Speech by: Lord Mandelson
The 48 Group: “Icebreakers” London/Chinese New Year Dinner, London
Introduction
You know, the last time I was in China I was told that the construction boom in Shanghai is so intense that its street maps have to be redone every six months or so.
I’m not sure if it’s true but it’s a useful image for China itself. Because China is of course redrawing everyone’s economic and political map.
A few months ago I gave a speech at the Party school in Beijing in which I said that the next generation of Chinese leaders would have to be the most internationalist in its history.
Premier Wen gave an important speech in Prague last year about what he called the “larger trend” in global politics – multilateralism.
And I think that is right and inescapable, and that China will be central to it.
There has been a lot said and written about the climate change summit in Copenhagen and what it suggested about the way in which this change is playing out.
There is a very strong impression in the US and EU that this summit marked the emergence of a new and assertive China in international politics.
In the last few weeks we have seen China challenge EU shoe tariffs at the WTO. Tensions between the US and China over Taiwan, Google and Tibet are arguably running higher than they have been for a long time.
What Copenhagen certainly reinforced is that the question of the match- or mismatch- of our expectations of China and China’s own assessment of its role and responsibilities is a vital one.
Europe and the US want and expect an engaged partner – a “deputy global sheriff” as one Financial Times columnist put it the other day.
But for reasons I understand, China is often suspicious of that expectation and insistent on its own terms for any such role.
My question this evening is how realistic assumptions currently are on both sides.
Shared goals
Europeans put a lot of time into trying to divine what China is thinking. Many Europeans assume that the deeper instincts and outlook of China are essentially like those of Europeans, under a layer of ‘Chineseness’.
Partly this is rooted very deep in a European tradition of the universality of human rights and aspirations. We are frustrated or even offended to have our interest labelled arrogance.
Broadly speaking I think we should take this approach in international politics. Not the assumption that everyone shares European values of course, but the presumption that we all want the same basic things.
Stable, growing societies. Hopeful societies. Political self-determination and civic freedom. A safe and secure world.
These things should be a constant reference point, even in more hardnosed debates about our economic or political interests or priorities.
But I do think that Europeans need to be much more aware of the way that they are perceived in China.
Especially by a younger generation of Chinese, whose whole adult experience is defined by two decades of Chinese growth and who resent any suggestion that China should or could be dictated to on economic management or anything else.
When it comes to questions of economic credibility, the catastrophic mismanagement that crippled the Western banking system has only deepened the scepticism of the superiority of the Western model in China. And we do well to be honest in recognising and understanding that.
Not least because it is difficult to assert the wider value of economic liberalization in China or anywhere else if we appear unable or unwilling to confront the mistakes in managing or regulating it ourselves.
It is important that the basic aim of open markets and economic integration remains a shared goal. And this cannot happen if it is pushed or perceived as a ‘Western’ negotiating position.
A problem of perception
When I look back over the last five years of working with Chinese leaders as a senior EU official, I am struck by the distance between how we often see China and how China sees itself.
China has reshaped our markets, and increasingly the markets of the rest of the developing world.
In just the last five years it has overtaken, first the US, and then Germany, to be the world’s largest exporter.
It will soon overtake Japan to become the world’s second largest national economy. It has the world’s largest forex reserves. It has become the world’s biggest emitter of carbon.
What Europeans too often don’t see is that behind this growth is Chinese caution and inhibition born of a governance challenge on a massive scale.
In my experience, European leaders tend to be much more confident of China’s inexorable rise than their Chinese counterparts.
Not because China’s leaders don’t have a profound belief in China – they do. But because they know the scale of the challenge that faces them only too well.
They know that the export-led Chinese growth model is not sustainable in the long term.
They know that weak domestic demand and state-led bank lending, flush now with a huge stimulus, need to give way to something more diverse and durable.
They know that a quarter of a billion people will move into China’s cities in the next 20 years – the equivalent of the entire population of the United States.
