Graham Allison
When China’s top leaders met in August to review the year and assess the challenges ahead, they took satisfaction in their nation’s success compared to the floundering performance of the US and Europe in dealing with coronavirus. In President Xi Jinping’s bottom line: China had “fully demonstrated the clear superiority of Communist party leadership and our socialist system”.
After the 2008 financial crisis, China emerged as a major geopolitical force, advancing its values and interests. Today, as we see a second great economic divergence, we should expect more profound geopolitical consequences.
Official numbers for the first half of 2020 are already in. The world economy is shrinking. Every major nation is on track to have a smaller economy by the end of the year — with one exception, China. This brute fact is hard to ignore. Furthermore, we have seen this all before. After 2008, China weathered the storm, its economy growing in every quarter. In the decade that followed, China accounted for one-third of all global economic growth.
As its economy soared, approaching parity with the US, Beijing’s sense that the nation deserved a louder voice in the world rose proportionately. Former leader Deng Xiaoping’s “hide and bide” invisibility cloak was discarded dramatically. In a confrontation with former US secretary of state Hillary Clinton in 2010, China’s then foreign minister Yang Jiechi famously told her and several senior south east Asian officials also present: “China is a big country, and other countries are small countries, and that is just a fact.”
Mr Xi put it even more pointedly in 2017: “It is time for us to take centre stage in the world.”
China proclaimed a “nine-dash line” in the South China Sea in 2009, claiming ownership of 90 per cent of the waters in this long-disputed area. In the years since, it has been constructing new islands on existing reefs and converting them to military bases. Investment in military and intelligence agencies has also accelerated to build a force that, in Mr Xi’s mandate to them, can “fight and win”. And Beijing launched the $1tn Belt and Road Initiative to build transportation and communication infrastructure from China’s heartland to Rotterdam thereby, as Henry Kissinger noted, “shifting the world’s centre of gravity from the Atlantic to the Pacific”.
While many observers were initially startled by what they labelled China’s “new assertiveness”, escalating ambitions are quite normal in the history of relative power shifts among great nations. Gross domestic product is not everything. But it forms the substructure of power in international relations. It funds a nation’s military and intelligence capabilities, technical reach, and economic capacity to affect other nations through imports, exports, investment and cheap loans or grants.
In recent months there has been a significant increase in the tempo of Chinese military operations in both the South and East China seas, more aggressive confrontation with India over disputed borders and more active foreign ministry “wolf warriors” seeking to punish opponents in target countries.
Beijing has also moved decisively to impose its national security law on Hong Kong and strangle the territory’s drive towards democracy. And during the first chapter of a pandemic, China displaced the US from its usual role as helper to distressed nations by becoming the world’s supplier of face masks and protective equipment.
Predictably, these actions have triggered pushback. They have fuelled rising hostility towards China in the US, where both presidential candidates have called for versions of “decoupling”. Yet Chinese leaders continue to bet that the gravitational pull of their growing economy will prove irresistible to key companies and countries.
If we examine actions rather than words, Beijing is winning that wager. Those companies voting with their money, such as US financial services firms BlackRock, Vanguard and JPMorgan, have all increased their presence in China recently. Apple, despite some expansion in India, has also made little change to its dependence on China as its primary manufacturer and assembler of smartphones. A recent survey of US companies with major operations in China found that just 4 per cent were relocating production back to the US.
As the US and Europe struggle to contain coronavirus, get their economies back to growth and manage internal political divisions, expect an emboldened China to become ever more challenging on the world stage.
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