China’s Five Pillars for Global Transformation

>> Elizabeth Economy: You'll hear him say, the east is rising, the west is declining. There's going to be the triumph of socialism over capitalism. And you may remember back in 2023, he said to Vladimir Putin that we are witnessing changes unseen in a century, and you and I are driving those change.

Thanks. I'm going to talk about China's ambition on the global stage, how the United States is responding, and a little bit, I hope, about how the United States in the next administration might think about what more it needs to do. I'm going to start with a very simple but not uncontested point that Xi Jinping has a vision for China, a vision for China in the international system, and a vision for the international system that is in many respects antithetical to the interests, values and policy priorities of the United States.

This is not about reform around the margins. It is not simply about enhancing China's role on the global stage, it is, in fact, about reordering the world order. Xi Jinping also displays a lot of confidence about his vision and talks about how the historical trends in the world, historical forces, geopolitical forces are with him, notwithstanding the efforts of the United States and the West to try to contain China.

You'll hear him say, the East is rising, the West is declining, there's going to be the triumph of socialism over capitalism. And you may remember back in 2023, he said to Vladimir Putin that we are witnessing changes unseen in a century, and you and I are driving those changes.

So what are those changes? What is Xi Jinping's vision for China for what he terms the great rejuvenation of the Chinese nation? I think it reflects five transformative processes. First, Xi Jinping is moving from staking claims around sovereignty to realizing them. This means, in the first instance, of course, reclaiming territory that China considers to be its sovereign territory in Taiwan, Hong Kong, the South China Sea.

But it also includes contested territory like the Diaoyu Senkaku Islands with Japan, includes border territory with India. It includes land inside of Bhutan, China is currently building villages inside, of Bhutan. All told, China has territorial conflicts with 13 different countries. So in the first sort of, and I think most significant priority of Xi Jinping is really to redraw the very map of China.

The second shift is to supplant the United States as the dominant power in the Asia Pacific. Xi Jinping talks a lot about Asia as for Asians to govern. And by this he certainly means for China, not for Japan or India to lead. China has established a set of regional institutions like the Asia Infrastructure Investment Bank, the Regional Comprehensive Economic Partnership, which are both focused on economic issues, and the Shanghai Cooperation Organization, which is about security, at which China is the core.

 

And China speaks frequently, Xi Jinping speaks frequently about the need to end the system of US led alliances, which he terms anachronistic and anti-China. The third big shift is Xi Jinping's effort to create a new model for China's economy within the global system. He wants China to be the technological and economic power, global power, and he wants to insulate it from the pressures of the global economy, while at the same time trying to ensure that the global economy remains dependent on China.

So in 2019, he articulated his theory of dual circulation, which basically said that, China has a large enough economy that it can innovate, manufacture, and consume primarily within itself. It will continue to export to the rest of the world, and it will continue to import what it needs in terms of technology and know how, but also to ensure that multinationals retain some of their supply chain dependencies within China, because he views this as a source of political leverage on other countries.

The fourth transformative process then is Xi Jinping's effort to have other countries align their values, interests, and priorities with those of China. And he has several tools to accomplish this. The most notable is really his flagship foreign policy initiative, the Belt and Road Initiative, which was articulated in 2013.

Began as really a hard infrastructure initiative, basically connecting some of China's poor interior provinces to external markets. It was also a way for China to export its overcapacity in the construction industry. And it was a genuine desire to help fill the need of the world, especially the emerging and middle income economies, for more infrastructure.

It has morphed since then into a range of additional silk roads. There's the digital Silk road, which is fiber optic cables, and e-commerce, and satellite systems, and cloud computing, and 5G. There is the health Silk Road which came to fruition during COVID, demonstrating Xi Jinping's opportunistic sensibility. There's the green Silk Road, which we're experiencing right now, which is the export of China's battery technology, its EVs, solar panels, wind turbines.

So there's a massive sort of set of goods and services that China is now exporting across some very key technologies and industries through this Belt and Road. The Belt and Road also has a political component to it. So along with engaging with Huawei for its 5G technology, you can have a cybersecurity seminar that will help you learn how to control the Internet, how to manage Dissidents how to basically follow those whose opinions disagree with yours.

There are about 36 countries have taken advantage of this. There's also a military component. China established its first military logistics base in Djibouti. And for those of you who've studied China, you know that prior to about 2010/2011, the idea of having an overseas military base was anathema to China.

That was the purview of the United States, this hegemonic power. China would never have military bases. Now China has on the books plans for at least 10 different military bases. So the Belt and Road has, I think, expanded from simply just an infrastructure play to use that to export not only China's development model, but also elements of its political model and its security interests.

I just wanna highlight that, there's been a lot of talk about China sort of on purpose, leading countries to become financially dependent, right? This issue that China's trying to get countries to be in debt, I don't think that that is true. I think it's important to recognize this is not the imposition of China onto other countries.

This is the export, there is a willing consumer on the other end of this. So I just wanna underscore that so that, we're not taking away agencies from the recipient countries that are becoming involved in this initiative. China also has soft power tools. It has its Confucius Institutes.

And despite the fact that here in the United States and in Canada, Western Europe, these Confucius Institutes have fallen out of favor. These are, of course, China's training centers for Chinese language and cultural engagement. They've fallen out of favor here because of concerns over political influence. I'm happy to talk about that, more people are interested.

But in Africa and Latin America and Southeast Asia, the number of these Confucius Institutes is growing, because countries with few resources to teach Chinese language appreciate the fact that China can provide all of this for free. China's also established training centers in Guangxi Province and in Tanzania so that leaders from Southeast Asia and Africa can go and learn about the China model.

