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This is the last of four chapters focusing on America’s perceptions of China’s capabilities, and dwelling on the correspondence between those perceptions and the projected consequences. It focuses on US perceptions of the political economy of China from the 1950s to 1978 and its perceived consequences for China’s capabilities both internally and as a political and economic model for other developing countries. Although the decline in Beijing’s hard and soft power resources did not follow a linear trajectory, the apparent overall weaknesses of its economy eased America’s fears about the Third World impact of its politico-economic model, and also reduced concerns that any contact between Washington and Beijing would raise the prestige of the People’s Republic of China (PRC) to the point where its path to development would be revived as a serious source of inspiration in large parts of the developing world. The chapter dwells primarily on China’s perceived soft power attributes. The different sections look at domestic order and advancement in China in the 1950s, the Chinese model under stress from 1959 to 1965, the impact of the early Cultural Revolution in the second half of the 1960s, and restabilization and re-emergence in 1969–78.

This chapter discusses how domestic, regional, and global concerns intersect in Chinese thinking and mutually affect the policy choices leaders make. It starts with an examination of Chinese domestic political economy and then moves outward through the Asian region to the global economy. This offers a distinctive perspective not only on China but also on Europe—a region of comparable size and diversity to the single country China. It also provides for an unconventional assessment of such factors as income disparities. National diversity and competition fueled an engine of growth in Europe despite the daunting challenges of unification. On both sides, the comparison sheds light on China as it achieves some of the world's highest growth rates and indeed works to sustain political unity. Thus, it should be no surprise that China's leaders work to reduce income diversity and increase political cohesion, even while their capacities for growth are constrained by collapsed global demand.

The chapter disaggregates different types and levels of authority and agency in China’s international interactions. It outlines a system of bounded autonomy where the state retains the ability to set overarching agendas, and also to control key levers of economic control that create and shape the nature of the market that others have to operate within. But this still leaves considerable freedom for others to pursue their own agendas under ‘normal’ circumstances, and to manipulate political agendas to serve local and private economic interests. The chapter also focusses in on domestic Chinese debates over its place in the world, and how studying them can give is a clearer understanding of how China’s place in the world looks from the inside out. In addition to showing how these debates have evolved, the chapter also shows how a consensus of sorts has emerged over what China might (or should) seek to achieve as a global power.

This chapter discusses the various contributions of this study to international relations and the political economy of China by highlighting the value of disaggregating state responses to global economic integration. It turns to the ways in which the findings of this book apply beyond the case of China in expanding our understanding of the relationship between global integration and the domestic politics of economic policymaking. The chapter also unpacks the authoritarian Chinese state into its multiple actors who wield authority over economic policy and delineates the channels through which these actors engage with the new challenges and opportunities introduced by globalization. It also provides a new explanation for the emergence of what has come to be called Chinese “state capitalism.” The chapter offers a new explanation for why, rather than constraining authoritarian states or credibly committing them to global economic rules, WTO entry alters politics within the state and provokes divergent responses from different substate actors in ways that do not necessarily strengthen the transition toward market economy governance.