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Economy

China’s Position and Prospects

Jan 13 , 2020
  • Yuan Peng

    Vice President, Chinese Institute of Contemporary International Relations

At the start of a new decade, it’s useful to review the state of the world and the forces that will shape the future. Though success won’t come easily, China is set to emerge as one of the greatest forces for good in history.

1. One main thread pulling entire world

The main thread running through international politics and economic in the past year was the changing relationship between China and the United States, with a focus on the trade war. From the U.S. launch of the trade war against China in March 2018 to the recent formulation of the phase one agreement, the depth, width and length of the trade war has gone beyond imagination.

Regional decoupling between China and the U.S. in the field of high technology is inevitable. Security competition in such places as the South China Sea and the Taiwan Strait is ongoing. Ideologically charged speeches about China by some high-ranking U.S. officials and the signing of the Hong Kong Human Rights and Democracy Act show that the gaming between China and the U.S. is far from being limited to the trade war.

Trade differences can be taken as a mere strategic substitute, experiment or outlier, as the U.S. has explicitly identifiedd China as its main strategic rival. It is planning a new China strategy even as it fails to come up with conclusive reasons. All in all, U.S. actions are tinged with the color of a macro strategy.

Facing changes, the Chinese government has actively and steadily handled them with sincerity. It seeks negotiated solutions. It says it doesn’t want to fight, although it is not afraid to fight and will fight if necessary.

The trade war reveals the essence of the U.S. China strategy, which includes the merciless suppression of rivals. It tests the unity and tenacity of the Communist Party of China and the the ability of the Chinese people to resist as major risks and challenges are confronted.

It is the first broad encounter between the two parties after the U.S. clearly defined China as a strategic competitor. The advantages and disadvantages of both sides have been fully exposed, again proving the truth of the proposition that there are no winners in a trade war.

The initially menacing U.S. has been driven back to the negotiating table. China, on the other hand, has stood the test while enduring tremendous strategic pressure and the two countries reached a phase one deal on the basis of equality and mutual respect.

As President Xi Jinping said, reaching this deal benefits China and the U.S. and fosters peace and prosperity in the whole world.

2. Changes in a global context

The gaps between Chinese and U.S. national strengths continue to narrow, while those with others are widening. This is an essential truth in the current international pattern. In the face of such a situation, the West and non-West are simultaneously undergoing a process of disintegration and reorganization.

The West is no longer the previous West. U.S. President Donald Trump’s “America First” and the United Kingdom’s persistent Brexit troubles have given such non-English-speaking nations as France, Germany, Italy, Spain and Portugal a sense of helplessness regarding the Anglo-Saxon West. They have become much less interested in Western integration in its traditional sense. Rather, they must strive for strategic self-determination and to some extent shift their eyes to the East, even showing willingness to ease relations between Russia and the European Union.

French President Emmanuel Macron’s assertion that the NATO is “brain dead” is both a show of frustration and true feeling. Though it’s not pleasant to the ear, he did showcase the embarrassing position of the present-day West.

German Chancellor Angela Merkel proposed the establishment of PESCO — not to take the place of NATO or to confront it but simply to add another layer of protection for Europe. Transatlantic relations face rebuilding, which may be one of the biggest changes the world will witness in the coming decade.

The non-West is also reshaping its relations and partnerships while disintegrating and reorganizing. Take BRICS as an example. The China-Russia partnership of all-around strategic coordination has entered a new era; bilateral relations have been pushed to a historical high; and the countries are jointly exploring new measures and moves. The current government of Brazil, while satisfying U.S. demands and opening up new diplomatic possibilities by forsaking developing-country status in the WTO, hopes to further deepen economic and trade ties with China to solve its economic problems. It is making impressive efforts to strike a strategic balance.

While unwilling to give up SCO and BRICS, India has interests in the Indo-Pacific region and places considerable weight on the U.S. and Japan. It is is suspicious of China’s Belt and Road Initiative and is interested in forming a strategic alliance with the U.S., Japan and Australia.

