While the Coronavirus has rightly taken much of our attention, a fundamental geopolitical realignment has been taking shape in the world, and it will become clearer in 2021. The realignment is the start of a Second Cold War, which hopefully will not become a ‘hot’ war. The new Cold War will be between China and the West, but it will be quite different from the one with the Soviet Union. The world has changed significantly since 1989, the year of the fall of the Berlin Wall.
The gap between the two opposing camps is now much smaller. The Soviet Union, a military giant with little industrial development, had the advantage of presenting itself as the champion of an international ideology. This was somehow also a flag of the West, which made the call for freedom and democracy its identity. Today, China harbors no real international flag, and the West is besieged by internal contradictions, from the battle of illiberal democracies such as Hungary under Viktor Orban to the nationalist, xenophobic, populist waves running in every country and the dramatic increase of social inequality and degradation of jobs, quality of life, and perspectives about the future. All this makes the Western banner much less forceful than after the Second World War. Today, it would be probably impossible to create the United Nations or adopt the Declaration of Human Rights, because of the current fragmentation of the world.
In the meantime, China is experiencing an industrial, scientific and technological development that was never in the reach of the Soviet Union. Finally, let us add the demographic factor: China, with its 1.4 billion people, has a very different strength from the 291 million the USSR had in 1989. Russia has now shrunk to 147 million: much less than Nigeria’s 208 million, not to mention Pakistan’s 220 million.
This new Western alliance is taking place without many noticing. NATO is no longer dealing with the North Atlantic, as by its constitution, and the mighty Soviet military power is not as significant in today’s Russian Federation.
In his unsophisticated drive to make the United States not dependent on any other country, even if a historical ally, Donald Trump took his distance from NATO. President Macron has described NATO as “brain dead”. And Europe has discovered that living under the American shield could be a delusive perception.
So, the current European Commission has embarked on a strong policy to make Europe a competitive international player, giving priority in investments to green technology, artificial intelligence, digital development, reinforcement of European patents, and curbing the unchecked power of American Big Tech. And now that Great Britain has left the European Union, some of the divides of the 28 (now 27), like that of European defense are gone. There is even an allotment of eight billion dollars for the embryo of a European army, which of course pales in comparison with the 732 billion of the United States.
However, few noticed that in November NATO Secretary-General Jens Stoltenberg chaired a group of experts, which recommended, without opposition, that the first task of the Alliance would be to answer to the threat coming from the “systematic rivals” of Russia and China. To include China in the center of NATO’s agenda is a such change that it means reinventing completely the transatlantic alliance.
The old terms of the Cold War are coming back, like old barrels with new content. The final document calls for “coexistence”, the need to maintain military and technological superiority, establish new treaties for control of armaments and no to the proliferation of advanced weapons. It also underlines that there are fields for cooperation, from trade to climate control.
The Trump period has been an unexpected bonus for China. Barack Obama had made great efforts to create an Asian trade agreement - the Trans Pacific Partnership (TPP) - which would exclude China and included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. It was signed on 4 February 2016. In January 2017, Trump took the presidency and promptly withdrew from the treaty. Partly this had to do with his obsession of undoing whatever Obama had done, but it was also because of his strong belief that US should not enter any treaty because this would condition the US, which could benefit more from bilateral relations, in which the US would always be the big boy in the room. “America first” in fact meant “America alone”.
The result is that for four years China has been able to act as the champion of multilateralism, of climate control, while for the US it was simply a question of tariffs with its policy focused on Chinese exports. China has basically been able to duck the issue, and the trade balance between Beijing and Washington is more imbalanced in favor of China than ever before. Trump engaged in some fight against 5G and Huawei, but made little secret of admiration for strongmen, from Kim Jong-un to Vladimir Putin and Xi Jinping.
And, during those four years, China has been able to continue its program of global expansion. Not only on its famous project - the Silk Road - with open connections for its trade with the world; but also on establishing the biggest trading bloc in history: the Regional Comprehensive Economic Partnership (RCEP) which destroyed any trace of the TPP, which had excluded China. RCEP is based on China, and the United States is out. The treaty was signed in November 2020, and Trump was so obsessed with his theory about fraud in the US presidential election that he did not even comment. But the RCEP has 15 member countries: Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos. Malaya, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam. The bloc has 30 percent of the world's population (2.2 billion), and 30 percent of the world’s GDP (26.2 trillion dollars). Only India, which is under the authoritarian and xenophobic leadership of Narendra Modi, remained out, complaining that it would be invaded by cheap Chinese products. But in fact, India is poising itself as the regional alternative to China, even if it is far behind in economic and technological terms. But it is a young country, with 50 percent of its population under the age of 25 years, while in China it is only 31 percent.
