As China continues its march to reclaim the top spot on the global power pyramid, can it really co-operate with the US, or will it simply rub the West up the wrong way? Also, what are the implications for free trade and globalisation if China is no longer content to play second fiddle? ECR answers these questions and more.

Xi Jinping is the most powerful Chinese leader since Deng Xiaoping. Xi’s strategy has four pillars: economic growth, nationalism, repression, and the control of information. His authoritarian leadership and his role as reformer have a big impact on the world.

China thinks it is completely normal to be the largest show in town. The economic historian Angus Maddison calculated that China has been the biggest global economy for two millennia. In 1820, it accounted for a third of the world’s GDP. Viewed from this angle, China is simply on its way back to the top spot where it feels it belongs. However, the average Chinese citizen will lag the average US consumer for a long time to come with regard to spending power. Whether both countries will ever reach the same height is an open question.

Equally unclear is whether it will be possible for China to continue to advance in the global hierarchy without huge upheavals. Ideally, equilibrium should be reached whereby China adapts to international structures as the international community makes room for Beijing at the table and allows China to help shape global institutions, frameworks, and etiquette.

On the one hand, China is being given more opportunities to leave its mark on the international order. On the other hand, countries are sending out signals that point to distrust and a wall of resistance against China. In some ways, China is trying to act as a responsible partner and stakeholder on the global stage. For instance, it has started to take part in peace missions.

There is also no doubt that Beijing has been successful in launching the new Asia Infrastructure Investment Bank (AAIB). The membership of the bank has proved very attractive. It already has around 60 (prospective) members including Australia, Russia, South Korea as well as the four largest EU economies.

But this is meant as an alternative to the World Bank. And as such, the Americans have been sceptical about the AIIB initiative and the run of interest in membership clearly took the US by surprise. In political terms, the AIIB has turned out to be a spectacular piece of propaganda. Whether the bank will be equally successful as a driver of investment and projects in Asia is a moot point.

Power struggles

In other areas, the Chinese advance has been far from smooth. The Americans and Chinese are trying to steal a march on each other with their plans for trade blocs: the US with the Trans-Pacific Partnership (TPP), while Beijing is putting its money on the Regional Comprehensive Economic Partnership (RCEP). Most observers believe that the TPP and the RCEP boil down to macho behaviour and power politics between the US and China.

On the one hand, China is being given more opportunities to leave its mark on the international order. On the other hand, countries are sending out signals that point to distrust and a wall of resistance against China.

Understandably, Western media like to depict such power games as a struggle between liberal democracy and authoritarian state capitalism. Up to a point, this may be correct but it is in China’s interests to adhere to, and maintain, the basic rules and elementary conditions for capitalism. No other country has benefited so much from free trade and globalisation. Beijing will not quickly try to impose state capitalism on other countries. At the same time, it is increasingly noticeable that many states are becoming less convinced that the liberal economic model is essential for economic prosperity and other leaders may well study the ways of the Communist Party on the assumption that economic success could go hand in hand with an iron grip on power.

China’s increasing power fuels the rivalry with the US. Leaders on both sides may reiterate that the two powers can collaborate harmoniously at the top of the global pyramid. However, in the past millennia, the ruling hegemony has often found it hard to offer opportunities to – let alone make way for – other emerging superpowers. Meanwhile, the latter do not hesitate to seek confrontation.

Nonetheless, Beijing will probably continue to play second fiddle for a little while yet as the US continues to keep the time with the baton. The US has many faithful allies, its military superiority is unparalleled in history, and its economic scope is such that it is bound to be the dominant world power for years to come.

The bigger picture

Yet the trend is unmistakable. After all, the baton is not glued to the hand of the conductor – and he will find it increasingly hard to keep the orchestra under control. The US and other Asian countries have responded uncomfortably to China’s tempestuous ‘coming of age’. In combination with the Chinese yearning for recognition and additional growth, this could lead to painful situations, which could divide the West and undermine free trade and globalisation.

In many respects, China will want to conform to the established international order. The shared rules that govern relations between countries (which have evolved since the Peace Treaties of Westphalia in 1648) are useful to China.

Some of the countries bordering on China are worried about the security commitments of the US. The American pivot to Asia was supposed to shift the focus to the area around the Pacific Ocean, away from Europe and the Middle East. However, partly because of the Ukraine crisis and the failure of the Arab Spring, the pivot has not really taken off. As a result, both America’s Pacific allies and its partners in Europe and the Middle East have started to harbour doubts about its preparedness to step into the breach, if necessary.

That said, we think Beijing will shy away from creating too much unrest. Its foreign policy needs to be contained within a domestic framework that entails sufficient economic growth, structural reforms and the consolidation of the CCP’s absolute power. Regional stability is part of the plan to realise these objectives.

In many respects, China will want to conform to the established international order. The shared rules that govern relations between countries (which have evolved since the Peace Treaties of Westphalia in 1648) are useful to China. As are the resulting concepts of sovereignty and the balance of power.

In 1914, the global economy collapsed because the then superpowers declared war; whereas today, it is precisely the aversion of the (Western) countries to war that could lead to the unravelling of the global economy.

However, down the centuries, the international order has largely been shaped by the West and, since WWII, most of all by the US. Institutions, procedures, and conventions that are embedded in this system are often favourable to the West, whereas emerging economies are put at a disadvantage.

Rethinking the system

But things could get bumpy if China is convinced that the current international order acts as a gigantic bureaucracy that aims to guarantee the dominance of the West. This is where German sociologist and political economist Max Weber comes in. Anthropologist David Graeber paraphrased him, saying: “The only real way to rid oneself of an established bureaucracy, is to simply kill them all, as Alaric the Goth did in Imperial Rome, or Genghis Khan in…the Middle East. Leave any significant number of functionaries alive and, within a few years, they will inevitably end up managing one’s kingdom.”

Whereas we are not predicting a destructive world war, China could gradually become convinced that a complete rearrangement of the international system is required if it is to expand its power and prosperity.

In 1914, the global economy collapsed because the then superpowers declared war; whereas today, it is precisely the aversion of the (Western) countries to war that could lead to the unravelling of the global economy. Western fears could push the world over the edge because there is nothing to stop countries such as China from pushing their luck.

Over the coming years, we expect China to change tack repeatedly. Sometimes it will adapt to international order; other times China will try to adapt it – either internally or externally. Should tensions rise steadily, its focus will increasingly be on the latter.