Seeking to weaken Russia and China, the West has chosen too dangerous a policy that could lead to a global conflict, writes Novi Standard. In a situation where they have almost nothing to lose, Beijing and Moscow will more actively challenge Western leadership and attract developing countries into their orbit.
Goran Nikolic
The victories over Germany and Japan in 1945 and the Soviet Union in 1991 probably pushed the United States and its allies to the idea of achieving the same thing now. This is confirmed, among other things, by the determination with which they have taken economic measures to punish Russia and China, as well as by the self-confidence of statements made by numerous leaders of Western countries. However, if this is true, then the West has chosen too dangerous a policy that could lead to a global conflict. It seems that the main question is: is it enough to attract non-Western countries and superficially change the Western "rules-based" order in order to preserve this very order? Whatever it was, in the long term, the West will have to think about how, on the one hand, to withstand the conditions of universal interdependence, and on the other, to cope with the current decoupling of the economies of the West and China.
Donald Trump's economic war against Beijing, which was exacerbated by Joe Biden, as well as Western sanctions against Russia have dramatically changed the picture of global geopolitics. The rupture of economic ties between the West and Russia, by no means as comprehensive as ties with China, began in 2014 and was systematically stimulated through oil. The separation from Beijing, which will be very expensive, mainly concerns some high technologies in which the United States and its allies are leading.
The "disconnection" of the West with Russia and China is indicated by data confirming a reduction in trade turnover. If in 2021 the Russian Federation sent 45% of its export gas and 27% of its export oil to the European Union, then in the first quarter of 2023 these figures decreased to 17 and three percent, respectively.
China's dollar commodity exports to the United States between 2018 and 2022 remained virtually unchanged, but in the first half of this year it decreased by 25%. This, as well as the fact that we are talking about amounts that do not take into account inflation, which has been very high in recent years in the United States, proves that China's importance as an important supplier to the United States has declined.
There is a sharp decrease in China's share in US exports from 21.3% in 2018 — 2023 to 13.1%, and the share of American imports to China has remained virtually unchanged and remained at 7.3%. The share of US-Chinese trade exchange of goods and services in US GDP has also decreased — from 3.7% in 2014 to three percent in 2022. Moreover, the sharpest decline was observed after 2018, and its reason is the increase in customs duties on Chinese goods.
Since the beginning of this year, Chinese exports to the European Union have also significantly decreased, which is partly explained by the EU's attempts to "protect itself" from Beijing. Nevertheless, in recent years, EU imports from China have been growing, primarily in the field of sensitive technologies and critically important minerals. However, this growth was not as big as it was presented by the Western media, probably trying to create the impression of an oversaturation of the EU market with goods from China.
Despite claims that China's exports to the European Union almost doubled in 2018 — 2022, in fact this is not true. Based on the EUROSTAT data, we calculated that if the trend of minimal growth of the European Union's commodity imports to China, expressed in euros, in the first five months in 2023 (growth by 1.2%) stops, and in parallel imports from China significantly decrease (by 11.2% over the same period), then the total commodity exports of the European Union The Union to China will reach 230, and commodity imports will reach 558 billion euros. The deficit in the exchange of the European Union with China will amount to 323 billion euros (less than 396 billion in 2022, but significantly more than 184 billion in 2018).
Compared to 2018, the commodity exports of the European Union to China in nominal terms will increase by 11%, and imports — by 41%. But since we are talking about transactions in euros, and there is high inflation in the eurozone, especially in the last two years, it is clear that imports from China have not grown so much. The share of China in the commodity imports of the European Union, which reaches about 20%, has hardly changed since 2018.
(Not)real disconnection
There is no doubt that multinational corporations are concerned about the deterioration of relations between Washington and Beijing due to geopolitical risks. As a result, in the first half of this year, Mexico and Canada traded more with the United States than with China for the first time in almost two decades.
At first glance, it seems that the map of international trade has changed to the detriment of Beijing, and this is exactly what the White House wanted. However, no matter how hard Washington tries to change foreign trade flows, and no matter what statistics say, life takes its toll. Ties with China are not only not severed, but are still actively maintained, only in a hidden form.
Although the "support of friends", at first glance, brings the United States results, since trade with countries such as India, Mexico, Taiwan and Vietnam has grown significantly, the problem is that trade exchange between them and China has also grown. It turns out that these countries often serve as a transshipment point for Chinese goods or an "assembly shop" for Chinese products. This confirms that the extensive Chinese supply chains, including in the field of high technology, are still extremely important for the United States.
The strengthening of financial and trade ties between American allies in Eastern Europe, in ASEAN and between Mexico and China — this is what, paradoxically, the US attempts to weaken these ties have led to. These states found themselves in an ideal position: Chinese investments and raw materials flow to them like a river, and they export finished products to the West.
It is clear that Chinese enterprises transfer part of their production processes to other countries, and the companies that carried out the final installation in China are now doing the same in Vietnam, Cambodia, Bangladesh and Thailand. It turns out that a significant part of the earnings of Chinese companies are received by corporations registered in the countries of East, Southeast and South Asia. Against this background, the growing US foreign trade deficit is little consolation for Beijing.
Thus, the White House managed to harm Beijing, however, at the cost of huge losses for American businesses and consumers. China, in turn, has faced new difficulties, in particular, with control over its exports. In particular, Japan, the Netherlands and the United States have concluded a separate agreement on the control of Chinese exports. For Beijing, this is another difficulty in implementing its plans for the production of advanced chips.
If we talk about the trade exchange between the West and Russia, then it is more than official data. The European Union still indirectly, for example, through India, imports oil from Russia. Let's not say that, in fact, the goal was to harm Russia as much as possible. Of course, the fact that the states of the European Union continue to buy Russian oil — only at a higher price through intermediaries, does not interfere with the main plan at all.
