can china rise peacefully essay

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Mearsheimer's big question: Can China rise peacefully?

• Defence & Security
• Asia and Pacific
• Asia Pacific Security

The University of Chicago's famed international relations theorist John Mearsheimer has generously updated, and posted free of charge , the epilogue to his legendary realist book The Tragedy of Great Power Politics .

The original book, published in 2001, is frankly hard reading for any young IR or political science major, involving as it does many comparative counts of soldiers, horses and cannons through two centuries of Western European great-state warfare. Other historians like Kenneth Waltz and Rasler & Thomson have explored the nature of European imperial warfare for even longer periods, and have drawn essentially the same realist conclusion: that states seek to maximise their security and therefore their power, and inter-state military competition inevitably ensues.

In recent years, Professor Mearsheimer has turned his attention to the Asia Pacific, for the unsurprising reason that it is now the region of emerging great power competition. In his revised epilogue, he arrives at the equally unsurprising conclusion that China's rise this century will be fraught with challenges.

Mearsheimer, by his own admission, is not an optimistic individual, and he poses a sharp and gloomy challenge to the liberal and constructivist versions of geopolitics. I have a few specific Asian observations on Mearsheimer's new paper, which is impressive for both its completeness of argument and its reference to various specialist sources. But first, here is a quick synopsis for those time-constrained readers who want the punchline:

• China will seek the equivalent of a Monroe doctrine in Asia (ie. to be the unchallenged hegemon in its neighbourhood).
• This will pose a security dilemma problem, likely leading to an Asian arms race.
• It will also motivate a 'balancing coalition' to resist Beijing's dominance.
• The US, which will likely lead such a coalition, will respond with 'containment' efforts and other strategies such as 'rollback' and 'bait & bleed', well practiced in the Cold War.
• We can therefore expect to see a mutual hardening of rhetoric and positions in the security competition.
• Unlike central Europe in the Cold War, Asia's expansive geography (especially in the maritime domain) will create lower barriers to conflict. In a sprawling, largely oceanic theatre of operations, security actors may feel that conflicts can be 'managed'. Perversely, because the perceived cost and threat of nuclear escalation is lower than in Cold War Europe, this will reduce trigger thresholds and heighten dangers.
• Even more perilous is the 'unbalanced multi-polarity' structure likely to arise in Asia where China clearly dominates several smaller — but still powerful — regional states. This is the worst posssible architecture of all inter-state relations.
• Mearsheimer is particularly concerned about the morphing of Chinese nationalism into hypernationalism since 1989. This is the displacement of 'victor mentality' into 'aggrieved victimhood', dwelling on historical injustice. Hypernationalism has replaced ideology. It goes beyond patriotism and exceptionalism; it is hatred of 'the Other', something regrettably all too common in Asia.
• Chinese strategic philosophy values offensive realism as much as, or even more than, the US and USSR. Humane/benevolent Confucianist ideals were rarely practiced throughout China's ancient and bloody history of conflict.
• Mearsheimer rightly debunks the myth of 'economic interdependence' as a brake on conflict. WW1 is Exhibit A. There is a rich history of trading between countries at war.
• Finally, in recent years China has complained of provocation, and Mearsheimer thinks such complaints are essentially justified. The US 'pivot' may have exacerbated this problem. But more likely it is because weaker states wish to assert their claims before the power imbalance tips even further against them. I think Washington is well aware of this dynamic, and is trying to arrest it.

For me sitting here in Hong Kong, there are a few important (and perhaps hopeful) implications from this bleak assessment. [fold]

Mearsheimer seems surprised by the revival of the wuwang guochi ('never forget national humiliation') narrative, which lies at the core of hypernationalism. He shouldn't be. Wuwang guochi has been the hairshirt ( as Geoff Dyer recently put it ) of China's 'rejuvenation' for more than a century. It has powerful resonance and motivation for Chinese people. The troubling paradox for Mearsheimer, though, is that as China has become more successful in the international system, its resentment has also risen. He puzzles on why the foremost beneficiary of this order in the last three decades increasingly appears set to challenge it, and to dig up old bones of contention in doing so.

So it would seem obvious that the outside world should strain especially hard to deflect, and where necessary politely challenge, any revanchist challenges. Rather than bait China, we should embrace it and help it celebrate its revival by acknowledging it as a winner (a 'responsible stakeholder') with legitimate interests and painful memories.

This is the liberal argument for engagement: allowing greater Chinese emigration and investment, and reducing barriers (while protecting mutually sensitive sectors, obviously), so that Chinese people view the world as open and welcoming. For example, wouldn't China act differently if there were 50 million ethnic Chinese living and prospering in the West?

