Henry Kissinger is 97 years old, and the diplomat behind the first American visit to the People’s Republic of China is urging his country to design a way to communicate with the Chinese state in a long-term, strategic fashion that is unaffected by electoral cycles. “You can say this is totally impossible, but if it is, we will slide into a situation similar to World War I,” he recently said. In the years leading up to the WWI, of course, the conventional wisdom was that war between the great powers was not possible. The lesson was never to make such assumptions, and jealously protect peace.
In this atmosphere of tension, it is a relief to see that Washington is coming back. Unlike most countries, however, the United States has a couple of months of a lame duck period. More than ever before, this period has become an important time in great power politics. The question observers of this sphere should ask is, are Brussels and Beijing waiting for Mr. Biden? What are they trying to do with the lame duck period?
Let me start with Beijing. Clearly US-China tension is the megatrend that will set the direction and pace to everything that happens there. Mid-December, China has been discussing its plans for the post-pandemic recovery period in 2021. There is much talk about a dual circulation model and demand reform in this year’s Central Economic Work Conference (CEWC), organized together with the Central Committee of the Communist Party of China (CPC) and the State Council. Why?
The dual circulation model stresses the importance of internal circulation, a.k.a. domestic demand, together with external circulation, a.k.a. export demand. Demand reform, on the other hand, highlights the importance of enlarging the middle class and strengthening the social safety net to guarantee a sustainable basis for domestic demand in China, unlike what was done in 2008 to deal with the negative impact of American financial crisis on export demand. In designing a sustainable post-pandemic growth and job-creation agenda, we need to focus on domestic demand against the possibility of weaker external demand for Chinese products and services.
It’s not only about asymmetric global recovery, hence the possibility of slower recovery in external demand when all countries and sectors are taken into account. I think that all this talk about demand reform is also about China being cautious about the economic consequences of US-China relations in the months to come, probably due to the impact of fledgling US demand on Chinese production. The Chinese know that Trump is not the only factor derailing US-China relations. Unable to control the American side of the equation, they at least want to make it difficult for either side to sabotage the relationship.
On both sides of Asia, both Turkey and China started to transform their economies about four decades ago. Turkey started to transform itself in close connection with the European Union (EU) and China did the same in close cooperation with the US. Current account deficits in the US were coupled with the surpluses of China and led to a phenomenal pace of growth and job creation in China.
Economic transformation was more organized and controlled in China, less so in Turkey. Yet both were successful in their own way. The US led China’s transformation, turning it into an industrial powerhouse. Turkey became an industrial country with European transformation. Just as EU demand is important for Turkey, so is US demand important for China. Thus started the age of China-bashing in the US, very similar to the Japan-bashing of the 1980s.
Take for example, the US ban on collaborating with China on space exploration. NASA isn’t even allowed to let Chinese scientists examine stones it collected from the face of the moon five decades ago. This is the result of a law that Frank Wolf, a Republican Congressman from Virginia, negotiated to punish China for its human right violations, as well as to protect the American aerospace technology. The law become effective in 2011, five years before the Trump presidency.
China, by the way, sent two probes (Chang’e Project) to the moon in 2020 and brought together its own collection of moon stones. After the Americans and Russians, the Chinese have become the third stakeholder in the space race, with the technology to put a probe on the moon and bring it back.
It should be noted that the Chinese achieved this milestone with close collaboration with the European Space Agency. The EU also signed the long-awaited investment treaty with China just last week. All of this is happening without waiting for Biden. The great powers are rushing to create “facts on the ground” just before the Biden presidency. Kissinger’s concerns about controlling Chinese-American competition appear more serious than ever. And it may not be obvious, but countries like Turkey are once again looking at the world with fear and trepidation.
Originally published at https://www.tepav.org.tr.