That China has integrated to a degree into the international system is generally accepted. Yet, in looking at how other countries should respond (as we have been asked to do) we need to have some idea of the extent and nature of that integration. Both are still debated. There are differences over how far it has integrated. Some still argue the need to integrate China into the international system; for others this has already largely happened. Some see it as a shallow integration; for others it is more substantial. There are also differences over why it has done so. Is it a normative acceptance of the value of integration and of economic interdependence, representing cognitive learning by China of how the world works or ought best to work; or is it simply tactical learning reflecting a realist view that it integrates only so far as it has to?

In putting China under the microscope in this way, it is possible to consider the meaning of integration in several ways. I shall refer briefly to the extent and nature of its participation in international institutions; its pursuit of its economic requirements by way of competitive markets; and its adherence to international norms.

This cannot be more than very qualitative for various reasons, including the problem in judging the comparative level of integration in a world where most countries are incompletely integrated: the US on law of the sea, the Europeans on agriculture; and the Turks (and many others) on human rights, are simple examples.

In considering China’s participation in institutions, those drawing lessons from the Cold War and pressing for some form of containment of China, should note that China differs from the Soviet Union in that since 1971, it has been basically working within the Western-led international system. This is not simply as a member of the universal UN and its agencies but also in its gradual but conscious involvement in, subsequently, of economic institutions set up by the West after WWII. It did not attempt to set up alternative institutions such as the USSR did with Comecon but has sought to make changes from within the existing western ones.

For those who tend to see China as in some sense external to the international system, the policy question is how to bring China into the international system. As Iain Johnston has observed, this is based on a dubious assumption-that China is somehow outside the international system.1199386 If we judge in terms of participation in international institutions, it is evident that China has integrated extensively with the international system and is substantially a complying part of that order. Its international involvement in international institutions, as Sam Kim has documented, is very extensive. In fact, Johnston argued that it was over involved in IGOs. As with its substantial involvement in NGOs, that may reflect China’s view of what is expected within the international system of a great power or simply come from bureaucratic happenstance.

Is it a dissatisfied power? Clearly yes-but so is Japan and many other countries.

At various times the question has been whether China’s dissatisfaction with the international system would lead it to disruptive behaviour in those international institutions. The experience of China’s participation in the IFIs and in the UN seems clearly to suggest that that is not a risk. Although more complex and needing firmer assurances, widely held expectations for the WTO would be similar for reasons of face (China as a responsible great power) and helped by a domestic constituency that is concerned to counter domestic protectionist pressures.

Another way of judging integration is to look at how China participates in the international economic system. China could choose more or less self-sufficiency or economic interdependence, state trading or profit oriented enterprises, and in strategic raw materials, non-competitive pressures ranging from annexation to domination or monopolisation. If we accept that the international system is now basically capitalistic and market based then how far China looks to market solutions is relevant to how other countries should respond. The answer is largely provided by the responses of the international market itself in the extent of trade and more particularly investment; and that seems reasonably positive. There is foreign involvement, for example, in some two thirds of China’s total exports.1199387

In most areas China is clearly becoming more market oriented in its international dealings. At the governmental level, this is reflected not just in its desire to join the WTO but in joining in with international activities that respond to market processes and in removing or reducing many of the barriers to market operations. There are still many more to be reduced or removed: as Lardy has argued, China still has a considerable way to go in restructuring its enterprises, commercialising its banking system and consolidating its fiscal reforms as well as liberalising much of its service sector.1199388 Price controls although widely eliminated are still too prevalent and there is still too much arbitrary involvement of party officials. China has accepted, however, the economic interdependence that market integration implies and the vulnerabilities associated with it. Those vulnerabilities before the Asian economic crisis were mainly seen in terms of the political pressure that countries-mainly the US-could apply as a result of economic dependency. It is obviously concerned at those vulnerabilities-the concept of economic security became important even before the economic crisis gave it a new dimension-but it seeks solutions to them in much the same way as others, most notably through the use of its own economic power or potential, shifting purchases of capital equipment to Europe, for example.

