. They are doing a lot of currency swaps with all sorts of countries. And I assume they do deals increasingly in the RMB. I think everybody thinks that the RMB is going to appreciate and is going to become much more important and everyone wants a slice of the action. The British government has been trying to persuade the Chinese to allow the City of London to become the off-shore centre in Europe for the RMB. So obviously there is a lot of money to be made.

You mentioned foreign policy. And that brings up the question of how China has been dealing with its neighbours. Its claims over the whole of the South China Sea and frequent standoffs with smaller neighbours is making them very nervous. There is also its relationship with India, with which there is the unsolved border problem.

All the things you pointed out are significant and I am not saying they don’t have some meaning. Let us look at them one by one. For India, this is not a new development. China hedging in the region against India, this has been going on for a long time. I have to say that partly it is India’s problem of its poor handling of relations with its neighbours. The main reason why India is nervous about China is 1962. In 1949, none of China’s borders were sorted and since then it has sorted out every single border, including relatively recently with Russia and Vietnam, which were extremely problematic, much more difficult than the Indian border because the Sino-Indian border goes through the Himalayas. And I don’t think it’s just the Chinese that are at fault. This is something that India needs to sort out. The urgency for India is greater than for China. Because the Chinese don’t care about it too much. It’s not a big problem for them, but it is for India not because the border matters but the mentality of that memory, that trauma in the Indian mind, it is bad for India. It distracts India, India needs to have a new relationship with China, it has to have a new strategy of engagement, it has a lot to learn from China, there is a lot that China can offer India. If China is important now, China being one of the biggest trading partners of India, it is going to be much more important later. With Japan, the problems are bound up with something different. The Japanese cannot bear the idea of the rise of China. Why not? Because of what they did to China. There is huge enmity among the Chinese towards Japan. I don’t think Japan should be rolled into these issues. Japan has got a specific historical relevance and resonance. That brings me to your reference to the South China Sea. The big problem is the Chinese claim line. China claims the South China Sea—the rocks and the seabed. They are not talking about navigation, about sea lanes. That is not what they are concerned about. And this is a very very old claim. The way Deng proposed to resolve the dispute was joint development, shelve the sovereignty issue. But that’s obviously run into difficulties. Countries like Vietnam which have long had problems with China and the Philippines, which is a close American ally, thought the best way to sort this out is sooner rather than later. The Scarborough shoal, I think there is quite a bit of strong evidence that the Filipinos acted maybe because of the Americans. I don’t think China is clear about what it wants to do, there are many different voices. There is very strong popular pressure that these are our islands—that is one player—then there are the (Chinese) oil companies who are, I imagine, pressing for the rights to these oil reserves and then there is the PLA (People Liberation Army) position; the Chinese foreign ministry I think is probably a voice of caution. But they do have a problem in the South China Sea. It looks as though they are sort of bullying and I don’t think it is sending good messages.

What is your take on the US “pivot” towards Asia?

It didn’t surprise me that they (the US) were doing something like this. They lost so much ground in East Asia in the George W. Bush term in office in Washington and in the same period the Chinese made a lot of progress that lasted till 2010 when the Americans decided to go back in there again. The “pivot” is a natural move because anyone looking at the map would say that East Asia is crucial because it’s the economic engine of the world. So it’s extremely important, that was a natural response. The question is, is this going to amount to very much? It depends on how they pursue it. The Chinese think East Asia is their region. The problem for the Americans basically is this that essentially the pivot towards Asia is security, i.e., it’s about the military presence of the United States and its alliance system in the region and how to make that alliance system—consisting of Japan, Australia, the Philippines, South Korea, they would like Vietnam to join—more effective. I think it will be a mistake for India to join in this, India would be selling itself short. But the problem the Americans have got is that, they were a major economic presence in East Asia before and now they are a diminishing economic presence. Before, for many East Asian countries, the US was their largest trading partner. But now for most of these countries, their largest trading partner is China, so the whole regional economy is being reconfigured. What’s America going to offer these countries? Well, China is a threat to you and we will look after you. That might in the short run be an attractive package because are these countries going to turn against their largest trading partner? If the Chinese completely misplay their hand it might become in the short to medium term an attractive package. If the Chinese don’t do that I am not convinced that the American presence can be sustained in a fulsome way.

– Elizabeth Roche