In my previous article entitled ‘the coming Chinese century’ I laid out a number of reasons as to why I believe China is destined to dominate the world economically in the coming years. This poses an interesting question that is summed up by former Australian Prime Minister Kevin Rudd:
“Very soon we will find ourselves at a point in history when, for the first time since George III, a non-western, non-democratic state will be the largest economy in the world. If this is the case, how will China exercise its power in the future international order? Will it accept the culture, norms and structure of the post-war order? Or will it seek to change it? I believe this is the single core question for the first half of the 21st century, not just for Asia, but for the world.”
In short, is China a challenger to the post-war order and international stability, or is it a stakeholder in it? Should we therefore, be perturbed by China’s rise? The academic and journalist Martin Jacques in his book When China Rules the World argues that China’s rise will lead to a “realigned international power structure” which is “fraught with tension, instability and danger.” The conservative historian Niall Ferguson has even gone as far as to suggest that the US-China relationship represents a replay of the geopolitical rivalry between Britain and Germany that preceded the First World War. Nor is this confined to academic circles, Republican presidential candidate Mitt Romney for example, has made tough talk on China a main stay of his campaign strategy. I want to suggest that these are largely misguided notions and that whilst China may become increasingly assertive as its economic prowess grows, this will not lead to period of major geopolitical instability. As such, the post-war order will largely survive China’s rise.
It is worth briefly reviewing what is meant by the post-war global order. International order is created when a state achieves, what is known in academic parlance, as ‘hegemony’ Beijing a situation where a single state is able to dominate the rules and arrangements of international political and economic relations. In 1945, following the end of the Second World War the United Statesfound itself in such a position. The newly crowned hegemon set about using its economic and military pre-eminence to create an international order based on the free movement of goods and capital that still exists today. This post-war order is overseen and facilitated by two of the so-called Bretton Woods institutions: The General Agreement on Tariffs and Trade (GATT) – later the World Trade Organisation (WTO) and the International Monetary Fund (IMF).
The US assumed this role in 1945 out of enlightened self-interest as the experience of the 1930s showed what could happen when world order collapses. Following the Wall Street crash of 1929 many states turned inwards and pursued economic protectionism, between 1929 and 1932 levels of global trade fell by a third plunging the world into depression. The economic strife of the 1930s laid the foundations for Hitler to come to power, history tells us that when world order breaks down Beijing when states act on their own rather than in concert – the likelihood of great power conflict increases.
Fast-forward back to today and the litmus test for the question posed at the beginning of this article is this: what is the nature of China’s relationship to the Bretton Woods institutions? The answer is that it is largely benign; a brief survey of China’s recent actions reveals that it is both upholding and indeed, increasing its participation these institutions. Take the IMF, at the 2009 G20 summit inLondon,Chinaagreed to contribute an extra $50bn to the fund in an attempt to shore-up world economic recovery after the global financial crisis. Similarly,China continues to participate brazenly in the WTO and had to accede to unusually stringent conditions to join the organisation as it did in 2001. That China contributes to and continues to participate in the US-led international economic order illustrates that it does not fundamentally reject the status-quo international power structure.
International economics aside, how is China responding to US dominance is the geopolitical and military sphere? There are numerous sources of tension between the two; such as long-standing grievances over Taiwan and on the Korean peninsula along and relatively new sources of tension over US bases in Australia,Vietnam and Uganda. Yet, in spite of all this,Chinastill benefits massively from US geopolitical and military pre-eminence. As the economist Zhang Jian has pointed out, China imports more than 50 percent of the oil it consumes, and half of this comes from the Middle East. Most of this imported energy comes through a handful of vital marine bottlenecks such as the Strait of Hormuz and the Suez Canal, yet China contributes nothing to ensure stability through the world’s strategic sea lanes. It provides almost no financial support to Middle Eastern governments and unlike the US, there are no Chinese military bases in the region as to ensure the oil keeps flowing from the world’s most unstable region. This makes China a ‘free rider’ on US military security Beijing a state which enjoys massive benefits from a particular arrangement without ever having to contribute to it.
Here lies the crux of my argument, states do not seek to overturn international regimes or power structures, or indeed, go to war simply because they can, they do so because they think there is some benefit to be gained. Saddam Hussein invaded Kuwait in 1990 not simply because he could win, but because he stood to benefit from acquiring his tiny neighbours oil. The consortium of South American countries that formed the regional alternative to the IMF the Banco del Sur (Bank of the South) in 2009 did so, not simply because they could, but because they believed that the IMF was at odds with their respective national interests. By contrast, China benefits massively from the US-led order, being the world’s leading exporter, there is perhaps no other developing country that has taken advantage of the open trading system overseen by the WTO to the extent that China has. Likewise, it is only thanks to US military security in Middle East that China is able to import a vast and regular supply of oil necessary for its growth.
The answer to the question posed at the beginning of this article then, is yes; by and large China accepts ‘the culture, norms and structure of the post-war order.’ Simply put, China is happy with the present international arrangement as massive benefits continue to accrue from it. China may indeed become more assertive as it continues to rise and the international community must accept that it is entirely legitimate, and indeed necessary, for China to have more say at the negotiating table. However, China has far more common strategic interests with the West than opposing ones; this makes it a stakeholder in the post-war order, rather than a challenger to it. We have little to fear from the rise of China.
By James Curtis