Thinking Global

Imagine that an American intelligence agency organizes an “exercise,” as one occasionally does, on how to manage an unwanted but inescapable Washington role in a Chinese leadership struggle. Throw in the following scene-setting facts:

• With the Chinese Communist Party confronting a decisive leadership transition, a provincial police chief takes refuge in a U.S. consulate and spills the beans on a corruption and murder story swirling around Bo Xilai, whose populist, Maoist campaign threatens the establishment.
• Just a week before the visit to Washington of Vice-President Xi Jianping, who is in line to become paramount leader this autumn, President Obama takes sides. Although Bo’s forces are circling the consulate, the U.S. releases the police chief to Beijing’s leaders.
• With that crisis solved and Chinese leaders indebted to Obama, a blind human rights activist dramatically escapes house arrest and takes refuge in the U.S. embassy in Beijing. With Secretary Hillary Clinton arriving for a high-level Sino-U.S. summit, both sides enter crisis management mode.

It’s no wonder that the intellectual salons of Washington have grown a bit bored with the ongoing U.S. election campaign and have shifted their interest instead to Chinese domestic politics. The reasons are obvious: The details are juicier, the drama is more immediate and the historic stakes are considerably more significant.

That’s because any U.S. president, whether named Obama or Romney, will operate within a well-established constitutional framework and democratic habits. While the U.S. has managed 43 peaceful transitions of power over the past 223 years, Communist-led China has managed a smooth handoff only once since its 1949 revolution, and that was in 2002, when Deng Xiaoping engineered the rise of the current premier, Hu Jintao.

Former U.S. National Security Adviser Brent Scowcroft believes China has entered its most decisive domestic political period since the weeks preceding the government crackdown on the Tiananmen Square protests in 1989, which resulted in the arrest and purge of Deng Xiaoping’s presumptive heir, Zhao Ziyang, along with a large-scale removal of other officials sympathetic to the protesters. Tiananmen’s immediate aftermath strengthened the hand of hardliners, until Deng, with difficulty, reasserted himself and market reforms in 1992.

Former U.S. National Security Adviser Stephen Hadley regards the current split within the Chinese leadership to be the most severe since 1971. It was then that Defense Minister Lin Biao, in an apparent attempt to defect to the Soviet Union, died in a plane crash in Mongolia while trying to flee the country after a failed attempt to assassinate Mao Tse Tung. The Communist Party branded him a traitor posthumously.

The global stakes, however, are far greater now than either in 1971 or 1989.

China remains the world’s most important engine for economic growth, it has become the biggest owner of U.S. debt, and it has vastly expanded its global reach through investments and trade. China is likely to surpass the U.S. in the next decade as the world’s largest economy – and its political influence and military capabilities grow apace. Domestic uncertainties now make China the most crucial wild card for the global future.

Beyond that, the country’s leaders in the coming years will face a set of new strains that defy easy solution: Growth will inevitably slow, a rising middle class will make increased political demands, growing wages will make export markets more difficult to win, and the demographics of an aging society and its single-child policy will produce new social and financial pressures.

Thus, the fifth generation of Communist leaders, who will be installed at the 18th Party Congress this autumn, will inherit a China whose unreformed political structure isn’t equipped to manage the demands of its increasingly complex, modern state. They also will face a public angered by widening reports of official corruption amid growing gaps in income.

The seven new individuals who this autumn will be appointed to the nine-member Central Politburo Standing Committee of the Communist Party, the country’s highest decision-making authority, have been bred during the country’s meteoric economic rise. If the current scandal has revealed anything, it is a seething unrest among party leaders over how to manage a country that has moved so far beyond communist ideology.

The conventional wisdom is that the battle lines have been drawn between those who advocate liberal constitutional and political reforms – most prominently represented by Premier Wen Jiabao – that would bring greater pluralism and more powerful rule-of-law, versus those who favor greater state and party controls. Yet lines are far messier and opaque than that: China’s factions, personal rivalries and underlying ideologies defy Western categories.

To sort out the plot, watch closely to see which shoes drop next. That may indicate how much support Bo had at senior leadership levels both for himself and his populist approach, which was laced with Maoist nostalgia and “red culture,” emphasizing large public works, state company ownership and a brutal (if ultimately hypocritical) crime and corruption crackdown.

The standing committee removed Bo, but it’s not yet clear what party disciplinary or criminal actions he will face – or how transparent they will be for the public. In particular, how might party leaders handle the powerful Chinese interior minister Zhou Yangkang, a Bo ally, whose seat on the standing committee is the one Bo had sought? Will military heads roll, as it is rumored that Bo has enjoyed a following as well among uniformed brass.

Most analysts still believe the party congress will produce its forecast personnel outcome: the elevation of Chinese Vice-President Xi Jinping. Indeed, the Bo scandal may have guaranteed that outcome as leaders circle their wagons. But watch as well who takes the other leadership seats, in particular Wang Yang of Guangdong province, the leading next-generation reformist leader, who had been Bo’s predecessor in Chongqing.

China’s leaders seem to agree that the status quo is unsustainable. What’s at stake is who will change it – and in which direction.

For President Obama, this exercise provides just one policy course: Do no harm, avoid providing hardliners a scapegoat, and pray for the best.