China’s market integration was clearly a process designed to suit China’s own interests. It was an essential means for modernising China and for improving the efficiency of its industry. Madelyn Ross argued that, the driving force behind all of China’s foreign economic relations-to make China stronger, more modem and self-reliant-has not wavered’1199389 One could ask-so how does that differ from others? If self reliant in economic relations equates roughly to self-sufficiency, that aim had long been abandoned across much of China’s economic system when that was said in 1994.

All countries participate in the market processes because they believe it is in their interest to do so. One could ask-does China believe in the importance of market mechanisms and the institutions that underpin them, including in the provision of public goods. China has been increasing the openness of its system and providing more information publicly on its trade and investment mechanisms in a variety of contexts through APEC and elsewhere. Countries other than China may have a better understanding of the long term aspects of self interest, such as the diffuse nature of reciprocity and that may take some time to be internalised widely within China, but if so that is changing in China.

China’s participation in APEC is based on diffuse reciprocity and reflects its increasing comfort with multilateral processes at least in the economic field. Moreover, its integration in the regional economic system, apart from the trade and investment exchanges, is reflected in its response to the Asian economic crisis. Not only was its resistance to devaluing its currency helpful, but it contributed substantially to the rescue packages for all three prime victims of the crisis-one of the few countries that did.

The argument that it does not have a normative approach to its participation in the existing international economic system raises questions about what is normative about those norms. Certainly, China is unlikely to value economic interdependence on the grounds that it leads to political reform and eventually to an acceptance of western forms of democracy as a means of achieving peace. That may be a western norm, but not yet a universal one. In any event, some western analysts would put more weight on liberal markets and economic interdependence than democratic processes as the cause of peace-though the issue is still debated.

The pursuit of democracy as a universal value is still seen by China as a threat. Many Chinese analysts, however, have said that economic interdependence does reduce the likelihood of war and that the pressures of globalisation make international cooperation more necessary and inevitable.

More generally, China still sees less gain to China in the general benefits-the social, political and cultural exchanges-that come with increased economic exchange than would many western countries. These are Deng, s ‘flies, that unavoidably come in through the open window, and China thinks it can handle these problems.

An area for considering how integrated China is in the international economy is energy supply. China is obviously becoming dependent on the rest of the world for its energy supplies. Its energy demand will grow rapidly and will constitute a major demand on global energy sources. It is currently heavily dependent upon the Middle East, which makes it vulnerable in two respects. It is dependent upon what it sees as an unstable area and one heavily influenced politically by the US. It is also vulnerable in terms of the sea-lanes that carry the oil from the Middle East. It is probably comfortable at the US role in keeping open the international sea lanes,1199390 although when asked it will say that it does not like it. That is free-riding but would we prefer the alternative?

Alternative supply sources for China’s oil and gas are Russia and the CIS states. China could seek to dominate the CIS states and especially Kazakstan but apart from the difficulties of doing that, it would bring it into overt competition with Russia, which is seeking to exert its influence in the area. It is ensuring good relations with Kazakstan, among others, but that would seem to be all so far. China has not shown signs to date at least of seeking to exert undue pressure on the CIS states, beyond the standard practices of diplomacy. Moreover the attraction for investors in energy developments in looking eastward rather than to the west is to avoid the political instability of the westward routes. As elsewhere, China needs a stable external environment for its economic development and therefore peaceful and cooperative relations along its borders.

China has moved from attempting energy self-sufficiency largely for economic reasons-there are large additional resources still available in existing fields in Xinjiang and elsewhere within China but the economics of development and of transport limit their exploitation. In practice what has been happening is China’s integration into the global energy market through two major enterprises-CNPC-dealing with exploration and production-and Sinochem-basically dealing with refining. These increasingly market oriented, if still state, enterprises, however, have been investing for some time globally-in the western hemisphere, including the US, in Africa and the Middle East as well as in Russia and the CIS states. They are probably still not able to enter easily into strategic alliances with international oil majors but Chinese enterprises have also entered into joint ventures for the provision of services to the energy industry globally.1199391

While China has learned cognitively about the international economic system, notably that trade is mutually beneficial.1199392 China’s economy is a mix of substantial integration in many areas but of shallow integration in others.

