At the 2008 Beijing Summer Olympics, China will present to the world the glowing image of a fast-modernizing and responsible nation, rising gracefully to accept its rightful membership in the club of great powers. Already, the Chinese government has embarked upon a widespread charm offensive, seeking the international respect it craves to match its growing economic and cultural heft. Its efforts have been strongest in Southeast Asia, where China is aggressively forging new partnerships that are replacing age-old territorial conflicts. And its strategy is paying off. In a region that has benefited from decades of strong trade and security ties with America and has been long wary of Chinese ambition, a recent BBC poll showed that elites and everyday people alike now see China more favorably than they do the United States.

China also has turned up its efforts to sway the opinions of Americans. Last year, for instance, Beijing paid more than $2 million to sponsor a Festival of China at Washington’s Kennedy Center, where the Chinese culture minister told a gathering of U.S. executives and diplomats that “China brings to the [sic] America love and not threat.” Despite these efforts, the “China Threat” has been the subject of countless articles, books, and conferences dissecting how, if, and when the rise of China will adversely affect American security and prosperity. This discussion has revolved around the assumption that the Chinese challenge will be defined by the country’s material power–by how many warheads it builds, T-shirts it makes, or oilfields it buys. To be sure, China’s arms build-up and steroid-paced growth are causes for serious concern. But the rise of China is about a lot more than guns and butter. Equally challenging are the new ideas that rise with it: illiberal conceptions of internal governance and international norms.

Since the end of the Cold War, democratic liberalism has been the dominant model for national development and international affairs. The liberal creed centers on the economic and political freedoms that citizens have in relation to government and the belief that it is the responsibility of the international community to promote and protect those rights worldwide. The rise of China presents the West, for the first time since the fall of the Berlin Wall, with a formidable ideological challenge to that paradigm. The “China model” powerfully combines two components: illiberal capitalism, the practice and promotion of a governance strategy where markets are free but politics are not; and illiberal sovereignty, an approach to international relations that emphasizes the inviolability of national borders in the face of international intervention. China’s rise, in turn, presents a successful and, in many nations’ eyes, increasingly legitimate model for national development, one that poses a distinct alternative to Western-style democratic liberalism.

For the United States, it is this ideological challenge that, in the long run, presents more of a security threat than any military imbalance or trade deficit. The spreading of Chinese illiberalism could set scores of developing nations away from the path of liberal democracy, creating a community of countries that reject Western views of human rights and accepted standards of national governance. In the rise of China, what is really at stake is not American competitiveness or power, but the future of the liberal international order. There is indeed a new China threat, but it’s an ideological one.

Markets and Missiles

Over the past decade, American foreign policy-makers have staked out positions on China along fairly traditional lines, based upon differing interpretations of when and how its growing economic and military might will become a menace to American interests. In one camp are the hardliners, who believe that the China of today embodies a clear and present challenge and should be dealt with accordingly. They cite China’s dangerous (although opaque) increase in arms spending, coupled with its rising regional influence. These strategic concerns are joined by voices on Capitol Hill, who argue that America’s economic competitiveness and the well-being of their constituents are being eroded by China’s cheap labor, lax intellectual property protection, and undervalued currency. The suggested response is a twenty-first-century policy of containment, comprising heavy-handed diplomacy–and punitive measures if need be–to eliminate China’s unfair advantages.

Countering the hardliners are a set of non-alarmist moderates who argue that the China of 2025 will be either too weak or too friendly to pose a threat to the United States. On the military side, they note the unquestionable predominance of the Americans in the Pacific Theater, with the Chinese a long way from being able to mount a serious threat. The economic story is similar: Although China is large and growing rapidly, it still accounts for barely 5 percent of the world economy–ranking fourth in size behind the United States, Japan, and Germany–and remains a low-wage, low-tech, and fairly corrupt developing economy that is riddled with inefficiencies. Burgeoning environmental, social, and political pressures, in this view, also may yet stall China’s economic engine.

Others in the moderate camp are more bullish on China’s prospects, contending that as it continues its dramatic ascent it will, over time, be less likely to clash with the United States. First, the opportunity cost of conflict will become too great as China becomes wealthier and more interconnected with the global economy. Second, the growth of China’s middle class, along with their inevitable demand for political participation, will compel China to evolve into a peaceful democracy. For the moderates, patience and restraint are the watchwords; engagement is the overall arc of policy. The hope, in the words of former Deputy Secretary of State Robert Zoellick, is that China will become a “responsible stakeholder” in the global system that has facilitated its ascent.

