Executive Summary

China’s creative responses to and engagement with economic globalisation have begun to be acknowledged, readily by some and grudgingly by others. The implications of the rise of China for world politics and global political economy remain, however, a point of fierce contention.

This paper advances an argument fundamentally different from the current literature on the rise of China. Its major concern is neither about the growth of China’s absolute economic or political power and possible scenarios of great power rivalry nor about speculations of China’s intentions for political and economic coercions in the future. Rather it aims at providing a critical perspective in understanding China’s appointment with globalisation and looks at how a globalised China presents policy challenges for the future of the global political economy.

Barely three years after China joined the World Trade Organization (WTO), China has risen to be the third largest global trader. Its total trade for 2004 is over $1.1 trillion, surpassing that of Japan. Three years on, WTO enforced compliance has fostered a new normative basis for China to embrace norms, institutions and laws prevailing in the global economy.

China has also become a significant global investor. In recent years, Chinese companies have become increasingly aggressive in investing globally. The acquisition of IBM’s global PC business by China’s largest computer manufacturer Lenovo most recently best illustrates this point. China’s investment in energy sectors around the world and its recent promise to invest heavily in Latin America are also worth noting.

China’s evolving prominent role as both a global trader and global investor is but one most observable expression of a fundamental and revolutionary transformation of China, i.e. from an isolated nation to a globalised state. Such transformation is best seen recently in how the Chinese state successfully brokers between China and globalisation.

Globalisation: the Chinese way has, therefore, fostered and formulated a special set of relationships between globalisation and China, which has induced shifting normative commitment of the Chinese state. It is, however, not only a process of how the Chinese state is transformed and globalised, but also how globalisation is reproduced. The ultimate irony is that it is China’s national ambitions and aspirations that have guided its choices and policies of engagement with globalisation.

This transformation of China has profound implications for global political economy. As the largest global production platform and the largest emerging market, China’s contribution to the emergence of a truly market-oriented global economy has been indispensable and unmistakable. The changing purpose of the global economy in the 21st century is likely to facilitate accommodation, rather than promote confrontation, between China and the United States.

Yet, China still occupies an impossible position in terms of global governance. On the one hand, China’s willingness and capacity to play an active and responsible role in global economic governance is questionable. On the other, China’s unusual identity as a rising economic power, a non-democratic state and the largest emerging market combined makes the inclusion of China a compelling and complex challenge to the institutions, structures and mechanisms of global economic governance.

The fact that China is going global therefore asks four big questions for the future global governance, namely, global democracy, global prosperity, global stability, and viability of custom-made globalization. For the most important players in global political economy, particularly the United States and such global economic institutions as WTO, intellectual and policy challenges posed by China in this regard are no less daunting than those readily acknowledged in the more power-oriented arguments in the current China debates.