Question: What are some lessons or insights from Chinese history, philosophy or culture that can help foreign parties better navigate the China market?

Zhang Longxi

“Let China sleep; when she wakes, she will shake the world.” Graham Allison begins his best-selling book on the US-China conflict by quoting the famous warning Napoleon issued in the 18th century. “Today China has awakened,” he confirms, “and the world is beginning to shake.” Allison’s famous coinage of “Thucydides’s trap” depicts the geopolitical situation of the world today as on the verge of a potential war between the US as the currently dominant power and China as a rising power, but Napoleon’s “sleeping lion” and Allison’s “Thucydides’s trap” are all metaphors based on the idea of fighting and dominion, which may well be inapplicable to China and its culture.

In Chinese culture, He 和 is a crucial concept of which the core meaning is peace or harmony. Harmony is not the monotony of the same, however, for it is the coming together of different things that makes harmony. The ancient Chinese often use food as a conceptual metaphor to illustrate the idea of harmony: a perfect dish is the mixture of different ingredients cooked with art and loving care. This is in fact similar to the ancient Greek idea, for Heraclitus also says that “What is opposed brings together; the finest harmony is composed of things at variance.” “Harmony is the most precious,” we find this famous saying in the Confucian Analects, but this is not just a Confucian moral principle; even the classic of the Militarist school, Sunzi’s Art of War, argues that the best way to win a war is not by force and violence, but by winning the heart of your opponent. “Attack the heart is superior; attack the city is inferior,” says Sunzi. And eventually, “winning each battle in a hundred battles is not the best of the best,” says Sunzi, “conquering the enemy troops without fighting a battle is the best of the best.” Indeed, looking at Chinese history, expanding beyond the inland territories and waging wars to conquer other races or nations is not the norm, and to be at peace with neighbors is always the preferred option. Therefore, the constructive idea in dealing with China, particularly for business and commerce, should be “live and let live” rather than the either / or mentality and the typically American idea of winner takes all.

Zhang Longxi is the Chair Professor of Comparative Literature and Translation at the City University of Hong Kong. He is a leading scholar in East-West cross-cultural studies and is an elected foreign member of the Royal Swedish Academy of Letters, History and Antiquities, and also of Academia Europaea.

Alastair Campbell

When a Chinese spokesman declares that some action or statement by a foreign power has “hurt the feelings of the Chinese people” this tends to be dismissed as tendentious hyperbole. However, Chinese deploy interpersonal criteria rather than impersonal rules of engagement to manage relationships; and that applies to both individuals and governments. International diplomacy is no exception, hence the eruption of hostile exchanges we see between China and Western powers, where an historical shame culture experiences an incommensurable clash with Western guilt culture. The worse fate for a Chinese is being openly shamed rather than experiencing the individual guilt which underpins Western morality. Hence the vital importance of “face”, a critical factor in Chinese relationships whether personal or collective. The concept covers many shared qualities; respect, dignity, prestige, honour, but has two distinct formulations. These are Lian 臉 and Mianzi 面子, both relevant to the confrontation and potential decoupling which has now arisen.

Lian focuses on moral authority and applies to the individual or the collective face of the nation. A classic example is Chamberlain’s loss of Lian when he adopted a policy of appeasement towards Hitler and ignored signed treaties to protect smaller nations in favour of pursuing Britain’s national interest. Mianzi is less consequential – unless you openly question government policies. It focuses on image, reputation, and social standing. Hence it is an incremental asset and can be enhanced or reduced by the individual’s actions and statements. Business tycoons prize and acquire Mianzi by amassing wealth and the symbols of material success and by lavish gifts and donations but lose it when their business fails. The Western businessman therefore needs to pay attention to both aspects of face if he wishes to be successful. He must follow closely evolving government policies and avoid comment on political or religious issues, not an easy task for companies and funds whose governments openly challenge Chinese governance and policies. With business partners, he needs to explain the increasing stakeholder pressure for ESG observance but adopt a dialectical rather than prescriptive negotiating style. As Lucien Pye once said, a contract in China is simply a licence to negotiate, not a rigid set of immutable conditions. So, giving and acquiring face over the course of any relationship are prerequisites for success.

Douglas A. Jaffe

An ancient conflict inherent in Chinese culture is the one between Fa 法 and Li 禮. This conflict has underpinned the approaches rulers have taken to achieve social and political objectives throughout history. Understanding this conflict offers insight into how China’s leaders govern and manage society and highlights fundamental similarities in political systems across the world. Legalism 法家, embodied in the “Fa”, is a school of thought that has at its core a pessimistic assessment of human nature. It supports a realist view of governance and believes that as human nature is inherently flawed, people need clear laws and punishments, otherwise they will be prone to commit selfish and abusive acts. In contrast, Li, which is associated with Confucianism 儒家, has at its core a more optimistic view of human nature. In their eyes, people need to be educated and taught the correct rites, customs and beliefs and will then do the right thing. Advocates of Li do not think highly of laws because the motivation becomes one of punishment avoidance and not true learning or moral development. If people are taught the virtues of the ideology, they will not need prescriptive laws and punishments to guide behavior.

