Karakoram Highway, once the passage of the old Silk Road, now developed for China's Belt and Road Initiative. Image on the left from 2001, on the right is a different section from 2014.

China and the new international order

China is laying the foundations of a new international order. These rules and norms impact the everyday life of regions and populations, including trade in goods, international laws, wars, environmental practices, dispute resolution, modes of human and cargo transit. China’s approach is multi-faceted, that is, it’s using different seemingly independent tools as well as vectors of approach in its interest of developing a new collection of international to global agreements, laws, institutions, and norms of conduct that are additions to or parallel to existing ones. The collective impact of the entire body of these elements will constitute a new way of doing things. Essentially, you keep adding to the existing body until it no longer resembles what it once was, and its function is altered by all the novelties.

It’s important and rather dramatic to speculate on the possible degrees of success or failure in such a venture. This article won’t touch on that topic. Let’s rather see what means, methods, and tools are and can be used to encourage or force change to the existing international order.

The People’s Republic of China, established in 1949, has had a history of minimal activity as leader in the establishment of existing international rules and norms. It wasn’t powerful enough, and it had a lot of internal problems to deal with such as the aftermath of foreign invasions and interference, the closure of civil war, conclusion of a revolution, a restructuring of society, very rapid industrialisation from an agrarian economy, contests of power within its political blocs, among others.

This has changed. China is now a global centre of broadly useful economic activity. That means, if you exclude speculative economic processes like trade in assets, or betting on future market price of debts and business investments (equity), you have a segment of the economy that’s geared to the production of goods and services that have a use in the daily lives of people and institutions. These include smartphones, payment systems software, food distribution, hotels, schools, and so on. China’s share in the global production of such things is enormous. It wasn’t so until rather recently.

Let’s look at the money price of all goods and services produced within three key regions: China’s gross domestic product (GDP) grew from US$4,598 billion in 2008 to US$11,199 billion in 2016. It’s GDP grew by about 144% in that period, while that of the US grew by 27% and The European Union’s shrank by nearly 14%. Let’s also recall that 2008 was the start of the current economic recession. This year, 2018, China’s total retail sales will equal or be larger than that of the US. In 2008, they were only 1/4 the size of that in the US. Coupled with the existing and projected rates of growth, China becomes an increasingly attractive consumer market whose gravity and therefore influence over export producers will begin to outstrip the many decades dominant US. Its influence over what are often called ‘commodities’ is already significant, since it is the largest consumer of most such things in the world. Commodities include coal, copper, and iron ore; materials that are used in manufacturing, and the construction of built environments (homes, roads, etc.). So, the economy of regions and the business of companies that deal in natural resources are heavily tied to the well-being and policies of China, as are those which import the vast array of Chinese finished goods, and those that want to sell their own finished goods to an already enormous and growing consumer market.

China can and is using this interdependence, one that’s weighted in its own favour, to reform current international policies, institutions, and infrastructure whose formulation direct the flow of political, economic and cultural activity. It’s also establishing new ones. Therefore, it’s important for it to speak in support of a “rules based system” of interconnected norms and agreements. Since the existing system is primarily built by and in favour of Western powers — starting from the period of world-spanning European colonial and imperial domination — it can and does point to a need for change in the overall structure and consequence of the existing regimes, in a move away from the Western dominated system. This effort is being made in a broad spectrum of fields. Here are a few key cases:

