Defining the State of “Equilibrium” in the International Order: Emergence of the Beijing

Tejusvi Shukla served as a Research Assistant with the Centre for Land Warfare Studies between May 2019 and November 2020. Her area of research included India’s internal security with a special focus on Left-wing Extremism. Additionally, she has worked on India’s Medical Diplomacy and Cartographic Aggression. She graduated with a BA Programme degree in Economics and History from Miranda House, University of Delhi in 2019. Currently, she is pursuing her Masters in International Studies from Christ (Deemed to be) University, Bangalore.

Given China’s visible rise from 2012 onwards, a global reset – economically, politically, and militarily – has been ongoing at an accelerated pace. The country seems emerging as a world superpower, especially due to the global dependency of the world economic order on Chinese supplies and investments. This has occurred despite instances of political and military tensions with countries that are economically dependent on China – often challenging the US hegemony in the international order. This can be witnessed in Sino-Iran and Sino-Russia cooperation amidst US sanctions, as also in hedging tactics being applied by archipelago countries in the South China Sea that consider China too important to be disfavoured against the US – their traditional ally. This has led to the emergence of various containment alliances and counter-alliances, trade wars, and diplomatic tussles leading the international order to a visible state of instability. Henceforth, newer international institutions are being established and those pre-existing are being challenged. One narrative reads this as a disruption of the existing “rules-based international order” while another looks at it as a balancing act against a prolonged US hegemony. 

Hence, the question of whether this emergence is really disrupting or balancing the world order arises. The Hegemonic Stability Theory may be applied in examining this question. It suggests that stability in the international order rests in the existence of a hegemon that ensures and invests in the stability of the system. The nineteenth-century hegemon, the United Kingdom, declined following World War II when the US simultaneously grew economically and militarily. The US ambitions of hegemony were challenged by the Soviet Union. During this intervening time, the world was shifting from one state of equilibrium to another state of equilibrium until US hegemony was established following the disintegration of the Soviet Union in 1990. If the theory is applied in this context, the pre-existing US hegemony seems to be challenged by a rising China. For this reason, it is relevant to compare the growth trajectories of both countries, and their parallel national behaviours (although in different centuries and global contexts) – in terms of foreign and economic policies. 

The Emergence of the US as a Hegemon in the Nineteenth Century

Following the American Independence, American Foreign Policy was broadly defined by political Isolationism. The Monroe Doctrine warned European colonisers against interference in the Western Hemisphere – its sphere of influence – stating that interference by any European power would be considered “as the manifestation of an unfriendly disposition toward the United States.” This was in combination with economic protectionism in terms of its Infant Industry Argument (articulated by the United States Secretary of the Treasury, Alexander Hamilton, in 1790), and economic engagement through the Dollar Diplomacy under President Taft (1909) – so also through later overt tariffs through the Smoot Hawley Tariff in the 1930s following the Great Depression. Regional domination was thereby established. The “America First” argument dominated the American Foreign Policy discourse throughout this time of political isolationism and economic protectionism. By the end of World War II, the United States had emerged as a manufacturing hub holding a 40 per cent share of the world economy in 1960 – in the formative years of the Cold War. Simultaneously, most of the post-war Western European economies were bankrupt and the Soviet Union was attempting to further expand within the power vacuum left by these post-war devastated economies. Great Britain, for instance, had pulled back its troops and aid from Greece and Turkey in 1947 owing to its economic bankruptcy. An imminent Soviet seizure of this opportunity in Europe challenged the US political and economic ambitions. In this context, the Marshall Plan was proposed by Secretary of State George Marshall under President Truman.