But as Mearsheimer would immediately recognise, this effort will be complicated by the rise of other Asian nationalist leaders, with their own agendas quite separate from the US interest. It would be a disaster if Japan, long a champion of the liberal international project, chose this very moment to abandon it. And in which direction is India headed?

Another possibility is that Chinese hypernationalism 'isn't about us, it's about them'. In other words, although it is manifested as anger at foreigners, it may be essentially a domestic debate aimed at establishing nationalist credibility within a complex factional political system.

There are two sides to this argument. The first is that it's essentially benign, and the second that it's, well, not. The benign view is that hypernationalism is just harmless antics, a tirade for domestic audiences, and will burn itself out. The less friendly view is that no matter what foreigners do, there's no pleasing China. And there is nothing that, say, a balancing coalition of 'reasonable' states could do to assuage a bellicose dragon state. More than a few American realists thus think the ball is basically in Beijing's imperial court now; the burden for China's peaceful rise rests largely on its own shoulders.

Mearsheimer also addresses the issue of economic coercion. The problem of 'interdependence' or 'mutual vulnerability' is well known to historians. For example, in the late 19th century, the British political-industrial establishment understood very well that Germany was overtaking it in both power and prowess, yet chose to continue to trade with Germany because it needed Germany's specialised manufactured goods. More importantly, London recognised that Germany would compete hard to find alternative customers for its wares overseas, so a British-led boycott-embargo was essentially futile; in hurting Germany, it might actually inflict more economic pain on Britain's own commerce.

It does not require great imagination to see the parallels today in the US and China. Economic 'containment' would be devastatingly costly for both sides, yet as Mearsheimer points out, it is unfortunately quite feasible because states (or governments) 'will always value security over prosperity, because without security there can be no prosperity'.

There is, however, one additional variation of the economic coercion theme that Australians should ponder: one-way or asymmetric vulnerability. If one state needs another far more than vice versa, there exists the potential for outright coercion. Coercion in the realist sense need not mean military threats; political suasion might suffice.

Consider for example New Zealand's extreme dependence on China for dairy product exports. It is said in Hong Kong that 80% of Chinese infant formula imports come from New Zealand, and 80% of those are from Fonterra. Prima facie, it might seem that Fonterra has great sway over the People's Republic of China!

In fact, the very opposite is the case. When there is a milk safety scare, not only the CEO of Fonterra but the prime minister of New Zealand must get on the next jet to Beijing to attend to the matter. Mearsheimer would surely delight in such delicate exhibitions of power politics. To be sure, assuring important customers about product quality is simply good business. So too is diversification. But try as Fonterra might, there is no substituting the giant Chinese market for infant milk formula. The potential for coercion clearly exists, and anyone who doubts the ultimate power of economic coercion should visit Ukraine this fine spring. We should not be surprised if some New Zealand interests vocalise against joining any future 'balancing coalition' directed at China.

Mearsheimer would recognise New Zealand's dilemma: China is a hegemon in the sense that, perhaps short of all-out war, Beijing will become sufficiently influential to compel its neighbours and partners to its will.

Finally, a word on worst-case scenarios. Mearsheimer is a professor of international relations, not a Marines Corps commander. But he understands well the nature of violent military conflict. The original The Tragedy of Great Power Politics is a sober history of long, agonising wars, gangrene, disease and starvation. The remarkable Prussian blitzkrieg-style advance on Paris in 1870-71 was about the nearest thing we got to a 'short, sharp war' between great powers. I use that term in speech marks because there is a general worry, recently expressed , that China's strategic culture values first-strike advantage (also known in military terms as 'initiative') as a means to trump an enemy quickly and deter escalation. As Mearsheimer and others have noted, this is a risky gamble, especially when facing down great powers with vast strategic depth and resources. China, Russia and the US are three examples of countries that you wouldn't bet on backing down with a whimper.

Mearsheimer and other realists have asked whether nuclear weapons have somehow changed the essential nature of great-state relations. The general conclusion is that they have not.

What nuclear weapons do, however, is raise the risk and consequences of rapid escalation. No sane leader would wish to be in a nuclear-on-nuclear stare-down with minutes running down on the clock. Therefore, given the great annoyance that China must feel at the prospect of being surrounded on several sides, and the emotions which can whip up the Chinese public, it behooves the US and its allies to construct a defence arrangement that is the least provocative it can be. This is more easily said than done; security is a relative concept and one man's defence may look to his adversary like a threat. The US and its allies should explicitly design a doctrine of deliberate, slow, defensive and non-military escalation using diplomacy, time and strategic depth to avoid making hasty choices they'll later regret.

