China’s parallel global order


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Who was the greatest beneficiary of geopolitical events in 2014? While it will take time to grasp the consequences of the two key developments - the Ukrainian Crisis and the rise of ISIS in Iraq and Syria - it seems likely that China will emerge as one of the great winners of recent dynamics. Indeed, seen from Bejing, it is hard to imagine a more benign script than that which has unfolded over the past ten months.

Renewed instability in Iraq and Syria effectively curtailed the United States' attempts to pay less attention to the Middle East and focus on the most potent long-term threat to US hegemony: the rise of China. While a renewed US troop deployment in the Middle East seems unlikely, President Obama still finds himself in the unenviable position of coordinating the West's response to the Islamic State (IS), which is, the US government readily concedes, a "long-term effort." In the US foreign policy debate, the discussion about the rise of China has been once more eclipsed by debates about the Middle East. The same is true of the Ukrainian Crisis and Russia's frayed relations with the West, which occupies far more space during think tank debates in Washington, DC and policy op-eds in US newspapers than ideas related to China.

China is set to benefit for two reasons. First of all, current dynamics assure that the United States pays only limited attention to China's rise and increasingly global projection, allowing Beijing to remain under the radar for more time. Secondly, Western attempts to isolate countries such as Russia drive the new pariahs into the Chinese orbit without generating any significant cost for Beijing. As a consequence, Beijing has little interest in helping resolve the trouble in Ukraine. Never before has Russia been as strategically dependent on China as it is today.

This is the major argument of a new interesting policy paper about China's global strategy, published by the Mercator Institute for China Studies (Merics), a Berlin-based think tank that focuses on China. According to the authors, China is slowly building a "parallel structure" that will eventually challenge Western order. Yet contrary to many other China alarmists who unrealistically expect China to destroy existing structures in the near future, the paper makes a more subtle and detailed argument: Policy makers in Beijing will continue to invest in Western-dominated structures and push for their reform. Yet at the same time, they will quietly expand networks in many different areas, ready to engage those who do feel today's institution fail to satisfy their needs, or those who seek to increase autonomy from the United States.

China's strategy, the authors assert, is not aggressive. Most of the structures it sets up are complementary or parallel to existing ones, rarely challenging them head-on. They include initiatives in the realms of finance, currency, infra-structure, diplomatic dialogue, trade and investment and security (see image below).

China

One of the main goals of establishing parallel structures is to slowly enhance strategic autonomy and reduce China's dependence on Western-controlled structures -- for example by strengthening the role of China's currency and establishing a China-centric global payment system. Yet conscious of its limitations, China continues to actively support existing structures, making it harder for the West to accuse China of undermining current order.

The list of Chinese-led initiatives is impressive and shows that China is the only non-Western power with a global project - contrasting the other BRICS countries, which harbor global ambitions but lack the diplomatic clout to implement them. And yet, several projects the authors list are in their early infancy and far from operational. The BRICS Development Bank so far exists on paper only, and the BRICS Contingency Reserve Agreement (金砖国家应急储备基金) and the Chiang Mai Initiative Multilateralization (CMIM) are embedded within the IMF system. In the same way, it is uncertain whether the Nicaragua Canal (尼加拉瓜運河), will ever be completed (construction is scheduled to begin in December 2014).

Still, the authors are correct to point out that in some regions of the world, such as in parts of Africa, Latin America and Central Asia, several of China-led structures are already at work at the same time, enhancing their impact (e.g. in the fields of infrastructure, investment and currency swaps). While it is difficult to imagine how the Bo'ao Forum for Asia (博鳌亚洲论坛) will ever become more influential than the yearly World Economic Forum (WEF) in Davos, China is likely to be more successful when it comes to offering tangible benefits such as easy credit to finance infrastructure, a proposition particularly attractive in the Global South.

The authors are cautious enough not to make any specific predictions about the speed at which the China-centric institutions will supplant Western-led institutions, or whether this will happen at all. Rather, they point out that global instability (producing pariah regimes in need of China's support) and institutional inertia (slowing down necessary reform to provide more space for emerging powers) are likely to benefit China as they reduce the legitimacy of existing structures.

However, provided that it continues growing economically, China will expand its influence either way, either within existing but reformed structures that grant it more autonomy and decision-making power, or within China-centric institutions tailored according to its strategic needs - or both. As a consequence, China has no interest in actively destabilizing existing structures or aggressively promote alternatives.

The implications for Brazilian foreign policy are clear: Brazil must maintain strong ties with both traditional structures and actively participate in new institutions led by China. An either-or strategy is certainly bound to fail. Fully relying on established organizations such as the World Bank and the IMF is risky because their reach is likely to weaken in the coming decades. At the same time, focusing on new institutions created by China alone would be unwise because many of them will take years to be fully operational, and their success is far from assured. Engaging in both traditional and new structures is thus the only viable choice - in 2015, Brazil's President should therefore accept the invitations to speak in both Davos and Bo'ao.

Read also:

Book review: “China Goes Global: The Partial Power” by David Shambaugh

What do Chinese academics think about Brazil? Not much, apparently

Book review: “The Boxer Rebellion and the Great Game in China” by David J. Silbey

Why China will back Russia on Ukraine

Photo credit: Reuters / Kevin Lamarque

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