BusinessToday Previous Editions

13.4.2023 11 WORLD New Development Bank, an analogue of the IMF; the Russian-led Eurasian Economic Union (EAEU); the South- ern Common Market (Mercosur); and the Community of Latin American and Caribbean States, amongst oth- ers. The push also has more prosaic manifestations such as Russia's and China's efforts to create non-Western payment systems as alternatives to the Western-dominated SWIFT bank messaging service. Russia has set up the MIR payment system for credit cards and the Financial Communica- tions System (SPFS) for bank trans- fers, while China has the CIPS domes- tic payment system and is toying with the idea of joining Russia's SPFS. The West is in decline, say Xi and Putin. The BRICS are on the rise. All of Europe as well as the US are suf- fering from demographic decline and deindustrialisation that have left their economies uncompetitive, while the seat for global growth is in the East. All under heaven As an emerging superpower, China will play a key role in the development of the EM challenge to the West- ern hegemony. Following Xi's visit to Moscow most commentators wrote Russia off as a junior partner to China that would end up as little more than a "Chinese commodities warehouse" – a new variation of the previous slur of Russia as a "petrol station masquer- ading as a country." China's view of its relationship is more subtle, according to Yao Zhong- qiu, an eminent Chinese historian, who recently penned a long essay en- titled "five centuries of global trans- formation: a Chinese perspective" that lays out the Chinese world view. Yao paints a picture that is much closer to Putin's "multipolar" world view than the US "unipolar" approach. Russia has just made explicit in its new foreign policy concept released on March 31 that it has co-operation with its emerging market peers as the central tenet. The document singles out Russia, China and India as the bedrock of this new multipolar world order, but also threatens to use force if the West tries to stymie the effort. "Humanity is in the midst of a glob- al upheaval, on a scale unseen in 500 years: namely, the relative decline of Europe and the United States, the rise of China and the Global South, and the resulting revolutionary trans- formation of the international land- scape," said Yao in the preface to his essay. But China's approach is not as ag- gressive as Russia's. At the Boao con- ference last week, the Asian equiv- alent of western-dominated Davos, Chinese Prime Minister Li Qiang said that China now dominates trade in Asia, but going forward should build up a "intense mesh" of interactions rather than adopt a China-led "spoke and wheel" approach to everyone's mutual advantage. Yao's essay is interesting in that it highlights many grievances China has with the West and echoes both India and Africa's resentment of the past colonial abuses by the West. He highlights the Western "overreach" by what he claims is the wasting of mon- ey on multiple military campaigns, rampant and unproductive financial speculation in the endless pursuit of profit, and the growing inequality of Western societies, which has left them fragile. "In reaction to their own weakness and the new developments in the Global South, the United States has led its allies in launching a compre- hensive pressure campaign against what it considers to be its "near peer rivals," namely China and Russia," Yao says. "This hostile foreign policy, which includes a trade war, unilateral sanc- tions, aggressive diplomacy and mil- itary operations, is now commonly known as the New Cold War." Russia has long had a similar per- spective, as bne IntelliNews high- lighted in a cover story in 2013 on the emerging Cold War II. This new toxic atmosphere has made rational dialogue impossible, as "even estab- lished facts, let alone alternative per- spectives, are treated as matters of dispute." The decline of the US-led order "Today, China is in the midst of its fourth breakthrough in industrial- isation, which revolves around the application of information technolo- gy to industry. In the current period, the United States is worried about being overtaken by China, which has prompted a fundamental change in bilateral relations and ushered in an era of global change," says Yao. "The old Western-dominated world order has been overwhelmed; however, the real trigger for its collapse is the in- stability resulting from the fact that the United States has been unable to secure the unipolar global dominance which it pursued after the end of the Cold War." With the end of colonialism and the rise of China, it has once again turned to the "all under heaven" philosophy of tianxia. "The structural equilibrium for the world is for nations to stay in bal- ance, rather than be ruled by a single centre," says Yao. "Even the immense technological advances in transporta- tion and warfare have been unable to change this iron law." Yao goes on to argue that since the end of WWII the US has been a sole superpower and has, from the Chi- nese perspective, attempted to dom- inate the whole world. "The United States confidently an- nounced that their victory over the Soviet Union constituted 'the end of history'. However, ambition cannot bypass the hard constraint of reali- ty. Under the sole domination of the United States, the world order im- mediately became unstable and frag- mented; the so-called Pax Americana was too short-lived to be written into the pages of history," say Yao, reject- ing Francis Fukuyama's famous thesis as American triumphalism. One of the weaknesses of the US system is the development of a glob- al financial system. While this has brought great wealth, it has also led to the deindustrialisation of the US economy as production has moved overseas, which has also fed the ex- treme social inequality as the working class population have lost their jobs, while the rich investors have seen their income balloon. "Deindustrialisation is at the root of the US crisis," says Yao. China has developed a full-cycle industrial base, whereas that in American industry has atrophied. "Even the US military-in- dustrial system has become fragmen- tary and excessively costly due to the decline of supporting industries." The US ruling elite are aware of the problem, says Yao. Obama called for reindustrialisation but made no pro- gress due to the deep impasse be- tween Republicans and Democrats. The need to rebuild US industry also stands behind Donald Trump's "Make America Great Again" slogan. Most recently the same thinking drives US President Joe Biden's CHIPS legislation, but the scale of the prob- lem is illustrated by the fact that even with the US' economic power, the most sophisticated microchips take twice as long to make, cost twice as much and are of inferior quality to those produced in Taiwan. "As long as US [financial] capital can continue to take advantage of the global system to obtain high profits abroad, it cannot possibly return to domestic US industry and infrastruc- ture. The United States would have to break the power of the financial mag- nates in order to revive its industry, but how could this even be possible?" asks Yao. "In contrast to the de-industriali- sation which has taken place in the United States, China is steadily ad- vancing through its fourth break- through of industrialisation and rising towards the top of global manufactur- ing, relying on the solid foundation of a complete industrial chain," says Yao. "Fearing that they will be surpassed in terms of 'hard power', the US elite has declared China to be a 'competitor' and the nature of relations between the two countries has fundamentally changed." collision course

• Cover