WASHINGTON—The Nobel Peace Prize awarded to Chinese writer and freedom activist Liu Xiaobo, now serving a prison sentence for “inciting subversion of state power,” is helping to refocus the meaning of China’s rise. The attention that Liu’s plight is bringing to the contradiction between a 21st-century economy and a medieval political environment was sorely needed.

This is not the first time that a closed political system has coexisted with a relatively open economy. Throughout the 20th century, there were many such experiments both in the socialist camp (Yugoslavia after the breakup with the Soviets in 1948) and the capitalist camp (Chile under Augusto Pinochet, South Korea under Park Chung Hee and Chung Doo Hwan, Taiwan under Chiang Kai-shek and his successors). But there is one huge difference between China and these precedents—the former’s emergence as a leading capitalist power under dictatorship in a context not defined by the Cold War.

During that period, socialist countries that chose out of necessity to engage the West economically tacitly served to validate Western freedoms; right-wing capitalist dictatorships also validated them because they embodied the economic success of free markets, while their political atrocities were offset in many people’s minds by the horrors of Communism. In any case, none of the capitalist dictatorships was a major world power. The West was led by liberal democracies.

The case of China—a mixture of nationalist authoritarianism and capitalist powerhouse—poses a much greater dilemma for the West, which is increasingly dependent on the Chinese economic engine. If China is going to define this century, the dominant paradigm might well be a system of one-party rule in which a man such as Liu Xiaobo can be sentenced to 11 years in prison and two years without political rights for signing Charter 08, a manifesto modeled on Czechoslovakia’s Charter 77 that calls for human rights, multiparty democracy, freedom of expression and an independent judiciary. What a perfidious turn of events after the triumph of Western liberal democracy over communism was supposed to have spelled the “end of history.”

There is not much the outside world can do to force China toward political freedom. But awarding Liu the Nobel Peace Prize, among other gestures, could help strengthen the hand of those inside the communist bureaucracy pushing for reform. This is what Beijing’s reaction to the prize, including declarations of political war against Norway, the arrest of various critics and the harassment of Liu’s wife seem to indicate. This looks very much like a sign—and there are others, such as the letter, recently leaked to the press, from 23 Communist Party elders calling for political reform—that the guardians of the status quo are feeling insecure.

In six decades of Chinese Communism, the impossible has sometimes happened. Deng Xiaoping, the man who led the economic changes after 1978, had at one point been purged (his son was thrown out the window by members of his own party). During the Tiananmen crisis in 1989, none other than Zhao Ziyang, premier since 1980 and secretary general of the party since 1987, called for democratization. He was subsequently purged and replaced by Jiang Zemin, but the world was given notice that a titanic ideological split had taken place at the very top of the system over the need to transform it politically.

The more China opens its economy, and the larger the middle class grows, the more intense the pressure for a modern political environment from within will become. This was the case in every major capitalist dictatorship in the last century. The Chinese leaders know it well—hence their desperate response to this year’s Nobel Peace Prize.

Liu Xiaobo once got into trouble for suggesting, in utter frustration, that in order to transform itself China would need to undergo 300 years of colonialism just as Hong Kong had needed 100 years of British rule to become free. Actually, China has a long history of home-grown visionaries perfectly able to transform their fascinating country into a model for our time. With a little encouragement from outside, today’s Chinese visionaries, including the 10,000 people who have already signed Charter 08, will end up delivering their people from authoritarianism.

As former Czech President Vaclav Havel and Archbishop Desmond Tutu of South Africa wrote in a recent article on this year’s Nobel Peace Prize winner, Liu and the Chinese people will win their freedom. Eventually.