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Foreign Policy

The World Order’s Biggest Seismic Shift in a Century

Apr 29, 2019
  • He Yafei

    Former Vice Minister of Foreign Affairs

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President Xi Jinping has pointed out on many occasions that the world is undergoing changes not seen for a century. For nearly 100 years, human beings have experienced two world wars, the Great Depression, the financial crisis, and countless regional hotspots and local wars. At the same time, the establishment of an international system centered on the United Nations, including the Bretton Woods system, has given the world a measure of overall peace for more than 70 years. The world economy has also made progress in leaps and bounds. Countries have reached a level of interconnectedness and interdependence in politics, economy, culture, science, and technology that has not been seen for 100 years. Today, the world is once again facing big changes, bringing about strong shocks and great uncertainty. Human beings are once again confused by the world they live in and are anxious about the prospects of the world order. We need to think hard about what these changes mean to the future of the world, and what kind of opportunities and challenges they pose for China.

The world must be a world for all peoples

First, any big change essentially consists of an adjustment to the international order triggered by major changes in world power. These changes have its roots in the productivity revolution, while evolving economic development has led to social changes. The basic rule of societal change is that it is a long-term, gradual process that is full of risks and crises, from change to stability to more change.

Western countries believe that world history began in 1492 with Europeans’ discovery of the New World—or in 1648, after 30 years of war in Europe, when the Peace Treaty of Westphalia was signed and state sovereignty (in fact, of European countries only) was established as the core principle of international relations, ushering in a world order and pattern of relations centered on Europe. This pattern reflected the European leadership of the world. Among the European powers, the United Kingdom stood out. After the two world wars, the United States replaced Britain as the dominant world power. And after the Cold War, the United States became the world’s sole superpower.

Powerful countries established their own favorable international rules and a system based on their own strengths. Whoever is the strongest in this global governance system has the final say. However, the development of history is not based only on the will of human beings. In recent decades, along with economic globalization and global multi-polarization, overall peace in the world has brought prosperity to the world economy. It has also promoted the gradual strengthening of the power of developing countries. The constant adjustment of global power is a law of history, and the world political and economic landscape must adjust to changes in power.

In the second half of the 20th century and the first 20 years of the new century, globalization and multi-polarization developed rapidly. The world is now a world for all peoples, not a world built for one or two powerful countries. Each country is a member of the global community. All countries need to work within a rule-based global governance system to jointly build a human community with a shared future.

Whose does this world belong to? This historical proposition is once again set before all nations. Here we must recognize the seismic shift affecting the destiny of all countries, which will determine the future of the world. Now let us reflect on a century of change and a plan for the future of the world.

The capitalist system is facing challenges

An important change in recent decades is that capitalism—as an economic, political, and social system, an ideology, and a development model—has suffered blows and setbacks. The soft and hard power of the capitalist countries have been seriously affected, which in turn has affected the world order.

From the Great Depression in the United States in the early 20th century to the global financial crisis that originated in the United States and spread to the world in 2008, the cyclical economic and financial crises of capitalism have continued for centuries. Capitalist countries have constantly adjusted and reformed to maintain their dominant position in the international order and in global governance. However, today’s capitalist countries, including major developed countries, have been experiencing economic, political, and social contradictions that have accumulated over the past century. Whether capitalist self-adjustment can solve these problems remains a big question mark.

The core problem or weakness of the capitalist crisis is still the intensification of the contradiction between capital and labor predicted by Karl Marx. The polarization between the rich and the poor has caused serious social divisions, and this has become the main driver of the beginning of the decline of capitalist society.

Economically, the monopolies of industrial capitalism have once again put an unbearable burden on the economy, hindering fair competition and healthy development of the market. Statistics show that since 1997, two-thirds of all industries in the United States have a high degree of monopoly power, accounting for one-tenth of the total economy, and four giants in each industry account for two-thirds of the market. The result of this monopolistic presence is that global profits from monopoly reached as much as $660 billion in 2017, of which more than two-thirds were concentrated in the United States and one-third came from high-tech companies.

Politically, identity politics has become a mainstream school of thought and behavior in Western politics, including in electoral politics. In order to attract votes from an organization, a societal group, an ethnic group, or an industry with a specific identity, political parties no longer consider and formulate policies for the overall interests of the country. Identity politics and interest groups have made rule by veto a common occurrence, and the government is unable to operate normally or even at all. The 2020 US presidential election has begun. Currently, many of the Democratic Party candidates want to raise taxes on the rich, and some claim to be socialists or have socialist campaign platforms.

