Any containment of China’s expansionism and decoupling must be linked to strategies for rebuilding more sustainable economies and societies in the post Covid-19 world.
The past and present wilt—I have filled them, emptied them. And proceed to fill my next fold of the future…
Very well then I contradict myself
I am large. I contain multitudes
Walt Whitman, The Song of Myself, 51
Amidst prophesies about a new Cold War in a new century, Walt Whitman’s assertion of being contradictory, of being large and of containing multitudes applies to the two countries on the brink of that Cold War—the United States and China and to their emerging relationship. Since the end of Cold War 1.0 in 1989-1991, US-China relationship has been the single most important geopolitical and economic dialectic, transforming the international order. China has steadily but surely emerged as a new hegemon to challenge the old hegemon and victor of Cold War 1.0.
Recent bugle calls from the US/Western and Chinese leaders, strategic communities on both sides and “wolf warrior” diplomats of China on a host of economic, trade, security and strategic issues, especially in the context of the Covid-19 pandemic, are raising the spectre of Cold War 2.0. George Kennan’s attributions of mutual hostility and perpetual struggle for dominance in Cold War 1 seems to fit US-China bilateral relations in 2020. Trump and Xi are indeed, as Kennan said, “borne along by deep and powerful currents of nationalism” and commanding the “energies of one of the greatest peoples and resources of world’s richest national territories”.
Churchill’s invocation of the iron curtain in 1946 is apt too with the political, military and ideological barriers and spheres of influence that separate Western liberal democracies from an authoritarian, CCP/military dictatorship of PRC. Francis Fukuyama’s triumphant claim of End of History and the victory of capitalism and liberal democratic order in 1989-1991 needs a 21st century reprise. Endogenous challenges to these economic, social and governance models abound. They compete now with China’s fusion of authoritarian state model and socialist-neoliberal economic system.
However, unlike the US/West Europe-Soviet Union bipolarity, the one with China is full of strategic friend-foe and competition-interdependence contradictions. It is predicated on US-China trade war, and Covid-19 triggered variant of PLA’s “unrestricted warfare’” continuing and the persistence of anti-China sentiment in the US. The internal political imperatives and hyper nationalistic ambitions of China under Xi are key determinants. The extent, pace and success of economic decoupling and the containment of China’s expansionism is crucial. If a US-China modus vivendi eludes long enough and Europe joins in, it could herald decades of contestation between them for military and economic power, ideological and political influence for shaping the 21st century world order.
US commentators have identified several polarizing aspects of China’s remarkable rise. These include a politico-military authoritarian State constantly expanding its borders and being aggressive towards its neighbours; its quest for land and sea military hegemony in Asia and beyond; challenging US’ strategic reach and engaging in an arms race with the West; exploiting fault lines, institutions and freedoms in major democracies to destabilize or discredit them.
China’s enormous trading, economic and financial clout evoke competitive alarms too. China has outstripped the US as the premier trading nation with huge trade surpluses and become a global manufacturing hub driving regional and global supply chains. With a GDP of US$14.4 trillion and upper middle income country status, it ranks third in voting power after US and Japan in the IBRD/World Bank. With its inclusion in the SDR basket of IMF, the Renmenbi has become an important international currency. China’s foreign exchange reserves of US$3.3 trillion and ownership of US$1.1 trillion of US debt provides further leverage.
Western concerns about export of authoritarian and human rights flouting state models, natural resource guzzling and polluting industrialization models and BRI linked debt traps to developing countries in Asia Pacific, Africa and Latin America are growing. These effectively establish rival Chinese “spheres of dependence”. An emerging tech war with US accusations of intellectual property theft and appropriation of frontier technologies—critical for victory in the Fourth Industrial Revolution and the arms race, is a key driver of Cold War logic.
UN Secretary General Antonio Guterres has been warning the Donald Trump administration against devaluing multilateralism and creating a vacuum in international relations. “If the United States disengages, it will be unavoidable that other actors will occupy that space and I don’t think this is good for the United States and for the world.” China has co-opted multilateral organizations into its global designs including in the BRI project. First WTO and then WHO became battlegrounds, with the US crippling the WTO and China increasing its hold over WHO with US’ defunding and quitting threat.
China has grown its influence in multilateral institutions through a strategy of running with the hares and hunting with the hounds. Under the G77 plus China mantle in the UN, it garners the solidarity of the developing country constituency vis-à-vis the West. It exercises power through its permanent membership of the UNSC and has seized the leadership of several UN agencies. In the WTO, as alleged by the US, China has camouflaged its state controlled capitalist system, defied the market economy test, and undeservedly claimed developing country status, thus gaming the multilateral trading system to its advantage.
Since the 1990s there has been a dichotomy in US policy of regarding China as a major strategic foe and valuing it as an economic partner. Redeeming Trump’s Make America Great Again election promise in 2016 required reclaiming the trade, manufacturing, skills, jobs and technology ground that was seen as lost to China. In a major shift, Trump unequivocally identified China both as a strategic and economic foe and pushed influential American policy, economic and business groups deeply vested in the China relationship over decades to do course correction.
Defining China as an economic aggressor, Trump’s trade war with it since 2018 aimed at a radical and comprehensive opening of the Chinese market and dismantling of its state driven economic model. US-China trade war saw truce through a trade pact in January 2020. The Covid-19 contretemps with China accelerated Trump’s resolute efforts to decouple and diversify away from US-China economic, trade and technological interdependence. Measures including high tariffs, investment restrictions and export controls sought to reduce Chinese imports, disrupt and relocate US funded Chinese supply chains, deprive China of latest US technology and discourage financial integration.
The Covid-19 pandemic, which Trump termed as a China virus, dealt the biggest and decisive blow to the most powerful military and economic power in the world—USA and its relations with China. Adding insult to injury, China blamed the Trump government for mishandling the response, while denying its own responsibility as the Covid-19 originating country. In a June 2020 White Paper on Fighting Covid-19, China claimed total victory over the pandemic. It flaunted its systemic superiority and China’s Global Times claimed “revenge observation” of US’ travails.
The Great Disruption of Covid-19 presents opportunities and challenges in the interdependence/decoupling conundrum democracies like US, EU, UK, Australia and the “free world” face with China. Any containment of China’s expansionism and decoupling must be linked to strategies for rebuilding more sustainable economies and societies in the post Covid-19 world. For India, any US-China Cold War may present geopolitical risks, but also opportunities for Atma Nirbhar Bharat and reshaping our sub regional Asian and global order. We must plan for US-China Cold War remaining a mere wrinkle in time or its becoming “the next fold of the future”.
Lakshmi Puri is a former Assistant Secretary-General of the United Nations and Deputy Executive Director of UN Women; and a former Ambassador of India.