China and the new global geopolitical moment
Gabriel E. Merino[1]
In February of this year, when the pandemic was concentrated in China's Hubei province, analysts and columnists in the mainstream "Western" press of NATO-leading countries were talking about "Chinese Chernobyl." The reference was to the 1986 nuclear accident in the USSR, and the interpretation was that Covid-19, as in the now-defunct socialist power, demonstrated the crisis of the regime and the possibility of its collapse. In that context, China defensively asserted, through its Foreign Ministry spokesperson, that the virus had been brought to China in October 2019 by US forces who participated in the military games in Wuhan.
Two months later, Beijing is deploying all its economic, health, diplomatic, and cooperative capabilities globally, while images of mass graves on Hart Island, New York, contrast sharply with those of a hospital being built in ten days in Wuhan or the arrival of Chinese donations and medical equipment in various parts of the world. Now, instead of analyzing the “Chinese Chernobyl,” the renowned British magazine The Economist asks on its cover, in reference to the geopolitical consequences of the pandemic, whether “China is winning.” Furthermore, the websites of major Western media outlets are filled with the theory that the virus originated and escaped from a Chinese laboratory located in Wuhan, despite the World Health Organization (WHO) and various experts insisting that it is a naturally occurring, not artificial, coronavirus. Even the most critical liberals and globalists of Trump, who until recently denounced his statements about the “Chinese virus,” are now speaking in very similar terms. On the other hand, in The Washington Post (the newspaper of the American political establishment), one of its prominent columnists, Charles Lane, stated that this crisis “has taught us the true costs of doing business with China.” There, in a fiery article, he warns about Chinese investments around the world and exposes the problem of financial and economic dependence by examining China's relations with Africa and Asia. Added to all this are the various proposals that have emerged in the geopolitical West for China to pay for the costs of the crisis. Some in the United States have even calculated the costs in monetary terms and proposed sums that, paradoxically, closely match the US debt held by Beijing, its largest creditor.
This information war and struggle for the narrative of the crisis contributes to the dispute over legitimacy, a fundamental component of hegemonic struggles. It intensifies at a time when China appears to have the pandemic under control (reporting no deaths from Covid-19 since April 15) and is emerging as the main actor in global cooperation, deepening its policy of "soft power." Furthermore, it is providing additional funding to the WHO and supporting the strengthening of multilateral institutions created during the height of US hegemony, institutions that the "Americanist" and anti-globalist Trump administration is determined to dismantle. All of this is symbolic of the crisis.
Crisis and trends
Currently, the pandemic is hitting Western Europe and, above all, the United States particularly hard, where the death toll is already thirteen times higher than in China (which has a population almost five times larger). Furthermore, sharp economic declines are expected, comparable only to those of the 1929 crisis or World War II. JP Morgan estimated that the US economy could shrink by up to 40% in the second quarter, with unemployment reaching 20%, and according to the Institute of International Finance, the annual drop will be 3,8% of GDP. For the Eurozone, the estimated decline is 5,7% for 2020, in an economy that has not yet recovered its pre-2008-2010 crisis size in dollar terms and where the pandemic has exposed the weaknesses of its continental project, with inevitable geopolitical consequences. In contrast, China would grow by 2,1%, less than the 6% initially projected, but remaining positive, after its industrial production fell by 13% between January and February.
In this sense, if in 1929 the crisis had its epicenter in the United States, but the strongest blow occurred in Europe and destroyed some of the fundamental pillars of British hegemony, now the pandemic had its epicenter in Wuhan but the main negative impacts are being seen in the West and in particular in the United States, accelerating the trend of its relative decline.
The COVID-19 pandemic is catalyzing and accelerating a set of trends that were already developing as part of the crisis of the world order and the historical-spatial transition we are experiencing. Some of these trends include the rise of the Asia-Pacific region, and China in particular, and the relative decline of the geopolitical West, the Global North, and the great power of the 20th century: the United States. We are witnessing the configuration of a multipolar world that simultaneously exhibits bipolar characteristics, alongside growing contradictions between the Global North and the Global South. This poses significant challenges for semi-peripheral countries—middle-income countries that combine processes and characteristics of both the periphery and the core, such as Argentina and Brazil—which are caught between peripheral “involution” and the formation of alliances to transform the world order and democratize both power and wealth. Another trend is the structural crisis of global capitalism and its neoliberal form, which began in 2008 and is linked to geopolitical struggles and major changes in technological paradigms and in the ways of organizing economic production and social reproduction.