PHOTO: China’s former Chongqing Municipality Communist Party Secretary Bo Xilai (L) and former Deputy Mayor of Chongqing Wang Lijun (R) attend a session of the Chinese People’s Political Consultative Conference (CPPCC) of the Chongqing Municipal Committee, in Chongqing municipality, January 7, 2012. REUTERS/Stringer

For all their bitter differences, President Obama and Governor Romney share one overwhelming challenge. Whoever is elected will face the growing reality that the greatest risk to global stability over the next 20 years may be the nature of America itself.

Nothing – not Iranian or North Korean nuclear weapons, not violent extremists or Mideast instability, not climate change or economic imbalances – will shape the world as profoundly as the ability of the United States to remain an effective and confident world player advocating its traditional global purpose of individual rights and open societies.

That was the conclusion of the Global Agenda Council on the United States, a group of experts that was brought together by the World Economic Forum and that I have chaired. Even more intriguing, our group tested our views on, among others, a set of Chinese officials and experts, who worried that we would face a world overwhelmed by chaos if the U.S. – facing resource restraints, leadership fatigue and domestic political dysfunction – disengaged from its global responsibilities.

U.S. leadership, with all its shortcomings and missteps, has been the glue and underwriter of global stability since World War Two – more than any other nation. Even with the world experiencing its greatest shift of economic and political power since the 19th century, no other country is emerging – or looks likely to emerge – that would be as prepared or equipped to exercise leadership on behalf of the global good.

Yet many in the world are questioning the role of U.S. leadership, the governance architecture it helped create and even the values for which the U.S. stands. Weary from a decade of war and strained financially, Americans themselves are rethinking whether they can afford global purpose.

The election campaign is unlikely to shed much light on these issues, yet both candidates face an inescapable truth: How the U.S. evolves over the next 15 to 20 years will be most important single variable (and the greatest uncertainty) hovering over the global future. And the two most important elements that will shape the U.S. course, in the view of the Global Agenda Council on the United States, will be American intentions and the capability to act on them.

In short, will Americans continue to see as part of their identity the championing of values such as individual opportunity and open societies that have contributed so richly to the global commons? Second, can the U.S. sufficiently address its domestic challenges to assure its economic, political and societal strength while the world changes at unprecedented velocity?

Consider this: It took Great Britain 155 years to double its gross domestic product per capita in the 18th and 19th centuries, when it was the world’s leading power. It took the U.S. 50 years to do the same by 1950, when its population was 152 million. Both India and China have achieved the same growth on a scale and at a pace never experienced before. Both countries have more than a hundred times the population of Britain during its heyday, yet they are achieving similar outcomes in a tenth of the time.

Although China will likely surpass the U.S. as the world’s largest economy by 2030, Americans retain distinct advantages that could allow them to remain the pivotal power. Think of Uncle Sam as a poker player sitting at a global table of cohorts, holding better cards than anyone else: a free and vibrant society, a history of technological innovation, an ability to attract capital and generate jobs, and a relatively young and regenerating population.

However, it doesn’t matter how good your cards are if you’re playing them poorly. Put another way, the candidate who wins in November is going to be faced with the reality summed up by the cartoon character Pogo in 1971 as he was trying to make his way through a prickly primeval forest without proper footwear: “We have met the enemy and he is us.”

Imagine two very different scenarios for the world, based on how America rises to its challenges.

The positive scenario would require whoever is elected in November to be a unifier, someone who can rise above our current squabbles and galvanize not only the U.S. but also the world around a greater understanding of this historic moment. He would address the larger U.S. issues of failing infrastructure, falling educational standards, widening deficits and spiraling healthcare costs. He would partner more effectively with rising powers, and China in particular. And he would recognize and act upon the strategic stake the U.S. has in a politically confident, economically healthy Europe.

The doubling of the global middle class by a billion people by 2030 plays into U.S. political and economic strengths, increasing demand for the products and services of information technology where the U.S. excels. Developments that improve the extraction of shale natural gas and oil provide the U.S. and some of its allies disproportionate benefits. Under this positive scenario, the U.S. could log growth rates of 2.7 percent or more each year, compared with 2.5 percent over the past 20 years. Average living standards could rise by 40 percent through 2030, keeping alive the American dream and restoring the global attractiveness of the U.S. model.

The negative scenario results from a U.S. that fails to rise to its current challenges. Great powers decline when they fail to address the problems they recognize. U.S. growth could slow to an average of 1.5 percent per year, if that. The knock-on impact on the world economy could be a half-percent per year. The shift in the perception of the U.S. as a descending power would be more pronounced. This sort of United States would be increasingly incapable of leading and disinclined to try. It is an America that would be more likely to be protectionist and less likely to retool global institutions to make them more effective.

One can already see hints of what such a world would look like.

Middle Eastern diplomats in Washington say the failure of the U.S. to orchestrate a more coherent and generous transatlantic and international response to their region’s upheavals has resulted in a free-for-all for influence that is favoring some of the least enlightened players. Although the U.S. has responded to the euro zone crisis, as a result of its own economic fears, it hasn’t offered a larger vision for the transatlantic future that recognizes its enormous strategic stake in Europe’s future, given global shifts of influence.

The U.S. played a dominant role in reconstructing the post-World War Two international order. The question is whether it will do so again or instead contribute to a dangerous global power vacuum that no one over the next two decades is willing or capable of filling.