  • Methods of international payment in trade. The US dollar is currently the singular international medium of exchange. This is being re-imagined by China as it implements smaller test cases in bilateral and multilateral situations. It’s also as putting intellectuals and policy-makers to work on theorising alternatives to pricing trade in US dollars and to the current dollar denominated global reserve currency.
  • Construction of, investments in, and agreements for enormous infrastructure development linked to an international network with China as a common point of reference: no surprise since China serves as the common point of reference between various initiatives, being involved in the development or funding of these projects in every national context. A popular example is the China-Pakistan Economic Corridor(CPEC), where China has constructed a major port in Pakistan’s city of Gwadar and is building roads and pipelines leading from there to China as part of the greater initiative China calls the Belt and Road (also known as the New Silk Road).
  • New international financial institutions where the traditional dominance of Western powers is much diminished, used to fund and encourage projects that follow an alternative path to ones preferred by the World Bank and the International Monetary Fund. For example, the Asian Infrastructure Investment Bank, headquartered in Beijing, was formally established at the end of 2015.
  • Environmental and climate issues are, by their very nature, planetary. So, active support for the creation of multi-national or global agreements of this sort can help to expand the role of China as a lead negotiator and mediator on a matter that requires international cooperation. This does more than simply help to normalise a leadership role for that country. International rules and agreements on environmental issues are tied to economic activity, are political decisions, and they establish new legal systems. For example, China is is keen for international cooperation to establish a new Arctic policy in the face of dramatic environmental change. As a recent Chinese government white paper put it, “[…] China, as a responsible major country, is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region, jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative…”

[W]henever a great power rises, there is a corresponding globalization movement. This means that globalization is not a phenomenon that has continued from the past all the way to the present; rather it belongs to a great power.

These are the words of Qiao Liang, of a noted strategist and major-general of the Chinese People’s Liberation Army. During the same speech, given in 2015 during a forum at a Chinese Communist Party Central Committee office, he also mentioned that,

One Belt, One Road is not simply to join the global economic system, which is a globalization under the U.S. dollar. As a rising super power, the “One Belt, One Road” strategy is the beginning of China’s own globalization. It is a necessary globalization process that a super power must have during the phase of its rise.

One Belt, One Road is the best super power strategy that China can bring up at this moment, because it is a counter measure to the U.S. strategy of shifting focus to the East.

Notably, the Belt and Road Initiative (which he here calls One Belt, One Road), looks out westward, via Central Asia, toward West Asia or the Middle East, Africa, and Europe. So, at a time that the US put pressure on the Pacific region of East Asia, China changed focus to a westerly direction to locations from which attention and resources had been reduced by the US.

China has an edge in the productive economy and it recognises that the US has an advantage in finance capital. That’s why Qiao Ling points out that,

The U.S. will bury itself. That’s because it has not yet realized that a big era is coming and the financial capitalism that the U.S. represents will reach its peak and then start falling. On the one hand, the U.S. has already taken full advantage of benefits that capital generates. On the other hand, via the technological innovation that the U.S. leads, the U.S. pushes the Internet, big data, and cloud computing to an extreme. These tools will eventually become the forces that end financial capitalism.

Chinese strategists seem to expect that the current historic trajectory is leading to a transformed political economy and social fabric, that the methods and forms of production are undergoing fundamental changes, that the relation of forces are shifting, and new modes of production are on their way, that the existing money form that privileges the US is losing its grip. Therefore, they are preparing for the changes, facilitating them, and influencing their course.

This brings to mind the words of Zbigniew Brzezinski, grand strategist to numerous US presidents. “[…] once American leadership begins to fade, America’s current global predominance is unlikely to be replicated by any single state. Thus, the key question for the future is What will America bequeath to the world as the enduring legacy of its primacy?” he writes in his famous 1997 book dedicated to the task of maintaining US power around the world, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives. He foresaw that the US would not remain the sole super-power. So, his plan was for the US to use the period of its singular hegemonic position to set the framework for the world that was to come, the world that is now fast encroaching. It was therefore important that in that period the US “shapes a framework of key power partnerships that over time can be more formally institutionalized.” He was pressed for time, as his country’s “constructive exploitation of its global power could prove to be relatively brief[…]”

The international order that was to be shaped by the US was intended to place that country in the role of the indispensable power in an emerging multi-polar world: the country that sits at every meeting and assembly of international bodies, that mediates and arbitrates between conflicting parties, that is itself the political medium through which the new world order would flow. Meanwhile, a similar plan appears to be in the works on the Chinese side: to privilege themselves with the function of primary medium of exchange between the world’s great and small powers.

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