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Five Years On, Financial Crisis Has Transformed China's Reputation as a Global Power

Five years on, the dust is still settling but it is clear that the consequences have been more than financial. In terms of perceptions, many international publics believe the economic balance of power has swung sharply toward China.

September 2008, the month that Lehman Brothers went bust, was the time which many of us realised we were in the midst of an international financial crisis. As dazed workers clutching cardboard boxes streamed out of offices in Wall Street and other financial centres, regulators and politicians rushed to stem the damage of a situation some seemed to barely understand.

Five years on, the dust is still settling but it is clear that the consequences have been more than financial. In terms of perceptions, many international publics believe the economic balance of power has swung sharply toward China.

While welcomed by many in the country, this opinion shift is causing headaches for Beijing. It has exposed the country to greater foreign scrutiny for which it has been ill-prepared. This has exposed a growing soft power deficit which is complicating China's rise to power.

The fact that China is increasingly seen as leading the world, economically, is borne out by Pew Global's research. Of 20 countries surveyed in both 2008 and 2013, the median percentage asserting China as the "world's leading economic power" increased from 20% to 34%. At the same time, the figure for the United States has fallen from 47% to 41%.

It is generally the most economically developed countries that perceive China on top. As of 2013, a majority of publics in Australia (61% compared to 40% in 2008), Germany (59% compared to 30% in 2008), Spain (56% compared to 24% in 2008), Britain (53% compared to 29% in 2008), and France (53% compared to 31% in 2008) see China as the world's leading economic power.

Interestingly, more Americans also perceive China (44%) as the world's leading economic power rather than their own country (39%). A majority in Canada (56%) supports that view.

This trend is evident despite the fact that China, on current trajectories, is unlikely to overtake the United States as the largest economy in the world for a decade or more, and significant uncertainties still surround its future development. This underlines how international sentiment can 'overshoot' facts on the ground, and probably reflects perceptions of publics in developed economies that China has become a much greater commercial rival since 2008.

In much of the rest of the world (Africa, Asia, and Latin America, and the Middle East), the United States is generally still regarded as the world's leading economic power. However, that margin has been falling since the financial crisis, and more people in these regions now believe China will eventually overtake the United States as the "world's leading superpower".

Of course, many Chinese welcome recognition of the country's growing might. However, it is rightly seen as a significant challenge too by Beijing.

China's grand strategy is premised on a gradual, peaceful transition to power ("harmonious society") during which it will grow stronger while keeping low profile. The brighter spotlight on the country, since 2008, has thus been unanticipated, and unplanned for.

And, it is this which has fuelled China's's soft power deficit. Soft power, which rests upon the international attractiveness of a country's foreign policy, political values and culture, is recognised by Beijing as a key political commodity, but one the country has had limited success in cultivating. As international perceptions of China's power have changed, there are growing signs of international concern and sometimes even outright hostility toward the country.

For instance, a 2013 BBC survey found that China's global reputation, tracked across 25 countries, has sunk to its lowest level since the annual study began in 2005. In 2013, there has been an average fall-off of 8 percentage points in positive views towards China, and an increase in negative views also by 8 percentage points. Of the countries in the survey, 13 now hold overall negative views of the country, against 12 in which the overall view is positive.

The BBC data is supported by Pew Global whose own annual survey points to a fall-off in favourability toward China in 14 of 19 countries surveyed in both 2011 and 2013. Double digit declines in these two years were recorded in states including Japan, the United States, and the United Kingdom.

The reasons for this fall-off are not uniform. For example, many in Japan are perturbed by what they perceive as Chinese military belligerence, while US publics are concerned by Beijing's alleged currency manipulation; the mammoth trade deficit with China and large US financial debt held by Beijing, not to mention alleged Chinese cyber-attacks on US interests.

As this critical scrutiny intensifies, Beijing must find better ways to tackle what is becoming a troubling soft-power deficit.

Most immediately, China must restart a process of addressing foreign concern about its intentions as a rising power. Here, it needs to intensify efforts to be seen as a responsible, peaceful power. And match this rhetoric with actions.

There also needs to be stronger commitment to domestic political change, transparency and concrete steps towards democratisation. Many in the international community are likely to remain wary of the country while it clamps down on its own citizens seeking domestic reform, including human rights activists.

China's image would also benefit from enhanced public diplomacy to win more foreign 'hearts and minds'. At a symbolic level, example measures might include utilising the country's growing capabilities in space travel for high-profile international cooperation projects. Surveys underline that many international publics admire China's strength in science and technology.

A broader reform needed is reducing the role of the central government, whose communications often lack legitimacy and credibility with foreign publics, in Chinese outreach efforts. Here, the country would benefit instead by expanding the role of non-state groups - including from civil society networks, Chinese diaspora communities, sporting groups, student, academic groups and business networks.

This reform agenda poses major challenges for Beijing. However, unless it is tackled, China's soft power deficit is only likely to grow, especially if its global profile continues to grow on its current trajectory.

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