At the social level, unfairness persists, and the gap between rich and poor continues to widen. Capital owners, including those who possess new technologies, have most of the resources and wealth in society—ordinary workers, including the middle class, have stagnated for decades. Since 2000, the income of labor in American society has been declining. The 1% of high-income earners in the United States account for 40% of the country’s income, and the wealth difference is staggering. This has led to a serious confrontation between the elite and the ordinary people, as well as social divisions.

These institutional contradictions have resulted in insufficient social reforms. The sharp rise of populist and nationalist forces is a manifestation of this contradiction. These forces have also boosted extreme strategies in domestic politics and foreign policy. Deglobalization, including opposition to immigration, opposition to free trade, and opposition to technological exchanges—the global floodgate have been opened. If such an economic, political, and social system cannot be reformed, how much vitality is left?

A poll in the United States in 2016 showed that more than half of American youths have doubts about capitalism; the French “Yellow Vest” movement continues to ferment, and there is dissatisfaction and resistance among young people in other European countries. All this indicates that the centuries-old capitalist era has been shaken, and capitalism—along with its political system and social structure—have entered a stage of major changes and adjustments. This process will not be short-lived, nor will it be calm. It will cause shocks to the capitalist countries; but also, because the international system is closely connected, it will increase instability and uncertainty in the global political economy.

The development tasks of developing countries are arduous

In the second half of the 20th century, the overall strength of developing countries and emerging economies has risen. In previous industrial revolutions, developed countries took the lead. In contrast, developing countries became passive participants. Although they can make the most of late-comer advantages to achieve development and become part of the global production chain, they also face late-comer challenges and other disadvantages. Faced with the opportunities brought about by the new technological revolution, developing countries must now confront a major test—fully participating in the process of economic globalization and technological modernization to the maximum extent under the constraints of their own backward development.

As a large developing country, China has grown rapidly to become the world’s second largest economy and an important part of the global production chain. China’s development is a product of internal and external factors. The Communist Party of China leads the Chinese people’s reform and opening-up, strives to modernize China, and makes great contributions to the development of the world economy. Overall world peace and the continuous globalization of the economy have also created a favorable external environment for China’s development.

What path will China take as it develops? President Xi Jinping has repeatedly publicly declared that no matter how much China develops, China will not threaten anyone, will not subvert the existing international system, and will not seek spheres of influence. Xi also said that China is willing to share its development achievements and development opportunities with all countries. This is China’s worldview in the face of a century of great change. It is worth remarking upon China’s 40 years of reform and opening-up: these successful experiences have provided important contributions to the world economy and global governance, indicating that China is an important force in safeguarding world peace and promoting economic development.

China follows the path of peaceful development and advocates the maintenance of a global governance system while making appropriate changes. Most developed and developing countries have welcomed and supported this effort, hoping to draw useful development ideas from China’s experience and to share in China’s achievements. This can be seen from the general response to the Belt and Road Initiative in recent years. However, it is true that some Western countries have strong anxiety, suspicions, and misjudgments about China’s development. The impulse to contain China and hinder its development in order to maintain their world hegemony is strong. Although it takes time to eliminate anxiety and get rid of impulsiveness, if these countries insist on curbing the power of developing countries at this historical moment of great change, and refuse to make any adjustments to the international order and to global governance, they are sure to trap themselves in various ways.

The global governance system is facing changes

In the face of major changes over the past century, the global governance system will inevitably be adjusted and reformed. This is another important feature of the century-long history of change.

After more than 70 years of operation, the global governance system formed after the Second World War has shown its unfair and unreasonable aspects. The world is like a giant ship that is about to enter rough seas—thus, coordination and consensus among major countries is needed, while maintaining rule-based global governance, in order to effectively adjust and reform the governance system. This is not only related to the sustainable development of the world economy, but also involves the re-appraisal of governance rules for global security to ensure the world’s stable future.

Today’s world, where a rules-based global governance system is urgently needed, global governance is struggling amid a game of multilateralism and unilateralism — we face an embarrassing situation of being unable to effectively address and respond to major global challenges. These tasks range from the implementation of the Paris Agreement on Climate Change to the maintenance of the nuclear non-proliferation regime of the Nuclear Non-Proliferation Treaty, to the macroeconomic policies of major economies, including the coordination of monetary and financial policies, as well as to the maintenance of the global trading system and its improvement, especially the reform of the World Trade Organization. If it is impossible to consolidate the will and consensus of all countries that seek cooperation, especially among major countries, nothing will be accomplished. Faced with complicated and profound changes in the international situation, all parties should seize opportunities and meet challenges together, and seek win-win solutions for mutually beneficial cooperation. We must safeguard the international system with the UN and a rules-based multilateral trading system at its core, work together to achieve common development, actively promote the reform of the global governance system, and promote its development in a more just and rational direction.

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