Donald Trump’s America, caught up in a nationalist and protectionist spiral, is committing leadership suicide, whilst Xi Jinping’s China is turning into a global power.
The industrial revolution produced – in the words of Kenneth Pomeranz – a “great divergence” in the 19th century, between Europe and China, which had previously accounted for a quarter of the planet’s GDP. This is partly explained by contingent factors linked to the presence of coal close to English urban centers, and above all by assets that Europe had at its disposal as from the late 16th century: the deployment of capital intensive technologies, the rise of modern nation states that merged markets, the territorial and commercial expansion following the discovery of the New World and other lands, and the emergence of the rule of law and democracy.
The 21st century is seeing a reversal in this great divergence between China and the West – as exemplified by the USA. Donald Trump’s America, caught up in a nationalist and protectionist spiral, is committing leadership suicide, whilst Xi Jinping’s China is turning into a global power.
The USA is being undermined by populism. The Trump administration is prey to chaos and beleaguered by legal threats. Fiscal, healthcare and immigration reforms are being blocked. Growth in 2017 will not exceed 2.1% and a risk of recession can be discerned. The swing to protectionism has mainly materialized in the withdrawal of the USA from the Transpacific Pact, which annihilates the confinement of China to Asia. The USA is finding that it is powerless to counter Beijing’s annexation of the China Sea, and just as powerless to respond to North Korean threats to strike US territory. Its strategic alliances are breaking down, as seen in the way the Philippines and Malaysia have turned toward Beijing and in the increase in legal disputes with the European Union, Japan and South Korea.
The USA is falling back and leaving the field free for China, whose strategy combines the pursuit of economic reform, the export of its models for growth and for government, and the construction of a great sea wall that will push the USA out of Asia.
Xi Jinping is definitely gambling on maintaining high growth whilst moving toward more sustainable development. Economic activity shows an increase of 6.9% in 2017, and the increase in money stocks has been brought back to the same level, which shows how much control is being exerted over debt, which has reached 256% of GDP. At the same time, there is stronger supervision of banks and financial markets, and foreign investments (183 billion dollars in 2016) have been placed under strict surveillance so as to put a stop to speculation. Innovation and automation of production are speeding up, particularly in the electronics and automobile sectors – where there are 340,000 robots in operation – and massive investment is being poured into artificial intelligence.
China is taking full advantage of the USA’s break with multilateralism. With the abandonment of the Transpacific Pact, the way has been cleared for China’s plan for a free trade zone. Washington’s withdrawal from the Paris climate agreement gives Beijing the perfect opportunity to take the lead in the economics of the environment, especially in low carbon technology and electricity produced by solar panels and wind turbines. The new “silk roads”, which involve 890 billion dollars being invested in more than 900 projects in 64 countries, are extending the Chinese model to a global level. The aims of these projects are to control the infrastructures that are crucial for globalization, to create outlets for exports, to ensure access to raw materials and energy sources, and to bring about political tutelage by means of debt.
Xi Jinping intends to make the most out of the fallback of the USA. Breaking with Deng Xiaoping’s cautious attitude, he is pursuing a policy of control over the China Sea, by means of land reclamation and the militarization of small islands, and is building a blue-water navy to counter American naval supremacy. What is more, he is playing on the North Korean crisis to increase pressure on the USA. The keystone of China’s global strategy is the strengthening of Xi Jinping’s power – the man who has been given the title “Core Leader” of the Communist Party. The 19th Party Congress this coming fall will give the Chinese president a new five-year mandate – a foregone conclusion – but, more importantly, it will be a determining factor in the eventual elimination of any opposition. This would open the way for him to remain in power after 2022. The tough way in which Hong Kong has been taken back under control and the new purge carried out in Chongqing with the resignation of Sun Zhengcai who was appointed after the fall of Bo Xilai, show that nothing can be taken for granted. China may not have universal suffrage, but it does have political uncertainty. And, unlike Donald Trump, Xi Jinping does not have to be reminded that, in order to control the world, one must first control one’s own country and control oneself.
(Column published in Le Figaro, 28th August 2017)