ED: This is the first of two articles looking at the ascendancy of China, its new assertive foreign policy and how that will affect its relations with the West.

 

Global investors are “desperate for signs” that Chinese President Xi Jinping and France’s President Emmanuel Macron can improve relations and avoid a hemispheric geopolitical clash as the latter starts a three-day visit to Beijing and Guangzhou on April 5.

"China’s interest isn’t to have a lasting war," Macron said shortly after arriving in China, adding that should China send any arms to Russia, it "would be complicit in a breach of international law."

But according to Agence France-Presse, the French president said that at a meeting with Chinese President Xi Jinping he was not going to threaten China with sanctions. He is there to try to mend bridges and avoid a further deterioration in relations between the West and China.

On February 18, US Secretary of State Antony Blinken claimed that China was "strongly considering providing lethal assistance to Russia. The Chinese response was perfunctory. China’s Foreign Ministry Spokesperson Mao Ning said that the Chinese government did not accept “coercion or pressure on Chinese-Russian relations from the US” in context of China’s alleged military assistance to Russia.

The world has been thrown into a polycrisis after Russia’s invasion of Ukraine just over a year ago, but while a direct confrontation, and possibly a war, between the US and China is widely anticipated, Europe has other plans. Macron is in China to try to find a middle way, and European Commission President Ursula von der Leyen is making the same trip this week, with a similar agenda.

Macron is hoping to capitalise on China's 12-point peace plan that it introduced on the anniversary of the start of the Ukraine war on February 24 and put itself at the centre of the crisis in the process.

"China, having recently reaffirmed its strong ties with Russia, may play an important role [in bringing peace to Ukraine]," he said at the beginning of his visit to China on Wednesday speaking before the local French community.

Macron’s conciliatory approach is at odds with Washington’s, which has labelled China a competitor. Blinken set the tone in his first major policy speech in March 2021, a year before the war started, aggressively naming Russia as the “number one threat,” but graded China a rank lower as a “commercial rival.” Europe has been decidedly more dovish on China and would rather promote business ties.

To underscore the difference in approach to China, the US has recently introduced the CHIPS legislation that effectively bans exports of high technology to China or Russia and prohibits US citizens from working there in the industry, in order to preserve its technological lead over China. Macron, on the other hand, brought 60 top French executives with him to Beijing, including the heads of Airbus, electric utility Electricite de France (EdF) and train manufacturer Alstom.

This week’s diplomacy has been spurred by China’s decision to step up its diplomacy to the top tier, but openly side with Russia in the growing geopolitical clash. Western leaders are hoping to drive a wedge in between the two erstwhile partners to prevent a complete fracture. Chinese leader Xi Jinping was in Moscow for a three-day visit between March 20-22 in an ostentatious display of support for Putin in what was an open challenge to the US’ claim to be the “leader of the free world.”

China has suddenly become much more diplomatically active, having also brokered a reconsolidation between Iran and the Kingdom of Saudi Arabia (KSA) after a seven-year break.

What the West fears is that a non-aligned alliance of Global South partners is emerging, led by the BRICS (Brazil, Russia, India, China, South Africa) countries, to challenge the 500-year-old dominance of geopolitics by the industrialised West, according to historian Neil Ferguson in his book The West and the Rest.

China to challenge the Western Hegemony

The Western fears are real, as China does seek challenge the Western hegemony and it intends to do that with the help of Russia and the other leading Emerging Markets.

Much has been made of the rivalries between the main players that should prevent them co-operating. Even during the socialist experiment, mutual mistrust stopped communist China and Soviet Russia uniting to stand against the capitalist West. And up until today, the disputed border between China and India makes an alliance there unlikely, say foreign policy experts.

But things are changing. Moscow has already been forced into the arms of Beijing by its clash with Washington and Putin said in Moscow with Xi that Sino-Russian relations are at an all-time high. A newly emergent India has also been one of the biggest winners from the sanctions regime and has openly defied Western sanctions in support of the Kremlin.

BRICS (Brazil, Russia, India, China, South Africa) has gone from a marketing term, invented by Goldman Sachs head of research Jim O’Neil, to a political organisation designed to promote the interest of the leading emerging markets in a world dominated by Western institutions.

More recently, the Arab world has also gravitated to this new bloc. It first extended the OPEC oil cartel to include Russia and other producers in Africa and South America to become the 23-member OPEC+. Relations between the Middle East and the US have always been difficult, but those between Riyadh and Washington have become decidedly prickly; only last week OPEC+ decided to cut more than 1mn barrels per day (bpd) of production to push prices higher, ignoring the White House’s protestations.

