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Globalisation, China and the West

Updated: Feb 3

Not long ago, the Financial Times offered a safe definition of globalisation as the integration of nations, particularly the interconnection of economic markets and policies from increased quantities and qualities of communications and infrastructure on a global scale. Naturally, one word suffices to represent what is thought to flow through these connections and contribute to global integration: goods. Until recently, these were booming around the world in their growth, a significant component in the evidence of China’s consensus-clad road to toppling the US as the world’s largest economy. However, it is far from unlikely (we are still waiting on the data) that we enter this new decade after experiencing a fall in trade in goods by as much as 0.5%. Despite global productivity growth pulling through, traditional manufacturing industries last year contributed almost nothing to increase world trade. Nevertheless, these things happen and you might well think that the notion that globalisation is in the retreat exists only among opportunistic populists and the hopeful working class in bruised regions of the world such as the north of England, the streets of Philadelphia and the fluorescent yellow tinged lanes of that presently troubled country, France. Au contraire! Capital Economics argues that we have reached ‘peak globalisation’. The West’s ‘push-back’ against China is only under a Trumpian incarnation: it was inevitable in some form regardless of the occupant of the White House. Meanwhile, ‘most economies are now extremely open and there are no new major countries left to integrate into the global economy’. While China’s meddling in Africa and the East could boost growth there, it may form one bloc of two major ones (the other led by US). The consensus is in peril, which is welcomed in the West. In Europe, Brexit is testament to a mindset in Britain apparently wanting to reject globalisation, while the EU continues to exist and itself only encourages global trade if ‘Europe’ means the ‘whole of the world’. Of course, it does not, is ultimately protectionist and is too concerned with the aspects of globalisation which are perhaps economic, but too crowded with politics or, bluntly, people (enter: migration). It seems globalisation has reached its limit and the nation is back in the game.


Is this right? Leading governments have been under increasing pressure to better distribute growth in their own countries and limit the inequalities resulting from global integration. Since the recession, G20 countries have enforced some 7,000 protectionist measures in trade. In China, structural problems do exist and prove to be significant barriers against increased globalisation. President Xi has been determined to increase homegrown companies while tightening the grip of the state over them. The party of the one-party state is massive, with millions in its employ and plenty of party employees sitting inside Chinese firms, with media companies possibly soon to be subject to the decisions of the party, with members working for them or occupying shares. Imports to China began to suffer in the middle of the last decade as the country restructured itself, shifting more gained capital from investment to consumption while developing its own industries. At the same time, ‘Made in China 2025’ was launched, a potentially sinister plan to bolster homegrown technological advance and self-sufficiency. Global trade has been set back because foreign firms have faced requirements to share important data with China. Gradually rising wages in developing countries and governments in developed countries more experienced after over two decades in a highly globalised world are also working to tempt companies back home. More technological advances forming the digital economy and subsequently ‘digitalised globalisation’ may even be offset by technology that makes it easier for companies to stay at home. It seems that globalisation has expended itself, facing no further growth and possible retreat by drawing back in the face of efforts to preserve the nation.


The digitalisation of the world has well and truly begun with force. Skype calls now make up almost half of all international phone call minutes and Amazon is apparently unstoppable, to give only two examples. If the outside world is losing anything, three things come to mind: pubs, shops and phone boxes, and too few are standing up against the downward trend. It is certain that globalisation will be changed in the long-term, but not necessarily diminished. It may only decrease in regards to traditional goods, in which we should not invest too much attention in this decade, in which the younger generations are likely to continue to be liberally minded in the world and invest in services, technology and travel as their incomes grudgingly increase; older generations will rely more on services such as healthcare and online shopping, both heavily reliant on migrants or international trade. On the other hand, there is the idea of a cyber state and how technology may encourage a cut in the rate of globalisation. A cyber state is a quasi-state with a sophisticated virtual environment where one may interact with others (social media), earn and transfer money (virtual banking) and purchase products from anywhere (digitally-driven globalisation), all activities traditionally done in the actual state and increasingly done in the non-national cyber one, which is working to integrate the world while ironically making it possible to prosper in it without leaving the house. Therefore, the infinite number of cyber states pose challenges to national sovereignty if they are used by actual states as pawns to warp the sovereignty of others as people adopt ever more digitalised lifestyles. With this and the dawn of the AI revolution and eerie life-like virtual reality simulations, there is ample opportunity to draw up a dystopian future of humans more zombie-like and robotic than their robot servants, but that is for another article. The point here is that the precarious balance of technological power poses a direct threat to the nation because everyone seems to be using technology more and for more important endeavours. The more power one has over the content of cyber states, the more power they have to seriously influence the lives of individuals. The continued rise in technology is therefore seen as one reason to check globalisation and for nations to withdraw from it. However, cyber states still rely on physical territory for hardware storage, personnel and sales. This gives national governments leverage in deals if they approach things shrewdly. In 2017, Apple opened a data centre in China and seemed to make it easier for China to monitor its activities and even control them. Globalisation has not here been stifled. In fact, it has increased because of, not despite, China’s primacy of itself. China is approaching the situation negatively and proactively: deciding what it wants consumers to not see and do and bargaining or acting accordingly. In the case of China, however, globalisation is increasingly becoming the anti-hero by continuing to provide the context for cheap labour and the westernisation of the Far East while we nevertheless spur it on to do more to push China to liberal democracy. We may be disappointed. Digital globalisation may push us to champion China for upholding itself in the face of the splurge of information, a splurge traditionally championed in the West as a fundamental part of freedom. This serves a worrying prospect and should spur the West to think up alternatives to maintain the nation without compromising its commitment to freedom.