Despite their differences, both the hardliner and moderate perspectives remain fixated on materialist factors, and in doing so fail to see the forest for the trees. Raw power matters a great deal in international politics, but the lasting effect of China’s rise will be determined by the ideological milieu in which that power is exercised. A world in which China challenges the United States within the confines of the liberal international order is far different from one in which it does so within an illiberal environment of its making. Thus, rather than arguing over how best to guide, manipulate, or suppress China’s power, the United States must meet the illiberal challenge head-on. The continued ideological dominance of democratic liberalism is crucial to the permanence and projection of American power, and to creating a world that lives up to universal ideals of freedom, equality, and justice. To that end, the United States must aggressively prove to the world–first and foremost through its own actions–that the road to peace, security, and wealth is paved by democratic liberalism.

Democratic Liberalism’s Rise to the Top

Since the fall of the Berlin Wall, the precepts of democratic liberalism have spread throughout the world at the levels of both domestic governance and international relations. More and more countries have become capitalist democracies where private property, the rule of law, and elections hold sway; likewise, the relationships between states have become increasingly governed by a set of liberal international norms, such as the protection of human rights. American hegemony itself has been reinforced by the spread of economic and political freedom.

Of course, democratic liberalism did not ascend without a challenge. During the Cold War, the Soviet Union provided a coherent ideological and programmatic counterpoint, and the United States responded not only by engaging the material struggle through which both camps sought to demonstrate their military and economic superiority, but also by engaging the ideological struggle in which each superpower tried to prove the ethical supremacy of its model.

In addition to the superpower rivalry, the Third World devised its own governance alternatives, but they never reached the status of sustainable political ideologies that could provide a comprehensive narrative for national development. For instance, the Non-Aligned Movement (NAM)–which emerged in the 1950s, led by states like Egypt, India, Indonesia, and Yugoslavia–claimed for its members independence in both their internal affairs (usually choosing a strong emphasis on nationalism and tending toward state-planned economic systems) and their international relations (opposing imperialism in particular). But the NAM never developed into a coherent ideological alternative. In practice, many of these states were given military and economic aid by either the United States or the Soviet Union in a delicate global balance between democratic liberalism and Marxism.

Another approach was bureaucratic authoritarianism complemented by tight economic control, with high tariffs and nationalized industries, in an attempt to build strong domestic economies. While many Latin American nations that took this route stagnated under this import-substituting strategy, the group of East Asian countries known as the newly industrializing countries (NICs)–South Korea, Taiwan, Singapore, and Hong Kong–made the transition to an export-oriented strategy. These government-led drives to encourage domestic companies to compete internationally by using public subsidies and other incentives were highly successful in achieving explosive growth, poverty reduction, and international integration. Yet while Asian leaders like Singapore’s Lee Kuan Yew attempted to marry their new developmental paradigm to a political ideology by touting the “Asian values” version of participatory politics, this approach also never developed into a comprehensive ideological alternative. Over time, the NICs engaged democratic liberalism on its own terms by adopting many of its economic prescriptions with only slight modifications, and almost all of them ended up democratizing. Thus, unlike China today, neither of these would-be challenges to the liberal order developed an independent political ideology comprising a unique set of both domestic and international elements.

The fall of the Soviet Union, therefore, brought with it the death of the only coherent ideological alternative to democratic liberalism. Developing countries that were previously able to remain non-aligned and pursue their own versions of internal organization and international relations found themselves increasingly pulled into orbit around the United States and its Western allies. Indeed, one of the defining elements of the post–Cold War period has been the ability of the West, led by the United States, to impose a set of economic and political prescriptions on developing and post-Communist transitional countries. The “Washington Consensus” economic menu of free trade and structural adjustment–including marketization, privatization, and deregulation–became dominant in the 1980s. But the hegemony of democratic liberalism in the 1990s was even more comprehensive: Through the United Nations (U.N.), the World Bank, and the International Monetary Fund (IMF) and underpinned by American foreign policy, free-market economics was combined with a set of liberal policy prescriptions regarding human rights, civil liberties, the promotion of democracy, and other political freedoms.