Both China and Russia have made deep diplomatic inroads in the Middle East, as the relations between KSA and the US continue to deteriorate.

The emerging markets are fed up with being second-class citizens in the changing global economy and resent what they see as the West’s lingering colonial attitude to them.

The EMs now constitute more than half of global GDP (in PPP terms) and two thirds of the world’s population. Yet they are still the junior members of most of the global institutions such as the International Monetary Fund (IMF), World Bank and World Trade Organization (WTO). At the same time, the West is militarily united by Nato, but the EM world has no equivalent, leaving them at the mercy of US overwhelming military power. The closest they come is the Collective Security Treaty Organization (CSTO), a security organisation for the Commonwealth of Independent States (CIS) states, and which regularly conducts bilateral joint military exercises.

The war in Ukraine has brought these lingering resentments to the surface. The protestations of the leaders of the emerging markets have become audible.

Xi’s trip to Moscow was a step up for Beijing, which is now going on the offensive. Previously China’s foreign policy has been economic in nature, using the vehicle of the Belt and Road Initiative (BRI).

Likewise, Brazilian President Luiz Lula has been a vocal critic of sanctions, and openly backed Russia, throwing in his lot with the Sino-Russian camp.

South Africa, too, is looking to Moscow for economic help, and rebuffed Blinken’s effort to get Pretoria on board with the sanctions regime during a recent visit, preferring instead to hold joint 10-day naval exercises with Russia and China’s navies that started on the anniversary of the invasion of Ukraine, February 24.

The BRICS has gone well beyond a trade club and will hold its fifteenth summit in South Africa in August. But in addition, these countries are actively building up their own set of multinational institutions to reduce their dependence on the Western-dominated organisations: the China-led Shanghai Cooperation Organization (SCO); the New Development Bank, an analogue of the IMF; the Russian-led Eurasian Economic Union (EAEU); the Southern Common Market (Mercosur); and the Community of Latin American and Caribbean States, amongst others.

The push also has more prosaic manifestations such as Russia’s and China’s efforts to create non-Western payment systems as alternatives to the Western-dominated SWIFT bank messaging service. Russia has set up the MIR payment system for credit cards and the Financial Communications System (SPFS) for bank transfers, while China has the CIPS domestic payment system and is toying with the idea of joining Russia’s SPFS.

The West is in decline, say Xi and Putin. The BRICS are on the rise. All of Europe as well as the US are suffering from demographic decline and deindustrialisation that have left their economies uncompetitive, while the seat for global growth is in the East.

All under heaven

As an emerging superpower, China will play a key role in the development of the EM challenge to the Western hegemony. Following Xi’s visit to Moscow most commentators wrote Russia off as a junior partner to China that would end up as little more than a “Chinese commodities warehouse” – a new variation of the previous slur of Russia as a “petrol station masquerading as a country.”

China’s view of its relationship is more subtle, according to Yao Zhongqiu, an eminent Chinese historian, who recently penned a long essay entitled "five centuries of global transformation: a Chinese perspective" that lays out the Chinese world view.

Yao paints a picture that is much closer to Putin’s “multipolar” world view than the US “unipolar” approach. Russia has just made explicit in its new foreign policy concept released on March 31 that it has co-operation with its emerging market peers as the central tenet. The document singles out Russia, China and India as the bedrock of this new multipolar world order, but also threatens to use force if the West tries to stymie the effort.

“Humanity is in the midst of a global upheaval, on a scale unseen in 500 years: namely, the relative decline of Europe and the United States, the rise of China and the Global South, and the resulting revolutionary transformation of the international landscape,” said Yao in the preface to his essay.

But China’s approach is not as aggressive as Russia’s. At the Boao conference last week, the Asian equivalent of western-dominated Davos, Chinese Prime Minister Li Qiang said that China now dominates trade in Asia, but going forward should build up a “intense mesh” of interactions rather than adopt a China-led “spoke and wheel” approach to everyone’s mutual advantage.

Yao’s essay is interesting in that it highlights many grievances China has with the West and echoes both India and Africa’s resentment of the past colonial abuses by the West. He highlights the Western “overreach” by what he claims is the wasting of money on multiple military campaigns, rampant and unproductive financial speculation in the endless pursuit of profit, and the growing inequality of Western societies, which has left them fragile.

“In reaction to their own weakness and the new developments in the Global South, the United States has led its allies in launching a comprehensive pressure campaign against what it considers to be its “near peer rivals,” namely China and Russia,” Yao says. “This hostile foreign policy, which includes a trade war, unilateral sanctions, aggressive diplomacy and military operations, is now commonly known as the New Cold War.”

