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Arvind Subramanian asks why China's leaders have embraced aggressive policies that undermine their own global ambitions

Arvind Subramanian asks why China's leaders have embraced aggressive policies that undermine their own global ambitions

Until recently, China was unmistakably trying to be a hegemon in the image of the United States, increasingly complementing its growing hard power with soft power. But China seems to have missed its opportunity to build a serious rival to, or even supplant, the existing world economic order fashioned by the US following World War II.

All the elements of success seemed to be falling into place for China. It launched the Belt and Road Initiative (BRI), a transnational infrastructure investment program intended to define a vision of a China-led, post-Bretton Woods world, much as the US Marshall Plan did for the post-1945 order. China also aggressively promoted the renminbi as an international currency, and persuaded the International Monetary Fund to include it in the basket of reserve currencies underpinning Special Drawing Rights (the IMF’s unit of account) far sooner than was justified.

China also sought to take over leadership of international institutions; it currently heads five. It pushed to increase its voice in existing bodies such as the World Bank and IMF. And where it felt stymied, it established its own, such as the Asian Infrastructure Investment Bank and the New Development Bank.

The COVID-19 pandemic offered China an opportunity to cement this strategy of remaking the world economic order on its terms. It’s worth considering the possibilities.

For starters, as the world’s largest long-term creditor to low-income countries, China could have proactively and unilaterally declared a moratorium on all debt service owed to it. And it could have gone further. As Scott Morris and his colleagues at the Center for Global Development have shown, China’s lending terms – interest, grace period, and maturity – are much more onerous than those offered by the World Bank and its concessional lending arm, the International Development Association. China could simply have promised to eliminate this wedge.

Furthermore, China could have provided unconditional short-term liquidity – in both renminbi and dollars – to developing and other economies facing major capital outflows. One irony of the post-2000 world is that the country most able to provide dollar liquidity is China, owing to its $3 trillion-plus in dollar reserves. The People’s Bank of China could have extended swap lines to all its developing-world counterparts.

Regarding trade, China could have offered freer market access to poorer countries ravaged by COVID-19. It could also have ramped up production of essential medical supplies to fight the coronavirus – face masks, testing kits, protective equipment, and ventilators – assuring their high quality and offering to make them available to any country via the World Health Organization at concessional prices.

Such generous intervention would have shown that China was offering an alternative to US-led institutions. It could have repudiated its reputation as a usurious lender while entrenching the BRI. And while offering short-term dollar liquidity might have conflicted with China’s longer-term global aspirations for the renminbi, the self-restraint this move showed could have engendered a broader confidence in China, thus enhancing the renminbi’s prospects.

Instead, China’s recent actions have undermined its global aims. The geographic range and intensity of the Chinese regime’s belligerence are now familiar, with the ever-growing list of targets including Xinjiang, Tibet, Taiwan, Hong Kong, India, the South China Sea, the Philippines, Australia, Europe, the US, and Canada. And instead of being transparent regarding the origins of COVID-19, China has persuaded the WHO to connive with its own obfuscation.

The puzzle is why China is choosing aggression over magnanimity, or even over mere inaction. After all, China’s current leaders probably view America as a declining power that will soon organically vacate the hegemonic position that China seeks to occupy. If so, just as Deng Xiaoping, the father of China’s reforms 40 years ago, advised geopolitical patience until China became stronger, a Dengian strategy today would be to wait for the US to become weaker.

The obvious answer to the puzzle is Chinese President Xi Jinping and the regime that he both represents and has helped to create. But key elements of China’s earlier strategy – including the BRI and reserve-currency status for the renminbi – were Xi’s own signature gambits. So, what is driving the reversal?

Perhaps China’s leaders once again see the world through a victim’s lens. As they perceive it, the powerful West had kept a weak China in check since the early 1800s. Now that the roles are reversed, the regime believes it is time to correct historical injustices. With Xi’s aggressive insecurity having replaced Deng’s calm confidence, China now places a premium on settling its borders and returning to the glory days of the Middle Kingdom.

