Forget G-Zero, it’s China that’s leading the world
This is the third in a series of responses to Ian Bremmer’s excerpt of Every Nation for Itself: Winners and Losers in a G-Zero World. The first response can be read here and the second here.
Ian Bremmer is launching his new book with an eye-opening observation above the uncertain future of global order. This time he is warning us of the dangers of having a world with no clear leader. In his view, the United States and Europe are in a weak position to sustain any hegemonic position. In particular, their focus on austerity measures can complicate their role as military leaders of the world (e.g., NATO’s role). Moreover, multilateral organizations, such as the G7 or the G20, will not do the trick either. The G7 is in the middle of the worst crisis in almost a century, and the G20 has members with preferences that are hard to aggregate. BRICS, the organization supposedly coordinating the efforts of Brazil, Russia, India, China and South Africa, is too young and preoccupied with other issues to act as the new hegemon. What, then? Where is the world going? Who will emerge as the new leader?
The obvious candidate is China. I have not read the entire book, so I do not know precisely what Bremmer’s position is on China. But because the book’s argument is that there is no real global leader now, I assume he believes China will not be taking that role in the future either. I want to argue, in contrast, that China has begun to play that role and has the potential to become a hegemon. Yet, if China rises to be the global leader, there will be major tensions in the institutional foundations of global capitalism as we know them today. As China’s leadership role grows, the global institutions that have ruled the world in the last 20 or so years will have to change.
Bremmer argues that the most important tools for establishing global power and leadership today are the traditional economic levers and the cyber-capacity to conduct industrial espionage and protect or control information and communication across borders. I would argue that China’s proven track record in both of these areas makes it an ideal candidate for world leader. It is the champion of cyber-censorship and the only country that has tamed large global corporations, compelling them to share user information with the government. Moreover, any major company doing business in China already has bent over backwards to share information and intellectual property with its “forced” local partners (i.e., partners that are the product of mandatory joint ventures dictated by the government of Beijing or any of the Chinese provinces).
China is champion when it comes to using economic tools to impose global discipline, induce countries to do what it wants, and change global conditions. China indirectly determined interest rates in the United States for years, acting as the largest buyers of Treasury bonds. It also uses conditional loans to get African governments to do what it wants, including favoring Chinese companies over locals or Western companies. Furthermore, China has increased its power within the IMF and other multilateral organizations and has been sought after by the EU to participate in its bailout fund.
In addition, China has already been challenging the power of Western countries and organizations for years. It is emerging as a superpower on the sidelines, securing access to natural resources and exercising soft as well as military power in its backyard and beyond. In Africa, China has filled the void left by international organizations, acting as a development agency and as a soft (sometimes hard) imperial power. Many criticize the means, but nobody questions the results, e.g., new roads, bridges, buildings, ports, railways, etc. A similar phenomenon is beginning in Latin America, especially in natural resources. In particular, Chinese investments in oil exploration in Cuba are part of this trend and show another important dynamic as well: China likes to play in the U.S.’s backyard. In fact, China, more often than not, works against U.S. wishes, whether by not supporting efforts to impose tight sanctions on Iran, or pushing the boundaries of the South China Sea, or not being as active as it could be when it comes to North Korea.
So, what if China does become the next global hegemon? There will be three major changes in the global diplomatic and economic equilibrium. First, multilateral organizations, as well as the United States and Europe, have been exporting democracy and human rights as universal values. Many times they have imposed democracy or human rights provisions as part of conditional agreements tied to loans or foreign aid. China does not believe in those values and does not play by those rules. Chinese interference in Sudan, basically promoting its own investments, weakened Western efforts to impose sanctions on the Sudanese government for its human rights violations and support for terrorism. In 2004 China also rescued Angola and its autocratic leaders with a credit line when the IMF was about to impose tough conditions, mostly focused on opening the books of the country and its oil company, tied to a loan package.
Why G-Zero is a good thing
This is the second in a series of responses to Ian Bremmer’s excerpt of Every Nation for Itself: Winners and Losers in a G-Zero World. The first response can be read here.
It’s said that predictions are risky business, especially those about the future. No one knows that better than Ian Bremmer, who in addition to his multiple books has created one of the more successful risk analysis organizations. Being in the business of highlighting risks, he has for the past few years focused on the breakdown of the world order most of us grew up with, whether a 20th century world of great-power struggles or an early 21st century world of American economic and military preponderance. Now, says Bremmer, those systems are finished and in their stead we have… nothing.
