During the 1990s, Western attention gradually moved from Russia to China. This wasn’t a sudden change, but a slow realignment shaped by the Cold War’s end, the forces of globalization, and the growing recognition that China’s rise would have a much greater global impact than Russia’s waning influence.
Immediate Post-Cold War Context
The collapse of the Soviet Union in 1991 marked a profound geopolitical and economic turning point for Western powers, particularly the United States, the United Kingdom, and Western Europe. In the early years that followed, Western policymakers focused their attention on Russia, viewing it as the principal heir to Soviet power and a potential partner in a new, liberal world order. Under President Boris Yeltsin, Russia appeared relatively cooperative—seeking loans from the International Monetary Fund, joining the G8, and engaging in arms control and NATO partnership initiatives. These gestures fostered the illusion in Western capitals that Russia was transitioning toward democratic capitalism and could become a “post-threat” state.
Russia’s vast endowment of natural resources, industrial capacity, and scientific expertise further strengthened this optimism. Western governments, financial institutions, and consulting firms saw an opportunity to integrate Russia into the global capitalist economy and to reap enormous profits through privatization and market liberalization. For much of the 1990s, Russia was treated as the “favored child” of the post–Cold War order—a state that could be remade in the West’s image.
China, in contrast, was largely dismissed. In the early 1990s, its GDP per capita remained extremely low, its economy was still heavily agrarian, and its global influence seemed marginal. While China had begun market reforms in 1978, Western analysts tended to underestimate its long-term potential, focusing instead on short-term indicators such as wealth, institutions, and technology. At the same time, the prevailing view in the West was that globalization and free trade would eventually lead to political liberalization in China—a belief rooted in modernization theory.
Related articles:
The Liberal Bet That Backfired: How Engagement Empowered China
Complacency’s Cost: How Western Assumptions Fueled Vulnerability
China’s Meritocratic Governance: Beyond the Dictatorship Label
This period, often described as the “unipolar moment,” was dominated by the assumption of U.S. supremacy and the belief that liberal capitalism had triumphed. The strategic focus shifted from containing communism to managing globalization and spreading democracy. Within that framework, China was regarded as a peripheral player rather than a central strategic concern. Only later, as its economic rise accelerated, did Western policymakers begin to recognize that China—not Russia—would emerge as the more consequential force reshaping the global order.
Western Financial and Academic Engagement with Russia
In the early 1990s, as Russia embarked on its transition from a planned economy to a market-based system, Western financial and academic circles played a prominent role in shaping the process. Influential figures from U.S. academia, finance, and policy institutions—such as investor George Soros and Harvard economist Andrei Shleifer—became deeply involved in advising and investing in Russia’s economic reforms. Shleifer and his colleagues championed the so-called “shock therapy” approach: the rapid privatization of state-owned enterprises and the liberalization of markets. Western policymakers hoped this would quickly embed capitalist structures, attract foreign investment, and integrate Russia into the global economic system.
The intended outcome was clear. By promoting a Western-aligned capitalist framework, the United States and its allies sought both to stabilize Russia and to secure profitable footholds in its vast economy. Western financiers expected to capitalize on Russia’s immense natural resources and industrial capacity, believing that their technical expertise would give them an advantage in a newly liberalized market. Ordinary Russians, meanwhile, were encouraged to participate in the privatization process—often receiving shares in former state enterprises at deeply undervalued prices, despite limited understanding of capital markets.
In practice, the results diverged sharply from Western expectations. The privatization process was quickly dominated by well-connected insiders, many of them former Soviet officials, who amassed enormous fortunes by acquiring state assets at minimal cost. These newly formed oligarchs consolidated wealth and political influence, becoming largely autonomous from Western oversight. Meanwhile, foreign investors—hampered by weak institutions, corruption, and unpredictable legal frameworks—suffered major financial losses. Russia’s experiment in rapid liberalization left its economy unstable and its society deeply unequal, undermining the West’s hopes for a predictable, democratic partner.
The experience of the 1990s offered Western elites a sobering lesson: natural resources and economic potential alone do not guarantee stable or profitable outcomes. Institutional integrity, governance, and political order proved far more decisive than raw assets or technical advice. This realization would later shape Western attitudes toward China, whose centralized and disciplined state apparatus appeared capable of delivering steady, controlled growth—even in the absence of political liberalization.
