It’s the Ideology, Stupid: How China’s Political Agency Vexes the West
With the rise of China, talk of a second Cold War has intensified. This is typically explained in economic terms: a morality tale in which the Chinese Communist Party (CCP) flirted with the virtuous free trade order and its political corollaries only to fall to the temptation of state capitalism. Like a laboratory study in which the subject failed to defer gratification, China is portrayed as a barbarian who insists on bartering rather than using coins. Meanwhile, those who place China’s ideological commitments in the foreground are framed as naïve. This is understandable, as parts of the political lexicon have degenerated into empty buzzwords. In an age colored by political convergence, tired tags such as “Communism,” “liberal democracy,” or “free markets” easily attract derision; they evoke sepia images of the Cold War, not future conflicts. Yet even without any “freedom versus tyranny” narratives, the relationship between the West and China has been profoundly shaped by ideology. A better grasp of these ideological differences can shed light not only on present conflicts but also on why both sides have misunderstood each other for decades.
Perhaps the most visible sign of the strength of ideology in China is Beijing’s refusal to repudiate almost any of its past. The closest it has come are admissions that Mao made “secondary errors,” which had little to no bearing on his merits. Such beliefs are crucial because they determine to what degree players are willing to limit their actions as well as how a polity views itself. To define a rival as illegitimate is to suggest that it should not only be contained but overhauled. The Persians, for example, sacked Athens in 480 BC, but it was the Macedonians who demolished their democracy roughly a century and a half later. Similarly, Constantinople might have fallen in 1453, but that was long after crusaders stabbed the ideology of Romanitas in the back—what use was a universal identity that could barely defend its core—in 1204.
Since the CCP’s inception, elites have been drilled in a Marxist eschatology which sketches the “contradictions of capitalism” as provoking crises that will eventually liquidate the capitalist world, upheavals that only socialism with Chinese characteristics can contain. Such is the strength of this idea that no matter how many powerful individuals might suspect, mock, or refute it, none dares to do so in public. Another element is the CCP leadership’s ability to say or do anything—even indulge in counter-revolutionary practices, the socialist version of taqiyya—if it furthers the Communist long game. Beneath former general secretary Jiang Zemin’s circumlocutions, his “Three Represents” was precisely such an exercise at the turn of the millennium. Jiang’s “Three Represents” (sange daibiao) enlarged the CCP’s ruling constituency from the working classes to the “public.” The latter was a euphemism intended to obscure the inclusion of capitalists, precisely the class Marxists were meant to undermine. In essence, the party sacrificed a core message in order to secure its survival.
The West is not immune to its own ideological enthusiasms. Between Tiananmen Square (1989) and China’s creation of the artificial islands in the South China Sea (2014), U.S. political and business leaders remained convinced that Beijing’s market reforms were a backdoor through which liberal norms would spread. Deng Xiaoping was essentially seen as a stooge who would “institutionalize” the party—code for having it abandon its revolutionary pretensions—a view perhaps most fully articulated in Richard Nixon’s book Victory without War (1988), in which the former president claimed Communist administrations were best undermined by supporting ideologically compromised candidates who might stealthily navigate the party toward a politically liberal path. This hope was confirmed by President Clinton in 2000 when he claimed, “[China] is not simply agreeing to import more of our products; it is agreeing to import . . . economic freedom.”
General Secretary Zhao Ziyang was also touted as a prospective quisling and his subsequent fall from grace given a liberal sheen by Western commentators who lamented his potential as a lost Gorbachev. In reality, Zhao was brought low because his political base, centered on attempts to build bridges with the party elder Chen Yun, was narrow compared to that of Premier Li Peng, whose views on using violence in 1989 dovetailed neatly with those of Deng (and the rest of the leadership) at a time when Zhao dithered. In contrast to Hu Yaobang, the previous general secretary who had seasoned his Marxism with liberalism, or perhaps more accurately simply did not indulge in xenophobia toward Western norms, Zhao was a died-in-the-wool Marxist. His only sin in the eyes of the leadership had been to recoil from using violence against the masses. Nevertheless, the fact that “institutionalization” has consistently been of lesser importance than the informal distribution of power since Tiananmen, and that China has only moved in one political direction since Zhao, has, until very recently, failed to dent the resilience of Western liberal projections.
