The challenge of dealing with China

China's emergence as a regional powerhouse and a potential superpower is an important challenge that the world, especially the United States and Europe, has to deal with. Last week's visit to Washington by Chinese President Hu Jintao - which didn't create any dramatic newspaper headlines - nonetheless highlighted the importance of engaging China on the world stage.

China cannot be ignored. It possesses nuclear weapons, it sits permanently on the United Nations Security Council, it has the world's largest population - 1.3 billion people; it has a standing army of 2.3 million troops, it spends $25 billion annually on defence, it is the world's largest recipient of foreign direct investment - $53 billion a year compared to $30 billion in the US, it is the world's fourth largest exporter, it has the world's second largest foreign currency reserves, after Japan, which exceed $400 billion, and a quarter of the overall US trade deficit is with China.

China's economic growth, year after year, has been impressive and the country is a new political and economic giant, not only in Asia, but also in the world. Of course, this is not to say that China does not have serious social, economic and political problems which need to be addressed. Nor should the world simply look at China as a place where plenty of money is to be made. Yes, there are great business opportunities in China for Western companies, but this has to take place in parallel with a sincere dialogue with Beijing about both political and further economic reform.

There is an unpleasant economic side to China: it is facing a lot of unrest in the countryside, inequality has exploded, corruption is growing, the environment has suffered a lot and in much of the rural areas many social services have collapsed. In some areas there have been forced evictions of people from their homes to make way for development projects.

True, the recent Communist Party Congress voted for a massive investment into the country's rural areas. That was a good step, but is certainly not enough. In reality China's lack of certain types of reform have contributed to this difficult situation. A stronger system of private property rights, for example, would prevent the confiscation of land and homes for development, and a truly free and independent press would also greatly help by tackling issues such as corruption and over-development.

There is no doubt that the Chinese Communist Party is not as intrusive into people's lives as it used to be in the past and more personal freedoms exist today in China. However, the fact remains that there is no political pluralism, there are no legalised Opposition political movements, the country has an appalling human rights record, the rule of law is still weak, the prisons are full of political prisoners, political oppression is particularly strong in Tibet and 10,000 people are executed every year. It is the Communist Party which decides everything and there are no signs that the party intends to give up its power.

Some observers believe that since China has no history of democracy, talking about political reform is a waste of time. They also believe that the Western concepts of democracy and political pluralism are alien to a country such as China and that what should really interest the West is stability - which only the Communist Party can provide - so that the world can take advantage of China's huge economic success story. I beg to differ. As Australian Prime Minister John Howard said in a recent newspaper interview, the economic reforms being carried out by China will inevitably lead to more and more demands for political reform. China simply cannot ignore this reality.

Everyone knows what happened in June 1989 when students protested in favour of political pluralism - the protest was brutally put down by the Chinese army. However, other protests could easily take place in the near future. Will these also be crushed by the army? Maybe, but for how long can a country which is opening up to the world continue to use its troops to attack its own people?

As for the argument that democracy is alien to a country like China, the answer to that is surely to have a look at Taiwan and Japan, both Asian democracies. If Taiwan - whose people are Chinese just as in Communist China - and Japan can enjoy democracy, why can't China? If the answer is that Taiwan and Japan are advanced market economies, then my answer is that the more China continues to introduce market reforms, the more likely demands will grow for political pluralism to be introduced.

There are no easy ways for the West to deal with the slow pace of political reforms in China, but certainly the question of human rights has to be brought up with the Chinese. Of course China has a very important role to play on the world stage and the West needs China's contribution on a number of strategic issues such as Iran, North Korea and the fight against terrorism and nuclear proliferation, and China's economic expansion is in the West's interest because of the many business opportunities that are created.

However, this does not mean that human rights should be relegated to the back burner. The West, particularly the United States, should make it clear that full international respectability - something China craves - will only be earned when China improves its human rights record and when it co-operates with the international community in promoting human rights globally.

Michael Green, who handled Asian affairs on President Bush's National Security Council until last December, recalled a discussion he once had with a Chinese official on doing business in Sudan. "Look," the Chinese official said, "we don't care about internal issues like genocide, we only care about the oil because we need the resources." Such comments are not exactly encouraging, to say the least.

The meeting between Presidents Bush and Hu did not achieve anything in particular - China did not make any promises on American demands that it does something about its huge trade surplus with the US - but the fact that such summits are held where a dialogue over a broad range of issues takes place between these two giants is good news in itself. This dialogue should continue. The challenge is for the West to balance the need to engage with China and to strengthen economic ties while at the same time encourage political reform.