The conventional wisdom claims that the flowering of democracy in the 20th and 21st centuries will bring peace and prosperity to the community of nations. But some observers also believe that it may be helped along by the stunning growth of the middle class in emerging markets, which some reckon will add 1 billion new consumers to the global economy in the next 10 to 15 years.
To Kant’s democratic recipe for “perpetual peace” we should now throw Karl Marx and the “petit bourgeoisie” into the mix. Only this time around there is nothing “petit” about the middle class, which today accounts for roughly half of the world’s population and is growing by leaps and bounds. And instead of rejecting capitalism, as Marx believed the petit bourgeoisie would, they have embraced it with a vengeance.
The rapid growth of the world’s new middle class may also be changing the character and behaviour of political regimes in the developing world, including China.
Political elites in emerging market nations are slowly coming to the realization that they are riding a political tiger and that a “business-as-usual” approach to their countries’ internal problems — including endemic problems of corruption, cronyism, patronage politics, and “quality of life” issues like clean air, potable water, and food safety — is no longer acceptable. Whether they will act quickly enough is another question.
In Brazil and India, which are nominally democratic countries, economic liberalization and regulatory reform have been accompanied by an increasingly mobilized middle class that is pressing to reform dysfunctional political systems and corrupt ways of doing business. The middle class also wants to change the dial on foreign policy, where Third World nationalist protectionist rhetoric is still very much the norm. The powerful tech sector in both countries, for example, is uncomfortable about the decision their respective governments have made to try to put the Internet under the control of the United Nations and give national regulatory authorities greater control over Internet transactions and e-commerce. Instead, they want an Internet that relatively free of state controls.
There is some evidence — albeit preliminary — that China’s new leadership is also feeling some of the same heat from China’s rapidly-expanding middle class. President Xi is saying all the right things about tackling corruption, promoting social welfare and industrial consolidation, and opening up the ability of ordinary Chinese citizens to participate in domestic and global markets.
Xi has his work cut for him though, and optimism should be tempered by caution. He will have to liberalize financial markets and relax capital controls. There is also a real risk that entrenched interests — especially the Chinese military, which controls much of the economy — will block critical reforms.
As David Gordon of Washington’s Eurasia Group told the Centre for International Governance Innovation’s (CIGI) Global Policy Forum in Ottawa last week, Beijing’s new leadership is also moving to lower the temperature in China’s dispute with Japan over the Senkaku-Daouyu islands, to improve relations with U.S. by sending Chinese observers to American and allied military exercises in the Pacific, and is telling North Korea’s erratic leadership in so many words to “cool it.”
Gordon also noted that China’s new leaders may view the U.S. as a “resilient” as opposed to “declining” power — although ironically the shrinking U.S. middle class poses the real threat to U.S. “resilience” as do chronic problems in U.S. infrastructure, education, etc.
However, the truth of the matter is that it may have finally dawned on China’s leaders that an aggressive foreign policy and braggadocio displays of military power are ultimately not in China’s national self-interest. China wants to carve out a new energy relationship with North America to develop its own shale and deep water reserves where U.S. and Canadian firms are technology leaders.
It also wants to strengthen its trade and investment ties with its neighbors in the Asia-Pacific region. As a recent Pew public opinion global survey clearly shows, China’s regional and global popularity has plummeted because of its bullying behaviour. If China’s new leadership wants to advance its country’s interests, it will have to play nice.
China clearly has to make a big adjustment to play a more significant, yet nuanced, role which is globally commensurate with its surging economic power, but for which its experience and expertise are limited. The self-interest of both the U.S. and China should help preserve stability. As a former Chinese ambassador to Canada once remarked, “Though the road may be bumpy, $600 billion in trade means no war.”