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. Processing its “rise”, China has already moved beyond the stage of incorporation into the international order, where it had functioned in a playing field which had been established by Western countries, and started reformatting the existing international system in accordance with its own interests and development needs. At the same time, it appears that Beijing has no clear and future-oriented strategy to become a global leader (a so-called “Grand strategy”). The increase of China’s role in world processes was to some extent a surprise to the Chinese themselves, and to some extent an objective process, the cumulative result of individual measures taken by China, designed to solve the specific tasks of China’s economic development.

Formally, without claiming world domination and imposing its rules, norms and values ​​on other countries, China at the same time proposes new initiatives, concepts and ideas. It creates so-called “global public goods” (namely, the Asian Infrastructure Investment Bank, Belt and Road initiative, The New Development Bank, the community of the common destiny of mankind), and by default contributes to the creation of an international system, where it may play a directing and regulatory role.

So far, a number of factors limit China’s role as it makes its way to becoming a world leader. First of all, there is the incompleteness of economic reforms and modernization of China. In this regard, Beijing defines 2049 as the final year of the “great revival of the Chinese nation.” Second, China lags behind some other great powers in several key respects, which define national power, such as military strength, technological power and soft power. Third, China does not have a single ally (continuing to adhere to the principle of not joining military alliances), as well as truly close partnerships with strong global players. Answering the question with which states China has close reliable trusting relationships, Chinese experts, as a rule, name Pakistan, and after some pause and doubt, Russia. With this, the citation of Chinese foreign “allies” usually ends. And finally, fourth, there is Beijing’s lack of world leadership experience. At the present stage, China is adapting to its changing position in the international system and, most importantly, studying, borrowing and accumulating experience in the implementation of leadership functions.

In the past few years, China has taken measures in a number of areas that could lead to the creation of new, China-centric guidelines for the global economic and financial system:

- development of new international trade and economic rules by expanding the network of agreements on the creation of free trade zones (as by May 2019, China concluded such agreements with 22 countries);

- changing the global transport and logistics system through the initiation and financing of various transport and logistics projects, in accordance with the interests of China;

- in general, the stimulation of trade between China and other parts of the world, the result of which may be and has already become the dependence of individual countries on China, which potentially gives Beijing leverage to put pressure on them;

- reforming the key international financial institutions (multilateral development banks and the IMF) which remain under the dominant influence of the United States and other Western countries;

- creation of new international financial organizations, where China plays a leading or equal role with other participants (Asian Infrastructure Investment Bank, BRICS New Development Bank, the initiative to create the SCO Bank);

- strengthening the role of the Chinese national currency in the international financial and economic system.

It is an open question, how much better the world economic order emerging as a result of China’s actions will look, in comparison with the present situation. In recent years, in order to demonstrate its commitment to the best international practices, China took part in “showcase” initiatives, such as, for example, the Asian Infrastructure Investment Bank, where China does not abuse its status as the largest shareholder and is interested in AIIB's compliance with high international standards (for example, in such matters as procurement transparency). China demonstrates its willingness to react to the world community’s concerns, responding to criticism and making “cosmetic” adjustments in its trade, investment and domestic economic policies.

However, a large contrast between the Chinese “shop window” initiatives and the official rhetoric of the Chinese authorities betrays Beijing’s modus operandi. An example of this is the lack of transparency in the implementation of the Chinese Belt and Road initiative and individual infrastructure projects with Chinese financing, the provision of economically “linked” loans by China, the refusal to observe global standards in the implementation of projects abroad (labour, environmental and other standards), the emphasis on a bilateral format of interaction with its partners, giving China leverage over its counterparts, and, finally, Beijing’s wide use of punishment and coercive measures against countries that are harming China’s “core” interests.

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