China as a serious rival in the international rules-based system

Part 4 in our series China’s role(s) in the world economy

China as a rival: In part 3 of our series on China’s role in the world economy, we showed that China already competes on an even level with advanced economies in important key technologies or has even surpassed them.

Part 4 looks at the international rules-based system. Since China under Xi Jinping has revived and fueled the “competition of systems,” believed dead by so many after the fall of the Soviet Union, we think it has become clear by now that China will take on the role as a systemic rival now.

The international, rules-based order shaped by Western liberal democracies emerged in the 1990s following the collapse of the Soviet Union and the postulated “end of history” (Francis Fukuyama), i.e., the “competition of systems.” It was thought that this had been overcome but is now undergoing a period of upheaval.

In particular, the global financial and economic crisis of 2008/2009 has shaken confidence in this order and its economic promises of salvation worldwide. Since then, Western democracies seem to lurch from one crisis to the next, repeatedly appearing hesitant and disoriented – from the euro crisis to the refugee crisis to the transatlantic crisis after the Trump administration took office and most recently, the Corona crisis.

In parallel, China’s successful economic rise has taken place. But contrary to Western expectations, it was not accompanied by a political transformation toward democracy. The Bertelsmann Transformation Index (BTI) ranks 137^th developing and emerging countries on a scale of 1-10 “on the path to constitutional democracy. China ranks 114^th, and with a score of 3.3, falls into the category of hard autocracies, along with countries such as the Democratic Republic of Congo, Myanmar, and Afghanistan.

Under Xi Jinping, China’s system of state capitalist autocracy has not only become more entrenched, but China is also positioning itself more and more confidently in foreign policy as an alternative to democracy and a market economy.

In doing so, it is taking advantage of the weaknesses of the West outlined above. This change in Chinese foreign policy, which was foreshadowed with the change of government and is conceptualized in the BRI, came to full fruition at the 19th Party Congress of the CCP in 2017.

In his work report, Xi announced a “new era of socialism with Chinese characteristics,” in which China wants to cultivate a “new form of international relations” and in this way establish a “community of humanity’s destiny.”

This is linked to an increasing rejection of China‘s foreign policy principle of non-interference, the establishment, and the expansion of channels for international influence, including those parallel to existing ones, and targeted marketing of the Chinese development model.

The report literally states that this represents “a new choice” for developing and emerging countries and that “Chinese know-how and Chinese plans contribute to solving humanity’s problems.” From a Western perspective, China has openly positioned itself as a systemic rival and is openly pursuing the goal of reshaping the international order in the Chinese sense.

This can be seen, for example, in China’s attitude toward the global South, especially in Africa, where China has already established itself as a reliable and responsible alternative to Western countries. While Africa seems to be the “forgotten continent” for them and rarely appears on the political and economic map, China is proactively expanding partnerships with African countries.

This is happening both through significantly intensified trade and investment relations in the context of the BRI and through political alliances, for example, at the United Nations. In this way, China secures a growing number of advocates for Chinese interests in international forums and institutions.

Even if this type of Chinese involvement in developing and emerging countries is not free of problems, as described above, it nevertheless brings with it urgently needed capital, know-how, and – perhaps most importantly – development prospects. In this way, China may be providing more “help for self-help” from within its autocratic system than has perhaps been done in the context of classic development aid from Western democracies.

The Corona pandemic is the most recent example of how China, despite its initially delayed information policy, has succeeded in presenting itself as a responsible actor and its associated political system as a serious alternative to the West.  In the course of its “mask diplomacy,” China supplied urgently needed health goods and thus simultaneously strengthened the “Silk Road of Health.”

On the other hand, western countries, especially the USA, began to “compete for medical goods with sometimes questionable means.” When it comes to vaccine procurement, the West is well on the way to dismantling its own values and making itself untrustworthy, especially vis-à-vis developing and emerging countries:

The rich industrialized countries, which account for only 16 percent of the world’s population, have secured 70 percent of the vaccine doses expected to be available in 2021 from a total of five leading vaccine manufacturers – and this despite the fact that the countries of the Global South are suffering more economically and socially from the consequences of the pandemic and would urgently need access to sufficient quantities of vaccine to combat it.

While the West seems to care primarily about itself in the Corona pandemic, China (also) cares about others, albeit not due to altruistic motives. Nevertheless, this situation may become an additional driver of rivalry between the two underlying economic and social systems.

The 5th and last part of our China series tlooks at Germany’s upcoming general election as a starting point to draw up the challenges and opportunities that the new government of one of the most important EU economy will face in its relations with China – a situation that will certainly be similar for other EU countries.