Aircraft carriers are the ultimate naval instrument of power. They were battle-deciding high-tech weapons in World War II, but they still play a significant role today. For the People’s Liberation Army, it was clear: If the US maintains an entire fleet of these powerful vessels, China needs them as well. Such is the logic of the arms race between superpowers.
While the US operates 19 of these giant ships by honest count (official numbers count 11), China is about to roll out its third aircraft carrier. The decisive factor here is the technological trend. Initial details of the third carrier already indicate that it has modern equipment equal to that of the US ships, writes our author team in Beijing. Further development is foreseeable. China will regularly launch new battleships. The US feels under pressure and is upgrading in turn. China’s quest for equal strength is legitimate. However, in arms logic, this only leads to ever-higher spending with ever lower security.
Currently, however, the threat from Russia is more acute. Here, NATO boasts of having forged a broad alliance against Vladimir Putin’s aggression. But how broad is the consensus really? Frank Sieren took a close look at the concrete results of US diplomacy after the President’s trip to Asia. In fact, only Japan sides with the US and EU against Russia in the Asia-Pacific region. All the other nations do not want to commit themselves. Thus, the “global” alliance against Putin looks rather full of holes.
The launch of China’s third aircraft carrier is nearing. According to the Hong Kong newspaper South China Morning Post, the carrier, so far officially designated only as Type 003, could be launched from the shipyard as early as this Friday. Just in time for the Dragon Boat Festival.
The new pride of the Chinese navy should actually have set sail last year. However, the complex construction work on the more than 300-meter-long ship, the largest warship outside the United States, was delayed. The ship also missed the anniversary of the Chinese navy in April. Shanghai, and with it the Jiangnan shipyard where the carrier is based, was stuck in lockdown. Now, Shanghai is open again, and nothing stands in the way of the birth of the “third child,” as the carrier is called by Chinese naval enthusiasts.
The first Chinese carrier Liaoning set sail in 1988 under the name Riga. At that time, it still belonged to the Soviet Union. When the Soviet Union broke up, Ukraine took over the ship, work was stopped and the ship fell into disrepair. Nine years later, China bought the ship devoid of engines and weapons systems and put it into service in 2012 after retrofitting.
The second aircraft carrier, named after Shandong province, entered service in late 2019. It is the first aircraft carrier completely built by China. Technologically, the ship is a replica of the Kuznetsov class, to which the Liaoning also belongs.
Type 003 is now expected to bring the Chinese Navy a step closer to US aircraft carrier technology. On the one hand, experts expect a much larger displacement of 80,000 to 100,000 tons, while the Liaoning and Shandong rank below 70,000 tons.
But more important are the technical innovations. Unlike the first two carriers, on which aircraft take-off via ramp, Type 003 has an aircraft catapult system. Three such systems have been detected on satellite imagery. “The catapults are a major leap forward for the People’s Liberation Army Navy,” according to an analysis by the Washington think tank Center for Strategic and International Studies (CSIS). These would also allow China to launch larger aircraft with heavier weaponry and larger payloads from the sea for the first time.
Military experts assume that China will use electromagnetic catapults. So far, these have only been installed on the newest US Gerald R. Ford carrier class. They are capable of launching aircraft faster in succession. This would mean China is skipping a development step. Most aircraft carriers in the US Navy still use steam-powered catapults.
However, the Type 003 has not yet been fitted with a nuclear reactor that gives US carriers a global operating range. This technology will probably be first installed in China’s fourth carrier, which is already under development.
China’s own aircraft carriers underline its status as a global power. But its plans for the navy go much further. For a decade now, Beijing has been making extensive efforts to modernize its navy. At the 18th Party Congress in 2012, then-President Hu Jintao promised to build a naval power capable of protecting “China’s maritime rights and interests”. President Xi Jinping sharpened that doctrine several times. In a military white paper presented in 2019, the leadership also outlined for the first time the need to build a navy capable of carrying out “missions in distant seas”.
Although the USA still has a clear lead in this area with 11 aircraft carriers, a look at the number of destroyers in particular shows how quickly China catches up. Whereas the People’s Republic only had 13 of these battleships ten years ago, their number has now risen to 36. The USA has 68 destroyers.