At the dawn of this period of American ideological and material hegemony, many concluded that the natural trajectory for all countries would be along the modernization path of democratic liberalism. After the fall of the Soviet Union and the Communist project, President George H.W. Bush frequently spoke of a “new world order,” and Francis Fukuyama famously proclaimed the “end of history.” The United States had won the Cold War, so the story went, proving once and for all that democratic liberalism was the most effective, if not the only, mechanism through which societies could achieve peaceful development. With few exceptions, U.S. foreign policy has remained predicated on the belief that, due in large part to its undeniable success on the world stage, democratic liberalism would forever remain atop the ideological hierarchy.

But the first decade of this century has borne witness to a growing uneasiness with the liberal model. Developing nations are increasingly disenchanted with the Washington Consensus. Not benefiting from world economic growth, they have suffered the pains of structural adjustment and the ravages of financial contagion that many associate with being exposed to global financial markets. On the political front, in many instances, elections have done little to unlock countries from despotic or semi-despotic rule, and instead have led to sham democracies that are governed by corrupt and personality-dominated regimes. Into this void has rushed two major challenges. The first, jihadist Islamism, has made its presence felt not only throughout the Muslim world, but in the political and economic capitals of the liberal West. As a practical matter, however, this ideology is almost certainly unsustainable as a long-term model of political and economic organization, and its potential appeal does not extend beyond adherents to its faith. The second ideology, Chinese illiberalism, presents the real long-term geopolitical challenge: It is easily exportable, and it is dangerously appealing to a disaffected developing world.

China’s Twin Illiberalisms

China’s illiberal model is particularly powerful because it comprises both internal and external elements. It is a recipe for domestic governance along with a rulebook for conducting international relations. On the internal front, China’s leaders have, over the last quarter-century, developed a strategy of illiberal capitalism that has demonstrated its ability to achieve economic growth and poverty reduction without causing significant fissures in authoritarian control. Building on that domestic success, Beijing also has asserted a view of foreign policy that rejects the liberal proposition that the international community should have a say in the practices of national government. These twin ideologies are intertwined in a self-reinforcing cycle of illiberalism. By demonstrating the viability and achievements of an illiberal capitalist model for growth, China has become an exporter of ideas to a developing world weary of democratic liberalism–and a financier for those eager to play copycat. China’s reward is the construction of an international order based on illiberal sovereignty, which is permissive of the very anti-democratic and repressive internal practices that accompany its particular path to economic growth.

Illiberal Capitalism

It is hard to deny the attractiveness of the Chinese story. The numbers are staggering. The Chinese economy has grown, since market-oriented economic reforms were launched in 1978, at a blistering annual average of 9 percent. China alone contributed one-third of international economic growth in 2004, and China’s gross domestic product (GDP) increased sixfold between 1984 and 2004, recently making it the world’s fourth-largest economy. In the meantime, average incomes have increased fivefold, lifting roughly 400 million Chinese out of poverty. And China did this while managing to prevent political turmoil and keeping the lid on social unrest.

This is a critical part of the China story, for the economic and political are interlinked. In a radical counterpoint to democratic liberalism, the Chinese have developed a state-society compact through which the government provides a certain measure of economic prosperity in return for society allowing it to govern unchallenged. Freedom and civil liberties are exchanged for order and wealth and, to the degree that the state continues to deliver on its promise, the regime is unlikely to moderate. The Chinese regime has severed the economic freedom of capitalism from the political liberties of democracy, turning modernization theory on its head. At the same time, China has maintained its legitimacy by reformulating the pursuit of economic liberalization and growth into a nationalist project, justifying reforms, such as the introduction of profit-making incentives for state-owned enterprises, as necessary in the pursuit of national competitiveness in the global economy. Although Western analysts often have claimed to see the buds of freedom–such as in the 1989 Tiananmen Square uprising, the spread of Internet usage since the mid-1990s, and the recent uptick in rural social protests–the regime’s grip on power has yet to crack, and liberty has yet to blossom. Underpinning its state-controlled capitalist experiment, the Chinese Communist Party has constructed a new rationale for totalitarian political rule that no longer relies on Marxist economic ideology.

