China's emergence as the economic giant of the 21st century does not need to culminate in a volcanic struggle with the United States over global rules and leadership.
By John Ikenberry
The rise of China will be one of the great dramas of the 21st century. According to some observers we are witnessing the end of the American era and the gradual transition from a Western-oriented world order to one increasingly dominated by Asia. The historian Niall Ferguson argues that the bloody 20th century is in fact a story of “the descent of the West”; a “reorientation of the world” in which the Atlantic powers ceded their mastery of the world to the East. Asia is indeed booming. The extraordinary growth of the Chinese economy—and its active diplomacy—is already transforming East Asia. Future decades will almost certainly see further increases in Chinese power and further expansion of its influence on the world stage. But what sort of transition will it be? Will China seek to oppose and overturn the existing order or will it integrate with it? And what should be the Obama administration’s policy towards China in the context of these grand transitions?
There are three ways of looking at the rise of China and the policy challenges facing the United States. First, the rise of China does create dangers for international conflict but these dangers are not inevitable or predetermined. Scholars have described these dynamics of conflict generated by shifts in the global balance of power as “power transitions” and the “problem of peaceful change”. The rise of Germany in the late 19th century, challenging British hegemony, is the classic case of how power transitions can lead to war. In seeking a strategic response to the rise of China, the Obama administration needs to place the current moment in the context of these grand problems of power shifts and global change, understanding the dynamics, dangers and opportunities.
Second, the rise of China does not need to trigger a world-wrenching hegemonic power transition. The Sino-American power transition is potentially manageable if only because the international order that China faces is profoundly different from the orders that previous rising states have confronted. China does not just face the United States; it faces a Western order with global reach. Compared with previous international orders, the current one is much more open, expansive, integrated and rule-based. At the same time, the nuclear revolution has made war among great powers less likely. This has eliminated the major method by which rising powers have overturned old international orders defended by declining hegemonic states. China also has incentives to use the rules and institutions of the current Western order to protect its interests. In short, the international order today is different from orders of the past: it is harder to overturn and easier to join.
Third, unlike rivals in earlier power transitions, China and the United States have remarkable common or overlapping interests. These interests are in areas such as energy, the environment, and the “new security” issues related to terrorism and failed states. The ongoing global economic downturn has reaffirmed Chinese-American mutual dependence. In crafting a policy towards the rise of China, the Obama administration should find ways to seize upon this alignment of interests to develop a long-term strategic partnership.
Overall, the United States has great assets to draw upon in framing and pursuing a strategy towards China. The Western order itself—capitalist, democratic, liberal, and widespread—continues to offer robust, encompassing, and functionally useful rules and institutions for the global system. It is leadership of this Western order that gives the US tools and capacities with which to shape the environment within which China rises and makes strategic choices. This order is an asset that the US and its partners within the order need to invest in and utilise as they face an ascendant China. If they do, China will find itself faced with more incentives for accommodation and integration than confrontation and opposition.
China is quickly becoming a formidable global power. The size of its economy has quadrupled since its market reforms in the late 1970s and by some estimates, it will double again in the next decade. It has become one of largest bases for industrial manufacturing, and it consumes roughly a third of the world’s iron, steel and coal. It has accumulated massive foreign reserves, topping US$1 trillion at the end of 2006. Chinese military spending has increased at an inflation-adjusted rate of more than 18 per cent a year, giving it the capacity to project force with greater reach, sophistication and fire power. The growth of Chinese power has also been matched by active diplomacy, and its influence is growing not just in Asia but also in the Middle East, Africa and Latin America. Indeed, while the Soviet Union rivalled the United States as a military power, China is emerging as both a military and economic rival, heralding a potentially more profound shift in the distribution of global power.
These moments of “power transition” are an old and recurring problem in international relations—and they are fraught with danger. The logic is simple. As scholars such as Paul Kennedy and Robert Gilpin have depicted it, world politics is marked by a succession of powerful, or hegemonic, states that rise up to organise the international system. They create and enforce the rules and institutions of order that ensure a stable system in which to pursue their interests and security. But nothing lasts forever. Steady and long-term shifts in the distribution of power among states gives rise to new challenger states which eventually engage in geopolitical struggle over the terms of order. Rising states want to translate their newly acquired power into greater authority and control of the global system—to reshape the rules and institutions in accordance with their interests. Meanwhile, declining states fear the loss of authority and control, and worry about the security implications of their weakened positions.