In terms of total fleet size, China has already surpassed the US. The US Department of Defense estimated China’s fleet at 355 ships and submarines last year. The US itself had 296 watercraft. Between 2017 and 2019, China built more ships than India, Japan, Australia, France and the United Kingdom combined. German Vice Admiral Kay-Achim Schoenbach already warns, “China’s navy is expanding by roughly the equivalent of the entire French navy every four years. Last year alone, at least 28 new ships entered service in China, compared with just seven in the United States. Joern Petring/ Gregor Koppenburg
The West has a clear position toward Russia and China – and seems to expect the rest of the world to fall in line. This is also reflected in the statement from the recent NATO summit: “We condemn in the strongest possible terms Russia’s full-scale invasion of Ukraine”. President Vladimir Putin, who has perpetrated an “assault on international norms,” should stop the war immediately. NATO calls on “all states, including the People’s Republic of China, to uphold the international order.” Beijing was urged “to cease amplifying the Kremlin’s false narratives, in particular on the war and on NATO”.
In Asia, by contrast, only Japan fully supports the US position. South Korea stands shoulder to shoulder with Washington in condemning Russia, but is much more reserved toward China. The statements of the other countries remain neutral. The Ukraine war thus gives a new impetus to Asia’s emancipation process from the Western worldview. A majority of Asian countries pursue policies that are more closely aligned with their own interests than with those of the leading world powers.
The position of the Asia-Pacific region can be gleaned from the official statements of high-level US contacts to the respective governments. After Biden met with the ASEAN members in Washington shortly before, he traveled to Asia for the first time in May to South Korea and Japan and met his counterparts from the Quad member states Australia, Japan, and India in Tokyo.
Japan: The statement by Biden and Japanese Prime Minister Fumio Kishkida is similar in tone to the NATO statement: “The greatest immediate challenge to this [international] order is Russia’s brutal, unprovoked, and unjustified aggression against Ukraine.” Both countries have imposed sanctions and urge China “to stand with the international community and unequivocally condemn Russia’s actions in Ukraine”. Both leaders “discussed continuing actions by China that are inconsistent with the international rules-based order, including coercion by economic and other means”. And they reject China’s “unilateral attempts” to change the status quo in the South China Sea. However, they expressed the will to “continue to cooperate” with China in areas of common interest and stress the importance of “open communication” with China at the highest levels.
South Korea: At Biden’s meeting with his new South Korean counterpart Yoon Suk-yeol, however, the tone toward China was already different. Beijing is not mentioned at any point, let alone admonished or even openly criticized. Both sides at least emphasize that they want to build a strategic alliance for “upholding common values, and bolstering the rules-based international order”. And, they condemn “Russia’s unprovoked further aggression against Ukraine,” to which they have responded with sanctions.
Analysts believe that South Korea’s more cautious position stems from the fact that 30 percent of South Korea’s exports go to China. Prime Minister Yoon Suk-yeol, in office since May, had actually advocated a tougher stance against China during the election campaign. However, Yoon did not mention China in his inaugural speech. His inauguration was attended by Vice President Wang Qishan. It was the highest-ranking foreign visit by a Chinese politician in more than two years.
The Quad: The statement of the Quadrilateral Security Dialogue (Quad), founded in 2007 and consisting of Australia, India, Japan and the USA, is even more reserved regarding Russia and China. Now it speaks only of a “conflict in Ukraine” and an “ongoing tragic humanitarian crisis” and its “implications” for the Indo-Pacific. “all countries must seek peaceful resolution of disputes in accordance with international law.” North Korea and Myanmar are directly criticized; China is not. This position largely coincides with Beijing’s formulations and bears the hallmark of India in particular. The Quad countries speak only against “coercive, provocative or unilateral actions that seek to change the status quo and increase tensions in the area”.
ASEAN: A similar conclusion was reached at the 45th meeting in mid-May between the ASEAN countries and the USA. They represent approximately 670 million people and together currently account for a similar share of the world economy as Japan, but with much higher growth: five percent per year on average over the past 20 years. Japan, on the other hand, is at less than one percent.
For the first time, the meeting was held in the USA. China is not mentioned in this statement either. The Ukraine war even appears only under item 27 of 28. “With regard to Ukraine, as for all nations, we continue to reaffirm our respect for sovereignty, political independence, and territorial integrity.”
Australia: This trend was recently confirmed in two democratic elections in Asia. In Australia, Labor Party representative Anthony Albanese won against Prime Minister Scott Morrison. In the election campaign, the defeated party had emphasized its tough line on China. Albanese, on the other hand, who speaks some Chinese, was already Deputy Prime Minister under Steven Rutt, a Sinologist who lived in China for several years. Albanese’s new foreign minister will be Penny Wong, whose father has Chinese roots. Albanese, who has Italian roots, is the first prime minister in more than 120 years not descended from British colonialists. He therefore enjoys great support among Australia’s immigrants.