For countries that have yet to enjoy the often-promised economic growth, poverty reduction, and industrial development, China’s illiberal capitalism is an attractive alternative, especially for ruling elites eager to tighten their hold on power. This strategy is conveniently portable, emphasizing the nationalist and pragmatic nature of the development project rather than prescribing specific ideological rules for political and economic management. As a result, Chinese illiberalism is fast becoming a popular export throughout the developing world, even to those who don’t expect to replicate its dramatic success. In South America, Venezuela’s Hugo Chávez and Bolivia’s Evo Morales have embraced the China model. The latter visited China in January 2006 less than a month after being elected and, when asked why he had made the trip, Morales explained that he considered China a “political, ideological, and programmatic ally of the Bolivian people.” In the Middle East, Iran’s conservative media have explicitly advocated following a “China Model” of development in the wake of President Mohammad Khatami’s failed reformist agenda. Iranian diplomats have traveled to Beijing to learn more about China’s governance strategy, subsequently returning to help the government enact components of illiberal capitalism, such as reaching out to foreign investors while clamping down on political dissent at home. In Africa, Nigeria has been drawn by the luster of what its Senate president called “a good model for Nigeria in its quest for an authentic and stable development ideology.”

Unlike the Soviet Union in the last century, of course, China is not forcefully exporting its illiberal model. Instead, the manner in which China pursues its national goals–chasing economic interests and political allies without regard to domestic governance practices–is facilitating the export and sustainability of illiberal capitalism abroad. Seducing illiberal regimes into its orbit, China’s foreign assistance and private investments arrive free of “good governance” conditionality, thereby undermining the very mechanisms through which the United States has sought to advance liberal practices around the globe. The result is that developing countries now have an alternative to the funds that are often tied to inherently painful liberal reforms, as well as an ideological ally to help shield them from Western pressure.

Take China’s mutually beneficial relationship with Angola. The African nation’s economic recovery from decades of civil war has been fueled by rapid growth in the oil sector, which now accounts for roughly half of its GDP. Yet, like many other resource-rich developing nations, the country remains in relative disrepair, ruled by a prototypical strongman, Eduardo Jose dos Santos. The international community, primarily through the IMF, has sought to pressure Angola to make much-needed internal reforms. But just as it appeared that the IMF was making progress in compelling Luanda to fix its corrupt and mismanaged oil sector, the Angolan government signed a $2 billion credit line with China’s Eximbank. With more Chinese money in the offing, the IMF’s loan deal is dead in the water, leaving the IMF with little leverage beyond the ability to recommend reforms when solicited by the Angolan government. Following a meeting with Chinese Prime Minister Wen Jiabao this past June, President dos Santos proudly described how China has formed an unprecedented partnership with Africa by promoting reciprocal cooperation that is free of preconditions. China’s abundant resources have significantly reduced, if not altogether eliminated, the ability of the West to use conditions-laden assistance to push the Angolan government toward economic and political reform. Meanwhile, the Chinese economy is reaping the benefits of this relationship: In the first half of 2006, Angola overtook Saudi Arabia as China’s largest oil supplier.

Illiberal Sovereignty

The Angola case also provides a clear example of the other pillar of Chinese illiberalism: its approach to foreign policy and interstate relations. Unlike the United States and Europe, China does not subscribe to evolving international norms of multilateral intervention on the grounds of human rights and political freedoms, does not promote democracy overseas, does not demand open markets from its trading partners, and does not advocate selective violations of a nation’s sovereignty even in the extreme cases of genocide and the harboring of terrorists. Rather, the international dimensions of China’s illiberal model are defined by a permissive foreign policy predicated on the principles of absolute sovereignty and non-intervention. In this worldview, national governments, particularly in the context of pursuing their fair share of the world’s economic pie, possess ultimate power within their borders and are not answerable to the externally set norms of the international community. Again, unlike the Soviet Union, China is not pushing its new world order for ideological reasons; rather, illiberal sovereignty serves China’s needs to protect its claims to Taiwan and Tibet, satiate its voracious energy appetite, and keep meddlesome foreigners from questioning its model of economic growth or its treatment of internal dissidents. But the effect is the same: Illiberal sovereignty is fast becoming the first coherent challenge to the liberal world order since Soviet communism.