That is my lesson from Mearsheimer's book.

Air Sea Battle (ASB) is confidential and I don't know what it contains (it may all be bluff) but it hints at 'suppression', which is mil-speak for taking out enemy stuff proactively. That is not a recipe for strategic reassurance.

There were a couple of telling exchanges during US Secretary of Defense Chuck Hagel's recent visit to China. The Chinese defence chief Chang Wanquan told him that ' China can never be contained ', a statement that is true to a large degree. Containment, a word Mearsheimer uses repeatedly, is a red flag to Beijing. I recommend in future we use the word 'constraint'. Every great power must be constrained, and all can surely agree that is a good thing. To this day, many Europeans (and some Australians no doubt) regret that they had not more effectively constrained and dissuaded Washington from its mad Iraq misadventure in the last decade.

Last week, China's Washington ambassador Cui Tiankai warned against forming an 'Asian NATO' . Alas, Mearsheimer ( and Luttwak too ) insists that balancing coalitions are inevitable in response to unbalanced multi-polarity, as will likely arise in Asia. Mearsheimer's specific concern is not that an Asian NATO would irritate China (it most certainly would), but that it would be much less effective than the European variety because of Asia's much greater cultural and geographic distances and diffusion. He does not name names, but he recognises that certain Asian states are likely to bandwagon with an assertive China, while other more independent and pricklier ones will be keener to join the balancing coalition. Given their very prickliness, he doubts they will remain cohesive enough to face a China-centric bloc.

Mearsheimer has written a stark and provocative essay which is deeply pessimistic. It will be our great collective project this century to disprove his thesis.

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China’s Emergence as a Superpower

Photo: somartin/Adobe Stock

Table of Contents

Report by Anthony H. Cordesman

Published August 15, 2023

Available Downloads

• Download the Full Report 6214kb

The Emeritus Chair in Strategy at CSIS is issuing a report written by Anthony H. Cordesman that compares the key trends in civil and military power in the United States, developed democracies, China, and Russia. The report is entitled China’s Emergence as a Super Power: A Graphic Comparison of the United States, Russia, China, and Other Major Powers . A downloadable copy is attached at the end of this announcement, and it is available on the CSIS website at https://csis-website-prod.s3.amazonaws.com/s3fs-public/2023-08/230811_Cordesman_China_Emerging.pdf?VersionId=PfyIjoITze29gpLxIY8kFOsuXzqLikV5 .

The graphs, maps, and tables in this report only highlight a limited range of the complex changes involved, and reliable data are often lacking for the years after 2020. They still show, however, that the civil and military role of the world’s major powers is in a process of dramatic and unpredictable change.

The Key Impact of China’s Emergence as a Major Global Economic Power

 China has emerged as an economic superpower that rivals the United States in many ways, although the total economic power of modern democracies—most of which are strategic partners of the United States—vastly exceeds the size of the Chinese economy, trade efforts, and efforts in technology and research and development. China also faces major internal challenges created by outside restrictions and economic sanctions, its handling of Covid-19, and state interference in its economic development.

Nevertheless, China is already competing with the economies of developed democratic states on a global level. Its “belt and road” efforts to establish economic ties to developing states and control critical minerals and resources. It may succeed in creating a rival economic bloc that can function and grow outside the “rules-based order” democracies created after World War II, and it is already competing in its relations with a number of developing states and other countries.

The trends presented in this report show that this competition may well become an ongoing confrontation between China and its allies, and developed democracies and their strategic partners, unless radical changes take place in Chinese policies and leadership. And—as is discussed shortly—is a growing level of civil confrontation that is being matched by military confrontation as well.

Russia’s Diminished Global Economic Role

The following graphics show that Russia is not an economic superpower now that it has lost control of most East European states and many of the Central European and Asian elements of the former Soviet Union. Russia has long lagged badly in total economic growth, trade, research and development, and all the other major areas of economic power. Russia’s size, geographic position, and large oil and gas reserves do, however, still make it a key global power.

Key Uncertainties in the Civil Impacts of Economic Power

It should be stressed, however, that current trends can only tell part of the story. Any analysis of economic and civil power will be shaped by many key trends that cannot be quantified. They include the longer-term impacts of the economic stresses between and within developed states, the impact of internal politics, the impact of demographic change and population pressure, and the impact of global warming. They also include the degree to which the developed democracies can succeed in cooperating and creating truly functional economic strategic partnerships. As yet, governments often rely far more on rhetoric about such cooperation than on taking tangible action, although there are positive indicators as well.

