A friend of my former father-in-law told me what he considered a humorous anecdote once that has haunted me ever since:

I was an active member of an organization of retired executives who traveled to developing countries to serve as business advisers for their budding industries. I’d been particularly successful helping a couple of Latin American countries get some construction equipment companies up and running and I was invited to NYC for an organization awards dinner at which I was to be recognized with an award for my work. I arrived at the last minute from Brazil and hadn’t even seen a copy of the program. I was seated at the head table just as the meal began – right next to a little Chinese guy who nodded and smiled but who didn’t seem to speak English. As we began with our soup, I decided to try to make some conversation. “Likee the soup?” I said. The little man nodded and smiled….

We continued through the meal, me speaking pidgin English about the various courses, the little Chinese guy nodding and smiling at my attempts to communicate. As dessert ended, the program began – and our speaker for the evening was introduced. He was a distinguished professor of physics at the University of Beijing who was currently a visiting professor at Columbia University. When the introduction ended, with its long list of accolades for the forthcoming speaker, the little Chinese guy got up and went to the rostrum. He proceeded to give a powerful and lucid presentation in flawless English of coming economic developments in China – and of the role that nuclear and other forms of energy might play in those developments.

When he finished his speech he got a standing ovation. He bowed modestly and returned to his seat beside me. As I stared down at the table in embarrassment he leaned over in jovial confidentiality and said, “Likee the speech?”

James Mann, currently author in residence at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University, explores just this sort of naive American arrogance and circumspect Chinese diplomacy in an op-ed for the Washington Post.

In am illuminating piece called “A Shining Model of Wealth without Liberty” Mann explains how American foreign policy blundering, Chinese economic expansion, and a complete misunderstanding of how the Chinese have managed to maintain a repressive communist oligarchy while developing an economic powerhouse – and how their model, as well as their support, is giving inspiration other repressive regimes that they can have their dictatorships – and capitalist economic success, too. As Mann notes:

Today’s China demonstrates that a regime can suppress organized opposition and need not establish its legitimacy through elections. It shows that a ruling party can maintain considerable control over information and the Internet without slowing economic growth. And it indicates that a nation’s elite can be bought off with comfortable apartments, the chance to make money, and significant advances in personal, non-political freedoms (clothes, entertainment, sex, travel abroad).

What Mann goes on to explain is that the Chinese have figured out – in utter disregard of the pronouncements of Western pundits – how to keep their repressive communist regime in power even as they build an economic engine that poses a threat not just to America’s economic dominance, but to liberal democracies everywhere:

This all adds up to a startling new challenge to the future of liberal democracy. And the result is ominous for the cause of freedom around the world. China’s single-party state offers continuing hope not only to such largely isolated dictatorships as Burma, Zimbabwe, Syria and North Korea but also to some key U.S. friends who themselves resist calls for democracy (say, Egypt or Pakistan) and to our neighbors in Cuba and Venezuela.

How have we gotten ourselves into this horse race with a country that seemed light years behind us only a decade ago? Mann points to two developments – both of which have made the US look bad – and China look good:

First has been the failure of U.S. foreign policy, symbolized above all by the war in Iraq. Over the past decade, U.S. foreign policy has been dominated by a school of thought that emphasizes military power and has tied the spread of democracy to the use of force. Not only has this failed, it has also undermined support for democracy. U.S. attempts to export free markets and political liberty by force have been unable to bring even security, much less prosperity, to Iraq. And they’ve eroded our appeal and clout worldwide.

The second key development has been the staying power and economic success of the Chinese Communist Party. In the years immediately after the crackdown on pro-democracy protesters around Tienanmen Square on June 4, 1989, Western pundits predicted that the Chinese government had one foot on a banana peel. Any day now, they said, it would fall or be forced to embrace far-reaching political reform to survive. Instead, China’s economy expanded by a factor of nine, and the Communist Party remains firmly in control.

Every development that Westerners, particularly Americans, have thought would lead to liberalization of Chinese governmental controls has failed. The Internet, which everyone assumed would lead to a “peoples’ revolution,” remains firmly under government censorship (see this latest development – China is requiring bloggers to register). The middle class, which usually is considered the group most likely to demand personal freedoms, has been successfully bought off with perks, as mentioned above. Finally, the business class, usually a driving force for liberalization in the name of free enterprise, is hand in glove with the communist regime – in fact, the communist party is a principal share holder in most of China’s corporate powers. Mann describes the world’s reaction to this seemingly anomalous economic system:

In fact, the fast-growing economic system that China is developing is quite different from the American model — a fact not lost on other countries. Yes, China has private firms and stock markets. But only a small portion of the stock of any given company is traded on the stock market; the majority is held by state-owned enterprises. Communist Party officials frequently retain a majority of the seats on boards of directors and keep veto power over personnel decisions. And when it comes to foreign businesses, the Chinese system has been so good at attracting outside investment and fueling economic growth that the German magazine Der Spiegel recently asked, ‘Does Communism Work After All?’

So what does this mean for the United States? How should we respond to this “new reality” that is the Chinese miracle? Mann suggests that we must face tough truths:

The most important change is a conceptual one. We need to get beyond the arid framework of seeing every policy dispute involving China as a choice between “engagement” and “isolation.” Those loaded words set up a false selection and have little meaning anymore, if they ever did. With the third-biggest trading economy in the world, China is already engaged.

We also need to get beyond the notion that our trade, investment and interaction with China are going to transform its political system. Any serious policy must be based on China as it is, not on our mistaken assumption that prosperity and liberty inevitably go hand in hand. Trade and investment should be evaluated for their economic costs and benefits to the United States, not for their political impact on China…

Above all, we should approach China through the lens of our national interest. That includes not just security and prosperity but our interest in a world with open political systems and the freedom to dissent. If we don’t take China’s new model as seriously as the rest of the world does, we could find that we’re the ones on the wrong side of history.

Whether we have the national will – and an intelligent enough government – to handle these challenges may decide our future.