Despite the American and Chinese narratives hiding in plain sight, Western analysis remains wedded to the fact that ideology constitutes nothing more than a branding exercise for economic policy. For decades, each side has overlooked the other’s ideology to cooperate in a mutually beneficial economic system. The British historian Niall Ferguson called this unit “Chimerica,” while others dubbed it a “G2.” In reality, however, this interpenetration—essentially U.S. debt financing consumption from China, undergirded by dollar-denominated borrowing—was possible only because each nation had carved an ideological niche for the economic pact to occupy. In short, each party reckoned it had made a dupe of the other.
The United States believed the Tiananmen massacre to be a watershed moment—a funnel to a meltdown that would force China into absorption, like Russia in the 1990s, into the global system. The United States considered this a relatively risk-free gamble because the trade deficit it runs is financed by dollar-denominated debt, which is needed abroad as part of the financial infrastructure of trade. (With China alone, the deficit has fluctuated between $318 and $418 billion over the last decade, the rough equivalent of Denmark’s GDP.) In essence, the United States can buy a lot on credit until its hegemony ends.
Meanwhile, China reckoned that America suffered from such a selfish and disordered constitution that Washington would ignore Beijing’s transparent disingenuousness—posing as ready to “become a responsible global stakeholder” while transforming itself into a peer competitor and anchor of an alternative geopolitical order. The CCP thus deflected attention away from its ability not only to maintain political control and push forward with developmentalist state policies (essentially the basic model of export-oriented development that the United States had afforded to allies in the past) but also to erect a sphere of influence abroad.
Mutually Assured Deception
The U.S. perspective can be traced back as far as 1957 when Secretary of State John Foster Dulles claimed that peaceful means could be used to accelerate the Soviet Union’s evolution toward democracy. At the time, Mao noted that the United States “wants to subvert us . . . corrupt us by a peaceful evolution.” These sentiments crescendoed after Tiananmen when Deng affirmed Mao’s narrative and his new general secretary, Jiang Zemin, added, “The imperialist world tries to make us abandon the socialist road and turn us into a vassal of international capitalism. They use a number of methods to ideologically infiltrate our country, mainly propagating sham notions of democracy, freedom and human rights to incite and support the ideological trend of bourgeois liberalization.” It was under Jiang that “Document Number Seven” warned that the West’s ideological infiltration sought to “win without striking a blow.” Deng, the supposed fulcrum in China’s pivot to liberalism, according to the American framework, stated Beijing’s resistance to it most explicitly in his announcement that “Only socialism can save China. Only socialism can develop China.”
The solution, in a word, was to marry socialism and nationalism. In the West, “national socialism” almost always refers to its German variant, Nazism. China, which fought with the Allies in World War II, is hardly national socialist in that sense, and the CCP’s legitimacy is not grounded on the superiority of the Han. (With almost no immigration and a fairly subdued periphery since 1949, there is no need.) But Chinese socialism has always contained nationalist elements, and from its origins to the present has focused on restoring China’s place after its “humiliation” at the hands of foreign powers.
Moreover, in the global discourse, “nationalism” has a peculiar and somewhat antiquated ring. In the free, rich world of the Cold War and “end of history,” it was deemed passé at best and barbaric at worst. Safe in its avuncular role as a hyperpower, the United States lauded multilateralism as the aspirational framework for postwar politics. It was in Washington’s interests to paint globalization as a win-win for all—especially in the 1970s when it countered its economic and geopolitical crisis by building a neoliberal empire. But like a paterfamilias whose authority has not evaporated just because he is not at home, beneath the globalist rhetoric U.S. interests remained predominant. U.S. political and intellectual culture has simply refused to articulate these motives in direct terms.
Perhaps more familiar but less rigorously studied is the role of corporate interests in the erosion of strategic thinking in America—along with the policy-lock of occupying swathes of the Middle East to little effect. Put simply, China promised U.S. corporations market share, and in return they pressured Washington to grant Beijing’s economic requests. Between the presidencies of Bill Clinton and Barack Obama, U.S. corporations essentially performed the role of lobbyists for Beijing. As a result, human rights were never added as a condition of China’s “most favored nation” status, despite their centrality in America’s own ideological rhetoric.
This mutual deception benefited both parties (or at least the elites of both countries), but only while the economic entanglement remained politically muzzled. In the United States, this coyness was possible in part because organized labor—centered around the midwestern Rust Belt, which had once formed the world’s manufacturing base—had lost its privileged position, and the energies of foreign policy hawks were focused on the Middle East. Equally, in China, high importance was attached to Deng’s maxim of “biding one’s time.” This allowed the CCP to weather nationalist complaints that Beijing was too compliant, including perceived timidity over the Taiwan Strait crisis (1996), bombing of the Belgrade embassy (1999), and the U.S. spy plane crash (2001).
