To understand China’s emergence in the global order, it is necessary to understand what is meant by the global order. Definitions abound. But a simple descriptor is this: the arrangement of power and authority between nation states. Confucianism is all about hierarchical arrangement of relationships, so in that vein, the global order and Confucianism are similar.
The world has been transitioning through the global order. Prior to the Second World War it was a plural world order. Post the Second World War, it became bipolar. After the collapse of the Soviet Union, it became a unipolar world. Some analysts refer to the present global order as a pre-plural world. At close quarters, however, it appears that the world is fast moving back towards a bipolar world. After becoming a pole in the bipolar world, China’s ambition is to be the unipole even though it professes publicly to desire a multipolar world.
Some seminal events have led to the present global order. First is the rise of China which took place with the support of the U.S. After President Nixon established relations with China in 1972, successive U.S. presidents helped China to grow economically, technologically and militarily, with the hope that China would become more democratic and open. Their hopes were belied. Still, there is a section of people in the U.S. who believe that China may become so.
Second was the disintegration of USSR. Though the U.S. and China entered into their relationship to marginalise USSR, their engagement is now one of competition. The ineffectiveness of multilateral bodies like the UN and the Bretton Woods financial institutions is the third reason for the way the global order is evolving.
The aim of this essay is to analyse China’s emergence in the global order and implications of the same. The analysis is restricted to international relations and some aspects of the economy and does not examine the growth of military power of China.
In today’s global order, China is the elephant in the room. As soon as President Xi Jinping came to power in 2013, he proposed a new type of major power relationship. By this it was meant that the U.S. and China should avoid conflict, cooperate with each other and develop a win-win association. However, this was unacceptable to the U.S.
China then launched the One Belt One Road (OBOR, now the Belt and Road Initiative or BRI) initiative in 2013, which attracted many countries to join it. After investing approximately $ 1.1 trillion around the world, China is facing some push back from countries that are unable to fulfil the loan commitments. Nevertheless, China has launched many more global initiatives over the last four years. Starting from Global Initiative on Data Security in September 2020, China announced the Global Development Initiative, Global Security Initiative, Global Civilisation Initiative, Global Community of Shared Future (GCSF) and Global AI Governance Initiative, in quick succession. In between, China also released a Proposal for Reform and Development of Global Governance. Each of these proposals, starting from BRI, are subsumed into the next one and culminate in the GCSF. All are prescriptive in nature and positions China a notch above other countries. Cleverly, all the initiatives support the UN Charter. Combined with the influence China has cultivated and now wields in the UN, this places China at an advantage. Additionally, China began an International Mediation Centre in Hongkong in 2023, largely to deal with disputes related to the BRI[1] and several associated countries signed up to it.
In response, and fearful of being left behind, the western countries also launched a number of initiatives. The Blue Dot Network, comprising the U.S., Japan and Australia, was intended to provide assessment and certification to countries which do not have the expertise to carry out scrutiny of proposals and contracts. The U.S. passed the Better Utilization of Investment Leading to Development (or BUILD Act) in 2018 to merge many federal agencies and programmes into the International Development Finance Corporation. The U.S. also announced a Build Back Better World as an alternative to OBOR for the infrastructure development of low- and middle-income countries. The Indo Pacific Economic Framework (IPEF) was formed to advance resilience, sustainability, inclusiveness, economic growth, fairness and competitiveness in the economies of its members. Europe came up with its own development programme called the Global Gateway. Barring IPEF, others did not see progress as they were based on blended financing which did not take off. The West however did have two other successful initiatives – the Quad and Indo Pacific.
China-U.S. relations are important as they tend to polarise the countries into supporting each other. The U.S. described this relationship as the 3Cs – Collaboration, Competition and Confrontation. However, it is clearly more competition than collaboration. Trade and tariffs have been an important facet of this competition. The technology denial regime that the U.S. is implementing, followed by “small yard, high fences” to restrict the transfer of technologies that could give China an edge, is also significant.
Additionally, the U.S. passed three acts, namely the Reciprocal Access to Tibet Act (2018), Tibetan Policy and Support Act (2019) and Resolve Tibet Act in (2024). These acts were passed to ensure that China is kept under pressure over the Tibet issue. On Xinjiang, the U.S. passed a Uighur Forced Labour Prevention Act (2021) to condemn the forced labour in manufacturing goods that Uighurs are subjected to, which is denied by China. In the last two years, there have been efforts made by the U.S. to reach out to China, evidenced by the number of visits made by the Secretaries of State, Treasury, Defence and the U.S. Trade Representative to China. Their objective is to establish a baseline for the bilateral, but China views it as being unilateral, not mutual.