Australians are divided on how to deal with China. In a pre-election poll, the old government scored only five points out of ten for its China policy. Only 56 percent of Australians believe that China is more to blame for the tensions. 38 percent believe both countries are equally to blame, and 4 percent even place greater blame on Canberra. A total of 57 percent want Australia to remain neutral, although a majority have lost confidence in China.
Only 41 percent, on the other hand, want Australia to side with the United States. Albanese’s comments at the Quad meeting show just how difficult it is for him to rebalance his policy: “We will determine our own values, we will determine Australia’s future direction. It’s China that’s changed, not Australia,” he emphasizes, adding that China’s demands are unreasonable.
Philippines: There has also been a change of government in an ASEAN member state of strategic importance to the United States: the Philippines. There, Ferdinand “Bongbong” Marcos Junior recently won the presidential election. Sara Duterte-Carpio, the daughter of former President Rodrigo Duterte, will become Vice President. During his term in office, Duterte has strengthened relations with China and increased the distance to the United States.
The Marcos clan has maintained good ties with China for many years, which dates back to a visit by Imelda Marcos with Mao Zedong in 1974. At that time, a famous photo was taken of Mao kissing Marcos’ hand. To this day, the northern Philippine province of Ilocos Norte, where the family has its base of power, benefits from Chinese investment. Imelda, now 92, still welcomes Chinese politicians. While the US invested $1.3 billion between 2016 and 2022, China’s investment amounts to $1.7 billion.
The individual positions of these countries are highly significant. Asia is home to 60 percent of the global population. In terms of purchasing power, these countries account for almost 50 percent of the global economy. They contribute far more to growth than the US and Europe combined. Biden’s recent meetings with the heads of government of almost all the Asian states show how anxious the majority of these countries are to adopt an independent position. The idea of a globally united front against Russia is an illusion.
The world order is at risk of a lasting split, with the United States and its allies on one side, and China and its partners on the other. As US Treasury Secretary Janet Yellen noted at an Atlantic Council event last month, this outcome is far from desirable, and the US must work with China to prevent it. But, practically in her next breath, Yellen advocated actions that could thwart such an effort.
In Yellen’s view, the US should be deepening ties with countries that have “strong adherence to a set of norms and values about how to operate in the global economy and about how to run the global economic system.” In her view, picking partners that are “committed to a set of core values and principles” is the key to effective cooperation on important issues.
But where does that leave countries with different values and principles? How can the global institutional architecture survive if countries limit open engagement only to those who view the world the same way they do? If the West excludes a power like China from its multilateral arrangements, what can China do other than spearhead alternatives?
A better approach to China would be based on three key considerations. The first is that multilateralism is impossible without China. Not only is China the world’s second-largest economy; it also has one of the world’s largest financial systems, with assets amounting to nearly 470% of its GDP. China’s gross national savings – equivalent to about 45% of GDP – are similarly massive.
Moreover, China is the world’s largest bilateral lender, and it contributes substantially to multilateral financial institutions – and not only those built and led by the West. In fact – and this is the second consideration – China has assumed an important role in the international financial architecture, as both a member and builder of institutions.
In recent years, China has pioneered the creation of two new regional multilateral development banks. Both the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) are designed to complement the international financial architecture, proving that China can lead institutions, act as a major provider of development finance, and be a “responsible stakeholder” in a system created by the US and its allies.
But, in a sense, that system is failing China. At the International Monetary Fund, China’s voting share is 6.1%, slightly lower than Japan’s 6.2% and well below the 16.5% US share. Their shares at the World Bank are 5.4%, 7.28%, and 15.5%, respectively. Though this is clearly out of line with China’s economic weight, the pace of reform has been slow, not least because of American obstruction – a point Yellen brushed aside when discussing the need to modernize the IMF and the World Bank.
This gives China’s leaders good reasons to consider other options, including decoupling the institutions it leads from the existing multilateral system and creating new ones. The result would be a fragmentation of the global financial safety net, which would become less responsive, predictable, and inclusive, inevitably leaving some countries exposed to systemic risks.
