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The rising power of China will create new political fissures in the west The rising power of China will create new political fissures in the west
(10 days later)
Whether he wins or loses the US presidency next November, Donald Trump has already come up with one of the defining slogans of 2016 – “Make America great again”.Whether he wins or loses the US presidency next November, Donald Trump has already come up with one of the defining slogans of 2016 – “Make America great again”.
Trump’s vision of an America in precipitous decline is all-encompassing. At home, he points to falling living standards for many Americans and the disappearance of well-paid manufacturing jobs. Overseas, he claims the world is laughing at the US and laments that “we don’t win any more”.Trump’s vision of an America in precipitous decline is all-encompassing. At home, he points to falling living standards for many Americans and the disappearance of well-paid manufacturing jobs. Overseas, he claims the world is laughing at the US and laments that “we don’t win any more”.
Many in Europe are tempted to see Trump as an “only in America” aberration. Yet the fear of economic and geopolitical decline that Trump is capitalising upon is widely visible across the west. The coalition of frustrated working-class voters and nostalgic nationalists that the Republican has put together is uncomfortably reminiscent of the alliance that voted for Brexit in the UK. Trump’s “make America great again” mantra has an echo of the Brexit campaign’s winning slogan – “Take back control”. Nor is this is just an Anglo-American phenomenon. Across the EU, including in France, the Netherlands, Italy and Poland, protectionists and nationalists are gaining ground.Many in Europe are tempted to see Trump as an “only in America” aberration. Yet the fear of economic and geopolitical decline that Trump is capitalising upon is widely visible across the west. The coalition of frustrated working-class voters and nostalgic nationalists that the Republican has put together is uncomfortably reminiscent of the alliance that voted for Brexit in the UK. Trump’s “make America great again” mantra has an echo of the Brexit campaign’s winning slogan – “Take back control”. Nor is this is just an Anglo-American phenomenon. Across the EU, including in France, the Netherlands, Italy and Poland, protectionists and nationalists are gaining ground.
Related: Across Europe, distrust of mainstream political parties is on the rise
As Trump might put it: “Something’s going on.” That something is a historic shift in economic and geopolitical power that is bringing to an end a 500-year period in which western nations have dominated global affairs. This erosion of the west’s privileged position in world affairs is creating new economic, geopolitical and even psychological pressures in both the US and the EU.As Trump might put it: “Something’s going on.” That something is a historic shift in economic and geopolitical power that is bringing to an end a 500-year period in which western nations have dominated global affairs. This erosion of the west’s privileged position in world affairs is creating new economic, geopolitical and even psychological pressures in both the US and the EU.
The driving force of this change is the extraordinary economic development of Asia over the past 50 years. In 2014, the IMF reported that, measured in purchasing power, China is now the world’s largest economy. The US had held this title since 1871, when it displaced the UK; now China is number one. The rise of China is just part of a broader shift of economic power towards Asia. The IMF reports that three of the world’s four largest economies are now in Asia. China is first, the US is second, India third and Japan fourth.The driving force of this change is the extraordinary economic development of Asia over the past 50 years. In 2014, the IMF reported that, measured in purchasing power, China is now the world’s largest economy. The US had held this title since 1871, when it displaced the UK; now China is number one. The rise of China is just part of a broader shift of economic power towards Asia. The IMF reports that three of the world’s four largest economies are now in Asia. China is first, the US is second, India third and Japan fourth.
It is true that if you measure economies at current exchange rates the US is still the world’s largest economy – and European nations also rise up the pecking order. But growing Chinese and Asian economic weight is demonstrable in many other ways. China is now the world’s largest manufacturer and the largest exporter. It is also the world’s largest market for vehicles, smartphones and oil – and the biggest single market for many western companies such as Daimler and KFC. But it is not just Mercedes and fried chicken that are being consumed in Asia. In 2012, for the first time in over a century, Asian countries spent more money on armaments and troops than European nations. The world’s two largest arms importers are now India and Saudi Arabia.It is true that if you measure economies at current exchange rates the US is still the world’s largest economy – and European nations also rise up the pecking order. But growing Chinese and Asian economic weight is demonstrable in many other ways. China is now the world’s largest manufacturer and the largest exporter. It is also the world’s largest market for vehicles, smartphones and oil – and the biggest single market for many western companies such as Daimler and KFC. But it is not just Mercedes and fried chicken that are being consumed in Asia. In 2012, for the first time in over a century, Asian countries spent more money on armaments and troops than European nations. The world’s two largest arms importers are now India and Saudi Arabia.