To substantiate the view that the West is weakening, and the East is rising, it is necessary to look at the strengths and weaknesses of the world’s reigning unipole, the U.S.
On the strengths side, the U.S. has time and again proven that it can reinvent itself and emerge stronger from its troubles; it is still the global technology leader though China is fast catching up; the U.S. possesses technology and military might that is still unparallelled. It developed due to having a pluralistic society with talent from other countries that matched with the opportunities that the U.S. offered. The U.S. has a global presence through the approximately 750 military bases located all around the world; and its influence in the UN and the Bretton Woods institutions is strong.
On the weaknesses, the most significant is U.S. outsourcing of its manufacturing prowess due to globalisation resulting in neglecting the STEM education of its citizens. Then there is the divergent outlook between the Democratic and Republican parties and administrations; weak economic growth and unemployment; the narrowing technology gap with China despite efforts to deny technology to China; decreasing ability to be the global policeman; variance between the outlook of the government and U.S. companies with respect to China, and its naïveté about China and Pakistan in providing assistance to them in the past. Last is the U.S.’ unhealthy obsession about Russia.
In contrast, China is trying to increase its influence through the multiple Global initiatives mentioned, trying to develop military bases in several locations and also through the acquisition of ports or stakes in at least 90 ports in 53 countries. These ports are located at strategic locations in the Mediterranean Sea and the routes that run through it. There are also some ports in North America in which China has stakes. How these bases and ports can increase China’s influence is still unfolding.
China-Europe relations are of interest. Europe itself is not homogenous. The bigger economies, neutral nations and the group of Central and East European (CEE) countries and their differing outlook and relationships with China contribute to this. China established a 16+1 grouping with CEE Countries which became 17+1 when Greece joined. However, with Latvia, Lithuania and Estonia moving out of the grouping, it has become 14+1. This is a simple way in which China deals with separate groups of countries, and to leverage this group within the EU. From an effort to decouple from China, the EU is now looking at just ‘de-risking’ – meaning thereby that it is not possible to decouple from China. Europe’s immediate security concern is Russia, and China is a distant security issue. The Russia-Ukraine conflict has strained Europe’s relations with the U.S. – that too, may work in favour of China.
ASEAN is an area of importance to China and other countries. China has a large diaspora that is critical to this region’s relations with the U.S. and with China. The strategic location of ASEAN countries is a vital factor, and some of these nations are seeing high economic growth. That is why ASEAN centrality figures in each of the joint statements in Quad and Indo Pacific. ASEAN does not want to take sides between the U.S. and China as revealed in the ASEAN Outlook on the Indo Pacific. However, six of ASEAN nations have territorial issues with China in the South China Sea. The China-Philippines stand-off in the Second Thomas Shoal is becoming dangerous. ASEAN functions on the principle of unanimity, and this has been undermined, especially by China’s close relations with Laos and Cambodia. The Code of Conduct in the South China Sea between China and ASEAN has been under negotiation since 2018 and has not made much progress. China’s influence has increased in this region because of the Regional Comprehensive Economic Partnership trade agreement which was signed in 2019.
On China-East Asia relations, economics plays a major role. Analysts term China-Japan relations as hot on economics and cold on politics[2], China-Japan trade was a hefty$ 318 billion in 2023. Despite some strains, China-South Korea trade was $ 311 billion and China-Taiwan trade in 2023 was $268 billion. China and North Korea have a close relationship, with China probably being its only close friend. Of late, Russia’s engagement with North Korea has also grown close.
China-Russia relations are a mixed bag. The bilateral began improving in the 1980s. Apart from a brief period from about 2005 to 2011, during which military equipment did not flow from Russia due to reverse engineering by the Chinese of Russian equipment, the relationship has been strong. It became stronger after the U.S. grouped them together as revisionist powers in its National Defence Strategy in 2017. However, the bilateral came under stress when Russia launched its campaign against Ukraine, as it did not adhere with the stated foreign policy of China. This has since normalized, with trade between them increasing from $130 billion in 2021 to $240 billion in 2023.
Russia may emerge weaker after the Russia-Ukraine conflict, and its relationship with China is unlikely to undergo a major change as the latter steps into Russia’s back yard: In September 2024, reports appeared that China is improving its relations with countries in the Southern Caucasus like Georgia and Azerbaijan – the underbelly of Russia.