A darker possibility for the rest of the world is that China not only seeks historical justice, but is also gazing beyond its borders. It is in the nature of repressive, autocratic regimes to believe only in the currency of fear and hard power. In this view, Xi is merely reverting to type, following his idol Mao Zedong’s dictum that political power – both internally and externally – grows from the barrel of a gun. So, perhaps China’s recent aggression is not a bug but rather a feature of its strategy for supplanting the US.

In her book The Guns of August, the American historian Barbara Tuchman memorably captured the shift in geopolitical power from the United Kingdom to the US during World War I by saying that a strong America became an enfeebled UK’s “larder, arsenal, and bank.” In the wake of the COVID-19 pandemic, China could have achieved something similar vis-à-vis the US-led global order by becoming the development bank, central bank, and medical supplier to the world.

By choosing unprovoked aggression over enlightened generosity, China has squandered that historic opportunity and possibly also revealed its true character. Soft power, China appears to believe, is for wimpy democracies. Scorpions sting. The world must take steps to respond.  


Arvind Subramanian, a former chief economic adviser to the government of India, is a professor at Ashoka University and a non-resident senior fellow at the Peterson Institute for International Economics. He is the author of Eclipse: Living in the Shadow of China’s Economic Dominance. Copyright: Project Syndicate, 2020, published here with permission.

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97 Comments

23
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The problem with such a dictatorship engaged in massive scale central planning and controlling all information, is that no one can trust them.

And that will keep them from attaining their fullest potential

30
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They are believing their own propaganda. This has led them to overplaying their hand. The west needs to be ready to protect Taiwan from invasion and occupation.

Hahaha..like it was with the Crimean annexation? What's so important about Taiwan that you would risk armed conflict for?

All that happened with Crimea was a bunch of sanctions (which dropped the price of milk powder) and didn't resolve anything.

If we let Taiwan fall then who is going to be next?

Well dictator, I personally don't believe meddling in what could be a geopolitical flashpoint is in NZ's interests - long or short term. Better to voice our opinion and leave it to those with less to lose to be more strident or direct.

Ah yes. We should never fight for others, unless it serves our own immediate interests...

First they came for the socialists, and I did not speak out - Because I was not a socialist.

Then they came for the trade unionists, and I did not speak out - Because I was not a trade unionist.

Then they came for the Jews, and I did not speak out - Because I was not a Jew.

Then they came for me - and there was no one left to speak for me.

QD, ever heard the saying "never take a knife to a gunfight"? In NZs case that should be read as " never take on a helicopter gunship with a water pistol" My point is simple - leave the fighting to the big boys.

If China couldn’t take Taiwan in the 1950’s it never will. The Straits of Formosa and surrounds, are treacherous, the seas and weather. Only two to three months window. Otherwise you are likely to encounter the divine wind of legend. Then read the history of the 2nd Marine Division and see just how a easy a seaboard landing isn’t, even when the beachheads are only lightly defended. Can be no Pearl Harbour surprise with satellite surveillance globally and the island of Penghu on the approaches is fortified.. All beaches are defended. Note Forbes articles years ago, underground storage tanks and piping. The sea can be set on fire. Airborne then? Even Hitler was aghast at the decimation of paratroopers at Crete, ordered never used again. Transport aircraft are sitting ducks even if not at low altitude. Taiwan is built up, would descend into urban warfare, millions of civilian casualties. China is a land based army. It won’t be Taiwan but it might be South Korea. North Korea can be manipulated into conflict.It is unfinished business.Strictly, It would not be illegal, Nth & Sth are only under truce. China is very familiar with the peninsular. Precedent? Nth Vietnam unified Vietnam.

The salient point here being that China's military strength is largely land based. You want an army to invade a neighbouring continental country?.... China's your guy. But when it comes to crossing water China is drastically deficient. You can have all the soldiers in the world, with all the latest equipment, but if they can't reach their objective they're useless. That's why D-Day was such a pivotal turning point in WW2. China is attempting to remedy this by revving up their navy, but outdated Russian technology can only get them so far. That's why there are huge delays in their aircraft carrier delivery programme. In summary, I doubt there will be any attempt to invade Taiwan any day soon. China's words in that regard are just hollow rhetoric. Nonetheless, it's only a matter of time before China has the required 'assets' to make a move. Meanwhile it would be advisable for coastal perimeter nations (with US backing) to be united and vigilant, and hold the line with the China Containment Policy.

