Hegemonic Transition and China’s Role in the Emerging World Order

The following is a print interview with me published by the Foreign Policy Research Centre, New Delhi, exploring China’s evolving position as a global power during the current period of hegemonic transition.

Chinese President Xi Jinping and Russian President Vladimir Putin

 1. How do you visualize China’s Role in the Emerging World Order in the wake of Asia’s Rise and the West’s Decline.?

We should interpret China’s evolving role in world affairs by looking inside China first. Domestic order and stability is a prominent feature of Chinese strategic thinking, with perpetuation of Chinese Communist Party (CCP) rule the primary prerogative.

Chinese strategic thinking sees developments take shape over long time horizons. One of the key lessons from China’s four-millennia long dynastic cycle is that China as a unified political entity tends to break apart when politically unstable. Modern Chinese history is replete with examples that continue to influence contemporary Chinese strategic culture: the decline of the Qing Dynasty from the Opium Wars, through the Taiping and Boxer Rebellions to the Wuchang Uprising and Xinhai Revolution of 1911; the tumult of the Republic period from Yuan Shikai and the warlord era to the Japanese occupation and the civil war; and the upheaval of the Mao Zedong era where Mao’s attempts at national governance based on the principles of guerrilla warfare and permanent revolution led to the misery of the Great Leap Forward and the chaos of the Cultural Revolution.

The structural changes to the Chinese economy initiated by Deng Xiaoping through the 1980s moved the CCP away from the orthodoxy of Mao Zedong thought and implicitly established a new social bargain with the Chinese people that has become the legitimising foundation of CCP rule: the people will enjoy increasing standards of living in exchange for their continued acquiescence to one-party rule. Economic growth in the range of 7-10% per annum is pivotal to this grand bargain. Political instability, whether internal or external, is a threat to economic growth and by extension the perpetuation of CCP rule itself.

There are several schools of thought as to what this implies for China’s future global role. There is the benign rise theory, which argues that China is likely to be a status quo power given that its economic miracle has depended upon its participation within the American hegemonic order. There is an intermediate position which suggests that China is engaged in “soft balancing” against the United States through subtle moves to check the expansion of American power in regions adjacent to China’s frontiers, in cooperation with Russia. Finally, there is the aggressive rise theory, which argues that China’s interests have outgrown the current hegemonic order and thus China will seek to change the rules of the game.

China’s more assertive foreign policy behaviour since the global financial crisis of 2007-08 suggests that it is indeed beginning to challenge American hegemony. We have seen China establish what is euphemistically called the “Beijing Consensus”, through which it has established a series of priority access resource procurement deals with countries around the world. The Beijing Consensus offers developing countries an alternative to the structural adjustment conditionalities inherent to development assistance from the World Bank and the International Monetary Fund. In contrast, Chinese resource procurement deals promise no intervention in the domestic politics of partner states, sweetened by infrastructure contracts, in exchange for direct Chinese access to desired commodities outside of US dollar denominated international markets.

This strategy makes sense in light of growing and/or predicted scarcities in key resource feed stocks, locking in more stable price and supply arrangements without having to compete on volatile international markets with other players. It also creates a dynamic that is critical to hegemonic transition: a challenge to the hegemony of the US dollar as global reserve currency. Because global trade has for the most part been denominated in US dollars, countries have previously had to acquire holdings of US dollars in order to participate. The global demand for US dollars as a fiat currency has allowed the US to finance its global military commitments through deficit spending to a degree that no other state can match. Nowhere is this more evident than in the impact of petro-dollar recycling in international energy markets.

The Beijing Consensus presents a direct challenge to the US dollar as global reserve currency by removing trade interactions from dollar denominated markets and thus decreasing the necessity of participants to acquire US dollars, thus undermining the capacity of the US government to undertake deficit spending. The establishment of a BRICS development bank as a competitor to the World Bank, as articulated in the Fortaleza Declaration from the July 2014 BRICS summit in Brazil, and China’s deepening bilateral trade partnership with Russia are important developments that are illustrative of this growing challenge to the rules of the game.

2. Accoding to Joseph S. Nye, “[In today’s age] success depends not only on whose army wins, but also on whose story wins”. This comment remains especially pertinent, with China attempting to ‘improve its story’ to the rest of the world – primarily through the use of soft power. How have these initiatives played out? Have they contributed towards a more positive global image of the PRC?

If we look back on the beginning of the American global hegemony immediately following World War Two, its soft power message of liberal freedoms and democratic governance held tremendous appeal in a number of areas across the world. Ho Chi Minh even argued that the constitution of a Vietnamese state independent from France should be modelled on the US constitution.