The danger of power transitions is captured most dramatically in the case of late 19th-century Germany. Germany’s ascent began with its unification under Bismarck in 1870 and the rapid growth of its economy. By the 1880s and 1890s it was acquiring overseas territories and building a modern navy. In 1870, Britain had a three-to-one advantage in economic power over Germany but by 1903 Germany had pulled ahead of Britain in overall economic and military power. The rise of German power triggered the classic dynamics of a power transition: as Germany unified and grew, so too did its dissatisfactions, demands and ambitions; and as it grew more powerful, security competition emerged and Germany increasingly appeared as a threat to other great powers in Europe. In the strategic realignments that followed, Britain, France and Russia banded together to confront an emerging and ambitious Germany. The result, of course, was a European war.
But not all power transitions generate war or overturn the old order. Britain ceded power to the United States in the early decades of the 20th century without great conflict or a rupture in relations. Japan’s economy grew from 5 per cent of the US gross national product in the late 1940s to more than 60 per cent in the early 1990s without challenging the existing international order. Clearly there are different types of power ascents and transitions. Some states have grown rapidly in economic and political power and, in the end, adapted themselves to the existing order, such as postwar Japan. Many factors surely influence the pathways of power transitions, but perhaps the most decisive is the character of the international order that the rising state faces, the characteristics that shape the incentives and choices a rising state has to challenge or accommodate.
In this regard, the postwar Western order is unique in comparative historical perspective. It is more open and rule-based and deeply institutionalised than past international orders. All international orders dominated by a powerful state have been based on a mix of coercion and consent. But the American-led postwar order has been distinctive in that it has been marked more by liberal than imperial characteristics. This has made it more accessible, legitimate and durable. Its rules and institutions are rooted in and reinforced by the evolving global forces of democracy and capitalism. It is expansive. It has a wide and widening array of participants and stake-holders. In all these ways, in comparison with past international orders, it is easier to join and harder to overturn.
In particular, three features of the Western order seem distinctive—features that have contributed to its success and longevity. First, more so than with imperial systems of the past, the Western order is built around rules and norms of non-discrimination and market openness—creating conditions for rising states to participate within the order and advance their expanding economic and political goals within it. Across history, international orders have varied widely in terms of whether the material benefits that are generated accrue disproportionately to the leading state or the material benefits of participation within the order are more widely shared. In the Western system, the barriers to economic entry are low and the potential benefits are high. China has already discovered the large economic returns that are possible through operating within this open market system.
A second feature of the Western order is the coalition-based character of its leadership. This is an order in which a group of advanced liberal democratic states work together and assert collective leadership. It is not just an American order; a wider group of states are bound together and govern the system. These leading states do not always agree but they are engaged in a continuous process of give and take over economics, politics, and security. This too is distinctive—past orders have tended to be dominated by one state.
A final feature of the Western order is its unusually dense, encompassing, and agreed rules and institutions. An international order can be rigidly hierarchical and governed by coercive domination exercised by the leading state or it can be relatively open and organised around reciprocal, consensual and rule-based relations. The postwar Western order has been more open and rule-based than any previous order. State sovereignty and the rule of law are not just norms enshrined in the United Nations charter. They are part of the deep operating logic of the order.
Together these features of the Western order give it an unusual capacity to accommodate rising powers. Its sprawling landscape of rules, institutions, and networks provide newer entrants into the system with opportunities for status, authority, and a share in the governance of the order. Access points and mechanisms for political communication and reciprocal influence abound. China has incentives and opportunities to join in while, at the same time, the possibilities of actually overturning or subverting this order are small or nonexistent. This is particularly the case because of one other feature of the order: the United States, China and other great powers have nuclear weapons. In the past, old international orders were ultimately overturned through hegemonic war. In the age of nuclear weapons and great power deterrence, this mechanism of historical change is taken away. War-driven change is removed as a historical process. These characteristics of the Western order have implications for how a rising China makes choices, increasing the incentive to join rather than to overturn it.