It’s a compelling, alarming and yet exhilarating vision – though few probably embrace that last adjective. Compelling because it admits that most of the models we use to predict what will be are based on a world that no longer exists and hence are likely to be wrong. Alarming because it leaves us with a tabula rasa whose outcomes are utterly uncertain. Yet exhilarating because it offers the promise of a brave new world that may go in any direction, including more productive and positive ones than many observers currently assume.
Bremmer extrapolates from current trends about what this world might look like, and tends to focus on the dangers that lurk rather than the diamonds in the rough. He sees tough times for China, whose model, he predicts, will be less able to adapt to a world of increased competition for natural resources and more state capitalism that competes directly with the Chinese. He sees hard roads for weak states and troubled societies, with Syria’s grinding civil war and lack of international action just a harbinger. He sees a United States constrained by debt and a public looking inward, and a euro zone mired in years of crisis. And while he does acknowledge that even a G-Zero world will have winners such as Brazil and Turkey, he sees the emerging vacuum as more of a challenge than an opportunity.
As a description of the world we are entering, it is trenchant. Yes, the United States will remain the world’s largest economy for a while to come and its most dominant military power for a generation. But the coercive power of those assets is and will be ever more muted. Fewer societies around the world believe that the American model is the one to copy, and a large military can preserve security but not prosperity. Multiple states around the globe have the confidence, the leadership and the means to chart their own way and refuse to bow to the will of any other nation. And as the 20th century mechanisms for handling all sorts of international affairs decay, unpredictable crises and unforeseeable outcomes will become more common.
But that doesn’t mean that the international system will be less stable or that prosperity and security will not proliferate. There is, in fact, a risk that peace will break out, rendering the traditional tools of states less useful. It’s clear already that global companies are reaping astonishing benefits from the growth of a global middle class and from a largely anarchic but effective flow of commerce and capital that seems to be working brilliantly almost everywhere except in its 20th century heartlands of Europe and the United States.
In essence, if the G-Zero idea is pushed further, you could be left with a world that truly doesn’t look like the 20th century, or like most centuries. It could be a world where the absence of great-power conflict – the rivalry of China and the United States notwithstanding – leads not to chaos and anarchy but to stability and, at most, low-level armed conflicts. You could be in a world where the dominant theme is the churning and rapid transition of billions of people from agrarian and urban poverty into a middle class that consumes apartments, white goods, food, clothing and entertainment. And you could be in a world where tension is ubiquitous, uncertainty constant, but actual lethal and society-destroying conflict preciously rare.
Perhaps we are approaching G-0 but the current global power will not go away so easily. They won’t go gently to that good night and will act in dangerous ways to prove to their people that they were still a country envision by God himself. The danger we face with peak resources and explosive population growth will pale in comparison to the old models of the late 20th century. “good riddance”? I really hope so.
Since when has G-anything run the world?
This is part of a series of responses to Ian Bremmer’s excerpt of Every Nation for Itself: Winners and Losers in a G-Zero World.
Ian Bremmer has, as always, made a perceptive and provocative observation about the state of the world. Where I would respectfully differ from him is over the true significance of this observation.
It really comes down to what is meant by “global leadership,” on the one hand, and “global governance,” on the other. It is conventional to call for more of the former and to bewail the weaknesses of the latter. And with Bremmer I would accept that there is a shortage of such leadership and that global governance is patchy at best. The world is certainly not being run by the G-20, or by a G-anything else.
But the question we should ask is: “So what?” Or, by way of extension: “So what’s new?”
For a start, I do not recall a time during my working life of, so far, 32 years, when the world was truly being run by G-anything. I remember being more than a little excited when in 1982, as a cub reporter at the Economist, I was sent to cover the Williamsburg Summit of the G-7. I felt flattered to be sent, until I realized that nothing really happened at these summits beyond the slight editing of a banal communiqué.
The important thing about these summits, and about the G-20 summits of today, is not the meeting itself but the process that leads up to it. Governments are forced to take part in the sharing of information and ideas and some semblance of cooperation; and, just as crucially, for a brief period before the summit, international affairs break through the normal domestic preoccupations of national leaders. Furthermore, the global scrutiny generated by summits builds at least some sort of a barrier against non-cooperative, even aggressive, behavior – especially trade protectionism, but probably on security issues as well.
In a world in which power is more widely dispersed than ever before, thanks to what Fareed Zakaria pertinently called “the rise of the rest,” that process of cooperative discussion and mutual restraint is, it seems to me, the best that we should hope for from global governance. Since the Lehman shock of 2008, this process has worked passably well: There has been no substantial retreat from globalization, no big resort to beggar-my-neighbor policies, no naked attempt to exploit the economic weakness of America or Europe.
A thoughtful article. The G-whatever can’t and shouldn’t try to contol the world economy, in fact their governments shouldn’t even try it in their own domestic economies but leave a level playing field for the private sector.