Asia is projected to become by far the most important geopolitical and economic area of the world. According to the McKinsey consulting company, in 2040 it will account for 50 percent of world trade, and 40 percent of the total consumption of goods and services.
Europe, and also the United States, are convinced that they can compete with China, and avoid it becoming a world power. But this means a total realignment of international relations, and in particular, a new alliance between Europe and the United States, and a policy, as during the Cold War, of shaping a group of countries that are willing to side with the West. China will carry out the same policy, and we will certainly see a new group of nonaligned countries as a reaction to the conflict. For instance, in this moment, an influential group of academics and diplomats is campaigning in Latin America for the region to remain nonaligned in the coming conflict.
The December issue of Foreign Affairs, the most influential space for American debate on international issues, has come out with an essay entitled Competition with China Could Be short and Sharp, in which it openly speaks of a possible armed conflict in the next ten years. The authors see a strong quickening of competition in the near future and see several handicaps for China. The first, its lack of democracy, which is going to insulate China (at this moment it is doubtful that the US, with Trump as a beacon and an example, will be credible). Then, more substantially, is that China’s window of opportunity is closing fast. “Since 2007, China's annual economic growth has dropped by more than half, and productivity by 10 percent. Meanwhile, debt has ballooned eightfold and is on pace to become 335 percent by the end of the year. China has little hope of reversing those trends because it will lose 200 million working-age adults and will gain 300 million senior citizens in 30 years. Meanwhile, global anti-China sentiments have soared to levels not seen since the 1989 Tiananmen Square massacre. Nearly a dozen countries have suspended or canceled participation in the Belt and Road Initiative (BRI) project. Another 16 countries, including eight of the world’s largest economies, have banned or severely restricted the use of Huawei products in their 5G networks. India has been turning hard against China since a clash on their shared border killed 20 soldiers in June. Japan has ramped up military spending, turned amphibious ships into aircraft carriers, and strung missile launchers along with the Ryukyu Islands, near Taiwan. The European Union has labeled China a “systemic rival”, and the United Kingdom, France and Germany are sending naval patrols to counter Beijing’s expansion in the South China Sea and the Indian Ocean. On multiple fronts, China is facing the blowback created by its own behavior”.
It is interesting to see how American intelligence is prisoner of a sense of superiority. China, thanks also to Trump, has been able to acquire at least a foothold everywhere. Of course, they do not have the 1176 military bases that Washington has all over the world, but they are working on that. Anyhow, the Foreign Affairs essay recommends urgently increasing the defenses of Taiwan which, after Hong Kong, is the last piece of China not under Beijing. And they make the point that war is quite possible in a short space of time, possibly within ten years. However, with time, “the possibility of a war might fade, as the United States shows that Beijing cannot overturn the existing order by force, and Washington gradually grows more confident in its ability to outperform a slowing China”.
It is difficult to follow the American conviction that the world is theirs and that Pax Americana is immutable. In fact, in the 16th century the United States did not exist and, according to most economists, China accounted for 50 percent of the world’s GDP. Now Chinese technological development is on the verge of overtaking the US. According to the World Bank, in terms of buying power, China had already overtaken the US last year. Chinese currency and gold reserves are double those of the US. What is true is that within ten years we will have an enormous development of Artificial Intelligence, and for the time being the US looks to have the advantage. But the latest developments in AI all point to autolearning systems. And in that sense, the quantity of data makes the difference, and China has double the number of people than the US and Europe together.
But why would China be tempted to start a war against the US? It would unsettle a system based on trade, where China is by far the biggest winner. It would be an exceedingly difficult war to win because the scale of operations would dwarf the Chinese military. And how could the US launch a war against China? Once aerial bombing is done, (unless it goes atomic, which is the sure recipe for the destruction of the planet), you have to put, as military jargon has it, boots on land. Is invading China thinkable?
So, it would be important to discourage any escalation, and not only for the next ten years. War is always a danger because human stupidity, as Einstein said, is as limitless as the universe. The same authors of the Foreign Affairs essay recall the First World War, as something that should never have happened. But signs of an escalation continue. Last week, former NATO Secretary Anders Fogh Rasmussen gave an interview, in which he said that NATO must win the technological battle against China. And the National Security Advisor-designate for President-elect Joe Biden's administration, Jake Sullivan, has just made an appeal to the European Union, seeking solidarity with the United States and not subscribing to any commercial agreement with China. The Second Cold War is coming...