Today, this Western order is again providing a framework of rules and institutions that is facilitating growing Chinese and Asian participation and integration. China’s initial embrace of Western-oriented rules and institutions has been pursued in part for defensive purposes—protecting its sovereignty and economic interests while seeking to reassure other states of its peaceful intentions by involvement in regional and global groupings. But as the scholar Marc Lanteigne argues: “What separates China from other states, and indeed previous global powers, is that not only is it ‘growing up’ within a milieu of international institutions far more developed than ever before, but more importantly, it is doing so while making active use of these institutions to promote the country’s development of global power status.” The result is that China is already increasingly working within rather than outside of this Western order.
First, China is already a permanent member of the United Nations Security Council, a legacy of President Franklin D. Roosevelt’s determination to build the universal body around diversified great power leadership. In this way, China already has the same authority and advantages of “great power exceptionalism” as the other permanent members.
Second, the existing rules and institutions of the global trading system are also valuable to China—and increasingly so. Indeed, Chinese economic interests would seem to be quite congruent with the existing world economy. The capitalist system is open and loosely institutionalised, and it is a system that China has enthusiastically embraced and is currently thriving in. Integration into this aspect of the Western order is a necessary condition for the trade and investment that propel Chinese economic growth. In this current age, state power is ultimately based on sustained economic growth—and no major state today can modernise without integrating into the globalised capitalist system, i.e. if you want to be a world power, you will need to join the World Trade Organisation. In effect, the road to global power runs through the Western order and its multilateral economic institutions.
It is not just that China needs access to the global capitalist system, it also should want access to the protection of its rules and institutions. The WTO provides the Chinese with multilateral trade principles and dispute settlement mechanisms that should be a huge attraction to Chinese leaders because they offer tools with which to defend against the threats of discrimination and protectionism.
Third, several of these institutions also are relatively easy to gain access to and rise up through their hierarchies. The International Monetary Fund and World Bank are institutions where governance leadership is based on economic shares which growing countries can leverage into greater institutional voice. To be sure, the process of adjustment has been slow. In the case of the IMF, the United States and Europe still dominate the organisation. The US has gone from a 30 per cent voting share to 17 per cent—still a controlling number because 85 per cent approval is needed for action—while Europe still appoints or has a major say in the appointment of ten of the 24-seat board.
As China sheds its status as a developing country—and therefore as a client of these institutions—it will increasingly be able to join these institutions as a patron and stakeholder. Incremental advancement within these institutions creates opportunities for China. The steps and ladders exist for it to rise up within the international order.
The United States also has opportunities to draw China into various sorts of efforts at international co-operation. The emerging global problems stemming from economic development and globalisation are creating common interests across states. China is as dependent on imported oil as are democratic Europe, India, Japan and the US, suggesting an alignment of interests against oil-exporting autocratic states, such as Russia and Iran. These states share a common interest in price stability and supply security that could revitalise the International Energy Agency, the consumer association created during the oil turmoil of the 1970s. The emergence of global warming and climate change as significant problems also suggest possibilities for alignments and co-operative ventures cutting across the Chinese-Western divide. Like the US, China is not only a major contributor to greenhouse gas accumulation but also likely to be a major victim of climate-induced desertification and coastal flooding. Its rapid industrialisation and consequent pollution means that China, like other developed countries, will increasingly need to import technologies and innovative solutions for environmental management.
The United States and China also have common security interests in the promotion of stable, rule-governed societies in the developing world. There is a deep shift in the global system scholars call “growing security interdependence”. It is harder and harder for countries to achieve security without the help of others. Globalisation and technological revolutions are making it increasingly necessary to co-operate with others to achieve security. Today, where terrorists can gain access to massive violence capabilities and project them world-wide, security interdependence has taken a new leap forward. As Robert Cooper puts it: “The world may be globalised but it is run by states. Spaces with no one in control are a nightmare for those who live there, a haven for criminals, and a danger to the rest of us.” The US and China should have a growing common interest in ensuring that states in troubled parts of the world are stable and well governed.