It is not clear that China has a similarly compelling positive soft power vision to sell, beyond offering an alternative to American hegemony through the Beijing Consensus. What we do see is a model of South-South cooperation on offer, articulated in Hu Jintao’s “Harmonious World” doctrine that privileges, at least rhetorically, non-intervention in domestic politics and mutually beneficial economic outcomes. Rather than offering an explicit prescription for governance and the good society based on capitalism and liberal democracy, as does the American soft power vision, China’s soft power hook appears to be its distinction from what is perceived in many places to be overly aggressive US foreign policy behaviour in the War on Terror era, coupled with resentment over economic austerity regimes instituted through structural adjustment conditions associated with loans from the Bretton Woods institutions.

We are seeing a renaissance in official interest in China’s dynastic history as a source of ideational inspiration, particularly in the revival of Confucianism in official discourses and the proliferation of government-funded Confucius Institutes in countries around the world. Indeed there is much to admire about Chinese history and culture, however the CCP’s complicated relationship with this cultural legacy, particularly in relation to Mao Zedong thought and the attack on traditional social structures during the Cultural Revolution, makes it difficult for the Chinese government to draw too heavily on this as a source of soft power appeal.

What this highlights is the difficult task faced by the CCP in melding together a coherent legitimising paradigm from the often contradictory influences of China’s dynastic historical traditions, its Mao-era legacy and globalised capitalism.

3. Beijing has expressed concerns that Washington is either encouraging its allies in the Asia-Pacific region to pursue maritime territorial claims against China or, at the very least, profiting from the sharply increased regional tensions that these disputes have generated. Do you subscribe to this view point?

Regional states have different ideas about how to resolve the region’s maritime disputes. The United States favours multilateral dialogue as its preferred vehicle for dispute resolution, using existing multilateral forums as a trap to pressure the Chinese from multiple sides. It should not be surprising that we see balancing behaviour against China by Southeast Asian maritime states, as they can maximise their leverage against China through multilateral engagement and court American naval assistance, as the United States is the only power that can credibly defend their claims against Chinese incursions.

By contrast, the Chinese preference is to resolve disputed claims bilaterally with rival claimants, a strategy that maximises Beijing’s leverage and attempts to freeze the US out of the process.  Hence the importance of the Sino-American competition over dominant regional integration initiatives; the regional architecture that comes to predominate in the medium term may go some way toward defining a possible outcome to maritime disputes.

4. China is a great power and wants to grow greater and greater. But China has “Few Friends but More Rivals.” It is quite surprising that in East and South East Asia, almost all countries in the region have problems with their relations with China. With some of them, it has serious territorial disputes over small patches of land. How can China assure its peaceful rise ?

Hu Jintao’s “Harmonious World” doctrine was an attempt to assure neighbouring states of China’s benign intent, however, as my response to question one articulates, it may now be more difficult for China to present a credible defence of itself as a benign power. This is not just a question of the Chinese government’s intent, but an unavoidable feature of the international politics of hegemonic transition.

5. “A few years ago, China was driven in the past by intent. Today it is driven by capability.” Do you agree with this statement?

Eventually a rising power with global economic interests needs a military with the force projection capability to defend those interests. We are witnessing the beginning of this process in China’s naval modernisation. China’s area denial strategy for protecting its Pacific Ocean maritime flank simultaneously challenges the United States’ position as maritime hegemon in East Asia and has allowed Beijing to adopt an increasingly assertive approach to substantiating its claims in the South China Sea and East China Sea.

One could argue that the Chinese national project post-Deng Xiaoping has been driven, in part, by a desire to make up for China’s “century of shame” and return the country to its traditional position of prominence in world affairs. This project culminated in the 2008 Beijing Olympic Games, which was the “new” China’s coming out party. Now, as argued above, China appears to be positioning itself to challenge the rules of the game, so to that extent, I can agree with the statement.

6. How do you view Chinese perspective on  North Korea’s  nuclear proliferation?

There are diverse views on North Korea from among the actors within China’s foreign policy elite. Traditionally, North Korea has been viewed as a strategic buffer zone between US forces positioned in South Korea and the China-DPRK frontier along the Yalu and Tumen Rivers. Indeed China entered the Korean War when that frontier was encroached upon by UN forces. The buffer zone concept extends much further back into history than the Korean War, as the Korean Peninsula has historically been the primary invasion pathway for belligerent armies from Japan. There is also a view that North Korea soaks up the attention of a segment of US forces in East Asia that would otherwise be mobilised directly against China. The strongest argument for supporting North Korea is to prevent a collapse of the Kim regime and the North Korean state, which could precipitate a large refugee exodus from the DPRK into China’s northeastern provinces in Jilin and Liaoning. Such an influx could jeopardise social stability and economic development in these regions, which are not as prosperous as China’s eastern coastal provinces. From this perspective, the DPRK could be seen as a net strategic asset.