Through a wide array of bilateral and multilateral arrangements, the Chinese government has begun to build an alternative international structure anchored by these illiberal norms. Nowhere is this trend more evident than Africa. Beijing has made an unprecedented push to penetrate the continent with what Princeton Lyman, former U.S. Ambassador to South Africa and Nigeria, has called the “complete package”: trade and investment, military assistance, highly visible aid projects, debt relief, technical expertise, and educational and cultural exchanges, all backed by China’s influence in bodies like the U.N. Security Council. Top-ranking Chinese officials are now visiting Africa frequently, setting up formal multilateral institutions like the China-Africa Cooperation Forum. As co-dependence increases between China and numerous illiberal governments, so too have both support for the norms of illiberal sovereignty and China’s incentives to maintain the stability of its new allies.

To see the potential effects of this illiberal cycle, witness what is happening in the Sudan. There, the Chinese have sought to protect their massive oil investments by preventing the U.N. Security Council from taking overly punitive measures to stop the government-supported genocide in Darfur, arguing that it is not the business of the international community to interfere in Sudanese politics. China’s deputy foreign minister told reporters in 2004 that “the internal situation in the Sudan is an internal affair, and we are not in a position to impose upon them.” More broadly, China recently urged the new U.N. Human Rights Council–an institution that in theory embodies the principles of democratic liberalism–to avoid political confrontation and respect countries’ differences, with an emphasis on economic, social, and cultural rights. Illiberal regimes the world over are applauding this redefinition of a cherished liberal norm. Indeed, the failure of the international community to reach a coherent international strategy regarding the Sudan, Iran, or North Korea can be laid, at least in part, on China, as it has frustrated efforts to construct effective coalitions to handle these pressing problems.

Consequently, it should come as no surprise that several autocratic regimes have begun to return the favor as they line up behind China on the Taiwan issue, stressing the inviolability of national sovereignty. Since the early ’90s, China has been winning its diplomatic tug-of-war with Taiwan to gain the support of African states, with at least seven switching their allegiance to recognize China over Taiwan. In January 2006, Beijing stepped up this effort, issuing a white paper that outlined its relationship with the African continent. The paper openly declared that the one-China principle is the political foundation for the establishment and development of China’s relations with African countries and regional organizations, and invited those countries that have not yet established diplomatic ties with China to do so–and, of course, to reap the massive economic benefits that come along with those ties. Chad, for instance, announced just this past August that it was severing diplomatic ties with Taiwan and establishing them with China because it will support the country–in the words of Chad’s deputy foreign minister–”in its efforts to protect the sovereignty of the state and develop the national economy.”

What began as economic opportunism and the reaping of mutual benefit is slowly entrenching a new set of norms across the globe. These norms are being reinforced through an alternative institutional architecture. Though we have yet to see a coherent anti-Western bloc in the vein of the Warsaw Pact, the Chinese have begun to create new multilateral structures that better serve their most pressing needs. China is fast becoming Southeast Asia’s biggest trading partner and aims to form the world’s largest regional trading bloc by 2010. At this summer’s meeting of the Shanghai Cooperation Organization (SCO)–a summit co-founded by China in 2001–the energy-rich states of Asia gathered to, among other things, express their collective disapproval of liberal intervention. The fundamental importance of national sovereignty was a dominant theme at the talks, with the declaration of principles asserting, “Differences in cultural traditions, political and social systems, values and models of development formed in the course of history should not be taken as pretexts to interfere in other countries’ internal affairs.” If that’s not troubling enough, participation in organizations like the SCO provides a vehicle for nations–even pariah states like Iran–to take cover behind China’s newfound star power. Diplomatic efforts like the SCO, with its charter goal of “developing political multi-polarity,” give a glimpse of what could be one pillar in an alternative international architecture in which the United Nations, NATO, and the Bretton Woods institutions no longer set the principles that govern international politics.

The democratic liberal order has been, for more than 15 years, the only articulated set of norms and institutions within the international system. Even in its infancy, a loosely defined alternative like that being crafted by China and its illiberal friends represents a very real challenge. The desire among the leadership of both American political parties for China to become a “responsible stakeholder” in bolstering the liberal international order overlooks the degree to which Beijing has already begun to articulate and design a parallel to it.