Finally, the 2008 financial crisis has revealed how deeply the United States and China are tied together in global trade and finance. Beijing is deeply dependent on trade with the US and, more generally, on an American-led open world economy. It has little choice but to work with the US in finding a way out of the current world economic crisis in a way that prevents large-scale protectionism. Likewise, the US depends on Chinese capital to finance its current account and budget deficits. It increasingly needs China as a partner in the management of the global system. China and the US may struggle for leadership and influence in the coming decades but they will also have strong joint interests.
Seen in this light, the rise of China does not need to culminate in a volcanic struggle between the United States and China over global rules and leadership. The Western order has characteristics that can bias the coming world power shift in favour of peaceful change—on terms favourable to the US. But this requires strengthening the West. Today, the US is preoccupied with terrorism and war in the Middle East—and rebuilding Western rules and institutions seems to be of only marginal or even antiquarian relevance. The strategic question for America is: what sort of order will be in place to greet China as it rises?
If this analysis is correct, the Obama administration should pursue the following foreign policy agenda. First, the United States needs to reinvest in the Western order and strengthen its characteristics that encourage engagement, integration and restraint.
It needs to re-establish itself as the foremost provider and supporter of a global system of governance. This is the role it has played in the past: stepping forward to lead in the provision of public goods and rules and institutions that facilitate collective action. There are double dividends in doing so. By reclaiming its mantle as champion of an open, rule-based order the United States actually facilitates problem solving that makes countries better off. At the same time, when the US is seen to be using its power to strengthen the rules and institutions of governance, its power is rendered more legitimate; it strengthens its authority. Countries within the West will be more inclined to work with rather than resist US power, and this reinforces the centrality and dominance of the West itself.
The United States should also look for ways to re-establish its support for a wide range of multilateral institutions. On the economic front, this would include commitment to maintain and build on the agreements and architecture of the WTO. This would certainly involve concluding the current Doha round of trade liberalisation, which seeks to extend market opportunities to developing countries. The WTO is at a critical stage in its history in two respects. The norms of non-discrimination and most-favoured nation treatment are at risk in the face of the proliferation of bilateral and regional trade agreements, and questions persist whether the WTO can in fact carry out trade liberalisation, particularly in agriculture, that directly benefits the poorer and developing countries. On these issues the underlying character of the West—its commitment to universal rules of openness that spread material gains widely—hang in the balance.
A second general step is to redouble efforts to integrate the full range of rising developing countries into the key global institutions. This is a great challenge that the United States and Europe will struggle over for some time: finding room at the table for countries such as India, Brazil and South Africa, in addition to China. Bringing these emerging countries into the governance framework of the global system is a long-term challenge. Europe will need to yield some ground. But if accomplished, it will give additional life to the old postwar order.
A third step is for the United States to lead in the creation of a new regional security mechanism in East Asia that helps integrate China. China has already grasped the utility of this strategy in recent years—and it is now actively seeking to reassure and co-opt its neighbours by offering to embed itself in regional institutions such at ASEAN+3 and the Asian Summit. This is, of course, precisely what the US did after World War II, building and operating within layers of regional and global economic, political, and security institutions—thereby making itself more predictable and approachable. The challenge for the US is to encourage China to continue to respond in this same way. But to do this, there will need to be a more formal regional security organisation established into which China can integrate. Such an organisation need not have the features of an alliance system—the countries in the region are not ready for that. But it needs at its centre a treaty of non-aggression and mechanisms for periodic consultation.
It is in the United States’ long-term strategic interest to make certain that the power transition that is coming is not between China and US but between China and this larger Western order. It is certainly possible for China to overtake the US in economic size. Indeed, because of its population, China only requires a level of productivity one-fifth of that of the US to overtake it. If growth rates continue, China will emerge as the largest and most productive state in the global system in the mid-21st century. But China does not just confront the US It faces a much larger democratic-capitalist Western system. This changes what it means for China to reach parity and so also the strategic dilemmas it faces.