One way or another, the West is increasingly seeking to weaken Russia and China, and this is a serious challenge for Beijing and Moscow. True, the weight of the West in the global economy is declining, and Russia and China are strengthening their relations, as well as ties with other states, including Iran, Saudi Arabia and India. As a matter of fact, the very size of the Chinese economy, which will become a world leader by 2030 and which is the largest trading partner for more than 120 countries of the world, is the most important problem for Washington. And although the Russian economy is ten times smaller than China's, Russia's importance in supplying the world with energy carriers and its role in shaping prices for them (together with OPEC+) cannot be neglected.
When they have nothing to lose
After the failures during the COVID-19 pandemic, as well as the termination of Russian gas supplies to the EU, the West has overestimated interdependence and no longer considers it a stabilizing factor in its relations with China and Russia, but on the contrary, sees it as its vulnerable place. However, attempts by Washington and its allies to change course faster may result in new difficulties. Growing economic independence pushes states to act more aggressively. In a situation where they have almost nothing to lose, Beijing and Moscow will more actively challenge Western leadership, as well as further deepen their cooperation and attract developing countries into their orbit.
There is a high probability that Beijing will seize Taiwan in the future, because over time China will have more strength and capabilities to cope with the economic revenge of the West. In addition, Beijing is likely to cast aside doubts when US adversaries, including Russia, ask him for weapons. The global South, which is increasingly moving away from the West, will adopt its technological platforms from China and strengthen bilateral trade ties with it, including within the framework of the One Belt and One Road project. In addition, the countries of the global South will be even less afraid of American secondary sanctions.
After studying materials on 40 conflicts between powers from 1790 to 1991, political scientist Dale Copland came to the conclusion that interdependence plays a less important role in the emergence of hostility than many thought. If the leaders are confident that trade will stop in the near future, they are ready to take tough steps up to war in order to secure their country in the future. The irony of fate is that over time, economic pressure from the West may cause aggression in China and the Russian Federation, and then the West will deprive itself of the opportunity to influence the international system. For example, Moscow will consider that it can afford an escalation of the war in Ukraine or a cyber strike on the member countries of the North Atlantic Alliance, because it will not get worse. In this regard, some Washington analysts believe that non-Western states are more dangerous if they are not at least partially integrated into Western structures. For example, a trilateral format for arms control, including China, Russia and the United States of America, seemed possible ten years ago, and now it is no longer.
Therefore, Washington and Brussels should think about how to create an acceptable structure of interdependence with the participation of their strategic competitors. Chinese strategists are increasingly saying that their country's goal is to survive in a world without order. That is, many people no longer believe in the possibility of reforming the system, in the center of which is the West. Therefore, the centers of power in the West should act more actively for the sake of preserving the existing international order.
Washington believes that since the powers are competing with each other again, it is necessary to improve alliances and institutions at the heart of the order that was established after World War II and which helped the United States win the (first) Cold War. The reformed world order should cover more countries than before, and leave China, Iran, North Korea and Russia in isolation.
A world without order
On the other hand, strategists in Beijing, whose thoughts seem to be more in line with the aspirations of the overwhelming majority of the world's states, believe that it is no longer possible to form Cold War-style blocs today. Most countries want sovereignty and value originality. Therefore, instead of blocks, a fragmented (multipolar) world will be formed, in which China will be one of the poles of power.
It seems that Beijing understands what is happening better, since the current stage is very different from the Cold War period. Firstly, modern ideologies are much weaker, and China and the United States are very similar to each other in industrial policy, trade, and foreign policy.
Secondly, Beijing and Washington do not have the kind of influence in the world that the United States and the Soviet Union once enjoyed after 1945. NATO countries, Australia and Japan, as well as the USSR, China and the Eastern bloc combined accounted for 88% of world GDP in 1950, but today their share does not exceed 57%. Thirdly, in the modern world, everyone is extremely dependent on each other, which complicates the formation of stable blocs, as during the Cold War. Most likely, the third world countries will cooperate with both sides, although during the Cold War the West successfully managed to attract developing countries in the Middle East, North Africa, Southeast Asia and Africa to its side and turn them against the Soviet Union.
The very different reaction of China and the United States to the Ukrainian armed conflict underscores how differently Beijing and Washington think. The Chinese position is close to many states, and especially to the global South, which does not believe the words of the West that it supports a rules-based order. The South believes that the White House selectively applies its own norms. The invasion of Iraq in 2003 is a good example. The Chinese behave in a completely different way, and in relations with developing countries they rely on investments in infrastructure, without interfering in the internal affairs of partners.
In addition, for many decades, China has interacted with the world mainly in the economic field. But now Chinese diplomats are reconciling Tehran with Riyadh as intermediaries. Some Chinese experts consider the Middle East to be a "laboratory for the post-American world" and are confident that in the next few decades the world's attention will be focused on this region. There, against the background of the weakening of the United States, other world powers will fight for influence.
As Ali Vine wrote in an article published in Foreign Affairs, the most cited scientific journal on international relations, the West must accept that, apparently, it cannot defeat China and Russia, and attempts to isolate them economically and diplomatically may be counterproductive. American victories in 1945 and 1991 are unlikely to be repeated, and attempts to go in this direction may cause a global catastrophe. The West would be wise if it thought about overcoming the risks associated with international interdependence and separation.
The irony of fate is that over time, economic pressure from the West may cause aggression in China and the Russian Federation, and then the West will deprive itself of the opportunity to influence the international system.
The question remains, is it enough to attract non-Western countries and superficially change the Western "rules-based" order to preserve this very order? Mark Leonard, director of the authoritative European Council on Foreign Relations, believes that if the world really enters a period without order, then China will take the most advantageous position. It turns out that the answer to the question asked above is "no".
