China’s Bad-Neighbor Policy Is Bad Business

DENVER – These are difficult times for China. After decades of double-digit GDP growth, today’s slowdown points to an economic system in trouble. Once hailed as a model of development, the Chinese economy now appears sclerotic and cumbersome. The Chinese public is growing restive and increasingly questioning the system’s ability to deliver on official promises that the country’s economic “miracle” will continue. Many Chinese fear that the “Chinese Dream” may be just that: a dream.

China cannot fix its economic problems merely by pulling the right combination of existing policy levers. Rather, it must embark on a broader and deeper process of reform and renewal; and it must be willing to swallow the bitter pill of slower short-term growth in the interest of long-term goals.

At the same time, an expansive reform effort cannot be advanced by economic decisions alone. China must also come to terms with the gap between how it wants to be perceived and how the world actually perceives it. China should take a lesson from business and recognize that many of its actions and affiliations on the world stage pose serious risks to its reputation – and to its bottom line.

For example, consider an international observer’s view of developments in the South China Sea. China is plainly bullying its southern neighbors by using the menacing term “core interests” (in pursuit of which a country would resort to the use of force) to have its way in various disputes. But, to hear it from Chinese officials, China is an aggrieved partner in the region. They argue that they have reined in their fishing fleet to avoid incidents with the Vietnamese, only to see Vietnamese fishermen aggressively claim the relinquished waters.