To understand the policies of the Chinese government, foreign as well as domestic, it is necessary to understand the tacit social contract that underpins the regime. It begins with economic development. Any visitor to China today – at least to the most developed urban parts of this vast country – cannot but be astonished by the sheer magnitude and swiftness of the transformation from an underdeveloped and misruled Communist autocracy into a capitalist dynamo that has just outpaced Japan to become the second largest economy on earth and has its sights on eventually closing in on the United States at the top of the global league tables.

Take two examples. Beijing two decades ago was a city of bicycles. Today there are more than four million automobiles on the roads of Beijing. Six ring roads with intersecting connectors, all of them multilane freeways, are congested from day to night. The Beijing authorities have even been forced to restrict the number of car purchases, with a lottery system for new licences.

Shanghai was once a city ground under the heel of arrogant Western colonialism, where the European lords of the earth erected the notorious “No dogs or Chinamen allowed” signs around their privileged enclaves. Today its business district looks like a 22nd-century science-fiction city of the capitalist imagination. Pudong is the area of Shanghai directly across the river from the Bund, the street that ringed the old foreign enclave area. Twenty years ago Pudong was entirely farmland. Today it is the site of what must rank as one of the world’s premier urban skylines – matching Singapore, outdoing Tokyo, Hong Kong, Manhattan, with its sheer plenitude of ultramodern towers vying with one another in stunningly imaginative design as they push skyward in exuberant commercial cacophony. At night the Pudong skyline becomes a symphony of lighting effects, with rainbow cascades of colours up and down the walls, the offices of enterprise metamorphosed into effervescent spires of the night.

The Great Wall took decades and the blood, sweat and sacrifice of millions to erect. In Shanghai, more than 10,000 high-rise buildings have been erected in the past 20 years. Construction firms work 24 hours a day, seven days a week. Of course, the planners are not bothered with zoning restrictions, onerous building regulations or union rules, and certainly not with citizen groups protesting the destruction of old neighbourhoods or the elimination of green space. Shortly after my visit, a 28-storey residential tower caught fire while being renovated and scores of residents burned to death: apparently building codes for safety exits were less than adequate, and there was no legal requirement for sprinklers. And the pollution is appalling. But even with the dysfunctional side-effects that disfigure capitalist hyperdevelopment everywhere, one is still astonished at the stunning speed with which China has emerged as the ascending economic superpower of the 21st century.

The unspoken social contract

No one can deny the astounding power of the market forces unleashed by the economic reforms under Deng Xiaoping. The material evidence is everywhere. What is bizarre about China’s headlong capitalist transformation is that it is directed by Communists, in the name of Communism. It is the same state, the same party, the same gang of autocrats and apparatchiks who brought four decades of zealous Maoist ideology and often downright imbecilic economic policy – such catastrophic follies as the Great Leap Forward of the late 1950s when Mao’s brutal collectivization policies led to famines in which 35 million or more people perished. As late as the 1960s and early 1970s, the lunacy of the Cultural Revolution wracked Chinese society from top to bottom, as gangs of youthful zealots ran amok with official sanction, destroying or maiming everything and everyone in their wake like crazed locusts.

No one in China today tries to justify the Cultural Revolution. Everyone readily admits its insanity, and shudders at the memory. Deng Xiaoping is the new Great Helmsman, putting Chairman Mao in the shade. All China’s newfound riches and its correct policies are attributed to Deng’s reforms. To young Chinese, China’s modern history starts with Deng’s reforms; what came immediately before is a distant dark age.

Strangely, Chairman Mao is still quite visible. His portrait still stares out over Tiananmen Square (although now matched by a statue of Confucius). Along the Bund in Shanghai, a statuary Chairman stares across at the capitalist Oz of Pudong. But Mao is a curiously absent presence. The idiocies and atrocities carried out under his direction and encouragement are freely acknowledged but never as the results of Mao’s and the Communist leadership’s decisions. It is as if actual Maoist policies were malignant natural forces like floods, droughts or tsunamis rather than the malevolent responsibility of the men who actually conceived, implemented and enforced them. It is commonplace to hear young Chinese express revulsion at what they have learned about the excesses of the Cultural Revolution, while at the same time referring to the continued wise direction of the country under a Communist Party whose lineage extends in direct succession from Mao to Deng to today’s Hu Jintao. Yet there is no alternative to this contradiction within the ruling narrative. The same gang that brought the crimes of the past is bringing the gifts of the present. Blame them for the former, and one risks the latter.