The environmental impact of change on a scale that most Europeans can barely imagine has to be managed.
Europeans see 10% annual growth, barely slowed by global recession, as a juggernaut, a tectonic shift in the global economic order.
In my experience Chinese leaders see it as the minimum required to create the jobs to meet the expectations of an urbanizing and industrialising society with a growing and impatient taste for prosperity.
They see it as the only way to ensure a stable transition from a largely agricultural society to an entirely modern one in the space of two or three generations – generations that are getting older very fast.
We see China as increasingly rich. China sees itself as still, in many respects, worryingly poor.
Deputy sheriff?
These issues of perception are critically important and easy to overlook.
They are surely what lies behind the great tension over accepting global targets for carbon emissions.
And the antagonism created by overt criticism of China’s growth model – however justified.
Europe and the US want China to be “deputy sheriff”.
China is understandably preoccupied with its own development and stability and still suspicious that the rules it is being asked to enforce were not written with its interests in mind.
And there is something in that – we should be honest about it. The machinery of global governance is still rather ‘Atlantic’ in its orientation, for understandable, if no longer defensible, historical reasons.
That’s why it is necessary to reform the IMF and the World Bank and the other international institutions to reflect China’s growing influence, along with that of the other emerging economies.
That’s why it is necessary to ensure that the climate change process and international trade rules do not have the appearance of the developed world setting out the rules for everyone else, once they have secured their spot at the top of the economic pile.
I think that both at Copenhagen and in the WTO this principle has actually been well accepted.
And I do think there is a tension in China’s position that needs to be resolved. Some of my Chinese friends have said since Copenhagen: “Europe cannot expect to dictate to China or lead in its name”.
But at the same time there is a strong sense that China is not yet ready or willing to lead in its own name.
And the reality is that effective multilateralism will be impossible without Chinese engagement. And it will become harder and harder for Western politicians to maintain an open and constructive line with China if that line is not seen to be reciprocated.
There will be no global climate change settlement without China. No Asian or global security architecture. No sustainable governance of global trade or finance without China.
For all the frictions that go with managing this system, in the long run China needs these things to work and to function and deliver results as much as anyone else. That’s the reality.
Conclusion
I don’t see how we in Europe can deny the fact that China is going to grow on its own terms. You cannot really dictate anything much to a country of 1.3 billion people.
But the dilemma for Europe (and America) is this: we cannot dictate China’s development or the solutions to its problems. It’s not our business to do so and we wouldn’t know how to if we wanted to. But we do not have the luxury of ignoring them either.
On Europe’s part I think we are still not investing enough in understanding China on China’s terms and presenting it as a coherent European partner.
China has been one of the few global players seriously to invest in a political partnership with the EU as a whole, through the European Commission and Council.
But increasingly I hear from Chinese colleagues that they focus on individual member states because the EU relationship delivers form without enough substance.
Now, I’m obviously delighted that Britain and China have a strong bilateral relationship.
But I don’t delude myself that twenty years from now that partnership will rank alongside China’s partnership with the US, or India, or Japan.
The place at this top table will be taken by a European partner or probably not at all.
I believe this is one of the key foreign policy challenges for the new EU Presidency and the new European Commission. It needs serious and sustained engagement at the highest level amongst EU member states: more than just a sequence of flying visits to Beijing.
We need to develop a clearer and consistent channel for communicating with China, especially on trade and climate change issues.
But of course we also need a China that is there to negotiate and engage.
Europe and the US need to recognize that China will not simply accept a model of global governance or multilateralism that it played no part in designing, or which it feels does not reflect the imperative of its growth and stability.
But Chinese disengagement from the evolving landscape of global governance and multilateralism is obviously not a viable option for anyone, including China.
China is too big, the challenges too great and the global village too small for China not to accept a leadership role.
We may have to show some patience, and nerves for the occasional friction. But one way or another, we all need China to succeed and we all need China to pick up a sheriff’s badge.