Related: Middle East states almost double small-arms imports
Conventional economic theory holds that the growing wealth of Asia should be a boon to the economies of the west, since it offers new markets and sources of investment. But it is also clear that particular communities in Europe and the US, especially manufacturing workers and the less educated, have had their living standards badly hit by competition from Asia. Economists call this the “China shock” and the effects have been profound. By the end of 2008, the US had lost one third of its manufacturing jobs from peak and most of those had gone in the previous decade. Italy, whose industrial heartlands have suffered particularly badly from competition with Asia, has lost 25% of its industrial capacity since 2008. Researchers at Bocconi University in Italy have shown that across Europe it is the areas that have been hit hardest by Chinese competition that are most likely to move towards political parties advocating “identity-based nationalism”.Conventional economic theory holds that the growing wealth of Asia should be a boon to the economies of the west, since it offers new markets and sources of investment. But it is also clear that particular communities in Europe and the US, especially manufacturing workers and the less educated, have had their living standards badly hit by competition from Asia. Economists call this the “China shock” and the effects have been profound. By the end of 2008, the US had lost one third of its manufacturing jobs from peak and most of those had gone in the previous decade. Italy, whose industrial heartlands have suffered particularly badly from competition with Asia, has lost 25% of its industrial capacity since 2008. Researchers at Bocconi University in Italy have shown that across Europe it is the areas that have been hit hardest by Chinese competition that are most likely to move towards political parties advocating “identity-based nationalism”.
China’s increasing economic weight is also leading to tricky strategic and political choices for western nations. Britain’s current dilemma over the proposed nuclear power station at Hinkley Point is illustrative. With Brexit looming, investment from China looks ever more crucial to the UK. But China is not just an enormous economy. It is also a rising power with strategic aims that have led to a rise in tensions with its neighbours and with the US, Britain’s most important military ally and the bedrock of the Nato alliance. Given the rising tensions between the west and China, it was all but inevitable that the May government would have to consider whether it is sensible to hand over the management of such a strategic chunk of the UK economy to Chinese companies.China’s increasing economic weight is also leading to tricky strategic and political choices for western nations. Britain’s current dilemma over the proposed nuclear power station at Hinkley Point is illustrative. With Brexit looming, investment from China looks ever more crucial to the UK. But China is not just an enormous economy. It is also a rising power with strategic aims that have led to a rise in tensions with its neighbours and with the US, Britain’s most important military ally and the bedrock of the Nato alliance. Given the rising tensions between the west and China, it was all but inevitable that the May government would have to consider whether it is sensible to hand over the management of such a strategic chunk of the UK economy to Chinese companies.
Related: Energy specialists raise concerns about Chinese Hinkley involvement
The trade-off between security and economics when dealing with China is likely to be a recurring dilemma for the UK – and it is not just a problem for Britain. A few months ago, Australia faced its own Hinkley Point moment when it blocked a Chinese consortium from buying a company that owns more than 1% of Australia’s landmass. Since then, tensions between the Aussies and the Chinese have risen. A few days ago, the Global Times, a subsidiary of China’s People’s Daily, suggested that if the Australian navy joined the US in patrolling waters claimed by Beijing in the South China Sea, Australia would be “an ideal target to warn and strike”.The trade-off between security and economics when dealing with China is likely to be a recurring dilemma for the UK – and it is not just a problem for Britain. A few months ago, Australia faced its own Hinkley Point moment when it blocked a Chinese consortium from buying a company that owns more than 1% of Australia’s landmass. Since then, tensions between the Aussies and the Chinese have risen. A few days ago, the Global Times, a subsidiary of China’s People’s Daily, suggested that if the Australian navy joined the US in patrolling waters claimed by Beijing in the South China Sea, Australia would be “an ideal target to warn and strike”.
The shrill tone of such Chinese pronouncements underlines the fact that the shift in global economic power has not just altered attitudes in the west, it has also produced an increasingly assertive nationalism in Xi Jinping’s China. Over the past year, Beijing has asserted its claims in the South China Sea by building artificial islands across the ocean. In response, the US navy has sent patrols through waters claimed by China.The shrill tone of such Chinese pronouncements underlines the fact that the shift in global economic power has not just altered attitudes in the west, it has also produced an increasingly assertive nationalism in Xi Jinping’s China. Over the past year, Beijing has asserted its claims in the South China Sea by building artificial islands across the ocean. In response, the US navy has sent patrols through waters claimed by China.
Both a Trump and a Clinton presidency would probably lead to increased tensions with China, but by very different routes. Hillary Clinton is regarded in Beijing as a dangerous hawk who would be likely to be more determined in pushing back against China’s maritime claims. President Xi is a tough-minded nationalist, so a Clinton presidency would increase the chances of a clash in the Pacific between the US and China.Both a Trump and a Clinton presidency would probably lead to increased tensions with China, but by very different routes. Hillary Clinton is regarded in Beijing as a dangerous hawk who would be likely to be more determined in pushing back against China’s maritime claims. President Xi is a tough-minded nationalist, so a Clinton presidency would increase the chances of a clash in the Pacific between the US and China.
Trump, by contrast, seems relatively uninterested in America’s strategic role in the Pacific, but his vociferous protectionism has led him to propose swingeing tariffs on Chinese goods. Any such policy would be regarded as an act of economic warfare by Beijing.Trump, by contrast, seems relatively uninterested in America’s strategic role in the Pacific, but his vociferous protectionism has led him to propose swingeing tariffs on Chinese goods. Any such policy would be regarded as an act of economic warfare by Beijing.
Either way, the era when globalisation seemed like a process that could create only common interests between China and the west is over. It is now giving way to an epoch that looks altogether darker and more dangerous.Either way, the era when globalisation seemed like a process that could create only common interests between China and the west is over. It is now giving way to an epoch that looks altogether darker and more dangerous.