And thus the unspoken but almost universally acknowledged social contract. It goes like this: the regime promises unlimited economic growth and an open door of opportunity for individual enrichment; the quid pro quo is that the population agrees to give the regime a free hand in the political arena. If the people seek to participate directly in the political process bypassing the party, if they insist on direct accountability of party officials, if they publicly question the authority of the party to make all the key decisions, then unlimited economic growth will be threatened and the people will suffer. The other side of the contract, yet to be tested, poses an equivalent obligation on the party: if the regime fails to deliver continual economic growth, the people may reconsider their obligations. In the parlance of the old pre-Communist feudal regime, it will be seen to have “lost the mandate of heaven.”

China today is far from such a revolutionary or even prerevolutionary stage, but there is an unspoken threat in the air concerning the fulfilment of the social contract, on both sides. The party and state must understand the implications of any prolonged plunge into economic stagnation or decline and the prevalence of frustrated expectations. On the other side, the people understand the dire implications of pushing reformist demands to the stage of direct confrontation with the hegemony of the party – the spectre of Tiananmen 1989 hangs over all thoughts of oppositional politics.

Challenges to Beijing’s rule from ethnic enclaves within the Chinese empire – Tibetans and Uighurs, to take recent examples – are dismissed by the majority as the senseless stupidity of violence-prone agitators with “bad attitudes”: why would these people jeopardize the economic gains from Beijing’s benign management for the sake of their backward, feudal cultural identities? Similarly dismissive remarks are made about the small number of Maoist fundamentalists.

Westerners are often puzzled and frustrated by the thinness and marginality of the dissident strain in China. Much is explained by the tight hold of the regime over all forms of communication. The media are indeed claustrophobically controlled, and Internet blogging – today’s typical space for dissident voices against autocratic regimes – faces the Great Firewall, a technologically advanced censorship of the Internet to block any sites that might impart “anti-Chinese” (i.e., anti-party) material. I arrived in China in the immediate wake of the awarding of the Nobel Prize to the dissident Liu Xiaobo. Chinese media initially refused to report the award, later framing what scant notice was given in terms of anti-Chinese insults by an arrogant West.

Moreover, the Chinese blogosphere is dominated by other voices that are protected and even cultivated by the regime, those of sometimes quite rabid Chinese nationalists. When some outrage by foreigners to national sensibilities is perpetrated, the blogosphere erupts in expressions of indignation and demands for retaliation. Nationalism outpaces liberalism.

Yet simply blaming the state-controlled censorship and manipulation of communications cannot fully explain the vanishing dissent. Maoist China tried to control tightly every aspect of social and personal as well as political and economic life. Everyone had to dress according to Communist code, and was supposed to apply correct Communist principles to every aspect of his or her life. Today’s Chinese are free to dress any way they want and there are no puritanical party edicts governing sexual relations – here as anywhere else, moral rules no longer emanate from the party. Moreover, in business and trade, people are now free to operate according to their reading of the market, not according to their reading of the party line. To Chinese coming out of the long decades of totalitarian repression, these freedoms, which we in the West take for granted, appear to be huge advances. What are the complaints of a few ideological cranks at the margin compared to this – especially when their kind of radical politics could, if left unchecked, cast all the economic and political gains of the past two decades into doubt?

In the West, observers have critically noted in recent years the many ways in which citizens are being downgraded into consumers. Yet the formal legal status of political citizenship stays in place and remains as a measure of how far we are falling short of the democratic ideal. The tacit social contract between state/party and people in China means a different standard is emerging – one in which citizenship rights in the sense of active participation in the political community are waived in exchange for a de facto consumer charter.

At this point, we can speak confidently of a functioning Chinese political and economic model (the “Beijing Consensus”) that has, so far, successfully combined free-market capitalism with a monopolistic one-party state. This is quite different from the sclerotic Soviet model, which combined a command economy with a command polity, a model that disintegrated when the economy could not deliver and the political regime in the end could no longer command. It is from this vantage point that the role of China in the world needs to be understood.

Is the Chinese model a threat?

Many observers have argued that the Chinese model is threatening the global dominance of the Western model of liberal capitalism, and that there is a new economic Cold War between East and West. China’s apparently irresistible rise, especially when matched against the Great Recession that has gripped the capitalist West since the financial crisis of 2008, appears to promote its authoritarian model. It certainly holds undoubted attractions for existing autocratic, politically illiberal regimes seeking to kickstart their underdeveloped economies without threatening their own privileges, which gives China a competitive edge in pushing its model in the Third World.