The graphics in this analysis also do not include the developing world. Here, the allocation of international economic power has generally favored developed states. As the UN, World Bank, IMF, and a host of NGO reports make clear, many states have failed to move towards effective development and face major challenges from failed or corrupt governance, repression and internal division, population pressure, limited water supplies, and climate change. For all the former rhetoric about globalism, this includes at least one-third of the world’s nations.

At the same time, there are cases like India, where the trends in global power could move in other directions. While they are not yet positive enough to include in this analysis, India has overtaken China as the world’s most populous state, has a GDP of some $9.3 trillion, and ranks high in terms of total military spending. Several major petroleum states in the Gulf are taking positive steps to develop beyond a reliance on energy exports, as are some states in Asia, Africa, and Latin America. For all the failings in the developing world, they are also important potential successes.

The Impact of Trends in Military Power

The graphs and tables that follow show that the United States remains the world’s largest military power, the one with the most combat experience and highest levels of total spending and investment in modernization, and the one with the strongest strategic partners.

It is also clear, however, that the United States already faces growing competition from China, particularly in the Pacific and in the Indian Ocean as well. In the case of Taiwan, competition has already turned to serious confrontation and the risk of war. Once again, China has vastly increased its capabilities since 1990, as well as its military links to other Asia power. Much depends on the United States’ ability to strengthen its strategic partnerships with Japan, South Korea, Australia, the Philippines, and other Asian states—as well as European states with major power projection capabilities like Great Britain and France.

The Uncertainties Driven by the War in Ukraine

At the same time, the United States and its strategic partners face a major challenge from Russia and one that current U.S. national strategy tends to seriously understate. As the graphics show, Russia may not have an economy that can fully support its present conventional forces, but it remains a major threat to the United States’ European strategic partners and NATO, and the Russian military threat must be given equal priority with that from China. 

The trends shown in this analysis do not generally go beyond 2021 and cannot reflect the many longer-term changes in the military balance that are growing out of the war in Ukraine. It is clear, however, that the United States and its NATO allies are engaged in major proxy war, supporting Ukraine in its defense against Russia. They also are already rebuilding NATO’s overall level of extended deterrence against Russia, and doing so at a time when Vladimir Putin, Russia’s leader, has made it clear that he sees NATO as a major and continuing threat.

There is no current way to predict how the war in Ukraine will change the overall balance of military power and how and when it will end. It seems almost certain, however, that as long as Putin rules Russia, the United States and the rest of NATO will be engaged in a new Cold War, and one which will effectively match a similar Cold War between the United States and its strategic partners in Asia and China.

A Return to Nuclear Forces

As the final sections of this analysis also show, these two Cold Wars have a major nuclear dimension. The race to build up conventional military power is, in some ways, being outpaced by a new nuclear arms race. This race not only reflects the near collapse of nuclear arms control but a potential return to major tactical, theater, and dual-capable nuclear forces. It also is clear that Russia is now only a supe power to the extent it has inherited a massive legacy of nuclear weapons and technology from the former Soviet Union.

Anthony H. Cordesman

Programs & projects.

Can China Continue to Rise Peacefully?

To assess whether China can continue its economic and political rise peacefully, three key factors shall be analysed: the increasing assertiveness of Chinese foreign policy throughout the Obama administration; the Trump administration’s current economic policy towards China; and lastly, the ever-changing balance of power in the Asia-Pacific region. Finally, some of the key misconceptions surrounding Chinese foreign policy shall be examined and the argument shall be made that China’s rise is unlikely to be peaceful given the increasingly aggressive nature of the Chinese regime, making coexistence with the US indefinitely harder, alongside the fact that the balance of power in East Asia continues to shift in Beijing’s favour. Whilst a balance of power shift of this magnitude need not necessarily signify an escalation of conflict, the combination of these two key factors makes for a situation in East Asia which is becoming increasingly difficult to contain given the interests at stake.

