CHINAMacroReporter

Is The U.S. Ceding Global Leadership To China?

'China isn't positioned to replace the U.S. as a global leader anytime soon.'—Hard on President Trump's 'American First' inaugural address, Xi Jinping gave a rousing paean to globalism at the World Economic Forum. And, immediately the hot question became: 'Is the U.S. ceding global leadership to China?' Yes and no, says Bill Overholt of the Harvard Asia Center. Yes, the U.S. is ceding global leadership. No, China won’t replace the U.S. What will replace the U.S. is ‘G-Zero’, a world with no single global leader. Not China, not the U.S. So, can his critics lay this outcome at President Trump’s feet?
by

|

CHINADebate

February 27, 2017
Is The U.S. Ceding Global Leadership To China?

[Malcolm Riddell's conversation with Bill Overholt]

  • The U.S. has been ceding global leadership since the end of the Cold War.
  • But, China — often cited as the likely successor to the U.S. — is not yet ready to assume leadership.
  • Instead, we are headed for is a ‘G-Zero’ world, with no single global leader. Not the U.S. and not China.

Hard on President Trump's 'American First' inaugural address, Xi Jinping gave a rousing paean to globalism at the World Economic Forum. And, immediately the hot question became: 'Is the U.S. ceding global leadership to China?'

Yes and no, says Bill Overholt of the Harvard Asia Center. Yes, the U.S. is ceding global leadership. No, China won’t replace the U.S.

What will replace the U.S. is ‘G-Zero’, a world with no single global leader. Not China, not the U.S.

So, can his critics lay this outcome at President Trump’s feet? Again, yes and no.

Yes, President Trump's ‘America First’ policies and his disdain for international regimes in trade, climate change, and defense, as well as his treatment of some of the U.S.’s greatest allies, has certainly accelerated America’s global retreat.

But, no, too. Because the U.S. retreat began well before President Trump took office. As Bill points out…

1. Is The U.S. Ceding Global Leadership To China?

The headlines are all about President Trump, and a lot of that is appropriate, but there are much deeper trends that are more important in the long run.
When Americans are not concerned about a great war or a Cold War, they get less interested in foreign policy when they elect a president.

Thus, since the end of the Cold War, we have elected presidents - from Bill Clinton and George W. Bush to Barack Obama and now Donald Trump - who came to office with no foreign policy experience.

And, we can see a parallel trend in Congress...

What's happened since the Cold War is that Congress has generously funded the military.
But, the State Department and economic aid budgets have been cut and cut and cut. That's a continuous process that has been going on since the 1990s.
Again, Trump is the ultimate caricature of that, trying to take an already minuscule State Department budget and cut it by another 30%, but he's on trend.

The result: 'The principal tools of successful strategy are being eroded at the same time when the top leaders are less experienced, less knowledgeable, and less interested in national strategy and foreign policy.' No wonder American has been losing influence globally.

But, regardless of the causes, the U.S. retreat could still benefit China.

Take Australia, as an example. Headlines there say that Canberra is 'now thinking it needs to tilt more toward China because the U.S. is such an unreliable ally.'

And that, it's 'starting to take more Chinese priorities into consideration’ on issues ranging from South China Sea to free trade.'

If our foreign policy can push even Australia - perhaps our most faithful ally - toward China, how much more will it drive our less stalwart Asian allies toward Beijing?

So, if China isn't destined for global leadership, can it nonetheless supplant the U.S. as the regional leader in Asia? Bill has his doubts about that too. 

2. In A G-Zero World, Will China Dominate Asia?

  • A G-Zero World is coming, where the U.S. will be first among several other powers - but no longer global leader
  • China will become the second most important power and the leader of Asia, propped up by countries alienated by President Trump
  • Still, the extent of Beijing’s regional hegemony hinges on whether it can overcome an array of domestic and international challenges.

Last week, Bill Overholt of Harvard’s Asia Center, presented an intriguing case for why China will not replace the U.S. as global leader (in case you missed it, you can watch our conversation here.)

Instead of a world led by China or the U.S., for that matter, Bill posited a G-Zero world, without any dominant hegemon. In contrast to...

A G-1 one world with one leader like the U.S.
A G -2 world would be a world where the U.S. and China were collaborating to create a world order, as to some extent they have been for a quarter century.
In the G-Zero world, the U.S. and China will be one and two, respectively globally. But...
China will be the regional leader in Asia.
We're not talking about everybody joining an alliance with China. That's not going to happen.
But, on trade issues, on local strategic issues, the Chinese voice is going to get stronger and stronger.
And, even a powerful country like South Korea will be more and more influenced by Chinese views.

