Will China Run the World? Should it?

14 Dec

[Prefatory Note: Interview Responses to Questions of Javad Heiran-Nia on world order in the time of COVID-19, with emphasis on China & United States, especially as reflected in the restructuring of the world economy. The underlying issue is whether the Chinese or U.S. approach to global policy and world order will gain the upper hand, and at what costs to humanity. The interview will be published in a forthcoming issue of Age of Reflection, a monthly magazine. (http://www.asreandisheh.com/). This post adds some observations at the end that do not appear in the interview.]

  1. In recent years, and especially with the spread of the Corona virus and the way China and the United States have dealt with this virus, the issue of Chinese and American order has received more and more attention. Do you think it is relevant to talk about Chinese order?

Yes, I think it has become extremely relevant to talk about the comparative approaches of China and the U.S. to problem-solving and political order, both their differences and similarities. There exists a preliminary question relating to the seemingly unusual character of American political leadership during the past four years of the Trump presidency, and the probability that it is about to change in style and substance shortly after Joe Biden is inaugurated as the next president. Trump is the first American leader to reject the authority of science and expert guidance in a period of national crisis, greatly aggravating the harm caused by the Corona-19 virus through the advocacy of behavior that contributes to the spread of the disease rather than to its containment. It is also notable that other illiberal leaders of important states have also acted in extremely irresponsible ways during the crisis, including Bolsonaro, the leader of Brazil, and to some extent, Boris Johnson, the British prime minister, among others.

The comparison between China and the United States, current leadership aside, suggests some important differences. The most important difference relates to the role of the central government, and in China’s case, the state. China has more of a unitary system in which policy is set in Beijing for the entire country. In the United States, the reality of federalism means that all 50 internal states enjoy a measure of autonomy, which results in diverse responses to the COVID challenge, some following the approach taken by Trump while others following health guidelines and produce overall better results.

In general, it is possible to suggest that the role of the state is more effectively and efficiently deployed in China in response to COVID, although exhibiting a disturbing disregard for the freedom of citizens and their human rights, especially with regard to political dissent and peaceful opposition. The extraordinary success of the Chinese economy over the course of the past 50 years, confirms the importance of providing centralized guidance in promoting technological innovations and in managing the allocations of capital investment in rapid and sustainable patterns of development. 

The U.S. has long suffered from the effects of massive over-investment in military capabilities, which has led to a series of costly foreign policy failures going back to Vietnam, compounded by a refusal to adapt to a global setting in which the politics of national resistance prevails over the superior weaponry of the United States, producing endless wars with unfavorable political outcomes for the intervening. So far China has avoided this trap, expanding through reliance on a variety of soft power instruments, but whether it can maintain this posture in the face of the U.S. current disposition toward confrontation and the initiation of a second cold war is not clear.

The U.S. also suffers from ideological inhibitions that are leftovers from the Cold War rivalry with the Soviet Union. Any reliance on government to perform roles relating to health, education, and social protection are labeled as ‘socialism,’ which is treated as such an evil mode of governing as to foreclose serious discussion. The result has been disinvestment in the social justice agenda, which is compounded in bad effects by the continuing over-investment in the militarist agenda.  

  • Liberal order after World War II, with Trump coming to power, became more and more threatened, and Trump weakened the institutions and organizations that were the manifestation of economic liberalism; Like the World Trade Organization. China, meanwhile, is currently benefiting from a liberal order in the international arena. What is the reason for this?

This is a crucial question. There is no doubt that neoliberal globalization led to a surge in international trade and investment, fueling sustained economic growth, but it also led to great inequality of benefits from economic development, sharpening class tensions, and in the American case caused acute alienation among workers and rural communities. The Trump phenomenon arose as an ultra-nationalist impassioned backlash to these negative domestic impacts of liberalism. Trump’s insistent call for ‘America First’ coupled with a rejection of all phases of globalism resonated with many Americans. Such a strident outlook struck heavy blows against global cooperation and hospitality to asylum-seekers and refugee, and even immigrants, at the very time these more cosmopolitan behavioral patterns were most needed to address such serious challenges as climate change and migration flows that could not be handled satisfactorily by states acting alone. In some respects, this retreat behind borders worked politically and economically for Trump until the unanticipated COVID pandemic came along. Trump missed no opportunity to boast about the stock market reaching historic highs, low unemployment figures, and somewhat rising wages for workers. The down side of Trump’s approach led to repudiations of the authority of international economic institutions, produced accelerating inequality, and was accompanied by ugly reactions against immigrants and people of color who were denied the full benefits of citizenship and were treated as hostile threats to nationalist identities of supremacy claimed by discontented white Americans who felt understood, energized, and supported by the Trump leadership.