The Obama administration entered office at a time of increasing Chinese assertiveness in the Asia-Pacific region. The 2008 financial crisis, having originated in Washington, placed American hegemony into question and appeared to signify to China an opportunity for a more assertive defence of its own interests on the international stage. [1] Xi Jinping’s China has abandoned the Deng Xiaoping position of ‘hide your strength, bide your time’ in favor of a confident pursuit of the ‘Chinese dream.’ His promotion of a new ‘Asia for the Asians’ slogan constitutes a direct effort to de-legitimize America’s presence in the region. [2] Xi’s message resembles a tide of nationalism that China’s leaders attempt to wield politically. [3] At the same time, the country has become repressive in a way that it has not been since Mao’s Cultural Revolution. [4] The nationalists within the Communist Party of China (CPC) are determined to punish China’s neighbors such as Japan, Vietnam and the Philippines who they believe capitalized on Chinese weakness during the 20 th centuries, seizing control of disputed islands in the South and East China Seas and territory along China’s land border. They seek to resolve these territorial disputes, by force if necessary. [5] In response, the Obama administration in 2012 began a ‘pivot’ to the East Asia region. China meanwhile, further altered the status-quo with measures just small enough to avoid provoking a military response from the US. In the South-China Sea, Beijing has used coast guard vessels, legal warfare, and economic threats to advance sovereignty claims. In some cases, it has simply seized contested territory. While Beijing has occasionally shown caution, its overall approach indicates a desire to gradually create a distinct sphere of influence. [6]

After the purchase by the Japanese of some of the Diaoyu and Senkaku islands, Beijing expanded its forces surrounding the islands, declaring an air-defence identification zone with the US consequently dispatching B-52 bombers to the area in response. [7] When China reacted angrily to the 2016 tribunal ruling that China’s claims to territory in the Philippines were unsubstantiated, America similarly maintained a strong defense for international law, protecting against Chinese expansion. [8] Whilst direct confrontation was minimal, Beijing’s strategic changes during this period suggest a fundamental shift in ambition on the part of the CPC from one of economic engagement, towards territorial aspirations. Consequently, a report by the Brookings Institute claims that ‘the senior leadership of the Chinese government increasingly views the competition between the US and China as a zero-sum game.’ [9] Indeed, China has land borders with more than a dozen countries, connected by the East and South-China Seas to half a dozen more. Currently, it has territorial disputes with many of those countries because of its recent ‘island building’ program and insistence on increased military, fishing, and mineral-exploitation rights in the region. [10] Beijing has begun developing a variety of military capabilities such as a blue-water navy aimed at preventing Taiwanese independence and compelling Taiwan’s unification with China, denying U.S. and allied forces unfettered access to the Western Pacific, and controlling sea lanes in the region. [11] To counter China’s growing influence in Southeast Asia, the US has also resumed its aid to the Indonesian military and sent a carrier battle group in a joint naval exercise with Vietnam, alongside joint military exercises with the South Koreans. [12] By seeking to engage China constructively by encouraging greater responsibility in global governance and within multilateral institutions, while at the same time establishing a significant military presence in the region to encourage constructive Chinese behaviour, the pivot involved elements of both realist and liberal schools of thought. [13] Ultimately though, the Obama era was a period in which Chinese ambitions shifted dramatically from economic prosperity to expansionist foreign policy goals, putting it in direct opposition with US strategic goals.

Almost two years following President Trump’s inauguration and the reoccurring question threatening US-Chinese relations is the issue of economic relations, more specifically, the substantial trade deficit between the US and China. Trump, as an economic protectionist, sees an inherent problem with such a deficit. Consequently, Trump has enforced several substantial tariffs on trade with China. [14] His justifications for doing so, however, are almost universally asinine. Trump may have been able to make the claim that he was using the threat of tariffs as a way of forcing action from China, as many Republicans have suggested, after the US and China committed to a temporary truce to pursue further trade negotiations over the next 90 days. However, Trump, in one of his infamous twitter outbursts, declared himself a ‘tariff man’, undermining the idea that he seeks to use economic warfare with China as a means of greater economic liberalization. [15] Trump is in many ways a zero-sum game, anti-free trade protectionist. His withdrawal from the Trans-Pacific Partnership and his trade disputes with key allies in the region Japan has shown as much. Meanwhile, across Asia, China has enhanced its influence through the Belt and Road Initiative, a massive regional infrastructure plan, for example. [16] Trump’s protectionism may have major foreign policy implications with Beijing in this way. The President has decided to attack the primary reason that US-Chinese relations remain somewhat manageable whilst missing considerable opportunities to strengthen key US-alliances in the region.