Between the West and the non-West, there are a considerable number of “new middle-grounders” who seek a new strategic orientation and positioning. With patience peculiar to the Japanese, Prime Minister Shinzo Abe has tried hard to befriend Trump, yet has been frustrated repeatedly because their personal chemistry seems to make things difficult. The U.S. Japan policy remains “America First” or “America dominates, Japan follows,” with no flexibility on such matters as trade disputes and expenses for U.S. troops stationed in Japan.
Both the government of Japan and its people look forward to a visit by President Xi Jinping when the cherry blossoms are in full bloom in 2020. The development of China-Japan relations will become the most noteworthy change in Northeast Asia.

As the EU disintegrates, ASEAN has displayed impressive solidarity. Facing major-country rivalries, small countries place more weight on unity. From negotiations for the South China Sea COC (Code of Conduct) and RCEP (Regional Comprehensive Economic Partnership) to the East Asia Summit and ASEAN Summit, Southeast Asian nations place more emphasis on the centrality and autonomy of ASEAN in regional cooperation, an attitude that is vividly embodied in the “ASEAN Outlook on The Indo-Pacific,” which was approved at the 34th ASEAN Summit. It stresses cooperation, dialogue, openness and inclusiveness and intentionally distances ASEAN from the Indo-Pacific Strategy of the U.S. while embracing the Indo-Pacific concept. It was a highlight in the entire Asia-Pacific strategic pattern in 2019.

3. Abnormal motions and restlessness

The Eurasia picture has generally remained stable thanks to China and Russia getting closer, the SCO growing and the Belt and Road dovetailing with the Eurasia Economic Union. Yet the Russia-U.S. contradiction, the India-Pakistan conflict and uncertainty surrounding the future of Afghanistan have cast a shadow on long-term stability.

Because of Brexit and the protracted “yellow vest” protests in France, the independence movement in Catalonia, Spain, as well as Scotland’s pursuit of a referendum, Europe appears restless, even becoming one of the regions worldwide with the greatest uncertainty.

In the Middle-East, thanks to the strategic vacuum left by the U.S. troop withdrawal and the inability of Russia and the EU to control the situation, various forces in the region are itching to play a role. Saudi Arabia, Iran, Israel and Turkey all have a “big power” ambition.

Trump recklessly withdrew from the Iran nuclear deal and is openly prejudiced in favor of Israel, which is like simultaneously opening two Pandora’s boxes. The “dark age” seems endless for the Middle East.

Then take a look at the Asia-Pacific. The Pacific is no longer pacific, and the “Indo-Pacific” has arrived to add to the chaos. The Asia-Pacific region, which focused on development and stability after the Cold War, is now the main battlefield for major-power wrangling. The risks of regional conflicts and even war are on the rise.

Trump surprised the world by striding across the 38th Parallel, yet U.S.-DPRK relations haven’t stepped out of the Cold War. Showy Trump-Kim summits can’t conceal the deep structural contradiction of the Korea nuclear issue. The flip-flops are therefore understandable.

After withdrawing from the INF treaty, the U.S. has anxously sought to deploy intermediate-range missiles in Japan and Austrailia, reminding people of the arbitrary THAAD deployment in the Republic of Korea. The deliberate politicization of the intermediate-range missile issue has disrupted peace in the region. THAAD pushed the otherwise healthy China-ROK relationship to confrontation.

Will intermediate-range missiles again disrupt the improving China-Japan ties? We have to be highly vigilant.

Compared with the restless Asia-Pacific and generally peaceful Africa, changes in Latin America have been dazzling. From the new president of Mexico saying he’d be ashamed of flying in a luxury jet in a country as poor as Mexico — and selling the presidential plane — to the rise of the “Brazilian Trump” and the initiation of the “Brazil first” policy, new winds have blown across Latin American politics.

From the Chilean president announcing that the country would not host the APEC and UN climate change events to President Morales of Bolivia being forced into exile and hundreds of thousands of people taking to the streets in protests, the social turmoil seems endless.