It is no coincidence that this crisis is being compared to the 1929 crash and its aftermath, which coincided with the interwar period, the crisis of British hegemony, the great inter-imperialist struggle, and the rise of the United States. Today, all eyes are on China, and the crisis unleashed by the Covid-19 pandemic leads us to believe that we are facing a new moment in the geography of global power.
Numbers and scales
Analyzing China means delving into a new scale that, like any major quantitative phenomenon, encompasses profound qualitative transformations. The pandemic brought this issue to the forefront with absolute clarity. A new threshold of power is emerging, manifesting itself in multiple dimensions, beginning with the health sector: 90 percent of antibiotics are manufactured in China, which also supplies 80 percent of the raw materials for all medicines worldwide. Furthermore, from March 1 to April 5, China exported 3.86 billion face masks, 37,5 million protective suits, 16.000 ventilators, and 2,84 million COVID-19 test kits (La Vanguardia, April 5, 2020). In addition, it was able to quintuple its face mask production in less than three months and now produces more than 110 million masks daily.
These figures align with others that highlight the magnitude of this emerging phenomenon, as well as its extreme speed. Let's look at some data:
While Anglo-Saxon financial networks and their large banks dominated globally twenty years ago, now the world's four largest banks by assets are Chinese. Furthermore, three of the world's ten largest companies by revenue are Chinese, and China owns 119 of the world's top 500 companies (up from just 25 in 2007), reaching 129 when Taiwanese companies are included, while the United States has 121, according to the Fortune Global 500 index. Moreover, China no longer leads solely in low- and medium-complexity manufacturing. Its high-tech industrial products have gone from representing 7% of global value in 2003 to 27% in 2014. On the other hand, wages have tripled in the last ten years.
A megalopolis of 70 million people is taking shape in the Pearl River Delta, boasting a GDP of $1,5 trillion and developing into a global high-tech hub. Key cities include Guangzhou, Shenzhen (home to Huawei, Tencent, and ZTE), Zhuhai, Macau, Hong Kong, and Dongguan (where 20% of the world's smartphones are manufactured). The world's longest sea bridge, connecting Hong Kong, Zhuhai, and Macau, was built there. These are some of the reasons why China consumed the same amount of cement in three years (2011-13) as the United States did in a century. Furthermore, the region serves as a transit point for components used in 90% of the world's technological products.
This year, China surpassed the United States in patent applications for the first time, leads in some cutting-edge technologies for the so-called Fourth Industrial Revolution—artificial intelligence, the Internet of Things, 5G—, spearheads the energy transition alongside other Asia-Pacific countries, boasts a vast amount of data (Big Data) far exceeding that of the United States, and plans to close its relative technological gap in other sectors such as robotics, semiconductors, and aerospace through the Made in China 2025 Plan, which effectively breaks the technological monopoly of the Global North. This is one of the main reasons why the Trump administration launched a trade war against China—but also against its traditional allies and “vassals,” whom it demands uphold American primacy, thus generating enormous tensions.
In summary, this data shows that China is evolving from the world's factory to become the world's largest economic, production, and technological center, advancing at all levels of complexity to a scale that sets a new benchmark. The crisis unleashed by the pandemic is accelerating this process. Now, for the first time, it is also competing at the highest level alongside other global technology hubs in the development of medicines and a vaccine for COVID-19.
As an emerging power that has achieved productive supremacy, it is becoming more free-trade-oriented, while the declining power, or at least its most backward sectors and associated power groups, are exacerbating protectionism. In addition to what has been mentioned regarding production and technology, Beijing is already challenging global trade monopolies and mitigating its weakness in the financial sphere. On this last point, a key development has emerged since the pandemic, which, along with the 2018 launch of a yuan-denominated oil trading platform, highlights that China is becoming a store of value in the midst of a crisis.
As discussed in a previous article (“Coronavirus: economic blow and geopolitical strugglesOn the one hand, the crisis accelerated by the coronavirus implies a great destruction of value, and on the other hand, from a production standpoint, what will accelerate is the entire process linked to the so-called fourth industrial revolution: the “digital economy,” working from home, artificial intelligence, virtual education, etc. These are two sides of the same process of creative destruction, which entails a whole process of social re-engineering of which we are currently experiencing advances under a state of emergency, and whose development is still somewhat uncertain. Furthermore, its broader dynamics are observed in the Asia-Pacific region, in different dimensions and under hybrid production relations and new forms of organization. In the case of China, this means the combination of typical capitalist relations, which account for 30% of employment, and 70% under other ownership and production relations, among which the collectively owned village and town enterprises and the large strategic state-owned enterprises that conquered the world market and will make a huge leap forward post-pandemic stand out.