The third consideration that must shape the West’s approach to China is the thorniest: China’s economic and political systems – and thus China’s objectives and incentives – differ sharply from those of the G7 countries. This is a major source of tensions between the West and China, and a key reason why officials like Yellen advocate the easier engagement that is possible with “likeminded” countries.
To be sure, navigating conflicting perspectives, ideologies, and interests is challenging. This has been apparent during Russia’s war against Ukraine, which China has refused to join the G7 in condemning. But, as frustrating as China’s reticence is, confronting the country’s leaders will not help matters. Nor will excluding China from multilateral arrangements.
Instead, the G7 countries should focus on identifying areas of common interest where the risk of misunderstanding and disagreement is low and seize whatever opportunities for cooperation there may be. Climate change – and, in particular, climate finance – is an obvious example, but it is hardly the only one. While Western media have often presented China’s leaders as intransigent or even deceitful, China has continued to engage constructively with the West on a variety of economic and financial issues.
One example is debt management. Late last month, China joined Zambia’s creditor committee and committed to the G20’s Common Framework debt-restructuring process. It is a good sign not only for Zambia – whose debt burden currently amounts to nearly $32 billion, or around 120% of GDP – but also for other heavily indebted African countries.
Even with regard to Russia’s war in Ukraine, there is some convergence between Western and Chinese positions, albeit for very different reasons. In early March, the AIIB, citing the financial risks, froze all business with Russia and Belarus, and the NDB announced that it had “put new transactions in Russia on hold.”
This shows that appealing to shared values is far from the only way to convince countries to advance shared goals; practical considerations are also very powerful. In dealing with China, the West should attempt to build international dialogue and policy cooperation on a foundation of concrete common interests.
Contrary to the prevailing narrative in the West, cooperation with China has been the norm for decades. But if G7 leaders decide to make “core values” the basis of international cooperation, this could well change. A global economy in which China and the G7 follow separate, non-converging paths will leave both sides worse off.
Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, is the author of the recent report, China and the Global Financial Architecture: Keeping Two Tracks on One Path.
Copyright: Project Syndicate, 2022.
www.project-syndicate.org
This Hong Kong restaurant’s kitchen has sunk. The gastronomy ship “Jumbo” was something of a landmark in the Aberdeen district for over four decades. Especially at night, the ship’s lighting created an exotic atmosphere. Now the giant was to be towed out of the harbor because its operating license had expired. The operator had not found a shipyard willing to carry out overdue repairs on the barge. During preparations for removal, the galley escort vessel had sprung a leak and sank.
Aircraft carriers are the ultimate naval instrument of power. They were battle-deciding high-tech weapons in World War II, but they still play a significant role today. For the People’s Liberation Army, it was clear: If the US maintains an entire fleet of these powerful vessels, China needs them as well. Such is the logic of the arms race between superpowers.
While the US operates 19 of these giant ships by honest count (official numbers count 11), China is about to roll out its third aircraft carrier. The decisive factor here is the technological trend. Initial details of the third carrier already indicate that it has modern equipment equal to that of the US ships, writes our author team in Beijing. Further development is foreseeable. China will regularly launch new battleships. The US feels under pressure and is upgrading in turn. China’s quest for equal strength is legitimate. However, in arms logic, this only leads to ever-higher spending with ever lower security.
Currently, however, the threat from Russia is more acute. Here, NATO boasts of having forged a broad alliance against Vladimir Putin’s aggression. But how broad is the consensus really? Frank Sieren took a close look at the concrete results of US diplomacy after the President’s trip to Asia. In fact, only Japan sides with the US and EU against Russia in the Asia-Pacific region. All the other nations do not want to commit themselves. Thus, the “global” alliance against Putin looks rather full of holes.
The launch of China’s third aircraft carrier is nearing. According to the Hong Kong newspaper South China Morning Post, the carrier, so far officially designated only as Type 003, could be launched from the shipyard as early as this Friday. Just in time for the Dragon Boat Festival.
The new pride of the Chinese navy should actually have set sail last year. However, the complex construction work on the more than 300-meter-long ship, the largest warship outside the United States, was delayed. The ship also missed the anniversary of the Chinese navy in April. Shanghai, and with it the Jiangnan shipyard where the carrier is based, was stuck in lockdown. Now, Shanghai is open again, and nothing stands in the way of the birth of the “third child,” as the carrier is called by Chinese naval enthusiasts.