And as China consolidates its dominance in what it considers its backyard, there is no guarantee that long-time friendly Pacific powers like Thailand, Philippines, or even Australia will support the U.S. as they used to.

Still, China’s regional hegemony is not a given. According to Bill, the extent of  Beijing’s leadership will depend on Zhongnanhai’s...

  • Successfully implementing its ‘One Belt, One Road’ initiative
  • Tamping down the quibbling over minor territorial issues with its neighbors, and
  • Completing economic – and, especially SOE - reform.

How will Beijing carve out a place for itself in this more anarchic reality? How will neighboring nations, who long have prioritized economic growth over military spending, respond to a new Chinese push for Asian domination? And, the crucial question: is war between China and the U.S. inevitable?

3. What 'Thucydides Trap'? Why China & the U.S. Won't Go to War

'It was the rise of Athens [China] and the fear that this instilled in Sparta [the U.S] that made war inevitable.' - Thucydides -(with apologies) 

Like Zeus, the Thucydides Trap has lost its power

Thucydides, 2,400 years ago, summed up the cause of the Peloponnesian War this way: 'It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.'

In more recent times, political scientists have used the simple equation rise of new power + fear of reigning power = war to explain the cause of about a dozen major armed conflicts. The latest to apply the formula is Graham Allison in his Destined for War: Can America and China Escape the Thucydides's Trap?.

So can we escape? According to Bill Overholt, the question itself is wrong: The Thucydides Trap died in World War II.He argues that since World War II. 

the geopolitical landscape has experienced 'one of the greatest transformations in world history'...   

‘The people who use the Thucydides Trap for analysis - John Mearsheimer and a dozen of other political scientists, including now Graham Allison - focus on the period before World War II.'What they miss is the strategic divide between the pre-World War II era when traditional military and territorial approaches were the way to build a powerful and successful country, and the post-World War II modern world where those approaches are more likely to be self-defeating.' 

Because the proponents of Thucydides Trap analysis focus on the previous world order, they miss entirely that...   

'The game is now going to be decided more by economics. I'm not talking about economic interdependence. I'm talking about the fact that economics is the key to success if you're a realist in the modern world - and this is something that political science realists have never focused on. 'What you do today to achieve power is pour your money into your country's economic success, not make territorial conquests or have overwhelming military superiority. 'This post-World War II change from using military force to using economic development to gain power is one of the greatest transformations in world history.'   

In this new world order, where economics trumps force, the U.S. and China have little reason to go to war...   

'Never have two countries gotten so much economic advantage from dealing with each other than the U.S. and China have. 'There's going to be constant pressure on both sides for leaders to realize that and not to mess it up.'   

And, of course, not go to war.

