China is Edging over the US: Upcoming Ramifications
Prerna Gandhi, Associate Fellow, VIF

The US politically turning against China has been a defining interruption in China’s great power rise. It has led to a concerted effort to challenge China for its every misdemeanor, by leveraging on group dynamics. The friendly international ambiance that China enjoyed has now become plagued with suspicions, anti-rhetoric, and relentless scrutinizing by a legion of China watchers across the world. But this obstruction comes when China is edging over the US in many quantifiable parameters that cannot be overturned or wished away. Further, the growing domestic troubles and a volatile partisan divide show that the US isn’t exactly an invincible fortress. The incongruous doubling down on the hubris of American exceptionalism and western universalism show US’s inability to reconcile with a world that is confident of its local identities. The clichéd reductionism of all polity, society, culture, economy, religion to a democracy vs. authoritarianism with shades of liberalism and illiberalism has dented US power, while trapping it often in public moments of blatant hypocrisy. It’s argued that evolution optimizes for the whole, not the individual. In that context, the US is ceasing to offer any progressive vision for a new world order, increasing both anomie and alienation (even in climate change).

Now questions here arise on Chinese engagement and vision for the world, including how much trust the rest of the world has on China. Lack of transparency in its political and decision making systems, all credits to the Chinese Communist Party, make Chinese leadership undependable. The CCP in a bid to ensure its longevity has weakened Chinese institutional power and continues to rely on models of informal power and interpersonal ties. This has necessitated autocratic control by the party as there is neither space for dissent nor failure. Further, the unrestrained undermining of other countries’ power and institutions in a bid to create and maintain strategic advantage (势) in variety of agendas, among both allies and adversaries, makes no apologies for China’s frequent belligerent and coercive behavior. And with the add-on advantages from its expansive trade and economic ties with the rest of the world, there is more wind to China’s realpolitik sails, especially after pandemic exposed the power of China’s supply chains. The change in confidence can be seen from a submissive Liu He signing the Phase One Trade Deal with Trump in January 2020, to harsh rebukes from Yang Jiechi during the US-China High Level Talks in March 2021. Yet, China is not placed to take on a leadership role despite its almost being there.

And the point is no rising power is ever prepared and China is pragmatically some time away from any military showdown or wanting the yuan to become a reserve currency. Despite all the rhetoric, if China wants to aggressively internationalize the yuan, all it has to do is start asking the world to pay for its goods in yuan, beginning with the United States. But it’s best aware what an appreciated yuan would do for a largely investment and debt-oriented economy. Thus, Xi Jinping has constantly reiterated on increasing domestic consumption through dual circulation. Some bit of it is successful by pushing for a first domestic tax-free shopping zone in Hainan Island, but private consumption as a percentage of GDP remains abysmally low- about 40 per cent to GDP for China compared to 70 per cent for the US. On military adventurism, the CCP is aware there is no road back in case of any failure or heavy losses. China has yet to publicly acknowledge the number of casualties it had in Galwan border clash with India. There is also a cultural strategic preference to utilize all measures short of actual war to achieve political aims. In that avenue, China surpasses the US by more than several miles. The international relations community is just coming to acknowledge the deception, discipline, and patience of China in pursuit of its ambitions.

Even the US with a colossal 800 billion dollars defense budget is finding it difficult to address the closing gap with China that has a 230 billion dollars defense budget. It is difficult to determine military advantage through numbers of ships, missiles, jets etc. But China’s determination to out pace the US in high tech warfare from quantum to space including altering its nuclear deterrence poses serious challenges in countering the PLA war machine. What confounds further is the massive Civil-Military Fusion in the world’s largest manufacturing and trading country and its constant blurring of lines between expansionism and irredentism. China’s investing power through the Belt and Road Initiative add to its comprehensive national power. Despite a flurry of failures for the BRI in South Asia from Pakistan to Sri Lanka, there have been lazy conclusions that the BRI has been a gross failure worldwide. While yes, the BRI investments have slowed since pandemic, by March 2022, the number of countries that have joined the BRI by signing a Memorandum of Understanding (MoU) with China has increased to 146[1]. Also, China has morphed the BRI into different branches beyond infrastructure to include health, digital, space, green silk roads etc. This has made competing initiatives from other countries unable to catch up.

China has also pursued application of nearly every major regional trading agreement, from the Regional Comprehensive Economic Partnership (RCEP) to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Digital Economy Partnership Agreement (DEPA), etc. In case of CPTPP, Xi has mentioned that China is open to discussions on industrial subsidies and state-owned enterprises. This is notable since the dominance of Chinese State-Owned Enterprises has now led free market supporters such as Europe to outline a larger government role in the economy. The US on the other hand, has been struggling to define a new trading paradigm as unfettered trade has become a sore point in US domestic politics. There is public discontent with the government not being concerned about welfare of US workers. The Indo-Pacific Economic Framework expected to be announced this month has already made clear that it has no section on market access. How it will be received thus remains to be seen. While the Ukraine conflict has revived transatlantic ties especially in security domain, it is inevitable that European partners at some point will also push for larger economic cooperation. In fact, Germany has already called for fresh Transatlantic Trade and Investment Partnership (TTIP) negotiations that have been in limbo for many years[2].