Having said, that, it is also worth recognizing that the US has attempted to encourage China into accepting the mantle of ‘responsible stakeholder’ on the international stage through economic engagement for over 30 years. [17] This is the problem with the desire by the likes of Kevin Rudd to make China ‘accept the challenge’ of responsible statehood; it conflicts with key areas of Chinese foreign policy. [18] Economic openness alone has not led to a more open Chinese government. Xi’s recent clampdowns on inner-party dissent show an ever-increasing authoritarianism, not a regime willing to embrace political and social liberalization which more liberal theories of international relations often expect. China’s rejection of reforms towards liberal democracy seen during the eventual collapse of the Soviet Union under the Gorbachev administration for example, far precedes Trump. [19] In fact Xi has explicitly cited the Gorbachev administration’s reforms as something to be avoided at all costs in order to maintain the internal stability of the CPC. [20] Therefore, whilst Trump’s trade wars further destabilize the US-China relationship, this should be understood in the larger context of Beijing’s increasingly aggressive foreign policy strategy and seen as a secondary factor for making conflict with China more likely.

Whilst the US has maintained control in the Asian-Pacific for over 50 years, the balance of power has undoubtedly shifted significantly in favor of Beijing as economic power has, as realist theories of IR would suggest, begun the transition into military power. This has led certain realist thinkers to anguish over of what has been termed the ‘Thucydides trap’ whereby the rise of China would instill a fear in the US which would result in an eventual escalation of tensions, leading to war. [21] The most common and legitimate argument against this scenario is that the economic interdependence between the two countries is such that the costs of conflict would be so high that escalation could be avoided. [22] Indeed, it cannot be underestimated the extent to which the two countries have benefitted from open trading relations. But John Mearsheimer is correct to point out that political and nationalist concerns often, although not universally, trump economic concerns, citing extensive trade between the Triple Entente powers and Germany prior to World War I. The CPC has made this abundantly clear in recent years. The regime knows that if Taiwan declared independence, the cost of preventing this would have huge economic cost to Beijing. Regardless, they have repeatedly declared that they would go to war with Taiwan, such is the importance of making Taiwan part of China in the medium to long term. Whereas the US remains the superior military force, Beijing recognizes this and has been pursuing an alternate strategy of what Thomas Hammes has called ‘salami tactics’. [23] This includes creating anti-access, area-denial capabilities whereby in the case of a military conflict with the US, key strategic points could be maintained. With such weapons, China can target virtually every air base and port in the western Pacific, whilst threatening to sink enemy surface vessels operating hundreds of miles from its coasts. [24]

Nonetheless, despite the unprecedented rate at which China has managed to close the economic gap between itself and the US, the ‘Thucydides trap’ need not be inevitable. Indeed, whilst Graham Allison’s findings show that in 12 of the last 16 cases where a rapid shift in the relative power of a rising nation occurred, threatening to displace a ruling state, war ensued, this does not make it inevitable. [25] Clearly, the constructivist argument made by the likes of Alexander Wendt that ‘anarchy is what states make of it’ holds some truth. [26] With current relations with China not defined by the same ideological constraints of much of the Soviet era, there is greater opportunity for diplomacy between the two countries. The neo-realists like Kenneth Waltz choose to largely ignore the role of internal political factors, instead focusing on the external influence of anarchical forces. [27] Nonetheless, as the end of the Cold War showed, internal political factors like ideology are significant in the peace process. The likelihood of a Gorbachev-style internal reform however, is unlikely given the relative stability of the regime in comparison. A more legitimate constructivist argument highlights the importance of close dialogue whilst acknowledging that in relation to the persistence of the hostile images that Chinese and Korean observers have of Japan for example, there are clear limits as to the convergence of US-China attitudes and alliances. Similarly, the US increasingly views China as a considerable danger whilst China continues to see the US as an intrusive bully in its affairs. Repeated interaction can erode old identities and transform existing social structures, but it can also reinforce them. [28]

Having said that, as previously mentioned, the economic interdependence between the two countries makes the cost of conflict even greater. The liberal-institutionalist argument made by the likes of Robert Keohane that greater interdependence through multinational institutions like the World Trade Organisations can help to establish better trading and political relations between countries should not be underestimated. [29] Nonetheless, the argument by Mearsheimer still holds considerable weight. Economic interdependence, whilst a limiting factor, will not mean China’s peaceful rise. [30] Instead, the realist emphasis upon the uncertainty of intentions is crucial here. US security experts remain divided as to whether Chinese ambitions remain more defensive in the sense that they seek to use their increasing military strength primarily to defend their economic interests, or ultimately seek to become the dominant force in East Asia. Whilst the latter explanation seems to hold more evidence since 2010, either explanation maintains the core realist concern in relation to the danger of the Thucydides trap: that in an anarchical system, it is impossible to be certain about another state’s intentions and therefore a ‘security dilemma’ emerges. [31] As Barry Buzan outlines, a democratic China may, as liberal explanation would suggest, be accepted by the US, much like Britain did with the US’ dominance in the Western Hemisphere during the 20 th century. [32] Unfortunately, the attempt to encourage China towards a liberal-democratic system of governance has failed. Whilst the realist argument about intentions holds less truth in relation to western democratic states like France, it certainly applies to China’s intentions. The balance of power has shifted hugely in favour of Beijing with its economic power now transitioning into substantial military power and assertive behaviour internationally.