The first Chinese carrier Liaoning set sail in 1988 under the name Riga. At that time, it still belonged to the Soviet Union. When the Soviet Union broke up, Ukraine took over the ship, work was stopped and the ship fell into disrepair. Nine years later, China bought the ship devoid of engines and weapons systems and put it into service in 2012 after retrofitting.
The second aircraft carrier, named after Shandong province, entered service in late 2019. It is the first aircraft carrier completely built by China. Technologically, the ship is a replica of the Kuznetsov class, to which the Liaoning also belongs.
Type 003 is now expected to bring the Chinese Navy a step closer to US aircraft carrier technology. On the one hand, experts expect a much larger displacement of 80,000 to 100,000 tons, while the Liaoning and Shandong rank below 70,000 tons.
But more important are the technical innovations. Unlike the first two carriers, on which aircraft take-off via ramp, Type 003 has an aircraft catapult system. Three such systems have been detected on satellite imagery. “The catapults are a major leap forward for the People’s Liberation Army Navy,” according to an analysis by the Washington think tank Center for Strategic and International Studies (CSIS). These would also allow China to launch larger aircraft with heavier weaponry and larger payloads from the sea for the first time.
Military experts assume that China will use electromagnetic catapults. So far, these have only been installed on the newest US Gerald R. Ford carrier class. They are capable of launching aircraft faster in succession. This would mean China is skipping a development step. Most aircraft carriers in the US Navy still use steam-powered catapults.
However, the Type 003 has not yet been fitted with a nuclear reactor that gives US carriers a global operating range. This technology will probably be first installed in China’s fourth carrier, which is already under development.
China’s own aircraft carriers underline its status as a global power. But its plans for the navy go much further. For a decade now, Beijing has been making extensive efforts to modernize its navy. At the 18th Party Congress in 2012, then-President Hu Jintao promised to build a naval power capable of protecting “China’s maritime rights and interests”. President Xi Jinping sharpened that doctrine several times. In a military white paper presented in 2019, the leadership also outlined for the first time the need to build a navy capable of carrying out “missions in distant seas”.
Although the USA still has a clear lead in this area with 11 aircraft carriers, a look at the number of destroyers in particular shows how quickly China catches up. Whereas the People’s Republic only had 13 of these battleships ten years ago, their number has now risen to 36. The USA has 68 destroyers.
In terms of total fleet size, China has already surpassed the US. The US Department of Defense estimated China’s fleet at 355 ships and submarines last year. The US itself had 296 watercraft. Between 2017 and 2019, China built more ships than India, Japan, Australia, France and the United Kingdom combined. German Vice Admiral Kay-Achim Schoenbach already warns, “China’s navy is expanding by roughly the equivalent of the entire French navy every four years. Last year alone, at least 28 new ships entered service in China, compared with just seven in the United States. Joern Petring/ Gregor Koppenburg
The West has a clear position toward Russia and China – and seems to expect the rest of the world to fall in line. This is also reflected in the statement from the recent NATO summit: “We condemn in the strongest possible terms Russia’s full-scale invasion of Ukraine”. President Vladimir Putin, who has perpetrated an “assault on international norms,” should stop the war immediately. NATO calls on “all states, including the People’s Republic of China, to uphold the international order.” Beijing was urged “to cease amplifying the Kremlin’s false narratives, in particular on the war and on NATO”.
In Asia, by contrast, only Japan fully supports the US position. South Korea stands shoulder to shoulder with Washington in condemning Russia, but is much more reserved toward China. The statements of the other countries remain neutral. The Ukraine war thus gives a new impetus to Asia’s emancipation process from the Western worldview. A majority of Asian countries pursue policies that are more closely aligned with their own interests than with those of the leading world powers.
The position of the Asia-Pacific region can be gleaned from the official statements of high-level US contacts to the respective governments. After Biden met with the ASEAN members in Washington shortly before, he traveled to Asia for the first time in May to South Korea and Japan and met his counterparts from the Quad member states Australia, Japan, and India in Tokyo.
Japan: The statement by Biden and Japanese Prime Minister Fumio Kishkida is similar in tone to the NATO statement: “The greatest immediate challenge to this [international] order is Russia’s brutal, unprovoked, and unjustified aggression against Ukraine.” Both countries have imposed sanctions and urge China “to stand with the international community and unequivocally condemn Russia’s actions in Ukraine”. Both leaders “discussed continuing actions by China that are inconsistent with the international rules-based order, including coercion by economic and other means”. And they reject China’s “unilateral attempts” to change the status quo in the South China Sea. However, they expressed the will to “continue to cooperate” with China in areas of common interest and stress the importance of “open communication” with China at the highest levels.
