Just under a year ago, the prospect that the United States would turn into the fierce critic of the current economic and political order while China could become its ardent advocate was almost inconceivable. But, in a new era of world politics, wherein what is normal becomes abnormal and vice versa, it seems such an unreal reversal of roles is now in the offing.
For over the last seven decades, the US has led a liberal order, also known as Pax Americana, that is based on free trade, international institutions, the rule of law and democratic values. Yet, under Donald Trump, the US is now abandoning this leadership role.
With “American first” as his motto and guiding principle, the newly inaugurated president is adopting a nativist, protectionist and isolationist policy. He is despising NATO and the EU, two key pillars in the post-war Western world, and devaluing America’s ties with its traditional allies and partners in Europe and Asia-Pacific. His decision to leave the TPP – an expansive and comprehensive trade pact that the Obama administration signed with 11 nations in the Pacific Rim – is an obvious example of his dislike for free trade, international cooperation and of his indifference to America’s relations with its main allies and partners.
Trump is not interested in promoting freedom, democracy, transparency and the rule of law. He has expressed admiration for “strong-man” leaders such as Russia’s Vladimir Putin, despite Moscow’s annexation of Ukraine’s Crimea and allegations of its involvement in the US election. Unlike other presidential candidates and presidents, the billionaire mogul turned politician has refused to release his tax returns and repeatedly attacked American media. That is why he is often seen as xenophobic, authoritarian and dishonest.
China wants to lead…
Sensing that Trump is ceding the US’s long-held role as the leader of the liberal world order, Xi Jinping, China’s President, is stepping up to present his country as the new champion of that order.
In a keynote speech at the World Economic Forum (WEF) in Davos, Switzerland, last Tuesday, just three days before Mr Trump’s swearing-in as the US president, Mr Xi strongly denounced protectionism. He likened it to “locking oneself in a dark room” that blocks “light and air” and warned: “No one will emerge as a winner in a trade war.”
With such a view, Xi – the first Chinese leader to have attended and addressed the WEF – urged the world to “remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism.”
To position his communist country as the robust defender of free trade and open economy, Xi promised that “China will keep its door wide open and not close it,” allowing “both other countries to access the Chinese market and China itself to integrate with the world.”
More precisely, he pledged that the world’s most populous country “will expand market access for foreign investors, build high-standard pilot free trade zones, strengthen protection of property rights, and level the playing field to make China’s market more transparent and better regulated.”
As he made clear right at the beginning of his Davos talk, the leader of the self-declared socialist nation mainly talked about “economic globalization”. Throughout the speech, he used the phrase “economic globalization” nearly 30 times, while avoiding “globalization” per se.
However, besides defending free trade and promoting China’s new-found role as the champion of an open global economy, he called for a rules-based international order and positioned his country as a benign, responsible and law-binding player in that order.
In his address at the United Nations Office in Geneva a day later, the Chinese leader further expanded and stressed the importance of the ruled-based international order. For instance, he pointed out: “Here in Geneva, countries […] concluded a number of international conventions and legal documents on” a wide range of issues, e.g. security, trade, environment and human rights, and “it is thus incumbent on all countries to uphold the authority of the international rule of law.”
In both of his speeches, he mentioned the Paris Agreement on climate change, stating that all signatories of this accord should stick with it, instead of “walking away from it as this is a responsibility we must assume for future generations.”
The leader of the one-party state also urged the world to “advance democracy in international relations and reject dominance by just one or several countries” and stressed: “Big countries should treat smaller ones as equals instead of acting as a hegemon imposing their will on others.”
With regard to his country’s international behavior, he vowed: “No matter how strong its economy grows, China will never seek hegemony, expansion or sphere of influence.” Concerning Beijing’s domestic policies, Xi said Chinese leaders “always put people’s rights and interests above everything else and have worked hard to advance and uphold human rights.”
At a time when the world is concerned about Trump’s oppressive policies, such pronouncements by the leader of the world’s second biggest economy were heartening.
Nevertheless, not everyone was overwhelmingly receptive to his words.
Xi Jinping went to Davos, regarded as the spiritual home of capitalism, to defend free trade mainly because of Beijing’s fear over the negative impacts of Trump’s protectionist policies on China’s economy.
As the world’s biggest exporter in goods, China is the biggest beneficiary of the free flow of goods. It is enjoying huge trade surpluses with many – if not all – of its main global and regional trading partners. If Trump imposes a 45-per-cent tariff on Chinese imports as he has threatened, China will suffer most from his protectionism.
In fact, both of his speeches in Switzerland last week were largely motivated by China’s own interests.
…but it needs to back rhetoric with action
More importantly, much of his pronouncements remain rhetoric and do not really reflect China’s reality and Beijing’s policy and action.
One of the main reasons why China is having huge trade surpluses is that its trade with the world remain, by and large, a one-way traffic. While its goods can flow out easily, other countries’ merchandise are not granted similar access to its market.
The same is also true with capital flows, albeit opposite directions. Beijing is encouraging Chinese companies to capitalize in other countries’ key areas, whereas it is hindering foreign firms from investing in China.
A day after Xi’s Davos speech, the American Chamber of Commerce released a report showing that 81 per cent of its members felt less welcome in China than before and blamed the country’s inconsistent regulatory environment, vague laws and rising protectionism. They also had little confidence in its vows to open its economy.
In its 2016 Index of Economic Freedom, which measures the impact of liberty and free markets around the world, The Wall Street Journal and The Heritage Foundation ranked China 144th (out of 178 countries) and classified the Chinese economy as “unfree”.
The communist-ruled country is far less globalized and liberalized politically. China remains an authoritarian and highly-censored nation, which still trails far behind most of the countries in the region and the world in many key aspects.
In its 2016 World Press Freedom Index, Reporters Without Borders ranked the communist country almost at the bottom of the table, at 176 (out of 180 countries/territories). It is also placed far lower than Taiwan and many other regional countries in the Economist’s Democracy Index and Freedom House’s Freedom Index.
Judging by these international indicators, it is clear that under Xi Jinping, China is still – to borrow his metaphor – locking itself “in a dark room” that blocks and lacks vital “light and air”, such as freedom and democracy.
Xi Jinping’s call for a rules-based international order, in which all countries, big or small, should be equal, adhere to multilateralism, honor promises and abide by rules – and depiction of China as a champion of such an order hardly convinced anyone. This is because, to many observers, Xi’s nice talk contradicts Beijing’s actions in the South China Sea.
Last July an international tribunal ruled China’s nine-dash line, which covers most of the South China Sea, illegal and that China had violated the Philippines’ sovereign rights in its exclusive economic zone. However, it has vehemently rejected this landmark ruling. It is also believed that before and after the Hague-based arbitral tribunal’s verdict, Beijing has used its economic might to pressure other countries to adhere to its maritime position.
Given all of these, regional countries will look at its actions rather than its promises to believe whether Beijing “will never seek hegemony, expansion or sphere of influence” and “treat smaller ones as equals instead of acting as a hegemon imposing their will on others.”
Should China genuinely practice what Xi Jinping nicely preached at the WEF in Davos and the UN office in Geneva last week, coupled with the fact that America’s Donald Trump is retreating into isolationism and protectionism, it could play a central role in shaping and leading the global economy and politics in the years to come. It could even replace the US as the leader of the global economic and political order.