Tectonic Power Shifts Underway , Outcome Uncertain
The US and European countries’ potential economic decline as a result of the coronavirus crisis has laid the seeds for a shift of global tectonic plates to China, the director of the Stockholm International Peace Research Institute (SIPRI) said.
“There are some signs of a tectonic shift towards China – primarily, its long-run faster rate of economic growth on top of its massive resource base. These have been visible since the time of the 2008 financial crisis. In the decade-plus since then, the shift in China’s direction has probably been rather less significant than initially anticipated, despite the Belt and Road Initiative, and despite the misfiring of US policy and loss of influence during the Trump presidency,” Dan Smith told Tasnim in an interview.
He added, “So in my view, the seeds have already been sown but growth has been slower than I would have expected”.
Dan Smith has a long record of research and publication on a wide range of conflict and peace issues such as nationalism, identity politics, armed conflicts, ethics of intervention, gender aspects of conflict and peacebuilding. In recent years, his work has broadened to encompass other contemporary issues such as the relationship between climate change and insecurity, peace and security issues in the Middle East and global conflict trends. Smith has served four years in the UN Peacebuilding Fund Advisory group, two of which (2010–2011) were as Chair. He has lived most of his adult life in the UK with a 10-year spell in Norway. He has traveled professionally to more than 60 countries.
Following is the full text of the interview.
Tasnim: The post-COVID19 race could determine whether the US rebounds in a manner that allows it to retain what it calls the mantle of global leadership. There are reports that Beijing could leverage its first-mover advantage – alongside a faster economic recovery across Asian markets – accelerating the trend toward a Chinese-centric globalization. What do you think?
Smith: It is evident that the Chinese government is attempting to position itself in various ways to gain an advantage in global influence. Success in this, however, may be more elusive than some observers seem to believe.
If it takes less economic losses and rebounds quicker than the USA and the EU taken as a whole, China will have a short-term advantage of sorts. However, the integration of global markets makes a negative-sum calculation difficult to justify. If there is not an adequate Western market, Chinese output will also be affected. It can stimulate Western demand through loans but only if it finds Western takers for its finance. It has done that in the past, leading to a major imbalance within the world economy that was one of the factors in the 2008 financial crash and subsequent economic crisis. Given the negative long-run consequences of that indebtedness to China and the greater visibility today than two decades ago of the dimensions of competition between the great powers, there may be less willingness to absorb Chinese financing to sustain markets for China. That in turn, while not limiting Chinese freedom of maneuver, would limit its opportunities for pre-eminence in a new phase of globalization.
Tasnim: The IMF has projected a US economic decline of about 6% in 2020 and a contraction of the Eurozone of 7.5%. That compares to projected Chinese economic growth for 2020 of 1.2% after a first-quarter real decline of 6.7% – far less than the 10%-plus dip many experts had expected. The only group of countries in the world projected to be in positive territory are East Asian, at roughly 1%. This has raised concerns within the US and Europe. Recently, French President Emanuel Macron argued that the coming months could determine whether the European Union collapses as a political and economic project. Do you believe that their steeper economic decline and slower recovery could lay the seeds for a long-lasting shift of global tectonic plates to East Asian nations’ advantage?
Smith: There are some signs of a tectonic shift towards China – primarily, its long-run faster rate of economic growth on top of its massive resource base. These have been visible since the time of the 2008 financial crisis. In the decade-plus since then, the shift in China’s direction has probably been rather less significant than initially anticipated, despite the Belt and Road Initiative, and despite the misfiring of US policy and loss of influence during the Trump presidency. So in my view, the seeds have already been sown but growth has been slower than I would have expected. It may take another crisis or even two before we see really decisive signs that the Western era is over and the East’s has begun. During that time, so much can go wrong or right for different players that I would hesitate to state anything that sounds like a prediction.
It might be worth recalling that the Business Week magazine had a cover bemoaning the utter decline of US power back in 1979. These things take time.