South Korea: At Biden’s meeting with his new South Korean counterpart Yoon Suk-yeol, however, the tone toward China was already different. Beijing is not mentioned at any point, let alone admonished or even openly criticized. Both sides at least emphasize that they want to build a strategic alliance for “upholding common values, and bolstering the rules-based international order”. And, they condemn “Russia’s unprovoked further aggression against Ukraine,” to which they have responded with sanctions.
Analysts believe that South Korea’s more cautious position stems from the fact that 30 percent of South Korea’s exports go to China. Prime Minister Yoon Suk-yeol, in office since May, had actually advocated a tougher stance against China during the election campaign. However, Yoon did not mention China in his inaugural speech. His inauguration was attended by Vice President Wang Qishan. It was the highest-ranking foreign visit by a Chinese politician in more than two years.
The Quad: The statement of the Quadrilateral Security Dialogue (Quad), founded in 2007 and consisting of Australia, India, Japan and the USA, is even more reserved regarding Russia and China. Now it speaks only of a “conflict in Ukraine” and an “ongoing tragic humanitarian crisis” and its “implications” for the Indo-Pacific. “all countries must seek peaceful resolution of disputes in accordance with international law.” North Korea and Myanmar are directly criticized; China is not. This position largely coincides with Beijing’s formulations and bears the hallmark of India in particular. The Quad countries speak only against “coercive, provocative or unilateral actions that seek to change the status quo and increase tensions in the area”.
ASEAN: A similar conclusion was reached at the 45th meeting in mid-May between the ASEAN countries and the USA. They represent approximately 670 million people and together currently account for a similar share of the world economy as Japan, but with much higher growth: five percent per year on average over the past 20 years. Japan, on the other hand, is at less than one percent.
For the first time, the meeting was held in the USA. China is not mentioned in this statement either. The Ukraine war even appears only under item 27 of 28. “With regard to Ukraine, as for all nations, we continue to reaffirm our respect for sovereignty, political independence, and territorial integrity.”
Australia: This trend was recently confirmed in two democratic elections in Asia. In Australia, Labor Party representative Anthony Albanese won against Prime Minister Scott Morrison. In the election campaign, the defeated party had emphasized its tough line on China. Albanese, on the other hand, who speaks some Chinese, was already Deputy Prime Minister under Steven Rutt, a Sinologist who lived in China for several years. Albanese’s new foreign minister will be Penny Wong, whose father has Chinese roots. Albanese, who has Italian roots, is the first prime minister in more than 120 years not descended from British colonialists. He therefore enjoys great support among Australia’s immigrants.
Australians are divided on how to deal with China. In a pre-election poll, the old government scored only five points out of ten for its China policy. Only 56 percent of Australians believe that China is more to blame for the tensions. 38 percent believe both countries are equally to blame, and 4 percent even place greater blame on Canberra. A total of 57 percent want Australia to remain neutral, although a majority have lost confidence in China.
Only 41 percent, on the other hand, want Australia to side with the United States. Albanese’s comments at the Quad meeting show just how difficult it is for him to rebalance his policy: “We will determine our own values, we will determine Australia’s future direction. It’s China that’s changed, not Australia,” he emphasizes, adding that China’s demands are unreasonable.
Philippines: There has also been a change of government in an ASEAN member state of strategic importance to the United States: the Philippines. There, Ferdinand “Bongbong” Marcos Junior recently won the presidential election. Sara Duterte-Carpio, the daughter of former President Rodrigo Duterte, will become Vice President. During his term in office, Duterte has strengthened relations with China and increased the distance to the United States.
The Marcos clan has maintained good ties with China for many years, which dates back to a visit by Imelda Marcos with Mao Zedong in 1974. At that time, a famous photo was taken of Mao kissing Marcos’ hand. To this day, the northern Philippine province of Ilocos Norte, where the family has its base of power, benefits from Chinese investment. Imelda, now 92, still welcomes Chinese politicians. While the US invested $1.3 billion between 2016 and 2022, China’s investment amounts to $1.7 billion.
The individual positions of these countries are highly significant. Asia is home to 60 percent of the global population. In terms of purchasing power, these countries account for almost 50 percent of the global economy. They contribute far more to growth than the US and Europe combined. Biden’s recent meetings with the heads of government of almost all the Asian states show how anxious the majority of these countries are to adopt an independent position. The idea of a globally united front against Russia is an illusion.
