China’s surge

Let China sleep for when she wakes up, she will shake the world. ” The sentence attributed to Napoleon Bonaparte can summarize the great historical event that is occurring in front of our noses: The change of the geopolitical epicenter of the world from west to east.

With the largest population in the world, estimated at present in 1.4 billion inhabitants of a global total of 7.7 billion inhabitants, with an estimated economy in gross domestic product (GDP) of US $ 14 trillion and growth rate of more than 6% annually, China is about to be the world’s first economic powerhouse in less than a decade. This promotion is not accidental. It was Deng Xiaoping, a de facto leader of China after the end of the Cultural Revolution, who coined the phrase “It does not matter if the cat is white or black, as long as it captures mice,” pushing in this way the economic reform that in less than forty years has placed China at the gates of dethroning the west from its long hegemony.

Just as Deng gave the thrust to economic transformation, it is now President Xi Jinping who promotes the qualitative leap to the next phase. With the phrase “the peaceful rise” President Xi has synthesized the strategy and the tactics in the current historical context, collecting millennia of tradition. Thus, the strategic objective is explicitly established: rise. Rise from number two to number one. The tactic or how is also explicitly indicated: peacefully. For this China will play in various boards, economic and political and with surrogate players, for it to be peaceful. The methodology antagonizes with the methodology known and imposed by the West until now, that of confrontation, the zero-sum, the winner-loser. Nourished by the historical tradition of Confucianism, Taoism, and Buddhism where cooperation, conciliation, and harmony are prevalent, China proposes an alternative to the constant rant of humankind in the struggle of interests: cooperation in disputes.

It is in that context that President Xi proposed the Belt and Road Initiative (BRI). Developed as a program of cooperation between countries that traded through the historic Silk Road, China is already implementing an investment program estimated between USD 1.7 and 8 trillion to develop physical infrastructure (roads, high speed trains and ports), human infrastructure (training, education) and technology infrastructure (optic fiber connection, artificial intelligence, robots) in countries in Asia, Europe and Africa and promote trade and cooperation inter alia. The BRI is already tangible and impressive: the corridor that connects with Pakistan, the bullet trains of more than 300 km/h connecting with Europe and North Korea, African students in China, among others. Making an initial immersion in the concept of the BRI, one can find parallels with other historical experiments, such as the construction of roads and aqueducts by the Romans or the commercialization of the British through the East India Company. Hence, the eyes that are used to analyze Chinese funding cannot be the same as those for analyzing Orthodox funding. China bets on the long term and the financing is tactical. Of them, something more useful can be achieved. Recently, in the context of the BRI, Malaysia experienced it. Due to the Inability to pay the financing of a port, it had to give it to China. In Africa, in Djibouti, it established the first Chinese military base outside its territory and played a decisive role in the replacement of Mugabe in Zimbabwe, arguably to protect its investments.

Everything the BRI brings in we don’t know yet, but some concepts are beginning to emerge. Some of them are legal concepts. The pattern is not new. From Rome, several legal concepts emerged that we keep such as the concept of legal capacity so as Britain did through the East India Company India bringing in concepts such as the corporation and the limited liability partnership. In the context of the BRI, the discussion is taking place on the nationality of multinational companies, not as a scrap of legal persons registered in several countries, but as the important singular actor that they are today with power and capacities superior to many countries. The State-Owned Enterprises (SOE) figure also begins to emerge with nationality, regulations and sui generis rights and obligations. Even, contrary to economic orthodoxy, SOEs issue and trade securities, stocks, and bonds in capital markets. Of special interest is the development of different dispute resolution mechanisms. The words of a connoted Chinese jurist perhaps paraphrasing a well-known western song coin the intent: “all we are saying is to give peace a chance“. With this phrase, the Chinese disruptive thought is collected: So far, the form of dispute settlement has been under the format of war, one wins, another loses. The Chinese want to promote the Oriental format, Confucian win-win. Under that premise, they are developing the obligation to exhaust two instances before the confrontation: the cool-off period during which the parties must try to converse directly and demonstrate it and that of mediation with subsequent conciliation. In the development of conciliation, the Chinese bring the ancestral experience of the wise elders. Guided by curiosity to find the interests, the conciliators, unlike the mediators who occasionally serve as facilitators, moderators or masters of ceremonies, assume a more active role and by finding the core of the dispute, through rigorous, simple and demolishing questions, they propose a solution that seeks to converge the interests of the disputing parties so that they both win. This raison d’être is what has been underlying in Singapore’s recent mediation convention, behind which is China’s hand.