In theory, politically unaccountable administrations can make and enforce the big decisions that are required in the face of big challenges, which tend to paralyze liberal democratic regimes or throw them into confusion. Once a decision is made in China, the resources can be allocated, policies can be implemented and any obstacles lying in the path can be bulldozed – in contrast to the political bedlam that any serious reform proposal sets off in the democratic West. Once a decision is made in China, the resources can be allocated, policies can be implemented and any obstacles lying in the path can be bulldozed – in contrast to the political bedlam that any serious reform proposal sets off in the democratic West. A striking example of this is the imposition of the famous “one-child” policy to reduce population pressure, which has been largely successful, although with the perverse consequence of a serious gender imbalance of male over female.

Facing this, the Western model, with its rather simpleminded version of Wilsonian democracy (democracy reduced to a voting fetish) which successive U.S. administrations keep trying with relentless futility to export at gunpoint in places like Iraq and Afghanistan, is on the defensive. The free market after the 2008 crash is no longer delivering as it promises, and everywhere democratic politics are in gridlock. Disillusion, disenchantment, disengagement are wearing down the traditional political structures, leaving executive and legislative arms of government increasingly deadlocked and impotent. Every day, democratic citizens are declaring that the only sphere in which their voices are registered through their votes is unrepresentative, unaccountable and of interest only as a punching bag to absorb spasms of populist indignation. When it faced the Soviet model, the Western model was clearly and manifestly superior; the outcome of that contest was never really in doubt. When placed in the ring against the Chinese model, the odds appear shorter.

Yet the apparent advantages of a command political structure can be deceptive. Transparency so often makes democratic politics seem perverse; the making of laws and policies is like the making of sausages – the less known about the ingredients the better. Command structures can appear magical to the jaded democratic eye. The Party or the Great Leader whisks a wand, and – presto – things get done: the battalions march; the trains arrive on time. But benevolence remains the exception among authoritarian regimes.

The Communist Party has been in command in China for six decades. When the party leaders get it right, they have shown they can do great things. But when they get it wrong, they can be very, very wrong. What guarantee can today’s party – although clearly more sensible, more rational, less ideologically fanatical than in the past – give that it will not misuse its immense power in stubbornly pursuing wrongheaded policies, with grave consequences?

For example, China clearly has the political capacity to enact radical responses to the challenge of climate change, a capacity that befuddled Western democracies appear to lack. Yet this opportunity rests in the hands of those who have in fact contributed mightily to the problem by their reckless and unregulated industrialization and urbanization policies. Indeed, the cost of the explosive economic growth that has so boosted the regime’s fortunes has been horrific environmental damage. If not offset by radical countermeasures, the continued expansion of the Beijing model in China and elsewhere where it is emulated will do incalculable harm to the planet. True, the regime has shown a capacity to mount serious ecological projects, such as a vast reforestation program in the interior. But is the leadership willing to pay the price of environmental responsibility at the expense of its growth trajectory?

What guarantees can a one-party state make that wise counsel is actually being heard and taken in the decision making process? While I was in China, the Communist Party held its four-day-long annual Central Committee meeting. Of course, the 370 top party honchos met behind closed doors. The Chinese people know that momentous decisions that will have the most serious impact on their lives are made in meetings like this, and they understand as well that their views are of little consequence to the process. The media sit obediently outside the doors of the new Forbidden City, and await the authoritative disclosure/nondisclosure at the end of the meetings, tossed by the official spokesperson like breadcrumbs to pigeons.

This year, the hot news crumb was a signal that Hu Jintao’s successor has been anointed: a 57-year-old high party functionary named Xi Jinping, one of the “princelings,” so called because of their fathers’ lineage in the revolutionary generation of Communist fighters. Xi’s qualifications for the top job, even his policy views, remain pretty much a mystery to all but those in the inner conclave – and they are not talking. Questions that perplexed outsiders might ask include: What kind of expertise is inputted into this mysterious process? What is the range of opinions permitted? How much stultifying groupthink is prevalent? We have little idea, but the sharp negative reaction to any dissenting opinions voiced from outside the party does not suggest the presence of lively and free debate within.