The Marshall Plan aimed to rebuild these economies through time and conditionality-bound grants, loans, and investment. Notably, the Plan was initiated with prominent overt as well as covert Foreign Policy motivations. Overtly, history manifests that this initiative played an instrumental role in rebuilding the European economies – especially Germany. However, a host of covert motivations behind the Plan reveal themselves, as one reflects retrospectively. Besides containing the communist expansion, three prominent covert motivations are worth mentioning. One, the Plan ensured the opening of the European markets for American exports. It mandated assisted economies to open their markets to American imports, furthering the capitalist laissez-faire economic model. Two, it popularised the use of the US dollar as the currency for international financial and economic transactions. Three, it paved the way towards promoting a largely-US led international economic order (in form of the Bretton Woods System and the Washington Consensus). A contextually and technically different, but conceptually similar trajectory can be noticed in the Chinese emergence. 

Comparing Chinese Emergence to the US trajectory 

Having stayed a closed economy until Deng’s economic reforms, China grew at an unprecedented pace since the 1970s. Its quest for establishing regional dominance through aggressive military and economic engagements in the South China Sea, (like the United States in the LAC region via its Big Stick and Dollar Diplomacy in Honduras, Nicaragua, Panama Canal or Cuba), and its reticence of the US presence in the Indo-Pacific (or Asia-Pacific) – that Beijing considers an outsider in its sphere of influence – serve as a reminiscence of the emergence trajectory of the US in the nineteenth century. The Belt & Road Initiative (BRI), spearheaded by President Xi Jinping in 2013, becomes a specific case reflecting the deepening (overtly) economic and (covertly) political and military dominance of the Chinese beyond its traditionally geographical sphere of influence. Currently covering over 70 countries and international organizations, the BRI has stark conceptual similarities with the Marshall Plan. Technically, a number of differences have been noted, including BRI’s singular focus on infrastructural projects (unlike the Marshall Plan’s diverse focus areas), a set of project-based terms and conditions without a pre-determined termination date (unlike policy conditionalities with fixed termination dates), and bilateral negotiations (unlike institutional negotiations through the Organization of European Economic Cooperation) – the inherent overlaps are many. Firstly, in both scenarios, the state aiming to be a hegemon is well placed economically. The US was a manufacturing hub looking for new markets to satisfy the needs of its domestic production capacity when the Marshall Plan was introduced. China currently holds 18 per cent of the world GDP (while the United States holds 15.83 per cent) and is a heavily export-oriented economy. The global supply chains are dependent on Chinese production in many sectors ranging from pharmaceuticals to electronics and automobiles. Another striking similarity is the internationalisation of the currency. While the Marshall Plan was instrumental in strengthening the might and utility of the dollar, through BRI projects, the internationalization and penetrability of the Chinese Renminbi are evidently visible. The use of the Renminbi for cross-border transactions and those related to BRI are being effectively popularised. In fact, the recent addition of the currency to its basket of currencies for Special Drawing Rights by the IMF reflects the impact of this internationalisation effort. An attempt to create an alternative financial system has been underway simultaneously, for instance, in the form of the Asian Investment and Infrastructure Bank (AIIB) against the IMF. As outgrowths of the entrenched economic engagement, military and political gains by China are increasingly revealing themselves. The much-neglected Central Asian Region today depends solely on Chinese economic aid – notably, it is an energy-rich region and is home to a Chinese base in Tajikistan’s Taxkorgan. The naval base in Hambantota, a deep seaport in Kyaukpyu, in Djibouti, as well as very recently military cooperation with a traditional Western ally – the Solomon Islands – is a case in point. Hedging between the USA and China by Singapore, Malaysia, and most interestingly the Philippines (despite territorial disputes) are further reflections of growing Chinese dominance in the region and beyond.

While currently, the international order might be in a state of disequilibrium, whether the US hegemony remains or the Chinese hegemony is attained, the international order shall attain a new equilibrium under one hegemon in the coming time. However, whether the new equilibrium that is attained in the future is better than the pre-existing one will vary according to which part of the world one is seeking an answer to that question. For instance, from the perspective of this author analysing the ongoing situation from New Delhi, any global equilibrium attained through an unchallenged Chinese hegemony might not be a desirable equilibrium. 

Image credit: https://knowledge.wharton.upenn.edu/article/u-s-china-tariffs/

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