In contrast, China was able to benefit from market forces while simultaneously overcoming the impoverished condition of more than 300,000,000 of its citizens and rapidly building an efficient modern market society on the largest national scale ever known. China’s state-guided public investment policies have seemed very well coordinated to develop an economy that is not only remarkably productive in industrial era manufacturing, but has started to dominate the technological frontiers that have military and reputational implications as threatening to the West as was post-1945 decolonization. China managed to combine taking advantage of liberalism while avoiding most severe forms of domestic alienation, and found win/win ways to help with infrastructure development of less developed countries without seriously interfering with their sovereign rights or political independence, thereby raising its status internationally. From a human rights perspective, China built an impressive record with respect to economic and social rights, while limiting political and civil rights rather severely, and imposing an unacceptably discriminatory regime on the large minority Uighur population in Xinjiang province. 

  • The Biden team is set to amend the World Trade Organization’s constitution to make trade more profitable for the United States. They seem to be looking to make tariff changes and a kind of economic protectionism so that China does not benefit much from free trade. What is your assessment?

The Biden approach to China reflects a bipartisan, and largely mistaken, view that China has taken unfair advantage of world economy through improper subsidies of exports and by way of strict regulation of imports and foreign investment in China, including with respect to technology. I am not equipped to assess the reasonableness of these grievances, nor of the Chinese concerns with unfair responses to their activities in global markets. There is a danger arising from this attempt to control Chinese economic behavior that it will lead China to retaliate and give rise to the sort of protectionism that caused the Great Depression of the 1930s, characterized as a ‘beggar thy neighbor’ ethos in foreign economic policy. There is also present an impression that the United States is neglecting its own economic shortcomings by shifting blame to China rather than making reforms such as a more prudent allocation of resources and a more effective and equitable public allocation of public sector revenues to promote research and development in non-military projects. The U.S. political taboo preventing even discussion of the shrinking the military budget and the worldwide network of overseas bases is more explanatory of American decline than are accusations of improper behavior directed at China. The U.S.’s military budget is larger than the combined military expenditures of the next ten countries, and yet the U.S. has never felt more insecure throughout its entire history. It is these realities that are at the root of the relative world decline in the economic sphere, and the overall crisis confidence, currently besetting  the United States.

  • Fifteen Asia-Pacific economies formed the world’s largest free trade union, an agreement backed by China that does not include the United States. The Economic Partnership brings together the 10-member Association of Southeast Asian Nations, China, Japan, South Korea, Australia and New Zealand. The pact came as the United States withdrew from the Trans-Pacific Partnership. The pact that Obama believed would establish the Asian trade order in the 21st century and would not allow China to do so. China is now shaping the Asian order with a new treaty. What is your assessment?

This question points to another major deficiency in the global turn toward economic nationalism and away from economic multinationalism during the Trump presidency. China has taken intelligent advantage of the U.S. withdrawal from the Trans-Pacific Partnership, which incidentally excluded China reflecting Obama’s interest in containing China’s regional outreach. China has helped fill the cooperation vacuum by adopting a multilateral framework designed to facilitate Asian growth of trade and investment. Trump’s preference for ‘transactional’ bilateral deals over negotiated cooperative frameworks seems ‘ is very shortsighted, and is almost certain to be rejected as an approach during the Biden presidency. But it is probably too late to reverse these regional developments by U.S. inclusion unless Biden’s leadership moves away from confrontation and toward accommodation, which seems unlikely. This China-led 10 country Regional Comprehensive Economic Partnership includes Japan, South Korea, Singapore, Vietnam, Cambodia, Philippines, Thailand, Australia, New Zealand, and Brunei is off to an impressive start. This arrangement has been under negotiation since 2012, and just now formally endorsed by member governments. India had been expected to become a member, withdrawing recently because the expected lowering of tariffs was thought to harm Indian producers. As it is this Asian bloc comprises 30% of the world’s population, and just under 30% of the world’s GDP. 

  • With Biden coming, it seems that we will see a kind of limited liberalism in the international system. What is your assessment?

I anticipate a double movement with regard to the world economy: one movement would be toward restoring the spirit and substance of market driven transnational agreements and frameworks designed to encourage trade and investment within a rule governed framework that is mutually beneficial and inclusive; the second movement is more ideologically delimited, seeking frameworks that are ideologically and geopolitically more closely aligned, excluding China, and possibly Russia. This post-Cold War restructuring was somewhat anticipated by the Obama ‘Asia reset’ that deliberately excluded China from the TPP, and Biden is likely to go further in Asia, and possibly joining with India in adopting a new containment approach to foreign policy and world order. It is difficult at this stage to know how China will react if it is faced with geopolitical encirclement and a more exclusionary economic atmosphere. It is possible that China, which is more pragmatic and opportunistic than the West, will do its best to encourage a less conflictual new phase of economic globalization, which would spread benefits worldwide, is also responsibly concerned with the global public good, which translates into greater support for clean energy, environmental protection, human rights, denuclearizing initiatives, and a more equitable distribution of benefits of economic growth. 