The Turning Point
Three decades after China’s incorporation into the global market, the U.S. prognosis—that China would be reshaped in a liberal image by market reform—looks empty. The state maintains control over the economy via both formal avenues in state-owned enterprises and informal ones, such as rewarding successful entrepreneurs party titles, an act that forces adherence to higher agendas than business. Moreover, private property rights have not been fully established, leaving the state as the owner of all land, with capitalists in possession of no more than temporary rights to its use. China has also succeeded in enticing Western corporations with the bait of market share only to steal patented technologies, subsidize Chinese competitors, and create unfair legal environments, all of which helped to limit foreign competition in its domestic market, especially in strategic industries. By 2008, political rhetoric from China had become progressively more adversarial—one of Xi Jinping’s favorites, Vice President Wang Qishan, is reported to have told Secretary of the Treasury Henry Paulson that “We aren’t sure we should be learning from you any more”—amid an increasingly skewed playing field. Yet the United States continued to plow more funds into China. While foreign direct investment (FDI) lingered between $11 and $30 billion from 2000 and 2007—a period said to constitute the glory years of Chimerica—it rose from $54 billion to $118 billion from 2008 to 2021.
China, however, decided to use the 2008 financial crisis as a turning point to seize the geopolitical narrative and expand its position on the world stage. Between the economic crisis and a series of failed military interventions, America had faltered badly for the first time since the Vietnam War. The crisis weakened the idea that Western banks possessed a universal model and strengthened China’s resolve to keep control of its financial sector.
Just as Chinese leaders began to openly celebrate lessons from history on the rise of imperial powers such as Spain, the Netherlands, Great Britain, and America, they also repackaged their own economy’s falling profits and redundant capacity into a strength by externalizing their domestic stimulus program. This paved the way for the export of China’s overcapacity in infrastructure investment abroad, an initiative marketed as the “Belt and Road Initiative,” or BRI, mainly throughout Eurasia—a landmass that handily avoided confronting the Indo-Pacific’s fifth and seventh U.S. fleets. Chinese outward FDI, however, presents a confused picture because more than 70 percent is directed to offshore financial centers where it sits in holding companies or real estate, indicating its real nature: capital flight. Nevertheless, the BRI benefited many domestic players. Its capital export, for example, created a sphere of influence where Chinese goods and firms enjoyed privileged access compared to local or foreign competitors. Brands such as Sany and XCMG rose from insignificance to the third and fourth largest construction machinery companies in the world. Meanwhile, Chinese demand for commodities drove up global commodity prices, leading much of the developing world—especially Latin America—to repudiate industrialization and increase reliance on commodity exports, an instinct reinforced by Beijing’s efficient, low-cost manufacturing. Despite rhetoric about carrying the anti-colonialist torch or leading the Global South, many of China’s trade partners have witnessed deindustrialization and a return of the resource curse.
At home, the pivot was also bitter-sweet, as Beijing did not enjoy a particularly good crisis. Its export-led boom stuttered, and while its $580 billion stimulus program supported a form of recovery, it was driven by debt-financed fixed-asset investment. As exports weakened, state banks relentlessly expanded their investments. This sent outstanding debt in China to over 250 percent of GDP in 2017, a figure that surged to more than 330 percent during the Covid-19 pandemic. The loans have led to a debt time bomb among major financial players. While the government can contain the domestic debt crisis by repeatedly bailing out state debtors, this is not an option for large investments abroad. Hence the bad optics of the investment in Sri Lanka’s Hambantota port, for example, which continuously lost money after it opened, forcing a Chinese operator to take out a ninety-nine-year lease on it.
But if China is not doing especially well, neither is the West. Indeed, Beijing must be bemused that while dual-circulation—a policy initiative launched in 2020 that aims to reduce the role of foreign trade in driving the economy while improving the quality of trade—may be a long shot, it still seems more likely than the West’s wish to decouple. Beijing’s assumption is based on the fact that the West will find replacing the most basic components of supply chains far harder—at least on short notice and with little price disruption—than Beijing will find shunning or substituting the West’s financial infrastructure. Beijing is also increasingly focused on Western decadence. While the Chinese have undergone a supply-demand rollercoaster for the last seven to eight decades, mainly thanks to the CCP’s desire for autarky, the electorates of liberal democracies remain extremely vulnerable to supply-side shocks, perhaps eventually to the extent that they prioritize wealth and security over the small print of constitutional arrangements.
