Google's clash with China is about much more than the fate of a single, powerful firm. The company's decision to pull out of China, unless the government there changes its policies on censorship, is a harbinger of increasingly stormy relations between the US and China.
The reason that the Google case is so significant is because it suggests that the assumptions on which US policy to China have been based since the Tiananmen massacre of 1989 could be plain wrong. The US has accepted – even welcomed – China's emergence as a giant economic power because American policymakers convinced themselves that economic opening would lead to political liberalisation in China.
Read the FT's international affairs columnist's authoritative and lively commentary throughout the week
If that assumption changes, American policy towards China could change with it. Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America's only plausible geopolitical rival, is a different proposition. Combine this political disillusionment with double-digit unemployment in the US that is widely blamed on Chinese currency manipulation, and you have the formula for an anti-China backlash.
Both Bill Clinton and George W. Bush firmly believed that free trade and, in particular, the information age would make political change in China irresistible. On a visit to China in 1998, Mr Clinton proclaimed: "In this global information age, when economic success is built on ideas, personal freedom is essential to the greatness of any nation." A year later, Mr Bush made a similar point: "Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy ... Trade freely with the Chinese and time is on our side."
The two presidents were reflecting the conventional wisdom among America's most influential pundits. Tom Friedman, New York Times columnist and author of best-selling books on globalisation, once proclaimed bluntly: "China's going to have a free press. Globalisation will drive it." Robert Wright, one of Mr Clinton's favourite thinkers, argued that if China chose to block free access to the internet, "the price would be dismal economic failure".
So far, the facts are refusing to conform to the theory. China has continued to censor new and old media, but this has hardly condemned it to "dismal economic failure". On the contrary, China is now the world's second largest economy and its largest exporter, with foreign reserves above $2,000bn. But all this economic growth shows little sign of provoking the political changes anticipated by Bush and Clinton. If anything, the Chinese government seems to be getting more repressive. Liu Xiaobo, a leading Chinese dissident, was recently sentenced to 11 years in prison for his involvement in the Charter 08 movement that advocates democratic reforms.
Read More