  • Trump received over 70 million votes. This is almost equal to Biden, especially if Biden’s big margin in California is discounted. That means almost half of American voters like Trump. That is, his views on nationalism in all its dimensions, and his economic protectionism and unilateralism, are popular with the American people and are tied to the interests of the people. How can Biden balance the values of liberalism, of which globalization is a manifestation, with this demand of Trump supporters at the domestic level?

Biden’s efforts to find a consensus on foreign economic policy will definitely pose a crucial test for his presidency. If he seeks to act on the basis of domestic unity, policymaking will likely be paralyzed, especially if Republicans remain able to put roadblocks in the path of Democratic proposed initiatives. If Biden decides to ignore the priorities of this lingering large Trump support he will be confronted by resentment and disruption. It is a dilemma no recent American president has faced. Whether the dilemma can be overcome also depends on whether Trumpist Republicans retain control of the U.S. Senate, and that seems to rest on the Georgia reruns of the two senatorial elections, which will be decided in early January. Unless the Democrats win both races, the Republicans will control the Senate, and as they did with Obama’s second term, be in a position to obstruct and block most legislative initiatives that are seen as antagonistic to the Trump approach. Biden’s pledge to be president for all Americans sounds good, but whether it will be a successful governing style remains in doubt. My understanding is that most Trumpists want power not compromise or responsible government. In this regard, restoring civility to the American political scene will be welcomed even by some Trump supporters, but to uphold his policy goals it may well be necessary to confront Republicans and mobilize the support of the citizenry. With the recent election revealing the depth of polarization, further revealed by the Trump refusal to accept the outcome as certified by the long reliable voting schemes operative in the 50 states, including those presided over by Republican officials, there are many signs of domestic trouble ahead for Biden whether he gives way on his policy agenda or tries to have it fulfilled. Biden may have more success in reviving the bilateral consensus on foreign policy that existed during the Cold War, and would be now focus on restoring European alliance relations and challenging China regionally in South and East Asia, and globally with regard to a U.S. oriented revision of rule-governed globalization. Again, much depends on the degree to which the Biden leadership with continues to address global security through a militarist optic. Early indications suggest that the demilitarization of the American political and moral imagination will not be forthcoming in the near future whoever is president. 

  • If Biden wants to deviate from the principles of free trade in order to contain China, he has deviated from one of the main principles of economic liberalism. This means that liberalism has faced a serious challenge in practice, especially at the international level. What is your opinion?

Again, I think the way to consider such a departure from global scale, inclusive liberalism is to reevaluate the operation of the world economy during and after the ending of the Cold War in the early 1990s. On the basis of my prior responses is a return to a modified Cold War orientation toward foreign economic policy. Unlike the Soviet Union, China’s participation in the world economy is indispensable for world stability and sustainable development, which creates a realization of mutual benefits. There is no realistic prospect of resurrecting the ‘Washington consensus’ shaped by the Bretton Woods institutions as projecting American values onto the global stage as the more legitimate future than that projected by Moscow. What might be feasible is some reform within the neoliberal framework that gained certain concessions from China but more or less retained the inclusive structures of neoliberal globalization that have controlled the world economy since the Soviet collapse in 1992. Thinking optimistically, we might even witness an upgrading the quality of Chinese participation. If reform fails and geopolitical confrontation occurs, then a lose/lose future for the entire world looms as the likely outcome, which could work more to the disadvantage of the West than to China. It needs to realized that China has been adapting its public investment priorities in light of expanding the economic performance of its huge domestic market, including satisfying rising consumer demand, as well continuing with the largest international/transnational development in world history, The Road and Belt Initiative or One Belt, One Road (OBOR), a new Silk Road adapted to the circumstances of the present. As Deepak Nayyar has shown in his breakthrough book, Asian Resurgence (2019), China is no longer dependent on Silicon Valley and Europe for technological progress, but the West, including the United States, may increasingly look to China for the latest technological innovations. Undoubtedly, part of the rising tension with China reflects the threatening reality that the country has graduated from its non-threatening role as ‘the factory of the world’ to becoming dominant on some of the most dynamic technological frontiers, which is a symbolic as well as a substantive blow to America’s reputation and leadership credentials, and possibly even to its dominance with respect to innovations in military technology.  

8. Given that liberalism is not in America’s best interests internationally, and theorists such as Prof. John Mearsheimer warn the US government against pursuing liberalism globally, what do you think will replace the current liberal order?