Opinions have began to diverge from this view in light of North Korea’s 2009 and 2013 nuclear tests, which have prompted some within the Chinese foreign policy elite to suggest that the DPRK has become a net strategic liability to China. According to this argument, North Korea’s nuclear gambit raises the risk of regional conflict, which would be a disaster for China’s goal of 7-10% annual economic growth and the CCP’s grand social bargain with the Chinese people. In addition, political instability associated with the North Korean nuclear problem creates investment uncertainty that has slowed the development of China’s northeastern provinces. There is also a perception that North Korea has caused the Chinese government to lose face through some its recent provocations in 2013, which Pyongyang proceeded with in spite of warnings from Beijing.

China and North Korea enjoy a symbiotic relationship. North Korea is heavily reliant on China as the foundation of its economic development and conduit to the global economy. American protestations about Chinese leverage over the DPRK notwithstanding, North Korea does occupy an important strategic space that the Chinese government cannot take for granted. The two countries maintain an ongoing alliance relationship, however they are no longer “as close as lips and teeth” as Mao Zedong once proclaimed, and the Chinese security guarantee for North Korea is far from iron-clad.

The Quanhe-Wonjong border crossing across the Tumen River between China and the DPRK

The Quanhe-Wonjong border crossing across the Tumen River between China and the DPRK

7. What is China’s role in international politics of climate change? 

China is a significant actor in the United Nations Framework Convention on Climate Change (UNFCCC) conference of parties, where it has been the historic leader of the Group of 77 negotiating bloc representing the interests of the Global South. In the UNFCCC China has consistently held a position based on the doctrine of “common but differentiated responsibility,” whereby the countries of the developed world, who are responsible for the overwhelming proportion of greenhouse gases already emitted into the atmosphere through industrial processes, should take the lead in reducing their emissions and assist developing countries with the cost of greening their economies. In the meantime, they argue that newly industrialising countries should be allowed to raise their greenhouse gas emissions in order to reach a higher stage of development, before all countries of the world begin reducing their emissions together from a position of greater developmental equality.

The United States and other developed countries have argued against this position, claiming that their economies will lose competitiveness if they are subjected to emissions reduction obligations that their competitors in the developing world are not. This negotiating deadlock within the UNFCCC is not immune from the broader politics of the Sino-American rivalry and the machinations of hegemonic transition that I described above, which will make it difficult for the negotiating parties to reach agreement on binding emissions reduction targets for all states by the pivotal twenty-first conference of parties meeting in Paris next year.

This does not mean that China is a recalcitrant actor on climate change. Becoming “green” is in China’s self-interest. China has significant problems with environmental degradation and is acutely vulnerable to climate change impacts, both of which threaten the country’s economic vitality and thus its political stability. Indeed addressing climate change may be an existential challenge for the CCP, given the link between economic growth, raising living standards and the state of the environment in China. The Chinese government’s challenge is to maintain high economic growth rates while greening the economy, a task which has been a key focus in the government’s current 12th Five Year Plan for the national economy. China’s impending roll-out of a national carbon price mechanism, models for which are currently being trialled across six different provinces, could be a game-changer in terms of the flow-on pressure it exerts on China’s trading partners to establish their own carbon pricing schemes.

8. How do you look at Geopolitics Of China-Russia Energy Relations?

Sino-Russian energy relations are becoming closer due to energy security considerations and a mutual convergence of interests in resisting American pressure. In terms of energy security, China is a net energy importer and by buying oil and gas from Russia it can reduce its vulnerability to fluctuations in the American-dominated maritime oil trade and to disruptions to maritime deliveries which arrive en route through several vulnerable sea lines of communication from the Middle East. In turn, Russia gets to diversify its customer base away from reliance on European buyers, which is timely given the current geopolitical complications with NATO involving Ukraine. American pressure on Russia itself is driving Russia closer to China. American economic sanctions against Russia provide an incentive for Russia to sell its energy resources to customers through bilateral deals denominated in currencies other than the US dollar. Here Russia and China can collude in eroding the power of the US petro-dollar, thus undermining the economic foundation of American power.

Thank you to Dr Mahendra Gaur from the Foreign Policy Research Centre for the invitation to contribute to this volume.

Habib, B. (2015). ‘Response to Questionnaire: China’s Role in the Emerging World Order.’ in Gaur, M. (ed). Studies on China. Foreign Policy Research Centre. New Delhi, pp. 51-57.

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