China as #1: Where Might it Lead the World?

China as #1: Where Might it Lead the World?
Xi JinpingMichel Temer

It slowly crept up on us. But in a carefully choreographed 19th Party Congress in late October, President Xi Jinping was enthroned before several thousand elite party loyalists as “absolute monarch,” along with a multi-layered, hand-picked collection of respectful barons (not a baroness in sight) to form his new Politburo and its Standing Committee.

This new reality builds upon five successful years in power, rebuilding the economy into one now firmly established as a consumption-driven society; what Xi calls “socialist modernization.” He stands ready to exploit the multiple flaws of Western economic models exposed by the 2008 global financial crisis. The first year of a very un-Presidential Donald Trump, an unthinking disruptor, has substantially undermined any longer-term vision for the Western world. This has emboldened an otherwise cautious Xi to make his very publically laid claim to “global leader” status for the China-shaped future he spelled out in his 3.5-hour speech. His words, then formally enshrined by acclamation in the party constitution, will sit alongside, on par with, the original inspirational thoughts of Chairman Mao. A unique honour, and certainly the actions of a very confident leader.

How did he get to this position?

His China — now totally “his”, nominally for five years, but probably for another decade — has been set on a new path of assertive action on the global stage. He has seen, and assessed as serious flaws, the disunity of the EU and the unsolved follies of Brexit. Maybe Trump respects Xi’s wisdom, but it is clear that the assessment is not mutual. Xi sees Trump as a wily opponent, but one prone to rash actions and disruptive whims. Xi’s tactics during Trump’s recent state visit included flattering him with pomp and ceremony, giving him some commercial trinkets to take home (another Boeing order), while still recognizing him as a boastful, bullying dealmaker who does not understand global realpolitik.

President Xi is not looking to challenge the US directly. But nor will he yield to American pressures, military or economic, or any tweeting ploys to undermine China’s ascent to global leadership. His readiness, his capacity to be that global leader, is linked to China’s unprecedented economic successes over past decades of disciplined effort under a strong export-driven model. When China weakened in the largely stalled economies of the US and EU, it took a bold step that only a disciplined society could deliver. Against the odds, it turned its economy around, onto a new consumption-based growth path. This IMF/OECD-recognized success has not only enabled China to maintain critical domestic political stability by rapidly transforming the well-being of its long-suffering population, but also to lessen its economic vulnerability.

This new version of politics and social order will not adapt easily to Western models. But equally many emerging economies — BRICS, Indonesia, Ghana — see merit in China’s approach of fighting corruption and delivering on the UN’s Agenda 2030 poverty reduction goals via strong government. So far, the South has not seen meaningful results from Western donors who suggest replacing stagnant aid flows with private sector investors. China has simply delivered its proven new model, “socialist modernization,” as a preferred path for other countries to adopt. China is winning converts — or at least partners — via massive infrastructure investments under its Belt and Road Initiative, with new railroads snaking across Africa and right into the heart of Europe, plus new strategically placed seaports across Asia, Africa, and even the Americas.

China and its BRICS partners have decided, given the West’s blocking them from becoming equal partners in managing the World Bank and IMF, to create their own clones. The centerpiece, dominated by China, is the new, fully operational $100b Asian Infrastructure Investment Bank. Western countries are now hurrying to join, even those only allowed as junior shareholders (Canada was one of the last to join, leaving only the USA outside and without influence).

It is not clear that much will come of Trump’s latest mission to Asia. Many of the region’s governments want economic stability, peace, and growth from stronger intra-regional trade. Some saw a stable economic future in the TPP, but Trump killed that dream. They now see stability as equally likely to come from China’s own more flexible free trade plan, a Regional Economic Partnership stretching from Australia to India. But there is also continuing talk of a TPP minus USA driven by Japan.

As well, they no longer laugh at Trump’s tweets; instead they worry about war. As the US presses Asian nations to take sides in a very un-diplomatic posturing contest, Trump’s rashly worded tweets could lead to war with North Korea. Possibly even a re-run, full-scale Korean war, with a defensive intervention by China to keep invading US troops or nuclear missiles away from their own border.

What does all this mean for Canada as it prepares this winter for its chairmanship of the 2018 G7 Summit? China’s changes will not materialize overnight, but the chaos of present-day Western leadership under Trump is looking increasingly unattractive to Asia and Africa. They, the G7, and the G20 are all looking for some clarity on a new geopolitical order.

As G7 chair for 2018, Mr. Trudeau has a unique opportunity to make his mark on a new global agenda, one that he should seize in the spirit of his father. Rather than waiting for the disruptor to do his worst, Trudeau should focus the G7 on a consensus vision of a better, more inclusive future. The UN’s Agenda 2030 and Canada’s feminist framework provide an excellent basis for that vision. Trudeau will need to recruit two or three other G7 leaders to back him. To emphasize the inclusiveness dimension — especially the need for broader partnerships and less “Me First” policies — they could invite Trump’s new “best friend” President Xi to co-chair the visioning segment of the G7 Summit next June. They could round out the clubby G7 tone by also inviting the 2018 G20 chair, Argentina to the table. One thing is clear: geopolitics is shifting and only the alert and surefooted will prevail.

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