John Mearsheimer has long intelligently stressed the geopolitical dimensions of world order, which inevitably emphasizes patterns of conflict between major actors. As an extreme realist he regards ‘liberalism’ as naïve, and a sign of weakness, which invites cynical adversaries to take advantage economically and diplomatically. Mearsheimer is convinced that history is shaped by those political actors that prevail militarily, and as adjusted for present realities, the first priority of foreign policy should not be cooperation with rivals but their deterrence. He has gone so far as to credit nuclear weapons with the avoidance of World War III during the Cold War.

A complementary view to that of Mearsheimer has been influentially formulated by Graham Allison in his book Destined for War: Can America and China Escape the ‘Thucydides’s Trap’ (2017), which puts forward the thesis that high risks of war occur when the hegemonic hierarchy is challenged by an ascending actor in international relations. The present ascendant political actor that perceived a rising challenge from below is likely to provoke war rather than give way, which according to Allison is what has almost happened throughout world history.

Whether such abstractions should be given much weight considering several factors:

–the globalizing adaptations in the post-COVID world, giving increased role to WHO, and UN

Generally, as offset by persisting ultra-nationalist governance trends, despite defeat of Trump;

–a growing anxiety about global warming producing climate change with many harmful effects, including dangerous erosions of biodiversity;

–the Chinese challenge to American global primacy arising in a manner unlike earlier geopolitical confrontations, most notable with respect to economic performance, technological ascendancy, and soft power expansionism rather than by way of military challenge and territorial ambitions;

–U.S. relative decline globally, reflecting a continuing over-investment in military capabilities, a militarized permanent bureaucracy entrapped in an outmoded political imagination with a disposition that exaggerates security threats and under-invests in domestic infrastructure and social protection of its citizenry;

–a resulting intensification of uncertainty about the future of world order, some recovery of functional multilateralism under Biden leadership accompanied by increased reliance on coercive geopolitics involving relying on military ‘solutions’ for political problems. 

8 Responses to “Will China Run the World? Should it?”

  1. Rosemary Tylka December 15, 2020 at 12:00 pm #

    Dearest Richard,

    Could it be possible that China has only helped 300,000 of its citizens out of poverty? That seems like a very small figure to me, given the size of the population. Are there some zeros missing, or did I miss them with my DMLA?

    Big hug, Rosemary

    >

    • Richard Falk December 15, 2020 at 12:39 pm #

      Thanks, Rosemary; of course, more zeroes 300,000,000..I will make the change!!

      I fear these senior moments are getting more frequent!

  2. Beau Oolayforos December 16, 2020 at 6:53 pm #

    Dear Professor Falk,

    As you often say, the US is over-invested in war-making, aka ‘defense’. We can go back to our first economics lessons: the Production Possibilities Curve, which taught us the basic notion that, with scarce resources, ‘you can’t have everything’. A common pedagogic example was guns vs. butter: the more you have of one, the less you get of the other.

    No one argues that we proud Americans have more guns than anyone. The “butter” is domestic peace, decent food, housing, and medicine for the citizenry, and so on. We are nowhere near the top on that, and now our government is utterly nonplussed with the prospect of China spreading a little butter around.

    Not that the mainland Chinese are angels; their economic progress has come at great human cost. It is their misguided policies that gave covid to the world. But before our war-mongers start beating more drums, they need to put their own house in order. Tiennamen Square, for example, was awful, but has the Pentagon ever acknowledged, let alone apologized, for their generous support role in the Tlateloco Massacre?

    • Richard Falk December 16, 2020 at 10:44 pm #

      As always, Beau, suggestive, and with a firm grasp of fundamentals.

      Is it fair to say that China ‘gave covid to the world’? What evidence?

      • Beau Oolayforos December 17, 2020 at 6:48 pm #

        It was my understanding, admittedly gotten from media reports, that the covid virus was transferred from animals (pangolin, bats) to humans in Wuhan, and that infected humans then spread it by travelling out of Wuhan. The ‘wet markets’ were then shut down by the health authorities in Wuhan, but it was too late. Transfers of disease organisms from animals to humans isn’t uncommon, but covid proved to be particularly deadly. I’m not sure, but I think the wet markets had come under suspicion before covid, but the authorities wanted to tread a line between public health priorities and letting poor people earn a living. I always assumed it was an honest error, but an unspeakably costly one. Am I way off base?

      • Richard Falk December 17, 2020 at 11:59 pm #

        My impression is the same as yours. I reacted to your choice of words against
        the background of Trump’s allegations that responsibility for the pandemic is
        attributable to China.

        There is a competing explanation that I am not able to evaluate that the virus
        ‘escaped’ from the biowar lab in Wuhan.

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  1. Will China Run the World? Should it? – The New Dark Age - December 15, 2020

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  2. Will China Run the World? Should It? | HUMAN WRONGS WATCH - December 24, 2020

    […] Go to Original – richardfalk.org […]

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