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Capitalist Crises and a New Cold War

Aug 19, 2020
  • Chen Jimin

    Associate Research Fellow, CPC Party School

The international system and mechanisms of global governance face significant challenges amid a level of upheaval not seen in a century. Frequent and increasingly serious crises in capitalism are a key cause of recent changes.

While the establishment and preservation of the present international order have been a function primarily of Western nations, trouble in capitalism will inevitably spread to all international relations. To some extent, the clamor over a “new cold war” signals Westerners’ awareness of the problem.

The repeated emergence of trouble in capitalism is actually nothing new. The essential contradiction between socialism’s collective ownership of the means of production and capitalist private ownership has predetermined the cycle. Capitalism has made internal adjustments and active reforms. However, the more developed capitalism becomes, the more severe the challenges will be.

To some degree, the systemic crises of capitalism are already visible. Since the beginning of this century, the U.S.-led Western capitalist world has experienced financial, social, political and even institutional crises.

The 2008 financial crisis was the first to showcase the limitations of the Washington Consensus featuring liberalization, marketization and privatization, and to some extent reflected the defects of the economic model of liberal capitalism. Since then, the myth of Western economic development has lost its luster.

Against this backdrop, Western societies have also passed through social and political crises that are most obvious in movements calling for social fairness and justice, such as Occupy Wall Street in the U.S., the yellow vests in France and the ongoing Black Lives Matter protests sweeping the capitalist world. Adding fuel to the fire is the rise of radical nationalism and populism, resulting in such phenomena as the election of Donald Trump, Brexit and the resurgence of far-right political parties in Europe. 

At present, COVID-19 as a global public health challenge has again revealed the inherent weakness of capitalism. If the 2008 financial crisis epitomized the trouble with capitalism, the 2020 pandemic mirrors capitalism's dual dilemma of internal crises and external challenges. Internally, such pandemic-induced phenomena as economic recession, social injustice and stratum solidification have become more prominent; externally, the U.S. and other capitalist countries’ disappointing handling of the pandemic has resulted in the general public’s questioning their governments’ competence, which in turn has highlighted and worsened the corresponding institutional defects.

In recent years, Western scholars have raised serious doubts about their democratic institutions and their alienation of people. Partisan politics have taken the place of competence in governing. Veto politics have very nearly rendered Western political systems altogether dysfunctional.

China’s institutional advantages have been fully demonstrated when it comes to containment of the pandemic. It has attracted the West’s attention and further stimulated their sense of crisis, while at the same time worsening their confusion over the basic question: Why was China able to do it? Trump has wondered why the novel coronavirus hasn’t spread more broadly in China, for example.

Rather than engaging in serious soul-searching, some American and Western politicians have constantly attempted to pass the buck, searching for a scapegoat, even instigating and ideological confrontation. U.S. State Secretary Mike Pompeo’s latest speech at the Richard Nixon Presidential Library was a vivid footnote. Although China has no intention of exporting its own development path or institutional model, some Western countries have taken socialism with Chinese characteristics — which is different from Western capitalism but has tremendous growth momentum and appeal — as their competitive rival.

The Trump administration’s continual emphasis on “the communist government of China” and “communist China” is intended to highlight and consolidate ideological connotations and frame China as a country that constitutes an all-around security threat to the West. All of a sudden, the rhetoric about a new cold war has seen an upsurge and seems to have acquired more evidence.  

China finds the whole concept of a new cold war to be undesirable, and opposes outdated zero-sum thinking and Cold War mindset. In May 2020 at the news conference capping China’s annual legislative “two sessions,” Premier Li Keqiang stated that we insist on forsaking Cold War thinking.

On Aug. 10, a Foreign Ministry mouthpiece said that China has no intention of engaging in a competition of governing systems or ideological confrontation with any country, that China does not export the “Chinese model” and that it won’t ask anyone else to copy it.

The message was again reinforced that while some radical elements in the U.S. are always stirring up trouble and trying to push China-U.S. relations toward a new cold war, China’s U.S. policy has been characterized by continuity and stability.

Yet China also must prepare itself for the possible emergence of a new mode of relations. We do not hope for a new cold war, but strategically we must study and project what one would look like, with the ultimate aim of preventing it from materializing.

We should be aware that Cold War thinking and practices did not end with the collapse of the Soviet Union but are making a comeback in various forms. On Nov. 23, 1989, in a meeting with then South Commission and Tanzanian Chama Cha Mapinduzi party chairman Julius Kambarage Nyerere, Chinese leader Deng Xiaoping said:

“I wish the Cold War had ended, but I feel disappointed now. Perhaps one Cold War has ended, but another two have begun. One is targeted at the entire South, or Third World, the other at socialism. ”

In this sense, we have to be highly vigilant to a possible new cold war.

“The model of this new cold war surely is unfolding under the circumstances of the irreversible trend of globalization. Its format and content will be very different from those of the past one. Such phenomena as a confrontation between two camps, a military standoff, economic divide and separation of peoples may be difficult to repeat.

“This is ultimately because neither side in the so-called new cold war is like it was before. The Western world hasn’t seen actual, pressing security threats, U.S. indifference to leadership and weakened leadership capacity and subsequent inadequate Western solidarity; increasing Chinese strength, adherence to independent and peaceful foreign policies, especially its in-depth, comprehensive integration into the international system and its becoming a participant and contributor to, and builder of, the international system.

“China has become a main part of the world. Isolating from China is isolating from the world and from development. This is obviously inconsistent with capitalism’s development logic and evolutionary laws.” 

This is why China on one hand needs to continue focusing on domestic development, maintain its strategic poise, deepen reforms, expand opening-up, promote the modernization of its systems and capacity for national governance, constantly enhance national strength and do its own things well.

As long as China displays sufficient economic vitality and resilience, the Western world won’t refuse to share in the Chinese dividend. On the other hand, China needs to adhere to its principled position while maintaining sufficient policy flexibility and avoid creating competition and confrontation on ideological grounds.

To sum up, rather than dancing to the tune of others, China should concentrate on its own development agenda, preserve its strategic initiative and make every effort to realize the China Dream.

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