It’s no secret that the People’s Republic of China is nearing completion of a decades-long project to reassert itself as a global force. Whether it’s via the ‘One Belt, One Road’ initiative to spend billions on infrastructure spanning Africa and Asia, its formation of the Asian Infrastructure Investment Bank or its military build-up in the South China Sea, China has steadily worked to make itself an indispensable player on the world stage.
China’s rise, however, didn’t have to mean a corresponding loss for the United States. There’s room for at least two superpowers, and China has been content to share the field and even defer on matters far removed from its primary goal of enriching its roughly 1.5 billion citizens.
Then along came President Donald Trump.
Throughout his just-completed 12-day trip to Asia, Trump hammered his familiar themes: That the US will pursue its own interests above all, that it will no longer accept “chronic trade abuses” and massive trade deficits with the export-heavy countries of Asia; that the US will confront North Korea with allies, if possible, and alone, if necessary; and that America will henceforth court only bilateral trade deals with interested partners. He was feted, courted, red-carpeted and, on almost all major forays save for his attempts to build a coalition against North Korea, he was politely and unequivocally rebuffed. The most significant announcements on the heels of his trip were that the 11 nations remaining in the Trans-Pacific Partnership (TPP) would proceed with the pact without the US and that they would seek to work with China on regional trade and security on their own.
It isn’t just that, as Ambassador Susan Rice rightly assesses, the American president is helping “Make China Great Again”. It’s also that his words and actions have facilitated — accelerated, even — a US retreat from the world stage. That may not harm the rest of the world, but it will surely undermine the US. As the rest of the world, and Asian nations especially, realise that they are fully capable of solving vital issues such as trade, aid and security without the US, they will also knit relationships that exclude America. The US remains an extremely powerful world actor, but not nearly as much as Americans like Trump may think.
Had Trump not been elected, China’s President Xi Jinping likely still would have asserted a more prominent global role for his country. His January speech at Davos denouncing protectionism, his October address to China’s Communist Party Congress heralding a “new era” of Chinese power and his speech last week in Vietnam calling globalisation an “irreversible historical trend” were the logical rhetorical conclusions of China’s evolution, going back to 1989, towards an authoritarian capitalism that is deeply integrated into to the global economy. But Trump has accelerated that trajectory and transformed China from a rising power into what soon might be the only economic superpower energetically engaged with the rest of the world. The attendees last week in Da Nang heard Xi’s words as a clear rebuke to Trump’s belief that the clock on trade and economic interdependence can be set back. Xi signalled to Asian leaders that China intends to become more involved and thus underscored the vacuum that Trump’s lack of leadership has left.
And it isn’t simply Xi’s rhetoric. By drawing 11 Pacific Rim nations closer to the US orbit, the TPP was designed as a practical hedge against China’s economic domination of Asia. Trump’s withdrawal, as others have noted, was a massive gift to Beijing. So too has Trump’s harsh stance on the current bilateral trade agreement with South Korea caused the new administration of President Moon Jae-in to focus more on building bridges not just with China, but with Japan and other Asian nations. Again, that is likely a good thing for South Korea, but it has caused an utterly unnecessary diminution of the US.
The relative decline of the US didn’t begin with Trump. Even more, the changing distribution of power is less a sign of American weakness than it is a signal of the increasing vibrancy of much of the rest of the world. In the middle of the 20th century, the US accounted for more than half of global trade and industrial output. Well until the end of the 20th century, the relative economic and military might of the US meant that many multilateral arrangements were not equal arrangement among nations, but were instead dominated by America’s interests and demands. And when countries disagreed or confronted the US, they did so at substantial risk of being denied full access to American goods, capital or security protections.
That is no longer the world we live in, though. The US may still be the largest global economy and most substantial trading partner for many countries, but in the past decade, the relative importance of the US has decreased while China’s has soared. For instance, according to the World Trade Organisation (WTO), trade between the developing world and the developed world accounts for more than 50 per cent of all developing country trade in 2005, and now accounts for barely 40 per cent and is heading lower. Where the US, and to a lesser extent the European Union (EU), were the most important sources of goods and capital even a decade ago, now the most important markets and allies for developing countries are other developing countries, and China above all.
China entered the WTO in 2001 and is now America’s largest trading partner. China has also diversified its trading partners globally so that it no longer depends nearly as much on the US. Its trade with the US has grown year after year, but according to data compiled by the US Federal Reserve, its trade with the rest of Asia, Latin America and Africa, along with the EU, has grown faster. So, too, have US exports to China, especially in services, which is yet another sign that China needs the United States less, while the United States needs China more. If you factored in the percentage of profits for US multinational companies that derive from China-related business, that picture becomes even more acute.
Trump speaks as if the economic power balance has changed little, when in fact it has changed tectonically. That’s true of military force as well. The US remains by far the most dominant nation in the world militarily, but China, expected to spend anywhere from $150 billion (Dh551.7 billion) to more than $200 billion a year on its military, now has the capacity to counter any American military action in Asia except at a massive and likely unacceptable cost to Americans.
Trump appears to believe that strong rhetoric is a precondition to power without recognising that strong rhetoric in the absence of the economic, diplomatic and military imbalances that supported it in the past is hollow. China, however, is not only speaking the patois of globalisation; it is doing what the US did for much of the 20th century: Investing billions upon billions in the infrastructure of less-influential, developing trading partners around the world. It is becoming more deeply involved in multilateral institutions and starting to create its own. Its leaders, Xi in particular, have become a voice for globalisation. And it is building a military that inoculates it from the threat of easy coercion.
In the face of these shifts, Trump and a US waving a big stick while making demands appear somewhere between comical and tragic, like an ageing celebrity who still expects to see the paparazzi waiting outside, hoping for a glimpse, hanging on every word. Not so.
And it didn’t have to be this way. The US remains immensely wealthy and powerful; it will take more than a year of Trump’s zero-sum framework to change that. No matter what, at the end of Trump’s term, China will have improved its position, but that position is significantly enhanced by the American president speaking and acting as if the American century were in full bloom.
So far, most of the damage has been limited to diminished American prestige. Soon enough, though, the economic and then security effects will be felt. Before the bonds so carefully built over years decay entirely, the US has time to shift gears. But only if Trump comes to understand that American power cannot be based on the weakness of others. He may never recognise that; perhaps the next president will.
— Washington Post
Zachary Karabell is the head of global strategies at Envestnet, a financial services firm, and the author of The Leading Indicators: A Short History of the Numbers That Rule Our World.
