A year of grand awakening

US acknowledges the fact that it is entering a new era of great power competition with 'revisionist' states - China and Russia

US President Donald Trump’s first National Security Strategy Report issued a week ago was bound to attract a lot of attention in different capitals — let alone among the Washington foreign policy ecosystem. It was of course very easy to highlight the dichotomy between a number of foreign policy objectives asserted in the document and the way this administration has been acting in the international domain since the beginning of the year. In the same way, one could not but note the unnecessarily abrasive and belligerent tonality of the document — “America is in the game and America is going to win”.
 
While realising that many documents of this kind have had a short shelf life, being made obsolete by the turn of events, it is, however, worth assigning to this National Security Strategy Report a distinct significance as it highlights the fact that 2017 may have been the year of the grand awakening after many years of American and European complacent wishful thinking about China and the impact of its rise on the global economic and geopolitical scene.
 

Illustration by Binay Sinha

During all these years a key explicit or implicit assumption in the US and Europe was that, as its economy keeps developing and as its middle class keeps growing, China would “converge” towards the Western model of economy and society. This assumption was bred by the cultural and political arrogance that prevailed in the West since the collapse of the Soviet Union, the conviction that the only sustainable, possible, model was the one expressed by the “Washington consensus” — the irresistible advance of the compact economic/political liberalisation, market economy-democratic system — which had its moment of triumph in the late 1990s.
 
So, China was supposed to converge into that compact; and this expectation was crucial in the way the US and Europe looked at China’s admission in the World Trade Organization (WTO) in December 2001. The problem is that one element was overlooked in this expectation: The Chinese leaders had never expressed any desire or intention to “converge”. On the contrary, as China was becoming a WTO member, its leaders were reiterating their will to establish a “socialist market economy”. While this notion was dismissed by Western economists and business/political leaders as a mere rhetorical window dressing — a contradiction in terms — the Chinese leaders were deadly serious in doing everything in their power to establish such a system. And they have been pretty consistent about it in the last 20 years or more.
 
David Malpass, under secretary for international affairs at the US Treasury, was recently complaining that “China is not moving in a market-oriented direction”, giving that as the reason why the comprehensive economic dialogue between the US and China was now buried in the sand. The fact is that such a “dialogue” was based on a mismatch of expectations between Washington and Beijing — the former looking at this exercise as a way to get the Chinese economy operating more in accordance with the logic and priorities of the US, the latter considering this dialogue as a way to help ease or prevent some frictions that would have a negative impact on China’s growth, without ceding any real ground on the basic strategic tenets according to which the Chinese leadership is conducting the country’s economic trajectory.
 
For some time, as the expansion of the private sector in China seemed to fulfil the expectations of the Western countries and as the Chinese economy was not as big as it has now become, the interaction of China and its economy with the Western world could be managed without too many hiccups and with frictions kept well under control. But the situation has changed significantly: One the one hand, the Chinese economy has become the number one in the world in purchasing power parity terms; and with its $12-trillion gross domestic product (GDP), China represents now 18.5 per cent of the world economy. On the other, President Xi Jinping has broken with the Deng Xiaoping approach of “keeping a low profile (tao guang yang hui), biding time and never claim leadership”. He has made it clear since his meeting with former US President Barack Obama in October 2013 that he wants to establish a “new model of great powers relations”. In other words, dealing with the US on an equal footing basis. With the One Belt One Road Initiative, Beijing is now trying to create a sphere of geopolitical influence and a gigantic area of co-prosperity with China as its hub. The 19th Congress of China’s Communist Party last October clearly confirmed these orientations and objectives.
 
Neither the US or, for that matter, Europe, Australia and Japan will move towards a socialist market economy, nor will China converge towards the free market-democracy compact. And while China is presumably not aiming at “replacing” or supplanting the US in the world, it wants to establish itself as the number one power in Asia and aims to be the full equal of the US on the world scene. In that respect, Mr Trump’s National Security Strategy Report is right in acknowledging the fact that the US is entering a new era of great power competition with ‘revisionist’ states — China and Russia.
 
It would be quite unrealistic to expect that China — with its 1.3 billion people, an economy aspiring to dominate the 21st century — would just agree to fit into a system which was put in place when it was still a negligible part of the global economy and just focused on ensuring its way out of scarcity. There is no precedent in human history that an emerging big power would just aim at “inserting” itself seamlessly in a pre-existing order.
 
There will have to be at some stage some re-writing or adjustments of the rules that reflected a balance of forces which is now significantly changing. The quantitative change which has happened over the last quarter of a century and the changes in the very nature of economic activity brought by the ongoing technology revolutions will have to translate into qualitative changes in terms of the functioning of the international organisations regulating and monitoring this global economy.
 
The major challenge of the next 10-15 years — the outcome of which will determine economic and geopolitical stability — will be to define how different systems in the Western world and in Asia will be able to coexist and interact in a fruitful and mutually beneficial way. And to be able to agree on the necessary adjustments that will allow the international economic and financial institutions — existing ones or ones to be created — to play their more needed-than-ever role as stability anchors of a global system.  The writer is president of Smadja & Smadja, a strategic advisory firm
Twitter: @ClaudeSmadja