The imperial disdain with which the Chinese state invariably dismisses any foreign criticism of the impact of its policies on the outside world is another source of doubt about the party’s intellectual resilience. The policy of maintaining an artificially low Chinese currency to promote cheap Chinese exports to the West has been widely criticized as counterproductive on all sides: it not only impedes economic recovery in the West, which is in China’s own long-term interest, but is also destructive internally, promoting inflation and hindering the emergence of a stronger domestic market. Yet all suggestions from abroad that the currency be allowed to rise, however politely couched in the language of economic rationality, have been angrily dismissed by China as if any foreign comment is presumptuous and unacceptable.

An imperial power

This reaction calls to mind another, and perhaps even more disquieting, aspect of the politically monolithic Chinese model: its increasingly belligerent self-assertion in international relations, at least within the Asian region. Japan too once acted in very much this way, following its own rapid modernization in the 19th-century Meiji Restoration. Japan burst onto the world’s consciousness with the devastating defeat it inflicted on the Russians in the 1904−05 Russo-Japanese War. After the First World War, Japanese power expanded over Asia, leading inexorably to its fateful attack on the American Pacific fleet at Pearl Harbor in 1941. In a sense, Japan in this era was employing modern industry and modern warfare in pursuit of an expansionist foreign policy that was anachronistically feudal in conception. The disjuncture between its modernized sinews of production and killing and its traditional command structures and ways of thinking led to its catastrophic defeat in 1945, followed by yet another successful cycle of modernization, this time under the democratic capitalist model.

It is natural to see China as following along the Japanese interwar path in foreign policy. China ruthlessly extends its own imperial boundaries over places like Tibet, threatens Taiwan over Taiwan’s domestic policies, plays a heavy hand in Indochina, rumbles belligerently along the Sino-Indian border, declares its moral superiority to Japan based on complaints of Japanese atrocities in China 70 years ago, torpedoes multilateral attempts to make its reckless client regime in North Korea comply with international standards of conduct while condemning foreign assistance to South Korea as a provocation, and appears to insist on Chinese hegemony over the entire Yellow Sea between China and the two Koreas.

Like China’s growing military might, Chinese economic might is used aggressively as a counter to advance Chinese interests. Recently, a Chinese fishing boat in disputed waters rammed a Japanese patrol vessel (the event was videotaped by the Japanese). The Japanese tried to hold the Chinese captain so that he could face criminal charges. To the accompaniment of Chinese nationalist bloggers spitting indignation at Japanese “aggression,” China coolly cut Japan off from exports of rare earth minerals – crucial elements in such products as mobile phones and computers – over which it at present holds a global monopoly. Japan backed down and released the captain. Yet months later, rare earth mineral exports to Japan had not been resumed. Just so the point was not lost on Western countries that might have taken Japan’s side in this trivial but symbolic dispute, China briefly cut off such exports to the West as well. Nothing was said publicly, but the mailed fist had been delivered as a warning.

As with Japan in the interwar years, lines of political continuity from the feudal past can be glimpsed in Chinese behaviour. Beijing was and remains an imperial capital in more ways than one. Tiananmen and the Forbidden City are massive, overpowering, deliberately designed to dwarf the merely human scale. Whether housing emperors of the past or chairmen of the present, the message from the Middle Kingdom, the centre of the earth, is the same: we prevail over the lesser, peripheral tribes and nations. Visitors to the equally massive Ming Tombs, splendidly and extravagantly housing the bodies of past emperors, are met with a photo of Chairman Mao who toured the site and wrote poems inspired by what he saw, as well might this modern successor to the emperors of old.

We should not take such analogies too far, however. Indeed, a Canadian might find a more compelling analogy for contemporary Chinese attitudes toward the outside world in the United States. Perhaps there is something inherent in very large, hegemonic nations that fosters a certain mentality made up of ignorance of and lack of interest in the outside world, a sense of national self-importance that grows in the isolation that comes with power and wealth, and the habit of usually getting your own way – and of throwing violent tantrums when you don’t. That China harbours a backlog of humiliation and resentment in the face of Western arrogance only serves to make it even more prickly and self-assertive. The self-congratulatory myth of American exceptionalism has definite Chinese echoes, which do not bode well for Sino-American relations. As that old hand at playing the diplomatic China card, Henry Kissinger, nicely puts it, “neither Washington nor Beijing has much practice in cooperative relations between equals.”