More

CHINAMacroReporter

February 18, 2021
'Like It Or Not, America Is Still A Superpower'
‘The twentieth century was littered with the carcasses of foreign leaders and governments that misjudged the United States, from Germany (twice) and Japan to the Soviet Union to Serbia to Iraq. Perhaps the Chinese, careful students of history that they are, will not make the mistake that others have made in misjudging the United States.’
keep reading
February 16, 2021
'Is China experiencing an advance of the state sector?'
‘The value-added produced by state-owned enterprises has usually been in the range of 25-30% of China’s GDP. And what’s really striking about those numbers is that they just haven’t changed very much over the past 25 years. The share of China’s economic output being produced by SOEs today, under Xi Jinping, is not significantly different than it was under Hu Jintao, or even in the later years of Jiang Zemin.’
keep reading
February 16, 2021
‘China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries’
‘Behind layers of opaque investment vehicles that own stakes in Ant Financial are a coterie of well-connected Chinese power players, including some with links to political families that represent a potential challenge to President Xi and his inner circle. Those individuals, along with Mr. Ma and the company’s top managers, stood to pocket billions of dollars from a listing that would have valued the company at more than $300 billion.’
keep reading
March 31, 2021
Chinese Boycotts are the Least of Your Worries
‘For chief executives [and boards] around the world, watching the Chinese government go after Swedish clothier Hennes & Mauritz AB is excruciating — facing the evaporation of your hard-won China business over political issues largely out of your control,’ writes Michael Schuman in Bloomberg.’ ‘But it could be the new normal.’ ‘As relations between China and the U.S. and its allies deteriorate, Western businesses could increasingly get dragged into the fray.’
keep reading
March 31, 2021
'The Threat the U.S. Isn't Answering'
‘If BRI meets little competition or resistance, Beijing could become the hub of global trade, set important technical standards that would disadvantage non-Chinese companies, lock countries into carbon-intensive power generation, have greater influence over countries’ political decisions, and acquire more power-projection capabilities for its military.’
keep reading
March 31, 2021
'China Is Missing from the Great Inflation Debate'
‘Once again, massive fiscal spending in the United States has invited warnings of inflation and triggered dark memories of the 1970s. But these fears are based on a model that has since been obliterated by economic realities – not least the rise of China, which has fundamentally reshaped the US and global economies.’
keep reading
March 31, 2021
'Dominating the Digital Silk Road'
‘China’s Belt and Road Portal reports the Digital Silk Road has enabled six thousand Chinese internet companies and more than ten thousand Chinese technology products to enter foreign markets.’
keep reading
March 31, 2021
'Biden administration maintains Trump policy on Hong Kong'
'State department concludes territory should not receive preferential treatment under US law.'
keep reading
March 31, 2021
'China Owns, Partially Owns, or Operates 93 Ports'
‘Chinese firms own, partially own, or operate at least ninety-three ports across the globe.’
keep reading
March 30, 2021
'Profit or principle is the hard choice for foreign companies in China' George Magnus
‘Business risks for foreign companies in China are increasing after the recent exchange of sanctions between Beijing and western governments.’‘For foreign companies in China, the options seem delicately balanced. If they stand up for principles, they may put revenues at risk and will incur extra costs as they develop new supply chains. Yet if they prioritise their China profits, they could do irretrievable damage to their brands at home and in other markets, falling foul of shareholders and changing governance requirements.’‘It is an invidious choice but the latter is likely to be far more damaging to longer term performance and earnings, and corrosive of trust in the brand.’
keep reading
March 30, 2021
'How China keeps stumbling on the global stage' John Pomfret
‘Across the globe, Xi’s diplomatic representatives in Europe, Beijing, Hong Kong, Canada, Australia and elsewhere, are lifting up rocks and smashing their own feet.’‘The moves are befuddling — with a buoyant economy and a practically covid-free country, China is poised to see its influence rise if it plays it smart. But it’s not; instead, it’s alienating individuals and nations across the world.’‘I’ve been studying China for my entire adult life and I have to admit to being bewildered by China’s performance.’‘But I’m in good company. Thirty-one years ago, the great political scientist Lucian Pye wrote, “Just when all appears to be going well, Chinese officials create problems for seemingly unaccountable reasons.” ’
keep reading
March 30, 2021
'An Alliance of Autocracies? China Wants to Lead a New World Order.'
‘The world is increasingly dividing into distinct if not purely ideological camps, with both China and the United States hoping to lure supporters.’
keep reading
March 29, 2021
'Global Cycle Notes: U-Turn': China
‘A U-shaped recovery in the services sector beckons, but it’s still difficult to describe just what it will look like. No event in economic history compares, and the range of outcomes for wages, prices, employment, and financial markets is large.’
keep reading
March 28, 2021
‘At a Crossroads: The Next Chapter for FinTech in China’
‘As financial innovation has gained traction and the firms driving it have grown into sizeable players, the dynamic between innovators and regulators has begun to shift. Regulatory agencies have started to be more proactive in supervising the activities of technology firms after realizing that the size of many technology firms and FinTechs means they could threaten financial stability and peace in society if their innovation efforts and business practices were overly aggressive.’
keep reading
March 28, 2021
'New Trade Representative Says U.S. Isn’t Ready to Lift China Tariffs'
'The U.S. isn’t ready to lift tariffs on Chinese imports in the near future, but might be open to trade negotiations with Beijing, according to U.S. Trade Representative Katherine Tai.'
keep reading
March 28, 2021
China is not just shackling Hong Kong, it is remaking it