Shift in Western Strategy: Why China Became the New Focus
By the mid-1990s, Western attention began shifting decisively from Russia to China—a change driven by both economic realities and political logic. Russia’s chaotic transition to capitalism had demonstrated that vast natural resources and technical expertise did not automatically translate into stable profits or predictable growth. The country’s political volatility, entrenched corruption, and oligarchic dominance made it an unreliable partner for long-term Western investment. In contrast, China, though still poor, appeared far more structurally stable. Its centralized governance, disciplined bureaucracy, and capacity for state-led coordination offered the institutional predictability investors found lacking in post-Soviet Russia.
China’s economic appeal was equally compelling. Its enormous population, expanding labor force, and growing openness to foreign trade made it a prime candidate for global manufacturing and supply chain integration. Western corporations recognized that China’s combination of cheap labor and political stability provided an ideal foundation for sustained profit and industrial relocation. Moreover, Beijing’s incremental approach to reform—favoring gradual experimentation over abrupt liberalization—stood in stark contrast to Russia’s “shock therapy.” This cautious, adaptive model limited volatility and created an environment where foreign capital could operate with greater security.
Ultimately, the West’s strategic reorientation reflected a hard-earned lesson: long-term economic engagement required not just market potential, but also institutional consistency and political order. In China, Western policymakers and corporations saw a state that could deliver both—an authoritarian stability that, paradoxically, seemed to guarantee the very predictability the global capitalist system required.
Western Elites’ Changing Perceptions of China
In the immediate aftermath of the Cold War, Western elites viewed China with a mix of indifference and condescension. In the early 1990s, China remained a largely agrarian, low-income country with limited technological capability and an opaque political system. Western policymakers and analysts underestimated its strategic potential, assuming that China’s communist governance and economic underdevelopment would prevent it from becoming a serious global player. Compared with Russia—seen as the more immediate post-Soviet concern—China appeared peripheral to Western strategic and economic priorities.
As the decade progressed, this perception began to shift. China’s cautious, gradual opening to foreign investment and its emerging export-led growth model drew increasing Western attention. Unlike Russia’s chaotic “shock therapy,” China’s market reforms were measured and state-managed, producing steady gains without destabilizing the political system. Western economists and investors began to recognize that the Chinese Communist Party’s centralized control provided the institutional stability needed for sustainable development. Observers concluded that China’s resilience—particularly its avoidance of the economic collapse and corruption that plagued post-Soviet Russia—reflected organizational strength rather than rigidity.
By the late 1990s, Western attitudes had evolved from cautious optimism to strategic vigilance. China’s ability to maintain stability during the 1997 East Asian financial crisis, when many neighboring economies faltered, underscored its growing economic power and financial independence. Its vast domestic market, disciplined bureaucracy, and capacity for long-term planning positioned it not merely as a site for cheap labor but as an emerging competitor capable of reshaping global trade, technology, and finance. Western elites increasingly recognized that China’s rise posed a structural challenge to Western dominance, signaling the end of the post–Cold War illusion of a unipolar world.
This transformation in perception—from disdain to vigilance—marked a decisive turning point in Western strategic thinking. China was no longer seen as a passive participant in globalization but as an active architect of a new world order—one that could rival, and eventually redefine, the liberal economic and geopolitical systems the West had long dominated.
China’s “Soft Power” and Strategic Influence
During the 1990s, as the United States was preoccupied with NATO expansion, the Kosovo conflict, and prolonged interventions in the Middle East, China’s strategic importance quietly expanded. Unlike traditional Western notions of soft power rooted in cultural appeal or democratic values, China’s influence emerged through financial leverage and economic engagement. Its growing purchases of oil from Russia and the Middle East, coupled with targeted financial assistance to developing regions—including parts of Latin America—positioned China as a stabilizing force operating outside the Western-dominated financial order. These actions hinted at the framework later embodied in the Belt and Road Initiative of the 2010s, in which China institutionalized its economic outreach as a tool of global influence.
Beijing’s ability to extend economic and financial support gave it subtle yet powerful leverage in international affairs. The United States and its allies began to recognize that China could indirectly shape global dynamics—constraining Western policy options through trade dependencies and financial linkages rather than military confrontation. This evolution demonstrated that China’s ascent was not merely technological or industrial but profoundly political and strategic. By maintaining strong domestic control, preserving sovereignty, and pursuing guided industrial and monetary policies, China ensured a managed transition that avoided the institutional collapse experienced by post-Soviet Russia. Through careful sequencing of reforms—such as dual-track pricing, restructuring state-owned enterprises, creating Special Economic Zones, unifying exchange rates, and ultimately joining the World Trade Organization—China secured both autonomy and stability. Its rise thus represented a deliberate synthesis of economic pragmatism and political control, designed to protect national independence while expanding global influence.
