G20 Summit: Chinese Leadership and Greater Eurasia

07.09.2016
The G20 summit offers the Chinese leadership an excellent opportunity to consolidate its ambitions for global leadership. It is also obvious that China’s leadership is impossible without cooperation with Russia in Greater Eurasia.

The G20 summit in China is a political highlight of 2016 and one of the most meaningful global events in many years, exceeding in importance the group’s past annual meetings, which were becoming somewhat routine. There are several reasons for this. The first is China’s attention to detail and understanding of the symbolic importance of this summit. Diplomats involved in organizing the summit did not conceal that the preparation and drafts of conceptual documents were much better than at G20 meetings hosted by other countries. But it’s more than that. The Chinese have always been this way, whether it’s China’s meetings with African nations in the past few years, the SCO summit or the Olympic Games in Beijing. Given the international political situation, the G20 summit offers the Chinese leadership an excellent opportunity to consolidate its ambitions for global leadership. 

The reasons for this are in large part situational. First and foremost, there is the pending departure of US President Barack Obama from office. China will applaud him, of course, because it is protocol but will hardly take the US position seriously. In addition, a key element of Obama’s global economic strategy – to establish two oceanic trade and investment blocks, the Trans-Pacific and Trans-Atlantic partnerships – is facing challenges. The negotiations on the Trans-Atlantic partnership are on the brink of collapse, while the Trans-Pacific deal is obviously directed against China. But more than that, the two presidential candidates – Hillary Clinton and Donald Trump – are at best ambivalent about these Obama initiatives. Therefore, Obama has practically no global political legacy to speak of. His famous “Yes, we can” slogan has not panned out in the global economy, and his economic strategy is unlikely to be continued in any meaningful sense.

This vacuum in US conceptual strategies for the global economy may prove temporary. Regardless, it is not the only factor opening up space for China to pursue counterstrategies for global leadership. Brexit is another factor. British citizens said a clear and resounding “no” to the European Union, raising the volume of previous talk of the EU’s inefficiency and the impasse reached in the economic model offered by Brussels. Right now the European leaders are more focused on the upcoming EU summit in Bratislava where they will seek ways to minimize the damage from Brexit. In these conditions, their statements in Hangzhou understandably cannot be accepted without some irony.

As a result, Western countries have almost no opportunities to make a countermove in Hangzhou, allowing China to announce and advance its own program. Beijing understands this very well. In an unprecedented turn in G20 history, Chinese Foreign Minister Wang Yi recently released a ten-point strategy for global economic development. Claims that these ten points could shape the international system as much as the famous fourteen points of Woodrow Wilson, which completely changed the world after WWI, are not as outlandish as they might seem. 

The official slogan of the summit in Hangzhou used a traditional Chinese semiotic formula: the world’s future economy should be characterized by four I’s: “Innovative, Invigorated, Interconnected, and Inclusive.” But I believe one of the practical measures contained in the Chinese program for implementing this strategy is of revolutionary importance: this is the strategy for large-scale restructuring of global value chains and redistribution of the “golden billion” in the developing world.

This approach is incredibly important. It shows that the Chinese have turned away from the finance-based approach to reforming the world economy. Having understood that the ritual chanting about reforming the International Monetary Fund (IMF) boils down to the redistribution of several percent of its quotas, the Chinese started implementing a strategy that is different from that of the Bretton Woods institutions. In the past few years they established entirely new international investment institutions, such as the Asian Infrastructure Investment Bank, that provide for much greater participation by developing countries compared to the IMF. China’s leadership of these institutions goes without saying. The proposed reform of global value chains now offers a fairly clear practical goal for these new investment institutions to pursue. It is nothing less than a program for global re-industrialization with an emphasis on developing nations. If the Chinese can make it work (as they always do) this strategy will change the world. This is why the summit in Hangzhou may usher in a new stage in global economic development and a new global economic leader.

The key question regarding the implementation of China’s global re-industrialization strategy is where in the world it will be translated into reality the quickest. Understandably, China has a large-scale strategy to develop Africa, and African leaders increasingly regard China as a kind of a cure-all for the troubles of Western neocolonialism. But here there are at least some understandable restrictions on the development of the uppermost links in the global value chain. China’s growing presence in Latin America has less to do with the convergence of China’s efforts and those of local economies than China’s stiff competition with local leaders (the most obvious contradictions between China and Brazil in the area of re-industrialization were on display even in BRICS). China’s attempt to recast Australia as one of the resource centers for its programs increasingly appears to be a definite strategy. However, China is likely to meet fierce resistance from the Anglo-Saxon world.

