China’s Communist Party recently marked the 70th anniversary of its 1949 revolution, and the fireworks and military parades celebrate the country’s rise to become the world’s second largest economy. Yet there is no denying that this anniversary comes with a paradoxical unease about China’s place in the world. China is more powerful but less free than it was a decade ago and the world views its external aggression with growing concern.

China’s rise since Deng Xiaoping set the Party on the path of market reform 40 years ago has few historical parallels. China has taken advantage of open markets in the West, and the lure of its domestic market of 1.4 billion people to foreign investors, to lift hundreds of millions out of poverty and become an export and increasingly a technology behemoth. The U.S. and the world have for the most part benefited from this development. Imagine the alternative if China had remained stagnant and its people sought to emigrate in the millions.

For a time, even after the massacre at Tiananmen Square, it seemed possible that China might also evolve to tolerate more political freedom. Lawyers were allowed to represent dissidents and more religious worship was tolerated. Tens of thousands of Chinese educated abroad returned home with a taste of economic and political freedom. The hope was that China might evolve, if not into a Western or Japanese democracy, perhaps into a state on the Singapore model of relatively tolerant and uncorrupt one-party rule.

Those hopes have been dashed, starting in the years of Hu Jintao and especially in the ascendancy of President Xi Jinping. At home, economic reforms have stalled as the Party maintains political control over finance and refuses to reform state-owned industries. Donald Trump’s policies have exposed a vulnerability in China’s export-dependent economic model that relies too much on theft and predatory behavior against foreign companies. Beijing must impose currency controls to stop capital flight by Chinese who want a safe haven abroad.

This retrenchment in economic reform has coincided with increasingly draconian political control at home. Self-confident regimes don’t jail human-rights lawyers, crack down on churches or create a Great Firewall and employ tens of thousands of censors to control the internet. Most horrifying has been the effort to eliminate the culture and religion of the Uighur Muslim population in the western region of Xinjiang.

Then there is China’s attempt to dominate the Asia-Pacific, often by bullying its weaker neighbors. It has illegally occupied islands in the South China Sea and turned them into de facto military bases. Its burgeoning navy harasses foreign ships in international waters.

But Chinese leaders also know that their behavior is producing a global backlash that they should not underestimate. Trump’s policy reflects a new bipartisan American consensus that China’s economic abuses must be confronted.

We are not among those who believe that China’s economy must be decoupled from America’s or that China must be “contained” a la the Soviet Union. At least not yet. China’s economy can’t be sent into recession without damaging consequences for American workers and companies. The U.S. needs to co-exist with a rising China, cooperating when it makes sense but pushing back when China violates global norms. This will be the great test of statesmanship for a generation or more.

Yet how this drama turns out will depend more on how China’s ruling Communist Party behaves. The Party’s legitimacy depends on economic growth that will be harder to sustain as it must innovate to prosper. The rest of the world will no longer let China steal its way to dominance, and it will not passively allow the Indo-Pacific to become part of a modern Chinese dynasty. China will prosper more if it plays by the rules of world order.

~ The Wall Street Journal

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