Certainly, China has built closer ties with Central Asian Republics (CAR). That region is seeing a tussle for influence between U.S., Russia and China. The CAR look up to Russia for security and at China for economic support. They are among the first to sign onto any initiatives that China launches. There are reports of their being the conduit for China’s assistance to Russia in the Russia-Ukraine conflict. Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan are part of the Collective Security Treaty Organisation along with Russia and Armenia. However, some issues with respect to treatments of Kazakhs in China and contracts for development projects like the BRI owing selectively to Chinese companies are starting to surface, creating stresses.
China-South Asia relations have been in the limelight for some time now. China is not having a free run in South Asia as it expected. Still, the China Pakistan Economic Corridor and China Myanmar Economic Corridor give China access to the Arabian Sea and Bay of Bengal respectively. They will allow China to overcome its Malacca Dilemma, spelt out by former President Hu Jintao in 2004.
The theory of four concentric circles through which China is expected to increase its influence, is now in play. The first and inner circle, is the internal stability of China. The second is China’s immediate neighbourhood followed by China’s extended neighbourhood. The last, outer circle is the entire world. China’s second centenary goal of being a major power by 2049 corresponds to the fourth concentric circle.
On the economy, China is already the second largest economy in the world notwithstanding the problems it has been facing of late. China’s economic rise was due to a low -cost, labour-intensive and high-volume growth model. It benefitted greatly from the entry into the WTO and globalization.
Now China is preparing for an alternate economic universe. China holds the largest number of U.S. treasuries outside the U.S. and has ambitions for the Yuan to be the dominant currency of global payment. It introduced a Cross border Interbank Payment System (CIPS) as an alternative to the SWIFT system. China has already launched a Digital Currency Electronic Payment system and has started offering it to other countries. It has currency swap agreements with more than 40 foreign central banks or monetary authorities and 31 bilateral currency swap agreements are in force, with a total scale of 4.16 trillion yuan ($586 billions).
Externally, China has been active in creating the Asian Infrastructure Investment Bank and New Development Bank that are seen as alternatives to the World bank, International Monetary fund and Asian Development Bank. To avoid attracting U.S. sanctions on Iran, China launched the Petro Yuan in which to buy its oil from Iran. Now Russia, Iran, Venezuela, Indonesia and Saudi Arabia have agreed to trade oil in the Yuan. China has been acquiring significant quantities of gold in the recent past. In 2023 alone, China bought 225 tonnes of gold, with gold reserves now at 2,264 tonnes, the sixth largest in the world, and a quarter that of top placed U.S.’ 8,133 tonnes but thrice that of eighth-placed India’s 840 tonnes[3].
All these are surging towards de-dollarisation. While not imminent, de-dollarisation is gaining momentum. There are a flurry of reports on a BRICS currency to be launched, even though it is not acceptable to many of the BRICS countries.
The consequences of these multiple, overlapping, overarching ambitions and initiatives are profound. With its growing economic might, China has become an irreplaceable part of all supply chains, impacting several economies. It is emerging as the second pole, with its sights set on 2049, when it aims to become the single world power. Its increasing influence has resulted in a polarisation between China and the U.S. within the U.S. itself, in Europe, ASEAN, East Asia and Africa. China’s political, economic and military growth is so formidable that no individual country can face the China challenge alone. So far, the efforts made by the West are still ineffective. As China continues to build market and military bases abroad, its reach across the globe will only increase.
The implications for India are sombre. China can’t be wished away as it is India’s neighbour, with on-going territorial issues between them. Naturally, the countries in India’s neighbourhood will balance China and India and aim to gain the maximum from both. China has set expectations high, delivering faster on its promises, debt or no debt. This has already raised expectations of India by its friends, especially of economic assistance. On its part, India should have few expectations from its friends, particularly in its neighbourhood. This was evident from the lack of statements from them during the Doklam (2017) and Galwan boundary incidents (2020).
New Delhi can move smart, and increase defence cooperation with countries in its neighbourhood, ASEAN and Africa. India’s aspirations will continue to be contested by China, which has resisted the UN proscription of terrorists living in Pakistan, not allowed India to get membership of the Nuclear Suppliers Group, and not supported India’s permanent membership in the UN Security Council. India has its own ambitions of becoming a major power – a goal that will be impacted by China’s ambitions. India must prepare for the challenges that arise therefrom and seize the opportunities that will surely lie along this path.
Lt Gen S L Narasimhan is the Adjunct Distinguished Fellow for China and National Security Studies at Gateway House.
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References
[1] https://www.scmp.com/news/hong-kong/article/3234446/belt-and-road-summit-hong-kong-international-mediation-centre-set-resolve-project-disputes
[2] Jio Kamata in The Diplomat on 22 Sep 22.
[3] https://www.forbesindia.com/article/explainers/gold-reserves-by-country/90127/1