These are simplified explanations and in practice, Li and Fa do co-exist. Nevertheless, viewing China through a Fa/Li lens does give insight into how the country is governed and highlights some of the challenges foreigners have in understanding the rule of law and its place within society. The ideology, regardless of whether it is Confucian or Communist, has its own ideals and customs and these can conflict with laws. This conflict may not be as prominent in the West where rule of law is considered sacrosanct, but these conflicts exist. In the US and other democracies, for example, views on human nature influence how people choose political parties and cast votes. One can see parallels in liberal versus conservative views when looked at through a Fa/Li lens. This makes sense as people everywhere base their views and choices on individual notions of human nature. If this is a universal practice, perhaps our leaders should spend less time focusing on ideological differences and instead, concentrate on the fundamental similarities underpinning governance models to find common ground.

Pichamon Yeophantong

When we think of Chinese culture, the necessity of saving ‘face’ and performing reciprocity—along with the all-encompassing concept of guanxi 关系 (‘relationship’)—immediately come to mind. Social and, specifically, business relationships in China are commonly viewed as being predicated on strong personalised bonds of obligation as well as an economy of both big and small favours. With roots in Confucian thought, guanxi speaks to a communitarian worldview where the individual is but a part of a larger socio-political ecosystem. It also reflects the nature of Chinese society today, which sees informal relationships underpinning the interactions between entrepreneurs, government officials, and the wider public. For this reason, many commentators regard guanxi as an important expression of Confucian (business) ethics, one that should guide how foreign parties behave in China and in relation to their Chinese associates.

But what is often overlooked in discussions about guanxi is its hierarchical, pragmatic and, at times, punitive logic. The aim is to maximise personal interests by pursuing mutual gain and mitigating the uncertainty in social relations through intricate rituals like ‘gift-giving’ and the clear delineation of duties. Central to this is the Confucian notion of ‘positioning’, which emphasises the differentiated responsibilities associated with one’s social status and how orderly relations can only be maintained through strict observance of these duties. These requirements can give rise to the dark side of guanxi, where power differentials inherent in such relationships, particularly those involving the omnipresent Chinese state, can enable corruption and impede socio-political mobility. The ‘disappearance’ of billionaire Jack Ma from public view earlier this year—alongside the other disciplinary measures taken against Ant Group by Chinese authorities—serves as a case in point. The scathing criticism of Chinese regulators that Ma had delivered previously represented a flouting of sensitive guanxi rules, where he forgot his ‘position’ and effectively became an outsider. In this sense, guanxi resonates equally with Shang Yang’s Legalist philosophy: because human nature is deemed selfish, individual desires must be curtailed to accord with state interests, including through coercion and punishment. For those seeking to better navigate the Chinese market, it is thus worth remembering that as China’s ‘human economy’ continues to transform, guanxi can mean benefit but it can also impose liability.

Pichamon Yeophantong is an Australian Research Council Fellow and Senior Lecturer at the University of New South Wales (UNSW Canberra). She also leads the Responsible Business Lab and is a non-resident Senior Research Fellow at the Wong MNC Center. A recipient of the 2018 CHASS Australia ‘Future Leader’ Prize, Pichamon has published widely on topics relating to Chinese politics and foreign policy.

William Hay

Much ink has been spilled extolling – and criticizing – American exceptionalism. American exceptionalism manifests through an interlocking set of assumptions that are so ingrained as to be invisible to Americans (although at times all too visible to others). These assumptions include a conviction that the world’s political problems can only be solved through grass-roots universal suffrage; that individual freedom of speech is the only way to clarify contested issues; that a person’s worth is measured by the amount of resources that he is able to extract from the market economy; and that America bears a quasi-divine mission to spread these ideas throughout the world. Less visible, perhaps, is Chinese exceptionalism. More than 4,000 years of cultural history has endowed Chinese with their own set of ingrained assumptions. These assumptions include the conviction that the affairs of man are governed by immanent forces that constrain free will (including the law of dialectical materialism); that these forces dictate an absolutist, hierarchical and self-perpetuating structure of governance whose purpose is to direct and nourish the people as a whole and which individuals must trust and obey; that a person’s worth is measured by his contribution to the group; that these forces are strongest within Chinese culture; and that this system is self-contained and indifferent to outsiders.

Over more than 200 years of interaction, the profound differences between China and the United States have engendered not only suspicion but also intense curiosity and mutual respect. Periods of enmity such as the Boxer Rebellion of 1899 and the Korean War in 1950 have oscillated with periods of friendship marked by American funding to establish the leading Chinese universities in the early 1900s and the deep trade and educational ties that have flourished after the reform and opening up that began in the early 1980s. Interaction has spawned many individuals with the experience to mediate between these two exceptionalisms, yet few who are truly at home in both. If there is a lesson here for the foreigner in either land, it is to seek common ground through small steps taken with humility, patience and an open mind.