There remain considerable differences compared with the situation in developed countries; but some of those are themselves not fully integrated in some sectors, notably agriculture and in various service sectors. There are, however, also increasing similarities and common practices. In the case of energy, China is increasingly part of an integrated energy market. Again it does have little by way of choice if judged rationally, but rationality is not always the determinant of governmental policies.

The third criterion relates to norms. In the economic arena, these axe not normally difficult to define. Institutions were established post WWII that embodied specific norms of e∞nomic behaviour that could be pursued separately from political questions. Even those norms are not unchanging, however. During the Asian economic crisis, China gained from having retained capital controls, although at the time their dismantling would have been ultimately expected as being consistent with integration into the international monetary system. The need for some form of capital controls for those without a sophisticated monetary and banking system now seems to be gaining greater acceptance internationally.

Political norms have been less precisely defined by the international community and are more changeable. China is an Asian country and has sought to integrate increasingly with in Asia. In practice, as a consequence of the colonial period, most Asian societies would give priority to international norms of political independence, territorial integrity, national unity, noninterference in domestic affairs and peaceful resolution of disputes. Asian societies give high priority to the norm of peaceful settlement of international disputes rather than through military aggression and subversion. China, as a member of ARF, with other members has accepted the provisions of the ASEAN Treaty of Amity and Cooperation, which provides for peaceful settlement of disputes. Although an international society, like any society, reflects elements of coercion as well as interests and values, coercion through military force has come to be seen as less desirable than other forms of compulsion by China as by most other countries.

In Asia, a comprehensive view of security, virtually a structural norm, has emerged. Like other Asian states, China’s understanding of security has widened to extend beyond military security to embrace overall strength, giving greater emphasis to economic development, scientific modernisation and technical advance and to include social and political stability.1199393 In China’s case, this is a lesson drawn from, among other things, the collapse of the still militarily powerful Soviet Union. It is helped by the absence of any particular international threat to China.

China’s integration into any global security system is limited since such a system hardly exists, apart from the international arms control processes. On arms control, the Chinese degree of integration has improved, although like the US and other major powers, it participates in arms control arrangements in ways that minimise constraints on its own military capabilities. Its participation still falls short of what the West regards as satisfactory in a highly politicised debate, although the evidence is incomplete.1199394 Moreover, it is not clear that the standards being applied are balanced. The MTCR is an example where China is expected to follow rules to which it has not contributed, where the rules fit the convenience of the rule makers, are changed without consulting China and where it is judged in political terms on its adherence. Moreover, despite extensive US criticism of China’s slowness in adhering to the CTBT, China proposes to proceed with ratification of the CTBT despite the US congressional rejection of the Treaty. Some analysts believe the US pursuit of TMD in the region, regardless of the implications for the security dilemma and the interdependence of security, poses problems for the region.

Asian countries have moved slowly towards a limited concept of cooperative security-the idea that security can be achieved through cooperation. This is limited so far to conflict prevention through confidence and security building measures and to shaping the normative structure rather than containing or ending conflict.1199395 Although initially highly suspicious of regional security arrangements, China is now participating more actively, if still somewhat cautiously, in regional security dialogue processes, notably the ARF. It has also gained, like others, from the security confidence building that has come from the trust and shared political understandings that continuing constructive interaction creates in regional economic processes such as PECC and APEC as well as reinforcing the idea of security through economic cooperation.

Nominal acceptance of principles does not ensure adherence in practice, and China is widely regarded as being ready to use the military instrument. In practice this remains most evident in respect of, and probably limited to, sovereignty.1199396 Apart from the predominantly sovereignty based issue of the Spratly Islands, probably given more attention than warranted, Taiwan is now the major example. Yet here, so far at least, it has been deterrence rather than physical use of force. There could be practical reasons for a declining use of force: for China, as for other states, the costs of using force have increased, directly and increasingly in terms of adverse international reactions. Moreover, if China’s realpolitik is‘learned, from its historical experiences and from its economic and military weakness, as seems likely, it presumably can relearn provided it faces a more benign international environment. It already seems to be giving greater weight to its international image in a number of contexts, including those concerned with arms control, and to be increasingly sensitive about actions that might give weight in the region to the China‘threat’argument.

