Despite the fact that China defends the existing world system, and has postulated the need for greater justice based on a win-win approach, the world somehow got the impression that the gains from the new conditions is mainly redistributed in Beijing’s favour, writes Alexei D. Voskressenski, Director of the Centre for Comprehensive Chinese Studies and Regional Projects.
The People’s Republic of China (PRC) has managed to firmly establish itself as the second-largest world economy and continues to develop, although this was happening at a slower pace (4.5-5%) by the end of 2019. The Chinese President proposed the concept of the “Chinese Dream” and the revival of the Chinese nation. He made a political “slight freeze” to preserve economic gains. Amid the lack of a coherent political and economic concept of world development, he began to expand the sphere of “socialism with Chinese characteristics” and strengthen the nation’s main force — the Chinese Communist Party (CCP), which, he believes, should lead the country to become the world leader.
This push affects every other country in the world. The concept of “the common destiny of mankind” was put forward, in which China should play an important, if not decisive role. A project was announced to revive the world economy by connecting two of the three largest world markets through the infrastructural confluence of the EU and China — the Belt and Road project, the Maritime Silk Road, and the Arctic Belt Economic Zone. New production chains are being created, centred on Chinese national interests. Financial, investment and infrastructural activities outside the PRC have necessitated political consolidation by expanding the geography of the CPC party cells outside the country, even at enterprises with foreign ownership. The concentration of party and state political will and financial resources has allowed a number of Chinese companies to become global IT leaders (5G, AI, quantum technologies, etc.). The Chinese technological breakthrough is being accompanied by military modernisation, which should protect the country against hostile activity and at the same time consolidate the Chinese role in those areas that were vulnerable in the rapid advance towards the centre of the global economic system.
China’s successes have not gone unnoticed. A discussion has begun about what a globalising China would bring to the world. Despite the fact that China defends the existing world system, and has postulated the need for greater justice based on a win-win approach, the world somehow got the impression that the gains from the new conditions is mainly redistributed in Beijing’s favour. The unpredictability of the consequences of the world’s changing rules has become a cause for concern, especially in the context of the rise of nationalism and populism. Against this background, US Republican President Donald Trump has dismantled international agreements and partially restarted the American economic system, which then began to demonstrate head-to-head growth with the Chinese economy. A consensus has emerged among the American elite that the Chinese economy can be regarded as a strong rival. Donald Trump, accordingly, revised all agreements that were unfavourable for the United States in the field of politics and economics.
The outbreak of the COVID-19 pandemic confused all the cards. Despite the fact that China will have a long time trying to catch up to America in terms of quality indicators, the growth of labour productivity in a country with such a huge population will sooner or later make it the largest economy in the world. However, this necessitates an average annual growth rate of at least 5% over the next 8-10 years, coupled with zero growth rates in the United States. There are no guarantees that China will provide the best rules of the game for the global economy. The two largest economic superpowers are becoming “decoupled”, and the confrontation between them could lead to a new cold war. It is impossible to predict the nature of the further development of relations between the United States and China, since it is impossible to predict the outcome of many inevitable events in the near future.
Donald Trump has failed to reap the benefits of economic growth and reduced unemployment, and the pandemic has ruined all of his four-year public administration efforts. The emergence of new “black swans” is not excluded: there is no vaccine against COVID-19, there are reports of virus mutations, and the exacerbation of chronic conflicts is possible. What is happening in the United States can be interpreted in different ways: some talk about the crisis, while others are convinced of the formation of a new political consensus.
In this situation, the PRC needs to get out of the pandemic economy freeze period as soon as possible: in the first three months of this year, GDP fell by 6.8%, and by the end of the year, growth will not exceed 1.2%. For the PRC, ensuring economic growth is a much more significant problem than for many countries due to its huge population and fairly large share of poor people. According to various estimates, overcoming the economic difficulties caused by the pandemic may take a year and a half. Given the current situation, great changes can occur during this period. Joe Biden, for example, has a new programme to increase the economic competitiveness of the United States in the presence of very strong Chinese ties. If he wins the election, this can lead to non-standard decisions. New agreements between the United States and China are not ruled out even in the event of Trump’s re-election.