The good and the bad of globalisation is in the detail: it can be good insofar as it creates mutual economic interests and trading which discourages conflict and the prospects of war (the devil at work in humankind). It can be bad if a few corporations have the various governments in their pockets to extinguish local companies, creating imperfect competition and toxic effects. The latter is what the banking industry seems to have done in the West.
Global crisis politics – A Davos debate with Nouriel Roubini and Ian Bremmer
As governments grapple with the global crisis, politics has taken on central importance in determining the course of the world economy — and political risk is more significant than ever.
Two leading experts on the financial crisis and its political dimensions — Nouriel Roubini and Ian Bremmer — gave exclusive answers this week to Reuters questions on the key risks for 2009 and beyond, and the countries to watch.
Roubini is professor at the Stern School, New York University and chairman of economic forecasting consultancy RGE Monitor. He is widely credited as one of the few leading economists to forecast the onset of the crisis and its implications. Bremmer is president of political risk consultancy Eurasia group, and co-author of the forthcoming book “”The Fat Tail: The Power of Political Knowledge for Strategic Investing”
In which countries do political and economic risks intersect most ominously in 2009?
Bremmer – I would start with the United States. How U.S. policymakers respond to the meltdown of the U.S. economy hugely affects both the global financial crisis itself and much of the associated political risk. The politics are especially worrisome because the new Congress will likely wrestle with the White House for control in several key policy areas.
In Congress, members of both political parties have complained that the legislative branch ceded too much policy authority to the executive branch over the past eight years. The new Congress wants that power back. The Democratic leadership now enjoys large majorities in both the House (257-178) and the Senate (probably 59-41). Feeling empowered, even Democratic senior lawmakers won’t always wait on the inexperienced young president to set the agenda. That dynamic creates even greater risks than usual that policy will become a product of political horse-trading rather than coherent economic analysis.
Elsewhere, the economic and the political fronts are colliding to generate turmoil and risk. In Russia, the financial crisis has slowed the economy and put downward pressure on the ruble, reducing the purchasing power of ordinary Russians. The government has had to spend down significant amounts of its considerable financial reserves. There is anxiety about the health of Russian banks. Prime Minister Putin and President Medvedev remain popular and fully in charge — for now.
This is a huge amount of speculation, with little or no relation to the trough fundamental problem.This is the big picture; people in the US & UK have borrowed more money from foreigners than they can afford and now cannot pay the money back!The US & UK have two options; bankruptcy or inflation.Since bankruptcy is not a realistic option, they will choose inflation!Massive inflation simply must happen to restore balance!The only thing that governments can do is to delay the inevitable.The worst case scenario is that the current mess continues for many years to come before the inevitable inflation event takes place.Much better is to bite the bullet right now! Crash the Dollar & Pound in order to arrive to a more legitimate value.This will hurt a lot! But a lot less than to muddle ahead like this for a decade before thesame event takes place anyway!
China may be developing into a world player in the near future but it is not going to be a dominating power or a “hegemon” like the US of today or the GB of yesterday. This is because as a continental nation (as opposed to an island nation like GB or Japan) with a long history of both good and bad times the people have settled into a set of values unlike that of the western nations. For a western scholar to think that China will behave like the US today is because few makes any attempt to understand the language and even less so to study Chinese history and culture.
China had a world class navy in the Ming dynasty long before GB ruled the waves. Even the all powerful emperor at that time found that effort not sustainable. China learned the lesson well after the emperor grounded all war ships and banned all adventure overseas.
China also learned that the many occurrences of bad times in its history were with a weak central government. Starvation and deaths were rampant at those sorry days. Thus it is the ingrained human values in Chinese culture to have sufficient food, clothing and lodging for all. This is fundamental and all else are secondary.
China has also learned that human nature as it is, the western election tools did not bring in democratic or even good government as the losers in the election would do everything in their power to bring down the government regardless of the urgent need to achieve those fundamental human values. Good governance (as opposed to good government) may be an ideal like communism that is impossible to achieve.
China understood it could not be a world cop nor a charity to all nations. Its primary target is to meet the fundamental values for its people. Unlike Christian religion of a “god” making “people” look like Him, China believe in good leadership to achieve those fundamental values by exploring different components of political systems that suit itself more. It is still “work-in-progress”. Thus China is no “god” and in no position to tell other nations what system they must adopt for their own development now or in the future as it is no doubt different for different nations. The Mao’s era has long gone.
Could China be a “hegemon” in the same manner as the US of today? The chance is less than 0.1%. Could China lead the world? History has shown that it has done that in the past and may well do so again in some respect but not in the way many western nations feared.