Mutually Assured Economic Destruction

What is the plausibility of claims that these two me-first superpowers (one rising, the other in decline) are – like Japan and the United States in 1941 – on a trajectory toward violent collision? Setting aside xenophobic fears of a new Yellow Peril, what are the reasonable chances of economic rivalry turning into something much uglier? Where there are dangerous tripwires, as in the Koreas, fatal miscalculations can never be ruled out entirely. Moreover, China’s steady advance into Africa, the Middle East and even Latin America through its investments and development and aid projects bears with it the shadow of its growing military might, suggesting the potential for extending tensions worldwide. But there are even stronger reasons for downplaying the potential for military confrontation.

During the Cold War, the United States and Soviet Union constantly threatened each other with nuclear annihilation, yet they never once clashed directly. There was a reason for this belligerence in rhetoric and restraint in practice: the doctrine of Mutually Assured Destruction. Because each side had the potential to respond to a nuclear strike with massive retaliation in kind, the first use of nuclear power was rendered unthinkable. The resulting standoff led to a kind of stability that endured for four decades.

Relations between China and America in the 21st century exhibit a peculiar parallel. The recognition of a state of Mutually Assured Economic Destruction restrains economic rivalry from escalation. As America, following the spendthrift wars of the Bush administration and the great financial crash of 2008, has sunk into massive, multitrillion-dollar debt, its biggest creditor is China. In theory, China could accelerate America into outright economic catastrophe by suddenly unloading its billions in American bonds onto the market, causing the collapse of the U.S. dollar. But bringing about global chaos also threatens China, since it depends on the continued health of American and other Western markets for Chinese exports. This situation brings to mind an old joke: “Owe the bank a thousand dollars, you have a problem; owe the bank a million dollars, the bank has a problem.” On the other side of the barricade, America is restrained from taking any aggressive action against China by the sure knowledge that Beijing holds the power to retaliate with destructive economic effect.

Chinese capital, much of it in the form of “sovereign funds” (i.e., state-controlled corporations), is going on a global buying spree. There are diehard Cold Warriors in the West who think any Chinese acquisition of a Western business represents an extension of the Yellow/Red Peril, but in fact this is hardly a cause for disquiet. The more deeply embedded Chinese capital becomes in the global economy, the less the incentive for the Chinese state to take unilateral action likely to disrupt the profitability of markets.

None of this means that China will cease efforts to gain a leading position in the global economy. This prospect is not without precedent, however, and the precedent suggests a less than apocalyptic prospect. Japan, we might remember, was once the rising rival to American economic power. In fact, Japan started out very much like China. Just as today lamentations are heard in North America and Europe about the flood of cheap knockoff “Made in China” imports and the loss of manufacturing jobs to low-wage competition from China, “Made in Japan” once bore the same connotations, and aroused the same alarms.

But Japan soon moved on, developing its own high-tech state-of-the-art exports with their own world-class designer brands. This in one sense represented much more serious competition to Western industry, but the shift also had profound implications for the Japanese political economy. One does not get to lead the world in cutting-edge production with a cheap Third World labour force. A skilled work force has to be paid according to its qualifications, and an affluent work force provided a domestic market for Japanese goods to complement their export markets – and an enhanced market for Western products.

“Made in China” will likely follow the same path. Already China is outsourcing low-end manufacturing to cheaper labour markets in Vietnam, Cambodia and Laos, not to speak of its own underdeveloped rural areas. And Chinese workers in the cities are starting to strike for higher wages, with some success. If Chinese enterprise moves into its own product innovation cycle, as opposed to old-fashioned import-substitution industrialization, a better trained and more skilled work force will require appropriate levels of compensation. This will not only change the terms of the economic competition between China and the West, but will also have serious implications for Chinese society, just as it has had for Japanese society.

This transformation is the shoe that has yet to drop: few signs are yet visible of distinctive cutting-edge Chinese technology giving rise to distinctive competitive products that establish global brand domination. If China fails to make this transition, its economy will stagnate, and its model atrophy. If it does make the transition, it will become something quite different from what it is today.

Will this China of the future maintain the same degree of political control over its working population? For instance, can China exploit the advantages of e-commerce and the innovative synergies of networked research communication while keeping its Great Firewall against politically suspect sites and messages? It seems doubtful. It would be reckless to assume that China will come to resemble the West in its political structures, but equally reckless to expect its present autocratic form to resist significant evolution.