After the National People’s Congress, ‘election reform’ in Hong Kong, the dustup between the U.S. and China in Anchorage, and China’s going all ‘Wolf Warrior’ on the EU, that’s not such a bad thing.
keep reading
March 26, 2021
Beijing Targets American Business-2
'American businessmen, wishing for simple, lucrative commercial ties, have long resisted viewing U.S.-China relations as an ideological struggle. But strategic guidance issued by the leaders of both countries make clear the matter is settled: The ideological dimension of the competition is inescapable, even central.'
keep reading
March 26, 2021
'H&M, Nike Pay With China Boycotts on Xinjiang Human Rights Stance'
‘While both Western and Asian companies have frequently been targets of Chinese nationalism over the years, the latest flurry signals a shift in strategy by President Xi Jinping’s government as it confronts a more unified approach from the U.S. and its allies.’
keep reading
March 26, 2021
'The Illiberal Tide'
But even more problematic is that the reporting on any given action by another country may look so benign to the non-Chinese reader that he or she dismisses it as something China, even when it reacts forcefully, couldn’t be serious about. That is a mistake. Too often what looks ‘benign’ to the rest of the world is as serious as a train wreck to Xi Jinping.
keep reading
March 26, 2021
Beijing Targets American Business-1
‘Beijing’s message is unmistakable: You must choose.’‘If you want to do business in China, it must be at the expense of American values. ‘‘You will meticulously ignore the genocide of ethnic and religious minorities inside China’s borders; you must disregard that Beijing has reneged on its major promises—including the international treaty guaranteeing a “high degree of autonomy” for Hong Kong; and you must stop engaging with security-minded officials in your own capital unless it’s to lobby them on Beijing’s behalf.’
keep reading
March 25, 2021
China Goes All 'Wolf Warrior' on the U.S. & the EU
Today is the Tracker’s first issue. Covered here are two events where China went all 'Wolf Warrior' first on the U.S. and then on the EU.
keep reading
March 25, 2021
3 | China explains why it is going all 'Wolf Warrior' on the EU
China has found that bullying works a lot of the time, Why is China engaging in "Wolf Warrior" diplomacy
keep reading
March 25, 2021
2 | In Anchorage, Yang Spoke for the Party Leadership
‘Yang's temper tantrum has been interpreted by some commentators as being all about Chinese domestic politics. But it would be a mistake to see Yang's performance as mere bluster designed for home consumption. In Anchorage, he was speaking for the top leadership of the Communist Party.’
keep reading
March 25, 2021
2 | More to come?
‘This isn't about siding with America, it's about defending European sovereignty against a bully.’
keep reading
March 25, 2021
1 | Bitter Alaska Meeting Complicates Already Shaky U.S.-China Ties
'Mr. Yang, also noted “important disagreements” remained, and in remarks to Chinese state media suggested Beijing wouldn’t back down.'
keep reading
March 25, 2021
1 | The first U.S.-EU alliance against China
"Europeans will have to step up their reaction against China after insults, intimidation and sanctions against scholars and MPs. This isn't about siding with America, it's about defending European sovereignty against a bully."
keep reading
March 24, 2021
'There Will Not Be a New Cold War' Thomas Christensen
‘China’s vital position in the global production chain and the lack of struggle for ideological supremacy between authoritarianism and liberal democracy mean that the rise of a new Cold War is unlikely.’
keep reading
March 21, 2021
Just About in Place
To help us understand the makeup of the team, The Wire China has put together a great chart with bios of each member.
keep reading
March 21, 2021
'A Taiwan Crisis May End the American Empire' Niall Ferguson
‘No matter what other issues Kissinger raised — Vietnam, Korea, the Soviets — Zhou steered the conversation back to Taiwan, “the only question between us two.” ’
keep reading
March 20, 2021
'After the protests - China is not just shackling Hong Kong, it is remaking it'
‘The old Hong Kong is gone. Judge Mr Xi’s China by what it builds in its place.’
keep reading
March 17, 2021
How to Meet the China Challenge
How the Biden administration characterizes the China – strategic competitor, rival, enemy, and the like – and how it develops strategies – containment, confrontation, competition, cooperation, or some combination of these - will have an impact, to a greater or lesser degree, on most every industry and every market.
keep reading
March 13, 2021
'China All but Ends Hong Kong Democracy With "Patriots Only" Rule'
‘The National People’s Congress on Thursday approved a drastic overhaul of election rules for Hong Kong that would most likely bar many pro-democracy politicians from competing in elections, cementing Beijing’s grip over the territory.'
keep reading
March 13, 2021
'Understanding China’s 2021 Defense Budget'
'Like previous years, the first day of the new National People’s Congress session was highlighted by the widely anticipated announcement of China’s 2021 defense budget. This year it is set at 1.36 trillion yuan ($209.16 billion), a 6.8 percent increase from the 1.27 trillion yuan budget set last year.’
keep reading
March 13, 2021
Xi’s Gambit: China Plans for a World Without American Technology
‘China’s new five-year plan, made public on Friday, at the National People’s Congress (NPC), called tech development a matter of national security, not just economic development, a break from the previous plan.’
keep reading
March 13, 2021
'The five-year plan's big target - A confident China seeks to insulate itself from the world'
The National People’s Congress concluded on Friday, March 11. As I’ve mentioned before, analyses of the impact of the plans and policies on China and the world will start to come out in a week or two. In the meantime and to keep you immediately informed, today’s issue covers the NPC’s outcomes more generally, beginning with a full summary from The Economist.
keep reading
March 12, 2021
‘Enter the Trump Buddha'
“Trump, the Buddha of Knowing of the Western Paradise.”
keep reading
March 11, 2021
Artificial Intelligence: How to Beat China
‘China is organized, resourced, and determined to win the technology competition. AI is central to China’s global expansion, economic and military power, and domestic stability.’
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.