Strategically, tactically too, we have Japan converting two helicopter carriers to carry fighter jets. Sure hardly the Shokaku but then F35s are hardly Zeros.

Yes, Japan is doing its bit. But it is relatively impotent against China on its own. The 'alliance' of South China Sea perimeter nations + USA is the key here. That will also require back up from the co-ordinated effort other South East Asian nations, plus the likes of New Zealand & Australia. If that line can be held China's 'breakout' efforts will be contained for the short to medium term.

For all his arrogance, petulance and on and on, Douglas MacArthur got it right in that Japan could be reconstructed and reconstituted and would likely be a strategic ally in time to come. The limitation of the Japanese Self Defence force has run its course. The threat of China is right on their doorstep as it was for example, in the 13th century. Japan has every reason and every right to now re-arm in proportion to the size of the current threat.

The Japanese are an entirely pragmatic people when necessity arises, however their US imposed constitution will remain a huge hurdle to a reformation of the SDF's role until such time. Let the Japanese sort out when that is. I am confident they are staunch to the cause. Meanwhile, in the short to medium term it would be much more profitable to place emphasis on the 'perimeter alliance'.

11
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the same importance that should have been considered for Hitlers invasion of Poland - the earlier this behavior is challenged ad stopped -- the less likely we are to have either a significant localized conflict - or given teh respective players - a global conflict of world changing significance

Like Iraq?

18
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The Wolf has smelled blood and thrown off the Sheep's clothing.

all in all, the old imperialist cannot tolerate a seemingly new one to catch up but there is nothing the old ones can do about.

33
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I think tariffs and/or a boycott of purchasing crap from China is called for. I am doing my best in this regard.

meaningless efforts or fool's errands fit well on what you have been doing.

But, good on you.

22
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Xingmo, your comments on this site exemplify the problem. You bluster and threaten whilst truly believing your uncontested CCP view of the world.

Expansionist totalitarian states who believe their own lies are more easily overcome than ones who accept facts.

14
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Why should we endorse slavery by buying those products. BBC article: UK accuses China of 'gross' human rights abuses against Uighurs. https://www.bbc.com/news/uk-politics-53463403

That video is a classic, watching the guy stumble around trying to explain the obvious atrocities evident in the video.

Yes it's one thing to know that these forced labor camps exist in China but whole shocking exposure to see drone footage of people being marched on to trains with shaven heads on mass, being taken off to the concentration camps.

Shocking.

Shaven heads and blindfolded. Reminds one of the Germans and Japanese in WWIi...

And you think they won't reply in kind Ui? NZ inc needs China trade more than most people care to admit or accept.

14
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Really? Swapping milk powder for cheep flat-screens is that important?

It is when noone else wants the milkpowder, meat, seafood or logs

You've got to be kidding!

So the fact they are taking 40% of our meat, 60% of our logs and 30% of our dairy isn't important? I can't remember the #s for hort, wine and seafood but I know it's a sgnificant chunk. I've left out Education exports and Tourism for obvious reasons. Bottom line is we need them.

At all costs?

83b in total exports, 59b to China.What do you reckon?

Can't make an omelette without breaking a few Uighurs, you reckon?

They don't feed, clothe, house or educate me or my family. Neither does Taiwan or Tibet. Industry and jobs in NZ do. If you want to bankrupt a country to virtue signal that's your perrogative. The sooner NZ accepts it's stature in the world as an insignificant bit player totally reliant on exports the better

Prudent, like with the Juden.

Maybe so Rick, but who's getting the last laugh now??

From August 1939 when the non aggression pact was ratified, the Soviet Union supplied, very lucratively, raw material to the Nazi war machine which markedly powered their invasion of continental Europe. That was until June 1941 Operation Barbarossa, when the Germans quite gratefully and obligingly, fired the whole damn lot back. As Churchill expressed succinctly, bitterly, feed the crocodile in the hope it will eat you last. Some here have no idea whatsoever as to what horrendous lessons history so easily provides.