What goes up must come down

There is another, compelling, reason to anticipate rising political tensions in China. Since China has chosen the economic route of “free market” competition, there is one signal lesson that we in the West, schooled in Keynes and Schumpeter, have to teach those schooled in Marx and Mao. There is an iron rule of free market capitalism: what keeps going up must eventually come down. This was the rule that bonus-frenzied financial gamblers and neoliberal economists besotted with “efficient market” ideologies forgot until the Great Crash of 2008.

In retrospect, the idea that the debt-driven bubble of growth that flared from the 1990s into this decade could have gone on indefinitely was a greed-fuelled delusion, and in the time-hallowed manner of stock markets, greed was quickly succeeded by fear. Yet the Chinese today seem to harbour a similar delusion, that their growth model makes them exempt from the normal business cycles of boom and bust. Japan, stagnating for two decades, is a sign that expansion never follows a linear trajectory. There is no reason to believe that China has found some magic wand to conjure away a basic structural feature of capitalist markets. Its growth rate will inevitably falter since the conditions supporting it cannot be sustained indefinitely.

When Chinese growth does falter, the tacit social contract underlying the Communist Party’s continued monopoly of political and administrative power will be undermined. The existing system may be very poorly designed to deal with the repercussions of frustrated expectations and social unrest that could be generated by cyclical downturns.When Chinese growth does falter, the tacit social contract underlying the Communist Party’s continued monopoly of political and administrative power will be undermined. The existing system may be very poorly designed to deal with the repercussions of frustrated expectations and social unrest that could be generated by cyclical downturns.

It is a mark of the regime’s insecurity that it spends more of its annual budget on “stabilization” (domestic security) than it does on national defence. Plans to use foreign adventures as a diversion from domestic unhappiness are unlikely: the terms of the social contract suggest that diversion of resources from domestic consumption to military operations abroad will be destabilizing internally.

The ruling elite also needs to be concerned about uneven economic growth. Not only have income disparities grown precipitously, with the fruits of growth going wildly disproportionately to a tiny economic elite, but the regional distribution of resources is very badly skewed. The “New China” is an urban phenomenon, but the bulk of the Chinese population still lives in rural areas that have seen few benefits of growth trickling down. To make matters worse, rural residents are denied the kind of access to government services and benefits available to city dwellers – sometimes even by law.

Despite constraints on movement out of the countryside, there has been an exodus of predominantly young rural people into the cities with their prospects of jobs and betterment. Already there are signs of serious unemployment/underemployment among the so-called “ant army” of graduates from provincial universities who, lacking the required “guanxi” or familial/political connections to power, have flocked to Beijing and Shanghai and live in rabbit-warren accommodations while watching their blue-collar compatriots enjoy higher levels of employment. This is precisely the kind of skilled workforce needed for the next stage of Chinese high-tech product innovation, but for now they constitute an overproduction of technical and professional talent in a labour market skewed away from white-collar jobs in the quest for cheap exports. It does not take a great deal of imagination to foresee real problems of governance emerging under conditions of general economic downturn combined with a ruling apparatus unpractised in handling widespread public protest and dissent.

One final caveat about the Chinese model: can an ideology of growth for the sake of growth be sustained forever as the motive driving more than a billion people? For the emergent entrepreneurial class, the watchword of today is that of François Guizot to the emergent French bourgeoisie of the 19th century: enrichissez-vous! For those less well situated, a modest improvement in living standards may be all that is desired, and claimed. But even excluding major social and political unrest brought about by future economic difficulties, will the Chinese continue to push forward indefinitely with the same drive to gain a yet bigger luxury car, yet more Gucci shoes? Surely they will eventually come to doubt a system that combines outmoded Leninist/Maoist political nostrums with simplistic consumerist dreams reminiscent of 1950s America. Was it not an old Chinese caution to beware what you wish for?

The expectations sparked by Mao’s Communist revolution were rudely met by the harsh realities of transforming a rural feudal society. The expectations sparked by Deng’s capitalist revolution await their own uncomfortable rendezvous with reality. Apocalyptic fears that the Beijing Consensus model of authoritarian capitalism will inexorably eclipse the liberal democratic Western model, or that China and the West are on a collision course to military confrontation, are highly overheated. China has indeed astonished the world, but once the shock is over, the dragon begins to look less formidable, more amenable. As Confucius might have said, “Politics is politics, but business is business.”