The world order is at risk of a lasting split, with the United States and its allies on one side, and China and its partners on the other. As US Treasury Secretary Janet Yellen noted at an Atlantic Council event last month, this outcome is far from desirable, and the US must work with China to prevent it. But, practically in her next breath, Yellen advocated actions that could thwart such an effort.
In Yellen’s view, the US should be deepening ties with countries that have “strong adherence to a set of norms and values about how to operate in the global economy and about how to run the global economic system.” In her view, picking partners that are “committed to a set of core values and principles” is the key to effective cooperation on important issues.
But where does that leave countries with different values and principles? How can the global institutional architecture survive if countries limit open engagement only to those who view the world the same way they do? If the West excludes a power like China from its multilateral arrangements, what can China do other than spearhead alternatives?
A better approach to China would be based on three key considerations. The first is that multilateralism is impossible without China. Not only is China the world’s second-largest economy; it also has one of the world’s largest financial systems, with assets amounting to nearly 470% of its GDP. China’s gross national savings – equivalent to about 45% of GDP – are similarly massive.
Moreover, China is the world’s largest bilateral lender, and it contributes substantially to multilateral financial institutions – and not only those built and led by the West. In fact – and this is the second consideration – China has assumed an important role in the international financial architecture, as both a member and builder of institutions.
In recent years, China has pioneered the creation of two new regional multilateral development banks. Both the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) are designed to complement the international financial architecture, proving that China can lead institutions, act as a major provider of development finance, and be a “responsible stakeholder” in a system created by the US and its allies.
But, in a sense, that system is failing China. At the International Monetary Fund, China’s voting share is 6.1%, slightly lower than Japan’s 6.2% and well below the 16.5% US share. Their shares at the World Bank are 5.4%, 7.28%, and 15.5%, respectively. Though this is clearly out of line with China’s economic weight, the pace of reform has been slow, not least because of American obstruction – a point Yellen brushed aside when discussing the need to modernize the IMF and the World Bank.
This gives China’s leaders good reasons to consider other options, including decoupling the institutions it leads from the existing multilateral system and creating new ones. The result would be a fragmentation of the global financial safety net, which would become less responsive, predictable, and inclusive, inevitably leaving some countries exposed to systemic risks.
The third consideration that must shape the West’s approach to China is the thorniest: China’s economic and political systems – and thus China’s objectives and incentives – differ sharply from those of the G7 countries. This is a major source of tensions between the West and China, and a key reason why officials like Yellen advocate the easier engagement that is possible with “likeminded” countries.
To be sure, navigating conflicting perspectives, ideologies, and interests is challenging. This has been apparent during Russia’s war against Ukraine, which China has refused to join the G7 in condemning. But, as frustrating as China’s reticence is, confronting the country’s leaders will not help matters. Nor will excluding China from multilateral arrangements.
Instead, the G7 countries should focus on identifying areas of common interest where the risk of misunderstanding and disagreement is low and seize whatever opportunities for cooperation there may be. Climate change – and, in particular, climate finance – is an obvious example, but it is hardly the only one. While Western media have often presented China’s leaders as intransigent or even deceitful, China has continued to engage constructively with the West on a variety of economic and financial issues.
One example is debt management. Late last month, China joined Zambia’s creditor committee and committed to the G20’s Common Framework debt-restructuring process. It is a good sign not only for Zambia – whose debt burden currently amounts to nearly $32 billion, or around 120% of GDP – but also for other heavily indebted African countries.
Even with regard to Russia’s war in Ukraine, there is some convergence between Western and Chinese positions, albeit for very different reasons. In early March, the AIIB, citing the financial risks, froze all business with Russia and Belarus, and the NDB announced that it had “put new transactions in Russia on hold.”
This shows that appealing to shared values is far from the only way to convince countries to advance shared goals; practical considerations are also very powerful. In dealing with China, the West should attempt to build international dialogue and policy cooperation on a foundation of concrete common interests.
Contrary to the prevailing narrative in the West, cooperation with China has been the norm for decades. But if G7 leaders decide to make “core values” the basis of international cooperation, this could well change. A global economy in which China and the G7 follow separate, non-converging paths will leave both sides worse off.
Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, is the author of the recent report, China and the Global Financial Architecture: Keeping Two Tracks on One Path.
Copyright: Project Syndicate, 2022.
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