Out of Churchill and Chamberlain?

Chamberlain came from the industrial north. He was not so much an appeaser as he was profoundly affected by the decimation of the manhood caused by WW1 and the aftermath. He was convinced, and encouraged to be so by the like of Halifax, that the UK could not commit to or sustain another continental war. For example his remark “the closer we get to war the more popular Churchill becomes and vice versa.” After Poland and handing over to Churchill, Chamberlain was dying, but it is not often recognised he then became an ardent and loyal supporter of Churchill to as much as his ability would allow.

I agree he hasn't been recognised for the good he did do. Another lesson for us: while he was delaying by appeasing he was massively ramping up military spend, arming the UK for war. By the time Churchill took over military spend was close to 50% of Britain's GDP (IIRC).

I feel like I need a shower after reading that

Too early for a single malt stiffener then?

Commodities are traded globally aren't they? So if China doesn't take our logs etc, there will be other buyers who will

If there were other buyers we'd be selling to them now. Fact is they aren't there.

There is no one stopping you to swap for the latest OLEDs that are also manufactured in China.

I wonder why the Warehouse is going downhills...

Outdated business model, indifferent staff, disorganised merchandise format, competition.

15
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Imperialism has always existed on every continent of the world and has been perpetrated by all peoples against others. Well before European imperialism, there were various incarnations of imperialism in Asia, North Africa and the Middle East.

What were the Persian, Carthaginian, Egyptian, Hittite, Babylonian, Mughal, Mongol/Yuan, Qing, Tang, Islamic etc Empires if not Imperialist?

China is no less imperialist than America. It's just a question of who is going to be more successful at it and whose empire will ultimately bring more or less woe to the world.

Don't forget the Catholic Church, they were once ruled most of the world and had one of the most powerful army forces!

Well, it's a tad nuanced because obvs Christianity started out as a Middle Eastern religion and for millennia was heavily East orientated. My list was of notable non-EU imperialists. Christianity has clearly been Imperialist but I am inclined to consider it to have mostly done that while it was European orientated and hence it doesn't belong on my list. Although there are plenty of other non-EU imperialists that could be listed, I was just shooting off a quick list of big names.

East-oriented for Millennia? Hasn't it only been around for 2 millennia?

Some artistic licence may have been taken, unless GN is referring to the multiple older eastern religions that Christianity borrowed from or incorporated.

Could be argued from 2 perspectives.

1. Christianity could be considered a sect of Judaism if you think about it. The Jews that followed Jesus thought he was their prophesied Messiah it's just that the rest of Judaism didn't agree with them.

2. Christianity was mostly eastern orientated for its first millennia (longer to a lesser degree with the continuation of eastern traditions after the Schism). Greece and Cyprus are still Eastern Christian but most of Eastern Christian territory was taken during the Islamic Conquests.

Chairman Moa,

How about some facts to back that up? Tell me more about their armed forces; some numbers perhaps and where this army was based. perhaps some dates would be useful.

How about grab a history book from your local library and read about the Dominican, the Jesuit back in the 12-13th century.. Educate your mind.

Mother nature will have the last say X
Last week, the Three Gorges Dam opened three floodgates as the water level behind it rose more than 50 feet above the flood zone. Another flood crest is expected to arrive at the dam on Tuesday, the AP article states, adding that China’s military has been testing the strength of embankments and shoring them up with sandbags and rocks.

If the Dam is full, no problem. (Assuming that it is designed and constructed properly).
If the dam spills water, no problem. (Assuming that the generators and spillways are designed to be able to more than keep up with the incoming flow of water).
However if the spillways are not adequate then overtopping will occur. I am not sure how this dam will behave if this was to occur.
I doubt that any update on any of this information will be released by the CCP. So it is only media frenzy at the moment.
It may be that you are talking about downstream of the dam(s). Well that is another issue. And would have happened regardless of the 3 gorges dam.

Could you be impacted if the Three Gorges Dam in China collapsed? As natural and man-made disasters crop up more and more through China, the longevity of the Three Gorges Dam is receiving more scrutiny.

https://youtu.be/ubGLs89rNW8

Hopefully Mr Cha Buduo was not involved too pervasively in its construction.

