China offers an excellent trade in ideas, not just goods and services

Kerry Brown says the foreigner in search of financial profit in China should not overlook its other riches

PUBLISHED : Thursday, 16 July, 2015, 5:56pm
UPDATED : Thursday, 16 July, 2015, 5:56pm

It remains one of the most famous encounters between the West and China - the celebrated visit by Lord Macartney and his delegation to the Qing Court in Beijing in 1793. Emperor Qianlong's rebuttal of trade relations with Great Britain on the grounds that China had no need for foreign goods is often offered up as an example of how out of touch the Chinese empire was then. Within half a century, the first opium war and then a century of decline, war and disintegration occurred, something used to prove this.

In an essay in China's Many Dreams, economic historian Kent Deng renders a differing reading of the event. For him, had Macartney "offered the Qing Emperor new European knowledge represented by Isaac Newton, Gottfried Wilhelm Leibniz, Adam Smith, Thomas Robert Malthus and so forth, his embassy to China would have fared much better". Instead, they were after raw trade. Qianlong and Macartney, in more senses than the most obvious one, were talking different languages and seeking different things.

With the establishment of the Asian Infrastructure Investment Bank (AIIB), these questions of how the outside world sees China come into sharper focus than ever before. For all those who see the bank as a threat, there are also plenty salivating over the chance to get their hands on some of the Beijing-originated cash on offer. Most of the initial operating capital of the entity, formally launched late last month, will be from Beijing. And it will be natural to see it as one of the most tangible entry points to China's vast foreign currency reserves of some US$4 trillion.

Before we get too carried away with our hunger to help the Chinese use their money, however, it might be worth reflecting on what I will call the "Macartney fallacy". Coming from the world's dominant economic power then, it was unsurprising that his mindset was largely dominated by thoughts of trade, enrichment, and China as a source of profit.

Over the next decades, this predominantly self-interested image prevailed. Victorian merchants went to China to grow rich. Even in the 1920s and 1930s, businessmen like the American Carl Crow wrote books appealing to this meme with titles like 400 Million Customers.

That idea of China being more a massive business opportunity than a country or culture has proved hard to shift. This is partly because the counter-narratives have also been so extreme. For the great British Sinologist Joseph Needham, China was a place with a wholly different world view and tradition, where we might have almost semi-mystical encounters with its "otherness".

Choosing to see China either as a hard business opportunity or an other-worldly cultural zone prove to be poor attitudes for anyone trying to make sense of the country. Most of the past 35 years under reform has proved what should have been known all along - that China was a developing country with complex internal dynamics and different demands, expectations and opportunities The AIIB in practice is probably just about to reinforce this.

For those who continue to posit China as a source of capital, a place where the prime aim is to get access to investment, and drive hard business deals that enrich the visiting party, there might be some disappointing years ahead. But if we were to readjust our psychology towards China and see it more as a place not so much of financial enrichment, but one of intellectual engagement and knowledge partnership, then things might appear differently.

An impediment to this at the moment is the assumption by many that China is an idea-poor, non-innovative environment, where universities are mostly low-ranked according to global standards, pedagogical levels are low, and where there have been no Nobel Prize winners in economics or science subjects. Up to a point, parts of this might be true. But it fails to capture the ways in which China is also awash with young, highly aspirational graduates, many of whom have returned from study abroad.

The country also has a non-state sector whose hand-to-mouth existence means it is ravenous for new ways and new methods.

From this perspective, the country is fertile ground for ideas. Its conservative-looking elite leadership makes it easy to miss this point: China is a source of potential intellectual partnership, where the real opportunities are in the currency of ideas, rather than flows of capital.

The Asian Infrastructure Investment Bank is one instance of China now starting to share ideas in an area where it has been hugely successful, and often very innovative - and that is development.

The head of a major international organisation in Beijing told me a few years ago that the very fact the country had lifted hundreds of millions of people out of poverty since 1979 meant it did have a large amount to teach others in this area.

This did not mean it was proselytising for a China model. But it did mean it could supply some suggestions and thoughts for how others might look at specific developmental problems based on its own experiences.

Seeing the AIIB as the first step in upgrading China's ideas exchange with the region and the rest of the world places it in a new context. It is best we don't hold fast to the "Macartney fallacy" of over 200 years ago. With the AIIB, letting short-term calculations of material enrichment get in the way of deeper, long-term opportunities for intellectual and idea enrichment would be to miss a huge opportunity. And, more often than not, once the second is achieved, the first tends to follow behind. It is not so easy the other way around.

Kerry Brown is professor of Chinese politics at the University of Sydney, and associate fellow at Chatham House