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Artillery Row

China, America and the Kindleberger Trap

China is filling the void of retreating American influence

In the aftermath of the First World War an exhausted Britain found itself unable to maintain the role it had played for the preceding hundred years as guarantor of the global order. No longer did it provide the so-called “global public goods” of enforced security, a stable trade and financial structure, and an effective international aid system.

Countries like Argentina, which had become one of the world’s richest nations by 1914 partly as a consequence of British power and support, were dealt a significant blow by Britain’s declining international reach. Relatively speaking, Argentina is yet to recover.

China hopes to reduce the West’s prestige and global influence

What made the situation worse was that in taking over Britain’s hegemonic position, the United States refused to assume the UK’s former role in providing those public goods. According to Charles Kindleberger, the MIT professor and intellectual architect of the Marshall Plan, this caused the international system to fall into recession and create political turmoil. It was this failure to match global public goods commensurate to world power status that the Harvard professor, Joseph Nye, labelled the Kindleberger Trap.

It is a trap that China, in challenging American global supremacy, is determined not to fall into. As its response to Covid makes clear, Beijing has stepped up its efforts to become a global provider of public goods.

After an initial botched response to the outbreak, Beijing has sought to make amends though Covid diplomacy. This has two aims. First is to show the munificence of China in helping the world deal with the crisis and thereby deflect attention from its role as the source of the virus. Secondly, the failure of the United States and the broader democratic block to deal with the chaos is highlighted. In these ways, China hopes to reduce the West’s prestige and global influence.

It started with masks. Beijing made much of its ability to send millions of pieces of PPE out to the world. By the end of March it had dispatched medical supplies to 120 countries and four international organisations.

In contrast, Washington DC slapped export controls onto medical equipment, including face masks and ventilators, and even scooped-up shipments of PPE that were destined for its supposed European allies, France and Germany. Berlin’s interior minister called the United States’ forced diversion of supplies from a plane in Thailand an act of “modern piracy”.

The EU did not behave perfectly either. Hard hit by Covid early on, Italy requested help from the EU under the Civil Protection Mechanism. The EU nations declined the request. China, on the other hand, sent an emergency shipment of PPE and medical experts to assist the overwhelmed local hospitals. It was the same in the Balkans. “European solidarity does not exist. It was a fairy tale,” said Serbia’s President Aleksandar Vucic, before turning to Beijing for vital Covid supplies.

As the United States turns its back on the multilateral agenda, so China surges into the gap created

Global attention has now turned to who can satisfy the demand for a vaccine. Here too China is stealing a march. Whilst the US refused to join the World Health Organisation’s Covax initiative, which aims to foster joint development and distribution of a global Covid vaccine, China did so. Sinopharm, the Chinese pharmaceutical company, is now preparing a billion doses of a new vaccine and Beijing has announced that it will distribute the vaccine to countries like the United Arab Emirates, Brazil, and Indonesia. Western experts may criticise China’s move, saying that it is too hasty to deploy a vaccine without full testing, but this has not stopped more than a dozen governments signing up to receive it.

Then there was the issue of the World Health Organisation itself. In April, President Trump announced that the US would no longer fund the WHO because of concerns that the agency was too close to China. No sooner had the US administration made the decision than Beijing said that it would make a $30 million investment, thereby giving China even more influence over the body. This picture has been repeated time and time again. As the United States turns its back on the multilateral agenda in favour of unilateral action, so China surges into the gap created. Nowhere has this been more evident than at the United Nations.

Despite the fact that the United States is still the UN’s biggest funder, providing a fifth of the budget in 2018, American disdain for the UN has been noticeable for many years. This is reflected in the lacklustre level of representation in senior UN leadership, with the United States now providing the head of just one of its fifteen specialist agencies, the World Bank. China, by comparison, supplies the leadership of four, a well-earned result from years of time and effort put in to boosting its UN presence.

A main reason for China’s multilateral enthusiasm is the commercial rewards it brings

China is intent on controlling various parts of the UN. For a start, its dominance permits Beijing to suppress international scrutiny of its behaviour at home and abroad. In March this year, China won a seat on a five-member panel that selects UN rapporteurs on human-rights abuses, the officials that would be expected to investigate the controversial imprisonment of more than a million Uighurs at so-called re-education camps in Xinjiang. Having quit the UN Human Rights council in 2018, the United States was unable to stop China’s move to spike the Uighur investigation.

The other main reason for China’s multilateral enthusiasm is the commercial rewards it brings, for example in the field of technology. The UN agency, the International Telecommunication Union (ITU), plays a crucial role in setting the standards of new technologies. It is no coincidence that under Chinese control many of the protocols that the ITU has recently adopted have been Chinese in origin. This includes communications standards like 5G, which were heavily influenced by Huawei designs, as well as other technologies such as those involved in facial recognition, and city and vehicle surveillance.

By making Chinese standards global in their reach, Beijing is baking-in commercial advantage for its major tech companies: Huawei is now estimated to supply 30 percent of the world’s mobile technology market, double the reach of its nearest rivals, Nokia and Ericsson. China has also cornered the global market in surveillance software, and its facial recognition products are being used in at least sixty countries worldwide. Huawei alone has exported its surveillance equipment to 230 cities, from western Europe to swathes of Africa and Asia.

Unable to compete with subsidised Chinese products working to Chinese specifications, Western tech companies are being systematically shut out from much of the world. What is important for the West to understand is that this is not just a commercial issue, but a cultural and political one too, because these standards are not ethics-neutral.

China is deliberately creating the pressure needed to change the world’s way of thinking

Technologies like surveillance systems, artificial intelligence, and even the broader internet, which China has also suggested remodelling in its own image, are underpinned by subjective political and cultural values that can be recast with enough pressure. China fully understands this, which is why dominating the UN is so important to them. “If you control important levers of these institutions, you influence norms, you influence ways of thinking, you influence international policy, you inject your way of thinking,” said Ashok Malik, senior policy adviser at India’s foreign ministry.

China is deliberately creating the pressure needed to change the world’s way of thinking, especially in the developing world. It is doing so through its dominance of the multilateral organisations controlling international standards, backed up by the commercial influence it commands by being the number one supplier of the tech equipment.

As the organisation Human Rights Watch has noted, China has long railed against Western concepts of human rights, and has intimidated countries into joining its attacks on the international human rights system. As the United States relinquishes the floor, so the People’s Republic has even more power to impose its own values across much of the world, at the expense of Western liberal influence.

China’s increasing dominance of the international agenda is not just a problem for America. All Western nations have benefitted from the global order that the US has overseen during the last seventy years, both commercially and in terms of promoting their own liberal policies. As China takes over, this liberal order will be increasingly challenged.

The UK and its Western allies need to persuade Washington DC to rapidly re-engage with the world

There are signs that some countries are beginning to fight back against China’s ambitions. In January this year Britain’s then Secretary of State for International Development, Alok Sharma, announced plans for the UK to go toe-to-toe with China as Africa’s biggest investor. Although this ambition may now be scaled back in a post-Covid world of restricted finances, there are still other levers for the UK to pull, not least at the WHO where Britain remains a larger funder than China.

However, without American counterweight, it is unlikely China can be stopped from cementing its domination of the international agenda and, in doing so, avoiding the Kindleberger Trap. The UK and its Western allies need to persuade Washington DC to rapidly re-engage with the world, or Western power is going to decline even faster. If this does come to pass, then Western nations may reconsider their future relations with the United States. As Argentina knows only too well, placing your future in the hands of a declining global power does not reap rewards.

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