Therefore, it’s no exaggeration to say that China will mostly concentrate on developing new global value chains primarily in Eurasia. Russia is becoming very interested in these projects, with new opportunities opening up for the country. In the past few years Russian-Chinese economic cooperation has started to outgrow the traditional hydrocarbon focus and the major – albeit still local – projects for the joint development of the regions of Russia’s Far East and China’s North-East (launched by the 2008-2009 joint program). 

Last year our relations with China reached an entirely new level with the agreement to align Russian and Chinese integration and investment projects in Eurasia. After this it became possible to talk about Greater Eurasia as a feasible economic (and maybe even political) reality. This bilateral alignment forms the foundation of the recent proposals by Russian President Vladimir Putin on establishing a comprehensive Eurasian partnership.

It is no accident that even despite the afore-mentioned large-scale preparations, the Chinese organizers of the G20 summit told journalists that it may bring big surprises. A focus on implementing and institutionalizing a new Eurasian partnership may become one of them. In this way the “mainland bloc” may not only become a semiotically understandable rhetorical response to Obama’s oceanic projects but also turn into a self-sustaining long-term strategy. In this context the complementarity and convergence of Russia’s and China’s efforts will be enthusiastically welcomed. It also exceeds the traditional framework of the Eurasian Economic Union in the post-Soviet space for Russia. It is enough to mention the interesting plans for cooperation in the Western flank of the new Greater Eurasia between Russia and Turkey, Iran and Azerbaijan. This also applies to Russia’s growing cooperation with ASEAN after last spring’s summit and the currently developing Russia-ASEAN ties in the context of the Russia-ASEAN forum hosted by MGIMO University in Vladivostok as part of the Eastern Economic Forum. It is very important that Russia has already started contributing in a meaningful way to confidence building in ASEAN, in light of the historically fraught relations between China and the majority of ASEAN nations. The removal of these phantom fears should act as a down payment on the successful development of Greater Eurasia, and Russia will obviously play a positive role in this respect. No less important is the intensification of Russia’s dialogue with South Korea and Japan, which was on display at the Eastern Economic Forum in Vladivostok. The troubled history between these countries and China is bound to create an opportunity for Russia to play a confidence-building role for these states as regards the new Greater Eurasia.

To sum up, China’s aspiration for leadership in the world’s re-industrialization is moving to the fore of the global agenda. It is also obvious that China’s leadership is impossible without cooperation with Russia in Greater Eurasia. China’s position on this issue is simple and clear: several years ago the Central Committee of the Chinese Communist Party elaborated a formula that casts Russia as China’s strategic rear. China’s main concern is that Russia rapidly stepped up relations with China in 2014 only in response to the deterioration of relations with the West and will “betray” China and fly back under the US and EU wing at the first opportunity. China is entitled to be concerned. In this context it would be no exaggeration to say that strengthening trust between Russia and China is the number one task. A commitment to pursuing common interests in a new partnership in Greater Eurasia should be an urgent task rather than a response to circumstances.

It would be logical to ask whether support of China’s aspiration for global leadership is in our national interests. I think the answer is clearly yes. The ongoing surge of Russophobia in the West since 2014 makes it clear that they won’t forgive and forget. Realizing that there is no going back after Crimea’s reunification with Russia, the United States and the EU will continue seeking revenge against us, starting with sanctions and barring our Paralympic athletes from competing. It would be naïve to hope that this policy will change. Therefore, there is simply no alternative to cooperation with China. Otherwise we are doomed to total autarchy and isolation. Obviously, the idea that Russia is China’s strategic rear may escalate tensions in our society and revive racist ideas about the “yellow menace.” However, the political events of the past few years show that our bilateral relations are clearly going beyond the format of “front and rear.” It would be more appropriate to compare our relationship (although this may also provoke ultra-nationalists) to that of Britain and the United States, with the “old empire” and the new leader harmoniously co-existing for the common good. Let me repeat that I think there is no alternative to this course, otherwise the 21st century may become a real disaster for Russia.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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