The Global Economic Reshuffle: USA, China and Russia

The trade conflict between the United States and China is especially important from the standpoint of on-going global geo-economic changes. In the event that the conflict is resolved in the near future, the underlying motives driving the standoff will remain, and continue to influence the nature of the relationship between the two most important economic powers in the world. The US-Chinese relationship is not confined to commerce; it also includes transport and energy projects, participation in international political and economic organisations, and currency regulation.

With respect to these aspects of bilateral relations, one should expect the United States and China to remain opposed to one another for the foreseeable future. Both countries are building the world for themselves, reformatting it according to their own interests, including with respect to the flow of financing, energy transportation routes, and the structures of international trade and economic unions. We are witnessing the beginning of a global economic reshuffle, which should be expected to persist for a while. Having started in the second half of the 2000s, the transition to a new world order will last a long time. Its extensive duration will result from the continued asymmetry of the “post-American” peace, as the US resists the new world order. Despite this, a major war is impossible, due to the mutual assurance of destruction.

The Rise of China and the Creation of a China-Centric International Economic System
Beijing’s activity in world affairs has been steadily increasing since the global financial and economic crisis of 2008-2009. There is no doubt that China, which has substantially increased its economic and financial strength, has set off on a path of sustainable growth to play a key role in global economic governance; it is improving its leadership potential on the world stage and gradually building a China-centric system of international rules, norms and institutions.
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© 2019 Andy Wong/AP

The reasons for the global geo-economic reshuffle reflect the far-reaching interests of the main international players. Since the election of Donald Trump, the USA has been driven by a neo-mercantilist ideology, which is aptly expressed in the slogan “America First”. The period of global openness that arose due to US military and political domination following the Cold War has ended, largely because it stopped being profitable for America itself. Regardless of whoever wins the 2020 US presidential election – Trump or his competitor – the president will have to understand that openness to the world must have its limits. 

The emerging reality is connected with the understanding that China has managed to take advantage of global openness, while not wanting at the same time to open up to American business (as Russia did in the 1990s), and also that the pressure against Beijing will not have the desired effect. China has become an economic superpower, and today its economic capabilities are supported by increased military power.

China could become a pillar of the concept of maintaining global openness and could even partially open its markets to US goods, not at the cost of retreating to previous positions, but under the condition that geo-economic shifts would continue to be beneficial to Beijing. The Chinese leadership will continue to pursue the emerging opportunities for the gradual incorporation of surrounding countries into the Belt and Road routes; the exploitation of the Northern Sea Route and the energy resources of Russia, the Middle East and Venezuela; and the development of trade and investment projects in Asia, Africa, Latin America and Europe. US resistance to the growth of Chinese influence will continue, but will have a limited effect.

The immediate consequences of the global economic redrawing are unclear. China will continue to resist the great-power nationalism of the United States, and therefore future bilateral conflicts are inevitable, and with them the increased risk of a global economic recession. The trend of openness will continue for the time being, but in more and more limited geo-economic spaces. If China offers concessions, there will be a temporary accession of America as a superpower, preoccupied with foreign debt and trade deficit reduction, but the US is no longer interested in maintaining global openness under the same conditions. This will only push the rest of the countries towards nationalism, and the world – towards further geo-economic reformatting. In any case, a Greater Eurasia will be built as a result of the further cooperation of the regional powers and amid the declining influence of the United States.

For Russia, the emerging conditions are beneficial, not due to the aggravation of relations between the United States and China, but because their interests aren’t converging. The ‘Chimerica’ projects proposed by American strategists cannot meet Russia’s interests in any way, as these depend on Moscow’s ability to manoeuvre geopolitically, on an on-going basis. Russia’s geopolitical dilemma – maintaining the status of statehood necessary for external survival while carrying out the reforms that are necessary for internal rehabilitation – cannot be resolved if Moscow faces coordinated external pressure. On the other hand, a serious aggravation of American-Chinese relations would force Russia to pick sides, an extremely difficult choice. Sandwiched between two giants and in a vulnerable economic situation, the country will have to sacrifice some of its sovereignty. Therefore, deepening mutually beneficial cooperation with China requires the preservation of Russian ties with the West, including the United States, and depends on the ability of the Russian leadership to direct the country onto the path of growth and development.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.