Aside from overall sovereignty questions, China has negotiated peacefully existing border disputes in a range of historically contested contexts, often where animosities have long histories. Particularly notable has been the mixed bilateral/ multilateral process leading to the resolution of borders along some7000 kms between China and Russia and the CIS, including several places where military conflicts occurred in the recent past. Apart from adopting confidence building and preventive diplomacy measures in the Russia/CIS context, it has been negotiating existing border disputes elsewhere, such as with India and Vietnam, or deferring the too difficult problems to the future, as with the Senkaku Islands and perhaps the Spratlys. Sceptics see this deferral as delaying the solution until China is stronger. That may be so but it could also simply be a way of avoiding conflict when a solution is not evident. In the case of the Senkaku Islands, it held back its own nationalist response to Japanese nationalist provocations.

For China, the global norms of sovereignty and the UN principle of noninterference in the domestic affairs of sovereign states remain fundamental. They reflect not just the past history of outside interference but also of current concern to maintain the legitimacy of the Chinese state and avoid fragmentation.1199397 China not only sees its legitimacy dependent upon maintaining its sovereignty over Taiwan but also sees threats of outside interference in the case of Tibet and Xinjiang, in both of which it has some justification. Thus its support for the UN is strong both because of its membership of the Security Council but because it values the principles it upholds. A valid criticism is that it is not prepared to pay for it reflected in its low level of UN contribution, but hardly a criticism the US can make. Were there a norm of self-determination, China would be in breach, along with many other countries but, since such a norm would conflict with the norms of territorial integrity and sovereignty, there does not seem to be such a norm in the post-colonial world.1199398

Its different emphasis on these norms led China to differ from the West on issues such as Iraq and Kosovo. China feared that they might provide precedents to override sovereignty that could, at some stage, have direct application to China. China’s view on this would be shared with many others in Asia. Yet it has hardly been obstructive in the Security Council in its use of its veto, although its willingness to abstain has often been criticised as not accepting its international responsibility. While its concern about sovereignty makes it more inflexible in its negotiating stands on Taiwan and perhaps the Spratlys, its emphasis on sovereignty, reflecting its belief in the inviolability of borders, might suggest that it is less likely to violate the borders of others.

Will what many see as China’s undue inflexibility resulting from its support for unfettered sovereignty change over time? In practice it is changing if very slowly. China has made some small compromises over its sovereignty and its concern over non-interference in domestic affairs. It accepted conditionality on IMF loans, it recognises that WTO membership also involves domestic intrusions, it accepts US inspections of compliance with intellectual property rights agreements, and inspection requirements under WMD and environmental agreements. It has also accepted a degree of international burden sharing by its participation in international peacekeeping or UN force, including having its participants serve under an Australian commander, as in Cambodia and East Timor.

It has also gradually accepted a valid international interest in its human rights policies and practice. In ai process in which double standards often abound internationally, China’s 1989 crackdown in Tiananmen Square put its human rights performance under critical scrutiny internationally both for genuine humanitarian reasons and as a political weapon. After a long period of resisting international discussion of its human rights practices, China has gradually accepted the compromise that China’s human rights are a valid subject for discussion internationally. That acceptance has been further reflected in its signature, in addition to the UN convention on economic rights issues, of the convention on political human rights issues.

Its implementation of those conventions leaves a lot to be desired and it has not accepted fully the West’s principles but then neither in all cases has the West. It has at least argued its case within the system-the UNHCR-rather than opt out, and in response to critical resolutions in the UNHCR and criticisms elsewhere, China allowed international groups to examine its human rights and published a white paper on China’s human rights.1199399 Its poor, if improving, human rights performance reflects both problems of implementation and of significant differences on some basic western human rights principles; on these it often shares the views of some other Asian states such as Singapore, Malaysia and Vietnam.

Although in a number of respects, China has moved towards the West in common understandings of international norms, it clearly differs and feels threatened by the West’s promotion of democracy and human rights as universal norms, the new western norm of justified intervention on humanitarian grounds, and the promotion of universal labour standards. The international environment has become an important issue on which the international community is developing norms. Although China has become increasingly sensitive to environmental issues, international as well as national, the continuing divisions over these norms between developed and developing countries are reflected in China’s approach. Moreover, China suspects that the environment pressure coming on it is being used to reduce its international competitiveness.