Chinese diplomacy has been on the uptake to reach out to various geopolitical regions that have long been ignored by the west such as Oceania, Eurasia, Latin America, and Africa. Also, the growing alienation with the US, has led China to emerge as a regional arbitrator in the all-important Middle East. Beijing has carefully cultivated ties without getting entangled in regional rivalries. As it becomes the region’s largest trading partner and energy buyer, it has constantly sought to differentiate itself from the US by emphasizing US interference as a root cause of the region’s tensions. China’s successful diplomacy has led it to support Saudi Arabia’s ballistic missile programme, pursue Free Trade Agreement negotiations with Israel while signing a $400 billion, 25-years strategic agreement with Iran, all in the same time span. It has also brought Middle East to join in its regional led grouping of Shanghai Cooperation Organization (SCO) - Iran joined in as a member while Saudi Arabia, Egypt and Qatar were brought in as dialogue partners. An understated achievement of its diplomacy has been the friendship without limits with Russia. And while China has been wary to get caught in sanctions crossfire, its de facto support for Russia hasn’t gone unnoticed by Kremlin. In fact, China’s increasingly strong ties with all large energy producers across the world are now unmissable.

In terms of domestic parameters of education and innovation, China’s consistent efforts and prioritization over decades is now reaping results. Programme for International Students Assessment (PISA) data from the OECD for 2018 showed four major mainland Chinese areas (Beijing, Shanghai, Jiangsu and Zhejiang) ranking first in studying, math, and science, while the US ranked 13th in reading, 37th in math and 18th in science. Even the two special regions (Hong Kong and Macau) that were also ranked were in the top five. But even if we delete the six Chinese units from the PISA list (assuming there is great divergence in the whole of PRC on education quality), the US still ranks 34th in math and 15th in science. This is an appalling result for a country with allegedly the world’s best universities[3]. It is difficult to compare the Chinese Education Modernization 2035 Plan and the American Biden Plan for Educators, Students, and Our Future in terms of approach or focus. But the Chinese spent 830 billion dollars on education compared to the US that spent 585 billion dollars in 2021. What is also shocking is the weirdly divergent policies in promoting inclusion through education. China had sought to reduce academic pressure by curtailing the culture of after school coaching and tutoring while the US has seen extremist narratives of math being racist.

In terms of university education, an August 2021 report by the Center for Security and Emerging Technology (CSET) at Georgetown University, US, entitled “China is Fast Outpacing US STEM PhD Growth,” concluded that China is on track to produce more STEM PhD graduates per year compared to the US by 2025. This is significant since most students in Chinese universities are Chinese students compared to US universities that have more international students[4]. A December 2021 report on the “Great Technological Rivalry” from Harvard’s Belfer Center noted that in each of the foundational technologies of the 21st century—artificial intelligence, semiconductors, 5G wireless, quantum information science, biotechnology and green energy—China could soon be the global leader. In some areas, it is already No. 1[5]. US experts themselves mention China’s decisive advantage lies in the integration of R&D with manufacturing, mining, logistics and transportation. While 5G coverage is one parameter, but more challenging to replicate is China’s application of 5G to automated ports, industrial robots, smart cities and telemedicine[6]. An interesting fact that deserves mention here is Huawei which was heavily sanctioned by the US, increased its already strong R&D and now holds more than 110,000 patents in 45,000 product lines as of the end of 2021[7].

In conclusion, while the current moment is one of China’s ascendancy, it does not radically translate into US decline. The People’s Republic of China may be a modern manifestation of the Chinese political state, but the Chinese have political tradition dating back many millennia. China is aware that while coercion may go some way, but it is reputation that underlines all politics in the end. China needs time to stabilize its engagements in the regions it is doing well (such as Middle East, Africa, Eurasia, etc.), while accommodating for failures and lash back in other regions. China’s uneasy ties with US and Europe along with utter failures in South Asia may affect its larger geopolitical profile. A debt oriented diplomacy and its unprovoked aggression against India raise large red flags on Chinese intentions. While economic linkages remain upbeat in Northeast and Southeast Asia, the inability to address longstanding security issues in its maritime vicinity from cross-straits tensions to South China Sea and East China Sea, may open a Pandora’s box in coming time. Unwittingly, China may contribute to giving more momentum to new geopolitical frameworks that seek to counter its own hegemony. Thus, China needs to find accommodation with the world soon, equally as the world needs to accommodate China.

References:

[1]Countries of the Belt and Road Initiative (BRI), https://greenfdc.org/countries-of-the-belt-and-road-initiative-bri/
[2]Germany calls for fresh US trade talks amid Ukraine crisis as UK ‘transatlantic dialogues’ begin, 21 March 2022, https://www.export.org.uk/news/599595/Germany-calls-for-fresh-US-trade-talks-amid-Ukraine-crisis-as-UK-transatlantic-dialogues-begin.htm
[3]Asia Times: China-US contest will come down to education, https://asiatimes.com/2021/07/china-us-contest-will-come-down-to-education/
[4]CSET: China is Fast Outpacing U.S. STEM PhD Growth, https://cset.georgetown.edu/publication/china-is-fast-outpacing-u-s-stem-phd-growth/
[5]Belfer Centre: China Will Soon Lead the U.S. in Tech, https://www.belfercenter.org/publication/china-will-soon-lead-us-tech-0
[6]How America Can Keep Its Lead in Technology, https://www.wsj.com/articles/china-us-tech-research-manufacturing-creativity-innovation-11639175960
[7] Huawei Comes First in Patent Applications Filed with European Patent Office, http://www.businesskorea.co.kr/news/articleView.html?idxno=91105

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>


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