China’s predicament: Where is the river to cross?

Today, China is in a dramatic predicament for itself and others. What is the grand strategy to use to cope with the world? The big question hangs over the thousands of delegates convened in Beijing for the ritual plenary session of the National People’s Congress, the most important political appointment of the year due to begin on March 5.

The People’s Republic of China started in 1949 with the lofty goal of defeating international imperialism and spreading socialism worldwide. When Mao broke up with the Soviet Union in the early 1960s, he started his own international socialist movement supporting Maoist groups in Europe, Africa, and Asia. After he died in 1976, China dropped its internationalist ambitions and went on a different path.

Deng Xiaoping’s coming to power was marked by a clear, though ambiguously framed, strategy. He stated that the country should “cross the river by touching the stones” 摸着石头过河. The sense was that China had to modernize, that is, Westernize, that is, Americanize, step by step, being careful about possible mistakes.

It was no accident that Deng put on a cowboy hat on his famous American trip, concretely showing the Chinese and the world what he wanted to do. The walk had to be cautious, one step at a time, feeling stones and avoiding falling in the water, but the general direction was certain.

The strategy matched and dovetailed with a similar US strategy. In 1980, the US granted China lower export tariffs to America than those given to Japan or South Korea at the time. It allowed technology transfers and encouraged the World Bank to recommend a path for economic reforms.

These concessions had generated a virtuous circle between the two countries. US companies were relocating factories to