Historically, the CCP was renowned for its defensive posture on the world stage, in part because it did not possess a UN seat until 1971. Overall, it aimed to prevent criticism of its human rights abuses, affirm sovereignty over Taiwan, and limit international interference with its domestic toolbox. In recent years, China’s ambitions have grown considerably. In 2017, China’s leader Xi Jinping ominously claimed—using a phrase that would later become ubiquitous—that his nation was experiencing “great changes unseen in a century.” A year later, he called for his nation to “lead reform of the global governance system with the concepts of fairness and justice.” This effectively translates to a development model that promotes extensive state control over society, and a mix of market-based practices and statism in core economic sectors. To do so, Beijing explores ways in which it can exploit the current system. For example, it heads four of the fifteen principal agencies of the UN and hands out aid in an opaque manner, asking potential recipients to approach it for support without soliciting formal proposals. Moreover, since 2017, three Central American countries—Panama, El Salvador, and Nicaragua—have switched diplomatic recognition from Taiwan to China. So too has the Dominican Republic. At least sixty-five countries now owe China more than 10 percent of their external debt, and twenty-one of them, including Malawi and Sri Lanka, are in default or seeking restructuring. Yet the details of such contracts are rarely clear, as they tend to contain strict confidentiality clauses.
China is also building a parallel currency system for trade with key partners, alternative multilateral institutions, and an imposing security apparatus. Trying to internationalize the renminbi has been its least successful endeavor, mainly because it is not a freely convertible currency, and this looks unlikely to change any time soon. The rapid growth of the Cross-Border Interbank Payments System (CIPS), an international China-led clearing system and rival to the Society for Worldwide Interbank Financial Telecommunications (SWIFT), has been more impressive, especially as the former bundles together a payments and communications system while the latter only includes payment instructions. The $29 billion loan book of the Asian Infrastructure Investment Bank (AIIB), of which China is the largest shareholder with 31 percent of the capital is also notable, as is the alliance-building and norm-pushing of the Shanghai Cooperation Organization. China has also promoted new surveillance technologies and companies such as SenseTime—an AI firm blacklisted in America for its role in spying on Uyghurs in Xinjiang. In the past only used by international renegades such as Venezuela, this is fast changing. Last September, for instance, Saudi Arabia’s sovereign wealth fund announced a $207 million joint venture with SenseTime to build an AI laboratory in the kingdom.
Against all odds, China’s refusal to ideologically submit to America since 1989 has paid off. As a Cold War masterstroke, the United States tried to pull Beijing into a multilateral trading system with a view to breaking the back of its nationalism and state capitalism. Instead, China persisted on its own developmental path and grew to dominate key industries and increasingly technologies, pushing the rest of the world to rethink their trade strategies.
Under Biden’s Inflation Reduction Act, the United States will subsidize clean technology, which includes nuclear, and protect various supply chains in key industries to the tune of $369 billion. This led the EU to claim it is developing a subsidy package that reshores supply lines and locks its inhabitants into “buying European.” This may be idle rhetoric, however, as western Europe remains notoriously reluctant to build up its own hard power. This dithering can be ascribed to a lot of factors but perhaps most fundamental is the fact that the EU believes it will thrive as a cultural superpower—in other words, a museum—a strategy that post-Angkor Cambodia would probably advise against.
No matter who wins these future conflicts, China can claim its ideology altered the narrative. Choosing between national rejuvenation and economic rationality is a fool’s errand when national resurgence can remold the economic map around its own interests.
Globalization with Chinese Characteristics
Norm-pushing often requires intellectual gymnastics, and China uses the West’s globalist ideology against it, mainly by adopting a global rhetoric of its own that deprivileges Western voices. To give one example, Beijing routinely questions the widely held belief that international law is a sustainable form of universal order. Chinese theorists explore the ways in which international law’s history is closely connected to the European experience and fails to account for the non-European realities that influenced its formation. China also mocks U.S. multilateralism by co-opting its rhetoric to create alternative institutions, an act that reveals the emptiness of both varieties but is more damaging to the West, as Beijing faces lower expectations. This was a particularly effective strategy under the Trump administration, when Germany and France struggled with the U.S. president’s penchant for explicitly communicating the terms and conditions of American hegemony, which had the effect of pushing European powers to weaponize China’s rhetoric on multilateralism as a counterweight.