Despite the fact that China is undoubtedly in the best economic shape in the history of its relations with the United States and is ready to confront its foe, it is also in a delicate balance. Therefore, phenomenal efforts are being made to create a conceptual basis for resolving the Sino-American contradictions. China focuses on the national revival of a poor country that suffered injustice in the past, rather than fomenting a world revolution and establishing communism throughout the world by undermining the activities of bourgeois governments. Back in the 1960s and 1970s, Chinese foreign policy adopted the “157th Last Serious Warning” method, which was transformed into today’s statements, like “China strongly condemns US policy” voiced by specially authorised persons. At the same time, China’s military programme is not expansionist (the construction of two aircraft carriers out of six has been frozen), but its quality component is being enhanced, including deepening military cooperation with its strategic partner Russia. Under the new conditions, the United States, like China before, is pursuing a policy of building artificial dual-use islands in the regions adjacent to the South China Sea. Other countries in the region are being rearmed. This means that China’s military policy can be balanced.
Breakthroughs in world-class fundamental research cannot be ensured by a forced order. In the modern world, forced intellectual separation in all strategically important areas based on scientific nationalism will not be able to ensure innovative development. It will be difficult to find a replacement for the American market and 40-year-old strategic economic, scientific and technical ties with the United States, but it will be possible to do it to some extent. China has long been establishing ties with Europe and has formed a strategic partnership with Russia. However, there is no consensus in Europe about the emergence of China. Despite the fact that a number of countries (France, Italy, Greece, etc.) would like to strengthen economic ties, it will not be easy for China to achieve further development of relations with the EU in strategic areas. Consequently, geopolitical nodes of interaction and competition will shift it to Asia. Most of the emerging markets are located there and there are huge development prospects. However, the geographic displacement will occur in the current conditions geopolitically, and not in the economic and technological sense. East Asia will test new balances of competition and cooperation, including new models of regionally-mediated relationships.
In this confrontation, the matter is not likely to reach the cold war stage, otherwise it will be bad for everyone, and especially for China, because the living standards will fall and the CPC’s legitimacy will be shaken. It will be difficult to shift all the blame onto the US imperialists, since there is no unity among the Chinese elite on the need to escalate the confrontation with the US. But the most important thing is that there is a common understanding that war, even in its “cold” form, will stall economic growth, and the Chinese leadership needs not only to maintain the achieved living standards of the population, but to achieve new indicators of development, as declared in the party documents of the 19th CPC Congress. If there are failures in the economy, political problems will inevitably follow — the lessons of the USSR’s collapse were studied in China in the most thorough way.
China’s development model is not the Soviet model. China is firmly inscribed in East Asia in its expanded version. This is the most important area for it: there is the largest Chinese diaspora, prospects for infrastructure projects and investments, hotbeds of long-standing conflicts. The main “constructive” opponents of China — India, Vietnam, Japan, Australia — are also in East Asia. In general, they are politically more tolerant towards China than the United States. All these countries need Chinese capital and technology. It is more important for them to incorporate China, providing with its help the further economic development of the region. But the isolationism of the United States is not beneficial for them either, since no country in the region can confront China on its own.
Consequently, in this most important geopolitical region, there will be a rebalancing of relations and a search for new mechanisms to ensure a constructive balance of rivalry and cooperation.
China’s main national interest is to achieve the country’s reunification. This means that we are at the beginning of a new era, the decisive events of which will take place in Greater East Asia. The current trade confrontation between the United States and China is just a cover for this main “battle”. But its significance is not in aggravating the confrontation (although this is not ruled out), but in developing a new model for the incorporation of China into the global system.
This development of events opens a “window of opportunity” for Russia both in the West and in the East. An optimistic scenario will require well-trained politicians and experts, a rethinking of the parameters of development, scientific and industrial policy, the introduction of a new degree of openness and competition, an adequate theoretical and practical substantiation of the country’s place in the world system. Finally, it is really time to turn to the East. The pessimistic scenario may result in a further deterioration of the international and regional environment, increased confrontation with the United States, the economic marginalisation of the EAEU, increased dependence on China, and a deterioration of the economic situation, with all the ensuing consequences, but the need for highly professional expertise will not diminish in this case either.