[SCMP Column] Changing the Guard

November 07, 2015

First, the good news: China and the US are unlikely to come to blows over the South China Sea any time soon.
The bad news: the extraordinary 60-year period of peace and development fostered by US hegemonic oversight of the world economy is coming to a close. A “new normal” of “bi-polar” or “multi-polar” rivalry – evident in China’s increasing muscularity in the South China Sea, and its strategic blueprint embedded in the “Yidai, Yilu” (one Belt, one Road) policies – is soon to envelop us, with uncertain consequences.

For someone like myself, born in 1950 when the ink was still drying on the Marshall Plan to reconstruct post-World War 2 Europe, and on the “Bretton Woods” institutions like the World Bank and the IMF, calm and economic progress has been something I have always taken safely for granted. So too has Hong Kong, since the Japanese occupying forces upped anchor after second world war defeat, captured huge wealth and advancement over the past 60 years of US hegemonism across the Pacific.

But for both myself, and for Hong Kong, the emerging and rather nervous reality is that the “great moderation” that has prevailed from the early 1950s under the US’s relatively benign hegemonic embrace was maybe not “normal”, but perhaps instead a calm interlude in a normally more conflict-ridden world. The awkward reality may be that Hong Kong’s “golden era” through the 1980s and 1990s is now well and truly behind us. Future progress in a more rivalrous foreign policy environment may be much harder to earn. No wonder our “post-80s” generation is so gloomy. No wonder the “Occupy” movement attracted such emotional support.

In a number of recent strategic and defence-related briefings the messages have been consistent: China has entered a new and more muscular period in which it is likely to assert with increasing force its claim for great power respect. The “accidents of history” that for a century from the mid 1800s delivered repeated humiliations are now well behind it. China is now poised to challenge the US claim to “unipolar” domination.

Don’t get me wrong: I don’t for a minute believe that China’s military is about to go on the rampage – not least in the South China Sea. But China has now begun to say to the world that it has become a globally significant power, and – more important – that it is not necessarily bound by the US-crafted Bretton Woods institutions that have brought peace for the past half century, albeit at the price of adopting a US-crafted legal framework for most of our international institutions.

Nor do I believe that Beijing is about to adopt a “bull-in-a-China-shop” approach to challenging the Bretton Woods architecture that has served so many of us so well. But in the “Yi dai, Yi lu” framework, China is defining a distinctly China-centred view of the world and its economic priorities. In the Asian Infrastructure Investment Bank (AIIB) it is providing a new perspective on how best to come to the aid of struggling infrastructure-poor economies in Asia and Africa. And in its newly-assertive South China Sea positioning, including the impressive cement-pouring activity focused on a number of remote and inconsequential Pacific atolls, it is saying that the US Sixth Fleet can no longer regard the South China Sea as its exclusive and unchallenged back yard.

Through the nail-biting brinkmanship of the US Spratlys sail-by, I was not among those who believed conflict was imminent. Rather, I had a sense Beijing had at least one eye on the Hague, where Philippine challenges to China’s “nine-dotted line” South China Sea claims are currently being pressed in the Court of Arbitration on the UN Convention on the Law of the Sea. Look at it this way: somewhere in a back room of the Chinese Foreign and Defense Ministries there are probably people who discretely acknowledge that at some point in the indeterminate future China will need to bow to a ruling by the Hague Court of Arbitration. But between now and that indeterminate point the priority is to extend as firmly as possible China’s maritime claims. By “upping the ante” now, they extend the boundary on which compromise must finally be reached.

These various initiatives have aroused profound anxieties for our “unipolar hegemon”, and no-where is this more apparent than in the contrasting welcomes given over the past month to President Xi Jinping in the US and in London. Despite Britain’s former imperial aspirations, and its150-year colonial hold on Hong Kong, the British government seems comfortably reconciled to the clear ascent of China in world affairs. Better to acknowledge the new reality, and welcome China to the decision-making fold. By contrast, just days after meeting with Xi Jinping in the White House, Obama greeted the completion of the Trans-Pacific Partnership trade negotiations (a deal that excludes China) with a stark challenge: “We can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products…”.

So we have entered a period when the US, above all others, needs to come gradually to terms with the need to share hegemonic power. No doubt Russia and India nurture (less plausible) hegemonic aspirations, but the serious challenge is to recognise the irreversible reality of China’s ascent, and to embrace it, rather than try to crush it.

Rivalry is likely to mean a bumpy ride ahead for many of us in Asia. But there is one really good reason to remain confident that these rivalries can be properly managed. The six decades of “great moderation” have been well used to spread deep interdependence through trade and foreign investment. Tens of thousands of companies and literally millions of workers today rely on open trade and an unconflicted world for their prosperity and job security. Such interdependence puts important brakes on anyone’s inclination to violence or armed aggression. Long may that remain so.
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