In short, China exploits America’s own ideological metamorphosis, its insistence on defining itself not as a national player engaged in realpolitik but a pseudo-theological actor. The West created a globalist framework when its dominant position seemed assured. China now emphasizes the fact that the West respects globalism only as a canvas for its own brush when authentic globalism should respect alternative ideologies. It accuses the United States of eroding traditional notions of sovereignty by erecting issues of “supra-national” importance—peculiar to its increasingly particular cultural agenda—and asserting that noncompliance justifies alienation or ostracism from the U.S.-led global order. In Beijing’s own words, issued in a joint statement with Moscow in February 2022, the West “pushes its own standards on others, monopolizes the right to assess the level of compliance . . . and draws dividing lines on the grounds of ideology.”
Beijing’s strategy does not seek to deny the existence of national interests but rather to manipulate the price other nations must pay—in political and economic terms—to participate in a Sinocentric system instead of an American one. Sinocentrism is a civilizational matrix with several ideological imbrications. In general, Beijing’s preference is to present itself as only interested in developing other nations. This could evolve, however, into preferential trade with those who express deference to socialism with Chinese characteristics. Despite Western insistence, China does not see socialism as having been defeated as commentators often claim. Instead, it views the socialist project as having been deferred or sublimated; socialism is the last or latest—depending on the hue of nationalist—avatar of Chinese power tragically stymied by external forces from the Xiongnu to the Americans.
For the sake of a spiritual wrapper, China may massage “Asian values,” the region’s authoritarian history, into its initiatives in order to form an Asian bloc that demotes Japan to little more than a West Pacific version of Hawaii. Its narrative will probably focus on the world being a dangerous and insecure place and that only submission to states—who in turn defer to a sort of “Beijing Consensus”—will offer security in economic and military terms. This bloc would look to dominate international groups through Asia’s size and weight, which dwarfs the West by most metrics and catches India on the horns of whether to identify as a Western or Asian power, thus supercharging its importance.
In a world that is truly equitable—where states are given equal opportunity to develop outside a neoliberal weltanschauung and non-liberal ideologies are equally respected—the West’s power has an expiry date, and its views look increasingly parochial. Instead, the world in aggregate looks more like Asia, which China happens to dominate.
The Enduring Importance of Ideology
While analysts often find themselves carefully salami-slicing how much significance to grant either the Chinese or Communist ingredients of the CCP, in reality they form a single Mobius band. The CCP draws the majority of its legitimacy from the claim that it ended centuries of foreign exploitation. Hence its grounding of every diplomatic move in the context of the “century of humiliation” and its insistence on stamping every policy initiative with “Chinese characteristics.” This “nationalist-socialist” ideology is also the most obvious explanation for moves such as the redefinition of the South China Sea as a “core interest.” Policymakers such as Dulles were clearheaded about this tendency as far back as the 1950s, when he remarked that the CCP was “dedicated to expelling the U.S. from the Western Pacific.” Yet the West insists on prioritizing an economic lens, denying China national agency, and reducing the CCP to a puppet of economic concerns. This despite the fact that, at every turn, the CCP has indicated that it rules the “free market,” not vice versa.
For decades, ironically, the West deluded itself into believing that economic determinism would inevitably undermine the CCP’s authority, all while conceiving of its own actions in terms of the purest liberal idealism. Meanwhile, Marxist China has carefully calibrated its economic policy to support national and civilizational ambitions. Today, with its economic superiority increasingly in doubt, the liberal West seems unsure how to respond. The ideological rationalizations of “Chimerica” have collapsed—it is no longer possible to pretend that the CCP will be duped into political liberalism through commercial activity. But no coherent intellectual framework has replaced the end of history view, except perhaps more strident and parochial forms of liberal fideism.
Behind the West’s outlook lies a skepticism about the ability to exert political agency; to be a “live player” and create one’s own “script,” in the language of political scientist Samo Burja. This tendency forms the darker side of economic determinism and is exacerbated by several trends. Western academia entertains Nietzschean übermenschen, Promethean souls, or great statesmen as possible but only in the way that nuclear fusion is technically possible. The vast majority of people and leaders have their individual agency caged by structural determinants, including corporate interests. Americans too often see this impotence mirrored on the diplomatic stage by states who resemble non‑player characters (NPCs), thanks to the “unipolar” dominance of the United States since the late 1980s.
CCP elites share this mechanistic outlook when those lower on the social scale are in its crosshairs, but consider themselves above the puppet show. Whether this impulse can be attributed to past imperial grandeur or to a certain interpretation of Marxist literature, Chinese apparatchiks see themselves as steering—not being steered by—history.