Finally, while China is content to be part of the international system, it wants that system to be multipolar rather than, as at present, unipolar. It seems prepared to wait for multipolarity to reappear, however-which it does not expect to be soon-without seeking to do much about the present situation.

What does this all mean for the ways in which other countries should respond? Other countries are all different in their responses to China and so a general answer is not possible.

Each country views these issues differently-usually according to their own interests and their assessment of the balances between challenges and opportunities. For the US, China represents a potential competitor for power and influence regionally and even globally (and for some within it a ‘threat’) as well as a major market. For Japan it represents a major political and economic competitor in the region-hardly a direct security threat although some Japanese do argue that it is-and a significant economic partner. For Australia, and some regional countries, it could be either a threat to the stability of its region or a stabilising influence, as well as offering substantial economic opportunities. For smaller countries, the concern is less about the direct response than about what the big players do.

While the process of integration in depth is far from complete, China is now part of the international system. For others, it is now a question of matching ideas or, where not, finding a way to live compatibly together by minimising differences and resolving issues peaceably. The continued growth of China is inevitable. The international system has to accommodate to a country that represents a quarter of the world’s population. While that will pose difficulties, many of which will come from China’s side, experience so far suggests that these may be fewer than a times believed.

Market competition will grow and in some sectors will be intense. If within WTO guidelines, however, it will take place largely on the basis of accepted international rules. Competition from China in the energy sector will no doubt continue to cause some alarm (the new Great Game) as when China outbids the US in energy sectors such as Kazakstan, and no doubt geopolitical influences will come into play but seem likely to be played cautiously. Overall, China seems to have recognised the need for adaptation, better perhaps than the US Congress and some of the western media. China still puts the US relationship as its prime interest despite the difficulties in the relationship.

For many countries, ensuring China is party to all institutions and a part of the decision making process is important. China still has to learn how to present itself internationally and underestimates the external impact of what it does and says internally, the consequent negative reporting tends to shape international attitudes. The West, for its part, tends to underestimate the growing plurality of views in China-a boiler plate speech that turns all non-Chinese off is automatically seen as an official Chinese view.

A problem is that we tend to apply different standards of judgement to China. For example, Sam Kim emphasises the self-serving basis of China’s participation in the international system.1199400 This gives the impression that China’s motivations are different to those of other countries rather than accepting that they are commonly the same. It is probably true that China’s levels of integration tend to be greater under agreements that it has helped shape and which are in its interest, or where there are positive inducements to compliance. Yet, as David Lampton has said: ‘To often we ignore these basic ways in which China is the same as others’.1199401 Kim uses of the term ‘maxi/min strategy’to describe China’s international behaviour-that of a China that wants to maximise its gains and minimise its costs.1199402 It is not clear who does not do that-or at least aim to do so. As an economist I believe that self-interest has proved to be a very efficient way of organising affairs.

The depth of China’s integration into the existing international system is clearly uneven. In many respects, progress has been substantial. On some things, however, such as on human rights, including political reforms, and on arms control China’s integration falls short of the expectations of western countries and of some in the region. Provided progress is being made-and is seen to be made-the intensity of those concerns will be constrained. Moreover, it may be that China is moving to a better understanding of the public goods of arms control than the US Congress. China’s concerns about sovereignty and territorial integrity make it inflexible in many international contexts but is that difficult to understand while attempts continue to be made from outside to undermine that territorial integrity? The external pressure on China to continue to integrate substantially needs to be maintained to help it continue to make progress in key areas. While greater transparency is needed from China in a number of areas, arms control in particular some greater honesty from the West is also needed.

There is no evidence that China rejects the legitimacy of most norms nor of the institutional framework underpinning the norms and rules they require for the international system where they are genuinely international, and not simply reflecting the policy preferences of a small, but powerful, group of countries. Generally, if we recognise that China has basically worked within the international system and not sought to disrupt it, for logical and predictable reasons that meet its own self interest, that should give confidence about the future-including about China’s accession to the WTO.