Russia has long had a similar perspective, as bne IntelliNews highlighted in a cover story in 2013 on the emerging Cold War II. This new toxic atmosphere has made rational dialogue impossible, as “even established facts, let alone alternative perspectives, are treated as matters of dispute.”

But there is a difference between the Chinese understanding of multipolar and Putin’s. Chinese foreign policy has been driven by the concept of “tianxia”, or “all under heaven” since the 14^th century Ming dynasty.

Tainxia acknowledges that the world is vast and that it is impossible for the Chinese to dominate everyone else. Instead, the goal was to build up a harmonious system where all the different peoples and countries could co-exist.

It is a “universalist conception of the world, in which China and the West were considered to share the same “world island” separated by the Onion Mountains (the Pamir Mountains of Central Asia), where “each maintained, based on their own knowledge, the tianxia order at their respective ends of the world island.”

Trade between the West and China developed in the subsequent centuries but became unbalanced thanks to the Western dominance of maritime trade, while China remains largely a land-based power. As Ferguson has argued, this started to be a problem in the 18^th century after the industrial revolution was translated into massively superior technology and especially military technology. That led to the rapid colonisation of the less developed world, first by Great Britain, the birthplace of the industrial revolution, that ruled in Africa, Asia and the Americas, before reaching China in the 19^th century.

In the preceding centuries the West had a trading deficit with China, funded by the silver mines in South America, but in 19^th century Britain attempted to balance the trade by introducing opium, which it sold to a China that had outlawed the drug in 1800.

“In response the Western powers launched two wars against China – the First Opium War (1839–1842) and the Second Opium War (1856–1860) – to violently open the country’s markets up. After China was defeated, various Western countries, including England, France, Germany and the United States, forced China to sign unequal treaties granting these nations trade concessions and territories, including Hong Kong,” Yao relates. “As a result, the tianxia order began to crumble and China entered a period referred to as the ‘century of humiliation’.”

China responded to these problems by adopting a policy of ‘learning from the outside world to defend against foreign intervention’ which has been a constant theme ever since, says Yao, and epitomises the current strategy.

“On the one hand, China has closely studied the key drivers of Western power, namely industrial production, technological development, economic organisation and military capability, as well as methods for social mobilisation based on the nation-state,” says Yao. “On the other hand, China has sought to learn from other countries for the purpose of advancing its development, securing its independence and building upon its own heritage.”

The turning point for China was WWII, which destroyed the old colonial system and saw the decline of Britain in particular. Countries across Asia, Africa and Latin America, including China, won their independence. Meanwhile, the Soviet Union, stretching across Eurasia, emerged as a significant rival to the West. China also emerged as a major post-war force and launched a programme of modernisation by copying Russia’s rapid industrialisation, which exported much of the means to China to industrialise, transforming its economy.

The decline of the US-led order

“Today, China is in the midst of its fourth breakthrough in industrialisation, which revolves around the application of information technology to industry. In the current period, the United States is worried about being overtaken by China, which has prompted a fundamental change in bilateral relations and ushered in an era of global change,” says Yao. “The old Western-dominated world order has been overwhelmed; however, the real trigger for its collapse is the instability resulting from the fact that the United States has been unable to secure the unipolar global dominance which it pursued after the end of the Cold War.”

With the end of colonialism and the rise of China, it has once again turned to the “all under heaven” philosophy of tianxia.

“The structural equilibrium for the world is for nations to stay in balance, rather than be ruled by a single centre,” says Yao. “Even the immense technological advances in transportation and warfare have been unable to change this iron law.”

Yao goes on to argue that since the end of WWII the US has been a sole superpower and has, from the Chinese perspective, attempted to dominate the whole world.

“The United States confidently announced that their victory over the Soviet Union constituted ‘the end of history’. However, ambition cannot bypass the hard constraint of reality. Under the sole domination of the United States, the world order immediately became unstable and fragmented; the so-called Pax Americana was too short-lived to be written into the pages of history,” say Yao, rejecting Francis Fukuyama’s famous thesis as American triumphalism.

One of the weaknesses of the US system is the development of a global financial system. While this has brought great wealth, it has also led to the deindustrialisation of the US economy as production has moved overseas, which has also fed the extreme social inequality as the working class population have lost their jobs, while the rich investors have seen their income balloon.

“Deindustrialisation is at the root of the US crisis,” says Yao. China has developed a full-cycle industrial base, whereas that in American industry has atrophied. “Even the US military-industrial system has become fragmentary and excessively costly due to the decline of supporting industries.”

The US ruling elite are aware of the problem, says Yao. Obama called for reindustrialisation but made no progress due to the deep impasse between Republicans and Democrats. The need to rebuild US industry also stands behind Donald Trump’s “Make America Great Again” slogan.

