Is Vladimir Putin now the most successful leader in the world?

Vladimir Putin without a doubt appears to be the most successful leader in the world today. With the weakest of hands, an economy not much larger than Spain, and a gross domestic product per capita thousands of dollars smaller than Malaysia, he has asserted massive negative influence around the globe since becoming president of Russia six years ago.

But with his dual obsession on the importance of buffer states such as Ukraine and the disruption of the West, Putin ignores what should be his greatest concern, which is the mirror held up to it by China. The many successes in this neighboring country, compared to the dragging Russian economy, is a reflection on his leadership that will not be ignored forever by its citizens and elites. In 1905, Russia was in a similar situation. Japan, which Moscow viewed as an inferior Asian country, defeated Russia. The powerful victory of Japan over a Russia isolated in its own belief system shocked all levels of Russian society. It fermented a snowballing of disbelief in the legitimacy of the czar leading toward the revolution.


Now a modern Asian country is again demonstrating that something is dramatically wrong within Russia. China, a former student of Russia in autocracy, is not only winning in the game of globalization, it is now trying to master the difficult steps of reordering its economy to succeed in a new technological generation. Strikingly, Putin does not seem to care about this. He appears to not understand that Ukraine is the least of his problems as president. To contrast the approaches taken by Russia and China to globalization, to capitalism, and even to claims on territories that would “fall under their civilizations” is a study in national leadership.

From the beginning of their experiments with capitalism, these two former giants of communist tyranny acted differently, with China acting more wisely. When the Soviet Union collapsed, Russia followed the “shock” theory, switching immediately from a communism to a mostly capitalist economy, an approach that led to anarchy. Under Deng Xiaoping, China followed a more judicious approach, experimenting with capitalist reforms in various zones before integrating them all throughout the country.

But there is more than just how each country approached capitalism. When Deng began his reforms, the world was just moving into its current form of globalization. His reforms added the key component of Chinese capital in the form of millions of cheap factory workers, caffeinating globalization beyond any reality known up until that time. Russia did not add anything to the newly connected world. Its exports, raw materials and energy commodities that can be sold without any understanding of marketing or customer satisfaction, basically continued to be what they were under the Soviets. While energy generates huge cash flows, the industry can be controlled by a few and remain free from competition.

Chinese leadership also demonstrated extraordinary awareness when they agreed to reforms to join the World Trade Organization in 2001. These reforms enabled China to become the superstar of globalization. The leadership took a huge risk relaxing thousands of tariffs and other trade barriers. Within Chinese ruling circles, some feared that by reducing these tariffs, foreign competition would decimate outdated state enterprises, which partly did happen, but the risk was worth it. In the years that followed, China enjoyed one of the best decades in economic history.

Russia, on the other hand, did not join the World Trade Organization until 2012 while Dmitry Medvedev was still president and after years of drawn out negotiations. The hesitancy on this move represented the myopic Russian nationalist view that globalization threatened to replace existing Russian industries with new Western enterprises. Globalization was seen not as a way to lift the economy the way that it was seen in China, but rather as a means to invade Moscow using international business tools.

Of course, from the position of the Russian oligarchy, why rush to force drastic reforms on the industry when the main export is energy? But the corollary to this argument was that Russia might not otherwise diversify its exports and be anything more than a commodity supplier unless its industry was allowed to compete in the world and learn from that.

Finally there is the issue of territories, which has very little to do with globalization but a lot to do with how secure leadership is, as well as the nature of the culture they lead. Since the 1970s, especially in dealing with Taiwan and Hong Kong, China has understood that it has time on its hands. The leadership realizes that even Taiwan, which for decades directly challenged the legitimacy of the government in Beijing, is not its singular problem. Contrast this with how Russia has handled Ukraine.

Moreover, while both countries do not have many friends, Russia has clients, while China has partners. This is a significant difference. Putin has been rightfully accused of following a 19th century foreign policy, but that is a symptom, not a problem. His real problem is that Russia has remained a 19th century market. All his fears about the West are truly illusionary compared to the reality of the vast economic achievements of China.

Edward Goldberg is a professor of international political economy at the Center for Global Affairs at New York University. He is the author of “The Joint Ventured Nation: Why America Needs A New Foreign Policy.” His next book is “Why Globalization Works for America: How Nationalist Trade Policies Will Lead to Ruin.” Follow him on Twitter @EdwardGoldberg.