The rise of Asia Pacific and the new global geopolitical moment
We are currently witnessing the reverse of the process that occurred in the late 18th and early 19th centuries, when Western capitalist imperialism, led by the United Kingdom, managed to subordinate and decline the world's most important economies, China and India, transforming them into peripheries. This was achieved primarily through its military might, linked to the Industrial Revolution. The process it initiated is known as the "Great Divergence," which illustrates the enormous development gap between the two parts of the world: the Western imperial center and its peripheries and colonies, which came to include the "Middle Kingdom."
Following the meteoric rise of Japan and the Asian Tigers, China, the historical center of the Asia-Pacific region, which until the early 19th century accounted for half of the global economy, is re-emerging. While China's re-emergence has a long history beginning with the 1949 revolution, in the 21st century we can identify four key moments that mark fundamental shifts in the map of global power, the latest being the current pandemic.
In 2001, we identify a first key moment. After regaining Hong Kong in 1997 and Macau in 1999, the last major vestiges of Western colonial territory, that year saw the consolidation of the Shanghai Cooperation Organisation (SCO), a kind of defensive NATO in Eurasia, in alliance with Russia and the Central Asian countries, whose foundations had been established in 1997. Also that year, China joined the World Trade Organization and, moreover, marked a significant act of sovereignty by shooting down a US spy plane over its territory. Meanwhile, the George W. Bush administration ended the geopolitical framework of “strategic partnership in the 21st century” and shifted to one of “strategic competition.” At the same time, the US administration began to view China’s nascent but growing economic influence in Latin America very negatively.
The second phase began with the 2008 global financial crisis, which originated in the United States. Beijing then underwent a major shift, directing its enormous surplus resources toward the domestic market. To achieve this, it reduced its financing to the United States by more than 60% through the purchase of Treasury bonds. Furthermore, it expanded investment in science and technology, and advanced in the acquisition of strategic assets and the global expansion of its companies, becoming a major player in foreign direct investment, especially in Latin America, Africa, and Asia. Around 2009, the BRICS (Brazil, Russia, India, China, and South Africa) was launched, uniting the industrial powers of the semi-periphery into a bloc in the pursuit of reshaping the world order.
The third turning point came in 2013 when Beijing launched the revolutionary “Belt and Road Initiative” (as the project is popularly known) in response to the containment strategies pursued by Washington and its allies. Alongside this initiative, it promoted a new global financial architecture, including the Asian Infrastructure Investment Bank and the BRICS Bank, which overshadowed the IMF and the World Bank. Simultaneously, alliances with Russia deepened across all fronts to consolidate a power structure in the Eurasian continent that eclipsed the superiority of the “Sea Empire.” These moves exacerbated the reactions of the United States and the geopolitical West and fueled the hybrid and fragmented global war that has unfolded since 2014.
The current crisis marks the beginning of a new era. While the power center that was dominant (though no longer hegemonic) until the pandemic shows increasing signs of relative decline, China has definitively become a global player and appears poised to assume that role.
As an epilogue, we can recount an event that illustrates this new moment in relation to the region. In 2017, an agreement was approved for the American company Boeing, one of the Pentagon's main contractors, to acquire Embraer, the Brazilian aerospace company and "jewel" of Brazilian engineering. The agreement was made possible under the government of Michel Temer, who, since taking office, has pursued a program of neoliberal adjustment and alignment with the United States. Jair Bolsonaro ratified Boeing's advance and the progressive subjugation of Embraer to the Pentagon, while echoing the anti-China rhetoric of his admired Donald Trump and deepening geopolitical subordination.
Just a few days ago, it was revealed that the Boeing purchase fell through amid the company's crisis, exacerbated by the pandemic and the debacle surrounding its new 737-MAX 8 aircraft. What is striking in this scenario is that many powerful figures in Brasília, including those who spearheaded the strategic shift away from BRICS (Brazil, Russia, India, China, and South Africa) and the distancing from Beijing, are now proposing a future partnership with China to capitalize on its enormous and rapidly growing market. Meanwhile, Vice President and retired General Hamilton Mourão recently asserted that Brazil and China are destined for an inevitable marriage, further obscuring Bolsonaro and his "Westernism."
[1] Lecturer at the National University of La Plata and researcher at CONICET. Co-coordinator of the CLACSO Working Group on China and the Map of World Power. Article originally published in: The Digital Country, 30 April 2020.
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