Adding in the already troubled Venezuela and Cuba, the enormous changes across all of Latin America qualify as the Latin American chapter of big changes during the past decade.

4. The fumbling world economy

World economic conditions are worrying. The global economic downturn induced by low growth despite low interest rates and low inflation has rendered traditional frameworks of economic analysis helpless, causing many economists to lament their inability to understand what is happening.

Even without structural reforms, the U.S. has seen improvements in employment and the stock market, giving Trump capital for bluffing. But what the world feels is more confusion, fear and unease because, after all, the U.S. is again on the brink of an economic crisis.

The once eye-catching India story of rapid growth seems to have come to an abrupt end. There has been little effect even with the government’s withdrawal from the RCEP agreement and bringing in a stimulus package focusing on infrastructure construction.

The U.S. trade war against multiple countries resulted in a broad sense of uncertainty. Various forms of protectionism have arisen and such honored global governance regimes as the WTO have been undermined. The functions of such platforms of economic cooperation as the G20 and APEC have been weakened. World economic prospects may not improve in the near term.

On the other hand, a series of new technological terms, tools and new financial products have emerged successively, initiating intense competition in related fields for tech advantage, standards and talent. New products and industries have mushroomed.

Will disruptive technologies be the driver that reinvigorates the global economy, or will they bring more challenges to the already weak economic conditions? Strategic insight and policy guidance and regulation are needed.

5. A confident China braves headwinds

As a decisive force in the preservation of world peace and stabilizing the global economy, China certainly won’t be an onlooker in this time of change. Standing at a new historical starting point — the 70th anniversary of the founding of the People’s Republic of China — it has reiterated its commitment to reform and opening-up.

In 2019, with a deeper understanding of the centennial changes of the world, China saw the macro trends of history and maintained its stratetgic poise and confidence. It has come to the strategic conclusion that it will remain in a period of strategic opportunity for a long time to come.

Meanwhile, the problems exposed in world politics and the woes caused by the global economy have also attracted serious attention from the Chinese government. Such terms as “bottom line thinking,” “fighting spirit,” “expanding openness,” and “seeking progress amid steadiness” have made frequent appearances over the past year.

The Fourth Plenum of the 19th CPC National Congress held a timely special meeting about promoting the modernization of national governance capabilities. It was the sequel to the Third Plenum of the 11th CPC National Congress, which deepened reforms in an all-around manner and was the opening chapter of further progress in a time of centennial changes.

At the turn of “two centuries”, China can’t get around the question of how to deal with the U.S., the world’s sole superpower. In 2020, China-U.S. gaming may remain a stalemate. But it could become fiercer. The bilateral strategic standoff will require a considerably long historical process before it is resolved.

In 2020, as host of the BRICS and SCO (Shanghai Cooperation Organization) summits, Russia will again see Chinese and Russian leaders get together, which will no doubt inject fresh momentum into the partnership of all-around strategic coordination. China and India will celebrate the 70th anniversary of diplomatic relations, and the celebrations that are being meticulously planned — as well as the third informal meeting of their leaders — will herald new blessings and the stable progress of bilateral ties.

President Xi’s upcoming visit to Japan will leave room for imagination about the two neighbors’ improving ties.

Facing profound changes, those who can master the present will win the future. Those who determine China’s fate will always be the Chinese themselves.

Doing its own things well will place China in an invincible position. Historical experience has shown that past powers rose by non-peaceful means, especially by war. China has both the determination and capability to blaze a trail of peaceful development that transcends historical patterns to facilitate the building of a community with a shared future for mankind by formulating a new type of international relations.

But preventing war doesn’t mean forsaking struggle. It would be naive to expect that the great rejuvenation of the Chinese nation can be easily achieved without struggle. Understanding the bottom-line thinking and fighting spirit that General Secretary Xi Jinping has repeatedly reiterated can lead to fresh understanding of the current state of affairs and illuminate China’s future.

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