Finally, it is worth addressing some of the key misunderstandings about the Chinese state. Liberal-internationalist theorists often claim that China, rather than aggressively opposing western liberal democracy, has sought to stake its claim as a ‘responsible stakeholder’ in the new multilateral international order. Examples given often include China’s willingness to play a leading role in the climate agreements of 2014 alongside its continued support for expanding trade deals to the rest of the Asia-Pacific. Whilst it is true that China has, in certain respects, attempted to claim such a role, when it comes to China’s key foreign policy interests, Beijing is incredibly rigid in maintaining its strategic interests. The conflict surrounding the Diaoyu and Senkaku islands with Japan shows that China is unwilling to compromise on issues which it considers within its own sovereign territorial zone. It is what Paul Haenle refers to as the ‘catch 22’ in US-China relations: Beijing demands respect for its core security interests whilst, at the same time, invariably evolving what it sees as its core interests from Taiwan to the Diaoyu islands. [33] When declaring US-Chinese national interests as compatible, the likes of Michael Auslin often cite the common goals of territorial integrity, national security and economic growth. [34] But these arguments are weak and vague, easily applicable to almost any state.

Additionally, the kind of thinking posited by the likes of Charles Glazer, who advocates a bargain in which the US ‘ends its commitment to defend Taiwan…’ in exchange for a peaceful resolution of China’s maritime and land disputes, is exactly the kind of dangerous naivety which could lead to escalation. [35] Instead the last thing which the Trump administration should be seeking to do is remove its military forces from East Asia. If, as Trump has shown a willingness to do on the Korean Peninsula, US troops are removed under the guise of ‘America First’, all the evidence points to China seizing this opportunity and escalating from its current ‘salami tactics’. Similarly, Robert Ross talks of a US policy which seeks to ease Chinese insecurities about US encirclement by drastically reducing US military presence in the region. [36] Whilst unnecessary escalation is a legitimate concern, the pivot struck a necessary balance of engagement and enforcement of international law. Appeasement of Chinese demands on any of the core issues of the potential withdrawal of troops from South Korea, the removal of missile defense systems in Northeast Asia or reduced engagement with ASEAN, is unacceptable and more likely to lead to escalation with the undermining of regional security.

In conclusion, China’s rise is unlikely to be peaceful in the medium to long-term of US-China relations. This is not to suggest that the Thucydides trap makes war inevitable; it does not. However, the evidence is clear that China has transitioned from merely an economic force to a military one whilst also, at the same time, pursuing an aggressive foreign policy which not only threatens US interests but also regional security. Whereas the extent of China’s ambitions is still somewhat uncertain, Beijing utterly rejects internal political reform which the US has sought for decades as a strategy towards reconciliation. Whilst the Cold War showed the limits of realist theories of the balance of power, the Obama administration understood the shift which was taking place and, as realist theories would predict, pivoted to Asia to meet the challenge. The Trump administration’s isolationist leanings may worsen the likelihood of either American decline in the region or an escalation of conflict between the two superpowers due to an increasingly assertive Chinese foreign policy. At the same time, an overly assertive US policy could have similar effects, escalating tensions unnecessarily and sparking conflict. Economic ties are likely to be insufficient to prevent US-China conflict in the medium to long-term. Consequently, increasing conflict between the US and China appears highly likely given the ever-increasing authoritarian nature of the regime; the resulting transition towards a more assertive foreign policy seeking to pick off individual states from the lure of the US, and finally the balance of power dynamics which continue to shape relations between the two countries.