LOL. He (Mr "almost good enough") is foreman on every project in China.

差不多 (Cha Bu Duo),马马虎虎 (Ma Ma Hu Hu) = she'll be right.

haha, how come Rick knows this phrase. Lol.

Given China is exporting and building the most advanced nuclear power station tech to the EU, "she'll be right" attitude just stays where it belongs such as cough cough where Novo Pay never pays right; where herd immunity was immediately advised as the strategy to deal with Covid19, where nearly 4 million covid 19 cases and 140k death...

Sigh~~

When it comes to the quality of Chinese goods, ask yourself whether you would fly on a Chinese manufactured passenger aircraft.

For me? ...... NFW!

I would fly C919 anytime than Boeing 737 Max.

U prefer Boeing 737 MAx?

TheC919 sales are pathetic. Probably stolen technology, poorly built, and supervised by corrupt officials wanting the approval of their masters. Never hopping on one.

Thinks, Comrade X takes a flight on a CV19. Goes down with the herd.

Haha...I think Mr Cha Buduo designed my last toaster.

Colonel Kilgore misquote then “I love the smell of charcoal in the morning?”

10
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I was tempted to do a parody xingmo in your absence, but I don't think I can top the real thing. Full marks for shameless propaganda parroting on every topic.

At least in that sentence you admitted that China is indeed an "imperialist", albeit a new one.

Now even small country like NZ is joining the chorus :

https://www.newshub.co.nz/home/politics/2020/07/jacinda-ardern-s-calling...

Once we were a leader on these things. Now we cowardly act way after others.
Why have NZ and other countries been so slow to speak up? The atrocity has been known for a long time.

Two sidebars on this issue:

  1. The Thucydides trap - as per this Atlantic article - where two great powers square off. 2049 is the end point: a re-establishment of the Middle Kingdom, and achievement of this objective by that anniversary is explicit.
  2. The demographic trap. It has been said that China will be Old before it is Rich, because of the one-child policy which is currently scything through the working-age population. This places new urgency for the 2049 deadline: move now, while the demographics hold up..because it will soon be too late...

SCMP a year or two back had a story saying China was overstating it's population by more than 100million (lying as is usual for PRC stats), and that almost all the deficit was in under 20's. Their working age population is likely already falling, and will soon start to collapse with almost twice as many 50 year olds as 5 year olds.

15
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It's an interesting article, the likes of which I have been waiting for.
It seems that the aggressive pride, ego and nationalism of Xi has taken over from the patience and rationality of Deng.
As I have said before, China will lose out of this approach. It's self-defeating.

Very good and interesting article. I wonder if there is a gap in it in identifying the puzzle about China's actions, or lack of? Hubris - is it possible that China holds no weight in western history or philosophy and therefore fails to understand that a different path would have delivered their goals sooner?

19
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Can we perhaps acknowledge the double standards that exist in terms of power and imperialism?

For example both Russia and China clearly have expressed imperialist and power aspirations. From within this article for example "China now places a premium on settling its borders and returning to the glory days of the Middle Kingdom".

So why is it acceptable that China can aspire to restore it's Middle Kingdom glory days but at the same time it would be completely unacceptable for an old European power to try to resurrect it's old glory days?

Can you imagine the backlash if Spain announced it wanted to reclaim it's old American glory days? Or if Britain wanted to enjoy a a bit of Empire again?

Why is it that European Imperialism is toxic and Europeans must be constantly blamed and shamed for their Imperialist past but no one else is held to quite the same standard of criticism? The Islamic Empire was active at the same time as all the European explorers were busy trying to find new lands to claim and in modern times we constantly refer to and critique "white privilege" and the vestiges of damage done by European Imperialism and even though we still have a situation where there are 50 majority Muslim countries, all of whom previously had their own language and culture prior to Muslim conquest and domination we never refer to those pre-Islamic cultures as having been oppressed or lost? In fact, you will hear people from within those Muslim countries being extremely critical of Western Imperialism, despite the fact that their culture, is itself, a product of the exact same method of conquest and imperialism?