Divergent Western Predictions on US-China Relations
By the late 1990s, Western analysts were deeply engaged in debating the future trajectory of U.S.-China relations, reflecting the growing recognition of China’s global significance. Samuel Huntington, in The Clash of Civilizations (1996), rejected the notion that the world would converge toward Western-style liberal democracy. He predicted that the U.S. and China were likely to engage in a “mutually devastating” strategic conflict, with regional powers such as Japan and Russia potentially aligning with China, while India could emerge as a major beneficiary of shifting global dynamics. Huntington framed China as a civilizational competitor whose rise would inevitably provoke geopolitical tension.
In contrast, Walt Rostow offered a more cooperative perspective. Drawing on demographic and technological analyses, Rostow envisioned the possibility of U.S.-China collaboration, particularly in economic development and resource management. He suggested joint development of South China Sea oil and the creation of an Asian economic integration framework analogous to the European Union. Rostow’s approach emphasized pragmatism and partnership, closely aligned with Deng Xiaoping’s doctrine of measured engagement and economic modernization, which sought stability through development rather than confrontation.
The contrast between Huntington and Rostow highlights the divergent worldviews shaping Western strategic thinking: one emphasizing civilizational and geopolitical rivalry, the other advocating pragmatic economic collaboration to manage China’s rise peacefully. Both perspectives, however, acknowledged a fundamental shift—the era in which China could be ignored had ended. Its combination of predictable governance, rapid economic growth, and growing strategic influence meant that, unlike the chaotic post-Soviet experience in Russia, China had become a central actor on the global stage. Western elites now faced the dual challenge of engaging a rising power whose trajectory could offer either competition or partnership, making China a focus of sustained strategic attention.
This debate underscored a broader recognition: China’s rise was not incidental but structurally transformative. Its institutional stability and managed reforms had allowed it to avoid the pitfalls that undermined Russia, proving that economic and political order could coexist under a non-Western model, thereby reshaping both Western strategy and global expectations for the twenty-first century.
Underlying Strategic Lessons
The historical experiences of Russia, China, and South Korea in the 1990s highlight important strategic lessons for Western investors and policymakers. Resource wealth alone does not guarantee leverage or profitable engagement. Russia, despite its vast natural resources, faced weak market enforcement, rapid privatization, and political instability, which severely limited the effectiveness of Western financial strategies. Power was concentrated among oligarchs, whose self-interested actions undermined state authority and created unpredictable economic outcomes. Investors who sought to capitalize on Russia’s privatization often suffered sudden losses, illustrating that the mere presence of valuable assets does not ensure sustainable returns.
By contrast, China demonstrated the critical importance of institutional strength and predictability. Its centralized governance, political stability, and long-standing bureaucratic traditions allowed Western firms to invest with relative security. China’s approach to economic reform was gradual and carefully managed, enabling policymakers to experiment with markets while avoiding large-scale disruption. The country’s professional administrative elite and meritocratic governance system facilitated long-term planning and policy consistency, creating a stable environment conducive to sustained economic growth. This institutional resilience made China an attractive destination for foreign investment, offering long-term growth potential that outweighed the short-term allure of Russia’s resource privatization.
South Korea’s experience during the Asian Financial Crisis of 1997–1998 provides a complementary lesson. The sudden collapse of its currency, the bankruptcy of major conglomerates, and dangerously low foreign exchange reserves forced the country to seek a $58 billion IMF bailout. Under the program, South Korea opened financial markets, deregulated key sectors, and allowed foreign ownership in previously restricted industries. Western investors, including major U.S. financial firms, capitalized on this opportunity to acquire stakes in Korean banks and corporations at deeply discounted prices, demonstrating how stable institutions, regulatory frameworks, and coordinated intervention can facilitate profitable foreign engagement even in times of crisis.
Taken together, these cases illustrate that successful investment and strategic engagement require more than access to resources. Political stability, institutional strength, long-term planning, and predictable policy frameworks are essential to minimize risk and maximize returns. The experiences also caution against the financial myth that privatization or market liberalization automatically generates wealth, highlighting the importance of understanding local governance, elite capture, and broader institutional contexts in assessing strategic opportunities.
Conclusion
Western views of Russia and China shifted in distinct ways between the late 1980s and late 1990s. At first, Russia was seen optimistically as a resource-rich former superpower with considerable talent, but that optimism soon faded amid the chaos of privatization and rising corruption. China, on the other hand, was initially underestimated because of its poverty and developmental challenges. Over time, however, Western perspectives grew more cautious, eventually recognizing China as a significant strategic player with an economic trajectory that demanded close attention.