China’s world order?

The China-US relationship will be the pivot of the post-unipolar world order. China is the world’s largest auto market, the biggest exporter of merchandise and will account for the largest growth in world trade for some time. The US remains the finance and consumption capital of the world but the new production capital is China. It is dependent no longer on US markets, managerial know-how and technology, nor on US power as a counterweight to a Soviet threat. A dominant player in setting energy, mineral and other commodity prices, China is the world’s major net (but not per capita) emitter of greenhouse gases and determinant of climate change.

Driven by strategic narcissism, the $3 trillion wars in Iraq and Afghanistan have helped to bankrupt America and enfeeble its capacity to produce enough goods and services to pay its bills. The US economy is saddled with debts, deficits and distortions. As Larry Summers asks, how long can the world’s biggest borrower be its biggest power?

The Chinese save stubbornly, the Americans spend recklessly. Since the global financial crisis, which proved China’s remarkable resilience, there has been a flood of declinist commentary about the US by Chinese analysts. US president Barack Obama’s China visit in November was of a supplicant paying tribute to his chief creditor. His refusal to meet the Dalai Lama before the trip reinforced the symbolism. Their White House meeting on February 18 drew fresh denunciations from Beijing.

Yet, while the US needs China to finance a mounting debt projected to hit $9 trillion over the next decade, a collapse of the US economy would mean drastic cutbacks to sales of made-in China products in the world’s biggest consumer market and also erode the value of China’s $2.4 trillion currency reserves.

For the first time in 200 years world must engage with a united and powerful China that is more aggressive on several issues, including climate change, Internet freedom and the border dispute with India. But China too must come to terms with its new status: the Middle Kingdom has no historical, philosophical or literary tradition of diplomatic intercourse as a great power in a system of great powers. This will become especially relevant as China’s footprint becomes increasingly global.

Treating China as an enemy could turn it into one. But should the US underwrite the rise of a one-party state as its only plausible geopolitical rival? The Clinton and Bush China policies rested on the assumption that exposure to free trade and the information age would release and strengthen the forces of political change.

What if these assumptions are false?

Washington approved arms sales to Taiwan worth $6bn, calculating that with more than 1300 Chinese missiles pointed at it, bolstering Taiwan’s military preparedness may be a prudent hedge against having to defend it from attack. It simultaneously raises the risks of failure and the costs of success should Beijing choose to go to war. Beijing retaliated immediately, suspending bilateral military exchanges and imposing sanctions on companies selling arms to Taiwan.

Yet calculations of relative US decline are more likely to nudge Beijing towards exerting leverage over US international policy than outright confrontation. It will want to recalibrate the multilateral order on its terms, setting aside questions of human rights and political values to focus instead on solving common problems. China’s rise has been welcomed by many as a counterweight to US political arrogance. China could also be the world’s engine of growth. But if not careful, it could encounter a grating wall of resistance as countries, multinationals and NGOs begin to push back against heavy-handed assertiveness.

Is China prepared to shed Deng Xiaoping’s anachronistic adage to keep a low profile and not take the lead? Will it use growing wealth and power for narrow mercantilism or the common good? Google’s threat of exit may be a harbinger of a changing international mood.

China basks in the growing acknowledgment of its rising status, is happy to take the benefits flowing from it but is less keen to stop being a free rider, exercise global leadership and accept the burdens of being a great power. That mindset helps to explain currency manipulation to protect exports at the expense of other countries, unwillingness to commit to internationally verifiable cuts in emissions and courting of pariah authoritarian regimes to gain access to raw materials and resources.

Unwilling to bind itself to agreed global norms, China could find itself in somewhat lonesome company with arms-length relationships of convenience rather than true friends and allies — of which America still has plenty, including Australia, Canada, the European Union, Israel and Japan.

(The writer is director of the Balsillie School of International Affairs in Waterloo, Canada)