The list of 18 countries which will have declined invitations "for various reasons" to the ceremony in which the Chinese dissident Liu Xiaobo will be awarded this year's Nobel peace prize tells its own story. There is only one reason – fear of displeasing a rising economic power. The foreign ministry spokeswoman of China, the 19th country to refuse, called the supporters of this year's prize clowns perpetrating a farce.

The opposite is true. China is taking the snub implied by a man they have branded a criminal being honoured, entirely in earnest. Why else would they hurriedly concoct their own "Confucius peace prize", a day ahead of the ceremony in Oslo? Why would they attack the choice of Liu as an attack on their sovereignty and an example of western ideological warfare? Encouragingly, India is not bending at the knees and will attend.

Liu is serving an 11-year sentence for incitement to subversion. The incitement consists of co-authoring Charter 08, an appeal for democratic reforms. This manifesto, as Bao Tong, another dissident living under restrictions, explained in the New York Times is aimed at promoting human rights non-violently. It seeks to establish basic rights for all Chinese, irrespective of ethnicity, wealth or rank. The charter has been accused of subverting the People's Republic of China. It is in reality wholly republican in that it argues for equality under the law. Liu has been declared an enemy of the state for trying to uphold its values – that the Communist party should act within the constitution and the law.

Some of the past Nobel peace prize choices have been suspect. Awards have gone to people who have yet to earn it. But if anyone has, Liu has earned this and is paying a heavy personal price for doing so. He is a good choice for this year's peace prize. This may anger the authorities in China as an unwelcome intrusion into a domestic political debate which it has yet to have. So be it. By honouring Liu in this way, the Norwegian peace prize committee is upholding its values, and those of most democratic states.

To represent this as a clash between two capitalist value systems – one democratic and the other nationalist – does not help. China, like Russia, is work in progress. Both authoritarian systems will find it difficult keeping control while reforming their societies. The west's often-mouthed commitment to human rights is also qualified and governed by realpolitik. But we are doomed to live and trade with each other because neither can live economically within their own worlds. That does not mean institutions like the Nobel peace committee should be silent. Liu's values are ours too.