The lull in globalisation is temporary if China is working on a grand long-term plan with dreams of opposing its will beneath the face of globalisation. It is important to appreciate the eastern mindset, which is generally concerned with what is more long-term, collective and from a longer slog of an historical context than that of the West. Xi may be planning to contribute to a goal realised long after him. Under his presidency, China has bent globalisation to aid the imposition, rather than irrelevance, of the nation state. A big example of the work of his tenure is the launch of the Belt and Road Initiative, a colossal connectivity project in Africa and the East, including almost 140 countries and no less than 4.5 billion people. China has the banking and know-how weight to lead the multi-trillion-dollar initiative, still in its planning phases, tempting less developed countries into its breadth. In the meantime, other things are put on the back-burner, but we should not allow present conditions to determine our conclusions about the future – they could rapidly change, with China the heavyweight champion dominating a wider sphere of influence. It has already bolstered its banks, with vast sums of public money invested and subsequent capital boosts for Chinese companies implementing Belt and Road projects. Trade in goods between developing countries accounts for one-fifth of all global goods transactions. China may be setting itself up as their steward, bolstering infrastructure and dropping hints that it will soon start doing it in return for Chinese-style surveillance, data sharing and rule of law. Even in US, China is under pressure over the content of curricula in Confucius Classrooms – in developing countries, its education programmes may be implemented relatively easily. China’s globalisation may degrade the nations in its dependents, then, but such a globalisation will not change China, and certainly will not do so towards ends with which the West is comfortable. A new core-periphery model as identified by Capital Economics may arise, bolstering American and Chinese identities. However, this does not necessitate a new Cold War. China, US and their peripheries can trade with each other as well as themselves and even compete for the title of ‘best model’, just as companies compete within a state. Last month’s phase one US-China trade deal is an example of positive cooperation between the two countries. This could be immensely beneficial for consumers, enhance globalisation and retain the importance of the nation. Neither globalisation nor the nation state need go away, and one thing is clear: they are far from incompatible.


Those with fanciful notions of a globalisation in retreat in the Brexit and Trump world of the West should look at the East. Here, a globalisation under the guise of a China still clinging to the chains of an authoritarian establishment may confront the West’s place. With the right moves, 50 years hence may see a healthy, competitive and innovative relationship between China and the West that lifts all consumers; with the wrong ones, we may see a bolstered China with Eastern and African dependents constituting a real threat to the West, potentially extending to the cyber state. Xi’s China has dinged the death knell for any notion of an inherent incompatibility between globalisation and the nation. I hope its reverberations do not threaten the world with Chinese characteristics.


Jack Margetson



https://www.capitaleconomics.com/blog/the-end-of-globalisation/

https://www.cfr.org/backgrounder/made-china-2025-threat-global-trade

https://chinapower.csis.org/china-belt-and-road-initiative/

https://www.foreignaffairs.com/regions/china

https://foreignpolicy.com/2020/01/28/trump-phase-one-deal-china-misunderstand-global-trade-leave-worse-off/

https://www.tandfonline.com/doi/full/10.1080/17544750.2019.1687536


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