How the Liberal International Order Shaped China’s Challenge to Global Economic Governance

By Jake Werner

In both Beijing and Washington, the recent history of mutual gain in the US–China relationship is increasingly seen as an exercise in self-deceit.

Where shared benefits were once recognized, elites on both sides now perceive the national interests and even the national character of the other to be incompatible with their own. From the US perspective, China champions authoritarianism and undermines the ideal of a neutral market framework for global economic competition. In China, the US is said to uphold an unjust international hierarchy that refuses China its rightful status and denies developing countries the opportunity to grow.

In the field of global economic governance, each side has elaborated its own vision for a desirable order. The contrast can be summarized as follows:

Table 1: Contrasting Principles in China’s Vision and the US-Led Liberal International Order

The diametrically opposed nature of these core principles seems to support the emerging narrative of irreconcilable interests and values separating the two sides. A review of China’s engagement with the global system over the last four decades, however, shows otherwise.

In my new working paper, I seek to ground the Chinese leadership’s vision for global economic governance in China’s specific position in the system of neoliberal growth.

Far from an alien element within the liberal international order, contemporary China was indelibly shaped by it. In the following ways, China’s development has been similar to other countries around the world since the 1970s:

• From bureaucratic to market-driven allocation of resources;
• From permanent jobs carrying robust benefits to unstable, casualized jobs with few benefits;
• From workplace power for labor to a weak and disorganized working class;
• From tight-knit communities organized around stable employment to much higher rates of mobility, turnover and diversity with weaker social ties;
• From collective to individual responsibility;
• From the celebration of the worker to the celebration of the entrepreneur.

China participated robustly in the universal features of the new system, but also developed characteristics that stood in tension with the dominant ideology. I trace these traits not to ancient Chinese culture or to a Marxist–Leninist political essence—as both the Chinese Communist Party and its opponents abroad do—but to the specific position China occupied in the global system.

To sustain growth under neoliberal globalization, China had to outcompete other developing countries in attracting and retaining foreign investment. That required liberalizing economically and socially while simultaneously providing strong infrastructure and workforce education, maintaining low wages through labor repression and suppressing the social discontent that accompanied rising inequality and corruption under liberalization. Rather than dismantling the state to free the market, China’s solution was to rebuild the state, investing it with new powers to administer neoliberal reform while maintaining the stability required for further reform.

China’s approach succeeded in driving growth and maintaining state legitimacy, but the prominent role of the state also clashed sharply with the dominant values of the liberal international order. From the perspective of the Chinese elite, the Party’s record of governance over the last four decades has been an unmatched success. But China has also faced persistent foreign disdain for the path it has taken to rise within the system.

Whether the issue is human rights, industrial policy, or the need to democratize international institutions, the Chinese leadership feels its successes and priorities are being denied recognition. The tension between, on the one hand, growth and advancement within the terms set by the global system and, on the other hand, rejection and hostility coming from those who preside over that system, has inspired dual feelings of pride and resentment within the Chinese elite. That, in turn, supports the claim that China’s national character is unique and even superior to that of other countries and while also inspiring a universalist critique of neoliberal obstacles to global development. These ideological currents defy the liberal international order not despite, but because they arose from within it.

Western commentators often dismiss official Chinese thinking as meaningless window dressing that conceals authoritarian power politics, but I argue this is a mistake. First, the basic narrative of China’s aims is coherent and consistent. Its constituent elements may not fit together seamlessly, but they generally build on each other in a way that has appeal beyond China. Second, the state goes to great lengths to propagate its vision, indicating that it plays a crucial function in policy and politics. While foreign observers point to hypocrisy in Chinese foreign policy conduct, the leadership rationalizes such inconsistency as small compromises in pursuit of a larger victory for those principles, not unlike standard practice in other countries. Because China’s vision is rooted in the struggles and triumphs of recent decades, it is meaningful to the Party elite—even if it is more an outcome of overseeing the system than the motivation for official action.

Most important, aspects of China’s vision could contribute to a reform of global economic governance that would resolve the increasingly dangerous tensions within the global system: lower levels of global trade, investment and growth alongside rising nationalism leading to a sense of existential struggle among the great powers. However, other parts of China’s vision threaten to deepen the crisis. If those who dominate the global system refuse recognition of China’s perspective and act to sabotage China’s diplomatic agenda, reactionary impulses within the Chinese leadership will be strengthened while the productive elements are undermined.

Instead, US policymakers should seek to connect essential principles neglected in China’s vision for global reforms, such as labor rights, a green transformation of production and cultural pluralism, to the universalizing facets of the Chinese vision—the global right to development, state direction of capital to serve social goals, democratization of global governance and the establishment of new global public goods.

International cooperation around such a vision of reform would open the path to an inclusive globalization beyond neoliberalism, to the benefit of people in China, the United States and around the world.