I'm not trying to suggest here that Imperialism is positive or that we shouldn't critique it, I do wholeheartedly thing we should critique these things....but i'm asking why some cultures history of imperialism is more heavily criticised? From within and without?

Their was a saying earlier that sun never sets on the British Empire.

So what should British do now ?

Chinesse leader like any dictator has gone loco and will go down or should go down like all dictator but again will be after creating havoc as other dictators have done. Earlier world acts better for humankind.

Four legs Good....

Orwell the prophet....

"If you want a picture of the future, imagine a boot stamping on a human face - forever."

Yes. Too few even care for the warning.

It's not 'politically correct' to criticize the historic injustices wrought by non- European states.

A lot of the philosophy that eventually became humanism came up through the western intellectual tradition and internally critiqued imperialism. As you say GN much of it has been self criticism and analysis whereas regimes in China and Russia haven't developed that intellectual tradition of self analysis and criticism. It's the opposite, they discourage self criticism and encourage only self praise.

I think it is because those cultures (collectively at least) are still most powerful at present. No one really cares what Mongols or Arabs did as they have very little influence today.
Second is self criticism and individualism manifests most strongly in western cultures. These qualities mean that westerners are probably (again collectively) the only cultures who have accepted responsibility for their imperialist actions. It means others happily point out that the imperialist west itself accepts responsibilities for imperialist harms done. In Mongolia, Genghis Khan is a god, Timur Lane is so in Uzbekistan etc.

Good point B1980. Although as per GN's comment with 50 countries who are predominantly Muslim, use Arabic and Islamic law, I think we have to admit that actually the Islamic empire still has a very current and profound effect on the world and if anything it is increasing.

What is an influential Muslim country today? Turkey, what remains from last serious Islamic empire, is probably the most powerful Islamic country overall. But where is Turkey in the world power hierarchy today? so no one really cares. The modern time is far west vs far east. Africa, Middle East, Indian subcontinent, Southern and Eastern Europe, Central Asia. Latin America are not really in the game and have a very very large catching up to do (if they ever catch up). No one even talks about Romans, as who really cares, where has Italy been globally over the past few centuries?

Hasn't Might been always Right since the beginning of time ? Leaving out few exceptions like Gandhi (who probably would have been brushed aside if it wasn't for WW2).

12
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China was doing fine with their hidden agenda but after being exposed are on now on path of self destruction.

Check any news in the world and if it has to do with threat, war be it for territory - land or sea, economy, panademic, bullying only one country stands out in all and is China.

Either all countries in world is wrong to go against China or........

And they still think that they can get away with their tactics of bullying and threat. Yesterday even NZ prime minister made it clear to Chinesse leadership that need friends not master so be prepared.

'China was doing fine with their hidden agenda but after being exposed are on now on path of self destruction.'

Yeah, they always had an agenda but it was much subtler, and not self-destructive.
Good luck to China if it thinks it can piss off the wealthy countries of the world and not suffer economically....it's just dumb, and driven by ego, nationalism, and spitefulness...

Just remember Fritz, China currently holds most of the US debt bonds, a big chunk of EUs, and by far the most of any country's gold reserves. The world has been asleep at the wheel for far too long. Xi Jinping knows it

11
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Yes true. Some of us have been suspicious for a long time...
Why was the world asleep at the wheel? Because of self interest and greed of course.

Fritz, those two desires are hardwired into the human psyche. Everyone wants to improve their lot. You can call it self interest and greed or you can call it ambition.. depends which lens you're looking through

They hold paper?

That paper could be Rilly Useful. It could be used in all a them Ghost Apartment Buildings as wallpaper......or in the Smallest Room.....

Fair enough. They did invent it after all...

Indeed. And with the most likely person in the world to find justification for disregarding whatever he wishes. It seems absurd, but I doubt it would be the the most shocking thing headed our way.

Sigh... (holding head in hands) No.. RS the Bonds are electronically linked to each countries currency reserves. If China wanted to do maximum damage it could drop the Bonds into the market or demand repayment.

Yeah, fair. Just thinking beyond that point should the world come to physical war not just currency war. Trade war --> Currency war --> Physical war.

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See Party Policies here. Party Lists here.