Most recently the same thinking drives US President Joe Biden’s CHIPS legislation, but the scale of the problem is illustrated by the fact that even with the US’ economic power, the most sophisticated microchips take twice as long to make, cost twice as much and are of inferior quality to those produced in Taiwan.

“As long as US [financial] capital can continue to take advantage of the global system to obtain high profits abroad, it cannot possibly return to domestic US industry and infrastructure. The United States would have to break the power of the financial magnates in order to revive its industry, but how could this even be possible?” asks Yao.

“In contrast to the de-industrialisation which has taken place in the United States, China is steadily advancing through its fourth breakthrough of industrialisation and rising towards the top of global manufacturing, relying on the solid foundation of a complete industrial chain,” says Yao. “Fearing that they will be surpassed in terms of ‘hard power’, the US elite has declared China to be a ‘competitor’ and the nature of relations between the two countries has fundamentally changed.”

City on a hill

The US elite have long referred to their country as the “City upon a Hill,” a Christian notion by which it is meant that the United States holds an exceptional status in the world that other countries should follow, according to Yao.

“This deep-seated belief of superiority means that Washington cannot accept the ascendance of other nations or civilisations, such as China, which has been following its own path for thousands of years. China’s economic rise and, consequently, its growing influence in reshaping the US-led global order is nothing more than the world returning to a more balanced state; however, this is sacrilegious to Washington, comparable to the rejection of religious conversion for missionaries,” says Yao.

As China progresses, and now that Xi has stepped up China’s diplomacy to openly challenge the US claim to superiority, tensions will only rise from here.

“Washington’s aggressive approach has, in turn, hardened the resolve of China to extricate itself from the confines of the US-led global system. Pax Americana will only allow China to develop in a manner which is subordinated to the rule of the United States, and so China has no choice but to take a new path and work to establish a new international order,” Yao warns. “This struggle between the United States and China is certain to dominate world headlines for the foreseeable future.”

Yao says that war is possible, but that because a war against China would be a land war, this is not one that the US could win due to China’s “strategic depth.”

He goes on to define the US as a “commercial republic” that bases its decisions on a cost-benefit basis, and China has centuries of experience of dealing with hostile external challenges. As a result, Yao argues, the chance of a military confrontation is very low.

This commercial attitude is another weakness of the Western alliance, as the relations are transactional rather than based on shared values.

“Despite the posturing of the Western countries, there is, in fact, no such “alliance of democracies;” the US has always based its alliance system on common interests, of which the most important is to work together, not to advance any high-minded ideal, but to bleed other countries dry. Once these countries can no longer secure external profits together, they will have to compete with each other and their alliance system will promptly break up,” says Yao, adding that as the US will “do anything for profit”, the value system has crumbled away.

“The United States has openly returned to the vulgarity and brutality of colonial conquest and westward expansion,” as far as the Chinese are concerned, says Yao. “Today, the United States has nearly completed this transformation of its identity: from a republic of values to a republic of commerce. This version of the country does not possess the united will to resume its position as leader of the world order, as evidenced by the strong and continued influence of the “America First” rhetoric.”

China is intent on returning to the former tianxia set up with the West and China living on their separate ends of the “island”. China has already laid claim to the South China Sea which has been militarised as Beijing managed to catch the US napping. China has rapidly expanded its trade so that it is the dominant partner and investor in Asia. Russia has willingly joined this effort and China is already Russia’s single biggest trade partner, with a turnover that will top $200bn this year and $300bn shortly thereafter. In the next phase, China will continue to bind the countries of Eurasia through the BRI programme that is building a land bridge between Asia and Europe that negates the US control of the seas.

China is consolidating its position and intends to push the US out of the Pacific Rim, says Yao. In that sense Russia’s clash with the West will only catalyse this process. The irony is that rather than Europe driving a wedge between China and Russia, Macron and von der Leyen’s presence in Beijing is more likely to drive a wedge between Brussels and Washington, using the businesspeople in Macron’s delegation.

“The narrow confines of Europe cannot allow for multiple major powers, whereas the vast Pacific Ocean certainly can,” says Yao. “While China and the United States will compete on all fronts, as long as China continues to increase its economic and military strength and clearly demonstrates its willingness to use that power, the United States will retreat in the same rational manner as its former suzerain, Britain, did. Once the United States withdraws from East Asia and the Western Pacific, a new world order will begin to take shape.”

“Put simply, the old world order is falling apart; presently, the relevant questions are related to how rapid this breakdown will be, what an alternative new order should look like, and whether this new order can emerge and take effect in time to avoid widespread serious global instability,” says Yao.