- China is improving ties with the rest of the world in what is a late start compared to other countries.
- Its efforts to do so are being overshadowed by an increasingly insular world outside its borders.
- It remains to be seen if China can pick up the baton of globalization, albeit on its own terms focused on dealmaking and trade.
There has been so much discussion of the United States pivot to Asia that few people have stopped to consider the implications or the success of China’s own pivot to America.
China already wields enormous influence in Asia through its size and its adroitness at negotiating, buying or bullying its way to goodwill among its partners, much like every other player on the geopolitical landscape. It has or is part of free trade agreements that include just about every country in the region.
The all-but-certain death of the Trans-Pacific Partnership (TPP) opens another door for China to step in with its own Regional Comprehensive Economic Partnership (RCEP) that includes India, Japan and most countries in Southeast Asia. China also has plans to push for the Free Trade Area of the Asia Pacific (FTAAP), which would include some 21 countries in Asia and America.
Meanwhile, the U.S. pivot has been one of the key shifts in global economics and policy over the last couple of decades. It had the promise of helping the world continue along the path towards greater globalization.
Now, however, President-elect Donald Trump won partly by promising to shut the doors, slam the shutters down and build walls.
Meanwhile, in China, President Xi Jinping is cementing his base at home while building bridges abroad.
It is a somewhat surreal turn of events.
China’s giant kitty is enormously appealing to countries across the region that need investment while its middle class is enormously appealing to those that need customers. China is willing to work with both.
Trade in Asia (or anywhere for that matter) is not a zero-sum game, not by a longshot. There is room for all: U.S, China, European countries, Asian countries, Latin American countries and even, to a much smaller degree, African countries.
Trade is, however, related to influence. More trade, more investment, more deals, more jobs all equate more influence. And China has been building that influence for a couple of decades at a rapid pace.
A look at the (not-so-recent) past
A bit of context is useful, though. China is coming to the party way, way late.
When the great global traders of the 16th and 17th centuries built great transatlantic empires, China shuttered in on itself. And when great trading nations transformed themselves into the great colonial powers, China lost out due to a lack of innovation and an empire that was generally inward-looking. A couple of revolutions and a push to close borders kept China out of the race for much of the 20th century.
The West has problems, yes, but it got richer and richer. China also has problems but it did not get as rich as the West.
For about three decades, though, China has been making huge strides in growth and in expanding its global network. It is making up for lost time.
China is not exactly a great egalitarian. It takes virtually no immigrants or refugees – there are literally only a few hundred of them in the last three decades, compared to hundreds of thousands per year in the U.S. or Europe or Latin America. Individual rights and freedoms are less of a thing in China, which built itself on the promise of making people rich, not free.
America and Europe, on the other hand, got rich by promising both wealth and individuality. It is a spectacular story. Surely, it is a story that is replete with mistakes, gross injustices and huge problems but it is a spectacular and generally inspirational story that has empowered hundreds of millions. It is a story and a track record that the U.S. and much of Europe now seem intent on reversing.
They seem to be less keen on engaging than on building walls.
As Trump was raising cheers by promising to build his walls and rip up treaties, Xi was heading to Latin America to build bridges.
In 2015, China signed a bunch of agreements to double bilateral trade with Latin America to US$500 billion within a decade and to boost investment to US$250 billion, noted the Economist. As Trump was building his transition team, Xi was touring Ecuador, Peru and Chile.
While the U.K. voted for Brexit, the Chinese government and Chinese companies, both state-owned and private, were making deals to tap resources, build infrastructure but also reach deep into consumer markets and facilitate growth.
All these deals don’t always work great for China’s partners, but China is always looking to make a deal. The country might not be great when it comes to immigration or individual rights but it is open for business.
After decades, or centuries, of looking outwards, the Western powers are generally turning inwards: Brexit, Trump’s victory and the death of TPP, the rise of the extreme right in France and more. It was just a few weeks ago that a small region in Belgium almost sank a free trade deal with Canada after years of negotiations.
China is going the other way. It is looking out. China is signing trade and investment deals left and right. It is extending the reach and influence of its currency, which is now the fifth most used in global trade and now a reserve currency. In a somewhat unexpected twist, China is picking up the baton of globalization at least in terms of trade and investment.
I’m in no way qualified to say whether this is good or bad for the world in the long run or if the new drive for tighter borders and less global interaction in the West is a temporary glitch in a relentless advance towards globalization. It does seem clear, however, that much of the West is now doubting a philosophy of openness and diversity that has served it and the world quite well for centuries.