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Foreign Policy

New Washington Consensus: Catalyst for Disorder

May 08, 2024
  • Li Yan

    Deputy Director of Institute of American Studies, China Institutes of Contemporary International Relations

A year ago, Jake Sullivan, the U.S. president’s national security adviser, announced a new “Washington Consensus” in a speech at a think tank. Marked by significant conceptual changes, the new consensus has been regarded as a major paradigm shift in Washington’s approach to national governance amid growing competition between major countries.

However, upon closer examination and a look at the corresponding domestic and foreign policy practices being pursued by Washington, it is evident that it will only serve to unravel the international order and sow chaos. In essence, the new consensus is an instrument for the United States to maintain its hegemony in the world arena, which will inevitably have a destructive impact on the international order.

Historically, the United States has been accustomed to leading the world by championing various ideologies, a point borne out in the consistency of the old and new versions of the Washington Consensus. The old one, deployed during a period of rising power in the United States, aimed to promote American values and consolidate U.S. control over the international order. The updated version seeks to sustain U.S. dominance worldwide and discover new sources of national strength. But as the international order undergoes a new phase of adjustment, the appeal of American values is waning globally and its control over world affairs is declining.

While Sullivan may have amplified what he called “those challenges” in his speech, his stance reflects the confusion of the new generation of American political elites about the direction of the country and their growing anxiety about the ongoing decline of its dominance. Given that the new consensus remains an instrument designed to maintain the hegemony of the United States, Washington’s hidden agenda, driven by its own interests, is obviously not conducive to the current international situation. It only adds to the instability of the international order, which is undergoing profound changes.

The core principles of the new Washington Consensus underscore America’s growing emphasis on domestic priorities, potentially exacerbating turmoil in international governance. It appears the United States wants to abandon its belief in the free market and rebuilding its national strength and international influence by prioritizing domestic industry and reshaping international economic cooperation.

Over the past year or two, the Biden administration has enacted three major economic initiatives — the Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the Inflation Reduction Act — and formulated new domestic industrial policies while suppressing those of other countries. These moves illustrate Washington’s comprehensive focus on its own economic interests.

At the same time, Washington is trying to safeguard the interests of the U.S.-led clique. On international economic cooperation, for example, substantial resources have been allocated to enhance the security of industrial and supply chains and to foster economic, scientific, technological and trade cooperation with its alliances and partners. The United States is an important architect of the current international governance system, but the underlying principle of the new consensus and its corresponding policy practices have not only fractured the global trading system but provoked competition in industrial policy and created new sources of confrontation. In this regard, the new consensus doesn’t necessarily represent the consensus of the international community or even of the West. At most, it is an embodiment of political consensus within the United States.

Lacking a global context, the new consensus has the adverse effect of impeding agreement because of its underlying zero-sum mindset. In addition, despite its apparent focus on economic issues, it is primarily geared toward geopolitical purposes. By hyping concerns on economic security and national security, its vision for international economic cooperation tilts toward a clear preference for certain values. And it highlights the need to compete with China, thereby threatening to exacerbate divisions in the international community. Even European countries now have a deeper understanding of Washington’s efforts to preserve its hegemony and stoke global tensions worldwide under the guise of the new Washington Consensus.

Over the long term, the new consensus may also create more global inequality. Under its banner, the United States has implemented substantial economic stimuli and subsidy plans in recent years, prompting other Western countries to follow suit. Under these circumstances, the investment opportunities available to developing countries — especially poor countries — will inevitably diminish.

Significant shifts in the international trading system, such as the emergence of new divisions of labor in the form of friend-shoring and near-shoring, are bound to undermine the long-term interests of all countries, making it increasingly difficult for them to grow industries that are internationally competitive. Once economic factors circulate only within Western countries and their allies, imbalances and inequalities in global development could become even more entrenched.

According to Eswar Prasad, an international trade expert at Cornell University, “Poorer and less-developed countries could be deprived of the benefits of globalization as the major economies turn inward and as trade and financial flows fragment and fall in line with deepening geopolitical fissures.”

Even in the United States, concerns that the new consensus could exacerbate class divisions and social inequality are not uncommon. They have become a focal point of the Republican Party’s criticism of so-called Bidenomics.

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