In fact, one can indicate that the BRI implies the development of a new world order with Chinese traits first and eastern characteristics later. Or a new status quo that first applies to more than half the world and then we don’t know where it spreads.

Obviously, the BRI is a tactic. Moreover, it is a tactic inserted within a larger tactic: the economic ascent. In that category, there are other tactics: currency dominance. The Renminbi or Yuan prepares to occupy the space that the dollar is leaving. With the fall to less than 40% of the international transactions made in dollar and the pressure of the sanctions that the U.S. imposes on many countries, while the commercial war via tariffs with China and other countries takes place, a window of opportunity opens for another currency pattern. In parallel, China occupies spaces left by the U.S. A case in point is how China occupied the space left by the U.S. when it left the Trans-Pacific Partnership Treaty (TPP). Therefore, China remains unrivaled to assume leadership in that region of the world.

In the political arena, the alliances are obvious and the symbols emblematic. During the last meeting of heads of State at the UN in New York, the absences of Presidents Xi of China and Putin of Russia spoke for themselves. The message was that the old order of things didn’t interest them anymore. Instead of attending the UN, they were both together in Vostok, on the border of the two countries making the largest war games ever made since the end of the Cold War, Vostok 2018, with 300,000 soldiers, 1000 airplanes, 36000 tanks. Significant is that the fictitious enemy during the essay was the “western alliance.” Significant also is that the “western alliance” is perceived to be fractured: the divisions, investigations, and distractions of the U.S. politics, the BREXIT in the European Union, the “yellow vest” in France, the lack of consensus among allies in the zones of influence of the west, etc. China and Russia are likely to be antagonistic in the future, as they have been occasionally in the past. For now, the pragmatic marriage serves both. China works in its intention to rise peacefully and in its methodology of using proxies for some of its objectives. So, when there is a need to confront, it won’t be China’s face. The methodology has already been used. North Korea has been a proxy in the confrontation with the U.S. Pakistan is a proxy against India. Singapore recently has also been a proxy for the approval of the Mediation Convention.

China brags of being the only civilization that has survived for 5000 years. It also brags to have been an icon of regional power almost 4000 years ago when the world gravitated more around the east. It was Alexander the Great, who on defeating Dario III in the battle of Gaugamela in the year 331 BC and bringing in the fall of the Persian Empire, placed the west as the epicenter of world geopolitics in a more or less uninterrupted way until our time. Today, with the “peaceful ascent” of China, humankind is at a similar momentum, only this time it seems that the epicenter will turn eastward.

It seems the geopolitical framework under which we all will operate in the future will be guided by the dichotomy between the western alliance where the U.S. is currently in the lead and the other alliance where China will be in the lead in the relationship with Russia, Iran, and Turkey.

That framework provides political, economic and social challenges and opportunities for countries, business, and individuals. Parts of the world will be redrawn as new areas of influence, regimes will change depending on the interests of the alliances to which they belong, businesses will flourish and decline in each of the alliances and through the alliances and the flow of ideas, values and traditions will move from one to the other.

Within that framework, many unanswered questions remain: When will the western alliance fully understand the historic challenge it is facing? which countries will fall under one or the other alliance? Will both alliances ultimately clash? Is there anything that can be done to weaken the surge of the other alliance? Will the other alliance maintain its coherence, or will they confront each other to the benefit of the west?

Be it as it may, one thing is sure: China is awake. That was considered by the U.S. recently as its Department of Defense changed its strategic priorities from counterinsurgency to China and Russia. The issue could be whether it is too late and whether the status quo is fully aware and prepared to face the challenge. If history repeats itself, and the game is always the same but with different players, the lessons of Rome among other dominant powers, hopefully, could be useful to one or the other alliance.


⃰ Omar was recently invited to China to discuss dispute resolution in the context of BRI.