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By Root 546 0

few have contemplated seriously. Since the 1990s, China’s rapid economic ascendance has changed the West’s assessment of its capabilities and prospects. Projecting China’s future growth on the basis of its stellar development record in the recent past, the Western business community views China as an unprecedented commercial opportunity and a strategic market. Although China may be a difficult place to do business, Western businesses have learned how to manage and live with the risks inherent in that nation’s political and economic environments. But if the implications of this study are borne out, the lofty expectations of Western businesses are most likely to be disappointed. China may be one of the biggest economies of the world, but the high rates of growth and generation of wealth projected by Western businesses will unlikely materialize. At the very least, the conclusions drawn from this study should make these businesses reassess their China strategy and adjust the risk premium they demand in return for their investments.

At the geopolitical level, the prospect of a rising China that could challenge the existing world order in general, and the preeminence of the United States in particular, has dominated the debate on the West’s policy toward China since the mid-1990s.5 Security analysts are preoccupied with China’s potential military capabilities and intentions. Even though the China debate has spawned two conflicting policy approaches, often labeled “containment” and “engagement,” the fundamental premise underlying these two opposing approaches is similar. Advocates of engagement and containment both assume China’s rise as a given, and their differing policy prescriptions focus on projected Chinese strength, rather than its weakness. To be sure, China’s weaknesses sometimes cause concerns in the West. But on such occasions, relatively rare in the 1990s when the Chinese economy boomed, analysis of China’s problems tends to be extremely pessimistic, often with predictions of an imminent collapse of the Chinese political order and economy.6

Should China’s rise fizzle, as this book suggests is highly likely if no fundamental political reforms are implemented, both the containers and engagers will be disappointed. For the hard-nosed realists obsessed with the potential threat from a China with peer-competitor capabilities, a China stuck in its incomplete transition means a much weaker China incapable of mounting a real challenge for global preeminence. In practical terms, the careful construction of a strategic balance of power designed to counter China’s rising influence, as pursued by the George W. Bush administration through its efforts to recruit Japan and India into a potential anti-China security alliance, may turn out to be unnecessary. Needless to say, the tens of billions of dollars in military spending justified as a response to China’s rising military threat will be wasted. Without China as a peer competitor, Washington’s strategic thinkers will have to look elsewhere for new threats.

But liberal engagers will also have a harder time reconciling their expectations that economic progress will bring democratization with the hard reality that the Chinese experience has consistently defied such expectations. With progress toward a genuine open society frustratingly slow in China, Western liberals may find it increasingly difficult to maintain their optimism about China’s future as a candidate for democratization. In policy terms, the intellectual case for engagement with China that has been made will rest on even more shaky ground.

The international community should take another look at China and start preparing, at least intellectually, for the unpleasant prospect that China may not only fail to fully realize its potential, but also descend into long-term stagnation. Such a reassessment of China’s future should produce a new and more realistic framework in analyzing China’s ongoing transformation and addressing the real challenges it brings. Instead of viewing China as the new superpower of the twenty-first