Reasserting Democratic Liberalism

The last several years have demonstrated that if democratic liberalism fails to deliver on its promises of peaceful economic growth in the developing world, the conditions will be ripe for the emergence of unsavory alternatives. As the Clinton Administration’s 1998 National Security Strategy presciently warned in 1998, “If citizens tire of waiting for democracy and free markets to deliver a better life for them, there is a real risk that they will lose confidence in democracy and free markets. This would pose great risks not only for our economic interests but for our national security.” In foreign policy circles, however, the conception of an ideological struggle and the acknowledgment of a contemporary challenge to democratic liberalism have focused exclusively on Islamic fundamentalism. Yet the current obsession with jihadist extremism ought to be put in the context of its geographical limitations and nearly certain long-term unsustainability as a model of political and economic organization. Although the threat of catastrophic terrorism is very real, the jihadist brand of illiberalism is unlikely to lead to a coherent and portable governance strategy able to produce the human and economic capital to fundamentally threaten the reign of democratic liberalism.

In sharp contrast, while America’s leaders have been preoccupied with the “global war on terror,” China has taken its place at the fountainhead of an increasingly powerful challenge to the liberal international order. This beckons for a comprehensive strategy in response. Traditional foreign policy approaches of containment or engagement will not solve the dilemmas presented by the spread of this alternative governance ideology; the United States must move beyond trying to balance China’s power or ensure its integration within the global system–as important as those goals are.

Instead, the United States must reassert the primacy and attractiveness of democratic liberalism in a world in which sovereign developing countries are voluntarily turning toward a successful and increasingly legitimate illiberal model of governance. Twenty years ago, young men and women dreamed westward from behind the Iron Curtain and imagined an America that was a beacon of promise and liberty. In the face of free-falling poll numbers that confirm growing anti-Americanism abroad, the same could not be said across much of the developing world today. Selling democratic liberalism will require not only a better marketing campaign in the form of public diplomacy, but also an aggressive re-strengthening of the product. Part of the answer lies at home, where we must retain the appeal of our own domestic governance model by more effectively dealing with the political and socioeconomic inequalities so powerfully demonstrated by the likes of questionable election practices and Hurricane Katrina. Drawing from America’s Cold War diplomatic playbook, cultural and educational exchanges should also be used to regain the confidence and commitment of foreign elites, who are America’s best allies in delivering its message. And looking at American actions abroad, the first obvious step is to end what is perhaps the Bush Administration’s most dangerous legacy, the disconnect between America’s values and its actions, as seen from Guantánamo Bay to Baghdad.

Beyond image control, however, democratic liberalism must deliver on its promise of economic growth and political freedom. This means taking more seriously the notion that the fate of the developing world is crucial to the long-term wealth and security of the United States. Since the late ’90s, there have been few success stories–in both the last years of the Clinton Administration and the current Bush Administration–of improving people’s lives through free markets and democracy. Emblematic of this complacency has been the current administration’s unwillingness to use its political and economic leverage to successfully close the Doha trade round. America’s leaders should devise economic and trade policies–in agriculture and pharmaceuticals, for instance–that attract foreign regimes toward free markets, even if this entails challenging powerful domestic special interests at home. Furthermore, the United States ought to use its influence in liberal lending institutions to ensure that the principles of justice and equality are embedded in the development strategies of the international community. Meanwhile, the portion of America’s own wealth that goes to foreign assistance should be increased to be more commensurate with its peers in the developed world.

On the political front, the United States must be a standard-bearer in encouraging home-grown democratization efforts overseas, such as the “color revolutions” of recent years, by supporting the principles and procedures of democratic government rather than betting on specific political parties. And it is vital to give the developing world a stake in the future of democratic liberalism, rather than making its people reluctant consumers of American hegemony. Since the end of World War II, widespread global participation in a panoply of international organizations and agreements–ranging from the United Nations and the World Trade Organization to the Chemical Weapons Convention and the Montreal Protocol on ozone depletion–has been one of the most successful strategies for incorporating the developing world into the liberal order. Rather than undermining or abandoning international institutions on the grounds that they constrain American power, the United States should be the leader of multilateral efforts to deal with issues of war crimes, climate change, genocide, and weapons proliferation.

Ultimately, the United States can–and should–be a force for free markets and democracy in the world, but it can only do so if its actions are backed by the might of a democratic liberalism that produces better lives for people the world over. Shirking this responsibility will pave the way for the rise not only of a Chinese superpower, but also for the erosion of the liberal order that has delivered security and stability for the past 50 years.