It's one of the things that Xi Jinping said in 2017 that shocked a lot of people was that, China had a model that other countries who were disaffected by sort of market democracies could learn from. And so now they have these training institutes and you can learn everything from how to manage, deal with poverty alleviation to how do you develop a strong one party state to again, how do you manage the media and social media and the Internet.

There are also coercive economic elements to China and both in terms of the economy. We've seen how China over the years, when countries do things that upset China politically, it will try to use the leverage of its market to change their policies. So most recently, we saw China punish Lithuania because Lithuania established a representative office for Taiwan in Vilnius.

Before that, we saw a major boycott of Australia because Australia called for an investigation into the origins of COVID So this is one tool that China tries to deploy. I will say that, it doesn't actually work, but because countries don't actually change their fundamental policies when they're threatened by this boycott, but I think there's an element of what is it?

Cutting off the head of the chicken to scare the monkey? There's some expression like that, basically trying to make an example of these countries to instill a fear and concern in other countries. And then there, of course, is disinformation. And China, like Russia, uses disinformation, especially via the Internet, to try to develop political outcomes that they want.

We saw this very clearly in the recent election in Taiwan where they were putting out a lot of disinformation about the leaders and, you know, illegal, not illegitimate children and all sorts of different things to try to get the Taiwanese populace to vote for their favored party, the KMT.

And then finally China's, I think the fifth sort of transformative effort is to lead in the reform of the global governance system. And back in 2014, Xi Jinping gave a speech where he said that China should not only help to write the rules of the game, it should create the playground on which the games are played.

And by that, Xi Jinping means creating new institutions or using current institutions like the United Nations or other multilateral organizations to advance Chinese domestic and foreign policy interests. So, primarily this has been used to advance the Belt and Road Initiative. So Xi Jinping succeeded in getting the Belt and Road Initiative written into the mandates, or charters, or priorities of over 26 different, not over, over 24, 26 is the number, different UN agencies and programs.

It means trying to change notions of human rights. So moving away from the guarantee of individual political and civil rights to a state-directed center sort of view of human rights, so that the state has the right to determine for its people what human rights should be. It's been very effective in the United nations, in the UN Human Rights Council.

It just recently blocked just even a debate about China's treatment of the Uyghurs in Xinjiang. It's only the second time that this has happened in the history of the UN Human Rights Council, where not that the vote went China's way, but even they couldn't even have a debate on that.

China's also trying to advance its notion of Internet governance. So rather than have sort of the free flow of information be the norm, that states would retain the right to control the Internet within their own domain. So there would be actually just like a shut off switch so that any device connected to the Internet could be controlled by the state and just shut off at any time.

So that's something that's been advanced by Huawei in some of the technical standard setting bodies within the UN and some additional ones. So those are some of the main areas where China has tried to use the international system to push its own ideas. Xi Jinping has also just in the past couple of years, put out his own sort of grand ideas about the sort of global system with the Global Development Initiative, the Global Civilization Initiative, and the Global Security Initiative.

I think what makes these interesting is that nobody wants to actually read them because they're full of banal text and a lot of communist rhetorical flourishes or Xi Jinping thought flourishes. But he manages and they sound very benign, but in each of them there is the kernel of something that actually seeks to upend elements of the current international liberal system.

And so if you look for example at the Global Civilization Initiative, which in part basically says that all civilizations are equal and every civilization has the right based on its own history, its path, its economy, to determine what the human rights within it are. But it couches it in a way that many countries find attractive.

The Global Security Initiative is fundamentally an attack on the US led alliance system. It also supports notion of indivisible security, which is what Russia has used to justify its invasion of Ukraine, right? My security is feeling threatened, I'm going to take preemptive action. You could also imagine that Xi Jinping might use that to justify an invasion of, of Taiwan.

So it pays-to-pay attention to these things because inside all of them, there is something that Xi Jinping is seeking to use to challenge the current rules based order. And he manages to get many, many countries to sign onto all of these. And he'll use a lot of regional organizations, and countries think they're just buying onto something that sounds, again, very benign without fully appreciating what is actually at the core of this.

And then I would just point to Xi Jinping's effort on dedollarization. And this is I think an issue that really demonstrates the deftness of Xi Jinping's diplomacy. China has sought really since the global financial crisis to increase the use of its currency, the renminbi, in international transactions, to have it become a reserve currency with very little success.

But recently Xi Jinping has switched tactics and said all countries should have the right to trade and invest in their own currencies. And particularly now, when the United States has been using the dollar to sanction as a tool in the sanctions against Russia, China has found a lot of countries that are quite interested in not using the dollar for their trade.

And so, it's making a lot of progress just really through bilateral trade agreements and through bilateral investment, working with other countries trading in either their currency or the Chinese currency. I think most economists, of which I am not one, I'm a political scientist, think that this isn't going to go anywhere, that China doesn't have the depth of capital markets, it doesn't have the transparency, doesn't have the rule of law.

There's never gonna be buy into a yuan-based or renminbi-based international system, but I would say that's not what Xi Jinping is aiming for here. He's simply aiming to diminish the use of the dollar. And so I think this is something that, you know, we should all be watching and probably something that the US Government should be thinking about in terms of developing a strategy determining whether this dollar dominance is something that we want to retain and whether it matters to us or is it something that, you know, we're willing to see over the years sort of, you know, wither away.

Because again, this is a very typical type of Chinese strategy, which is to work from the outside in, to try to erode very slowly sort of norms and practices. And then you will simply blink and wake up and you'll find that the entire sort of geoeconomic or strategic landscape has been transformed.