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Written by: Sam Welsh Written at: Univeristy of East Anglia Written for: Andrew Patmore Date written: December 2018

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China’s Rise, World Order, and the Implications for International Business

• Research Article
• Published: 03 March 2021
• Volume 61 , pages 1–26, ( 2021 )

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• Robert Grosse   ORCID: orcid.org/0000-0002-2239-5555 1 ,
• Jonas Gamso 1 &
• Roy C. Nelson 1  

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It is increasingly clear that China’s economic and political power rivals that of the US. This is potentially a serious problem for multinational companies, since China’s rise could lead to more US–China trade conflict and disruption of supply chains, threatening new and ongoing foreign direct investment, and drawing other countries into the jostling for power. However, we argue that globalization is not necessarily endangered by China’s emergence as a comparable power to the US. The US and China both have vested interests in maintaining the open economic order, and these two countries are each providing the global public goods that incentivize economic openness among other countries of the world. In this paper, we develop a theory corresponding to this argument and provide evidence that globalization has not declined even as the global distribution of power has shifted. While global integration is likely to persist, disruptive skirmishes between the US and China will occur with some regularity. Therefore, we suggest that international company strategies today should focus more on risk management related to policy shifts stemming from China’s rise and less on achieving least-cost global supply chains. We present a risk management framework for this purpose.

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Introduction

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1 Introduction

Scholars and commentators increasingly see China as a global superpower (Anngang 2012; Cao and Paltiel 2015 ; Fish 2017 ) and China’s rise is widely understood to be ushering in a new global power distribution (Maher 2016 ; Shifrinson 2018 ; Tunsjø 2018 ; Zeng and Breslin 2016 ; Xuetong 2019 ). Footnote 1 China has the world’s second largest economy, trailing only the United States (International Monetary Fund 2020 ). It was the world’s leading exporter and second largest importer in 2018, the last year for which data were available (World Bank 2020a ), and its foreign aid provision and outward foreign direct investment (FDI) have also grown over the last decade (Dreher et al. 2018 ; Kolstad and Wiig 2012 ; Wang and Zhao 2017 ). Accompanying China’s economic rise has been an escalating assertiveness geopolitically (Liao 2018 ) that reflects China’s growing hard power (Robertson and Sin 2017 ; Tayloe 2017 ) and soft power capabilities (Shambaugh 2015 ).

In short, there is now a strong case to be made that the world has entered an era in which the US and China are approximately equally powerful. This is a marked contrast from the post-World War II era, during which the US dominated in the realms of economy, security, and technology (Ikenberry 2005 ). China’s emergence as a comparable power to the US raises concerns, since “realist” international relations theory suggests that such a trend will lead to a collapse of globalization as countries reject economic openness in favor of economic nationalism (Mearsheimer 2019 ). In contrast, we argue that China’s rise does not have to result in reduced international economic integration, and so we present a first research proposition to explore this issue:

Proposition 1:

China’s rise will not promote de-globalization, though it will lead to jostling for power between the US and China .

There has been a rise of political nationalism in the latter half of the 2010s (Snyder 2019 ). This has been accompanied by some degree of economic protectionism (Fajgelbaum et al. 2020 ), raising alarms among business leaders (Edgecliffe-Johnson and Waldmeir 2018 ). Much has also been made of the ongoing US–China trade war and hostility by US leadership toward the international institutions tasked with supporting economic globalization (Brown and Irwin 2019 ). However, these concerns may be overblown, as world tariff levels remain low by historical standards (Russ 2019 ), international trade and investment remain at or near their peaks, and the incoming Biden Administration may be more supportive economic globalization.

In fact, there are significant reasons to suspect that China’s rise will not usher in an era of protectionism and deglobalization. In the analysis that follows, we theorize that a world order in which China and the United States constitute a “G-2” can be conducive to the continuation of global economic integration. Maintaining a relatively open world economy is in the national interests of both of these countries. For that reason, both have committed themselves to international and regional economic agreements to help sustain that outcome. As long as both the US and China see the maintenance of the globalized world as being in their interest, each will adhere to the norms supporting globalization and help those norms to endure. In this sense, as we will explain further below, they will act as “ dual hegemons.” As we demonstrate in our analysis, the evidence supports this expectation, such that economic globalization has persisted even as China has become a superpower on (or near) par with the United States.

Even so, China’s rise and the changing global power dynamics that are accompanying it carry significant risks for international business. The new order brings changes to the nature of globalization: Skirmishes between China and the US may disrupt supply chains, threaten new and existing FDI, and include the establishment of new trade barriers. While we do not expect these changes and conflicts to cause a decline in net global integration, we argue that multinational firms need to evaluate and manage the risks that will occur as a result of changes in the nature of globalization.

Just dealing with China has been a risk for foreign businesses, because of the Chinese government’s protectionist tendencies. For example, China requires foreign auto manufacturers to have local partners with at least 50% ownership, as with Volkswagen and GM in their joint ventures with Shanghai Automotive. The government has also shown its disapproval of moving information across borders, as in the case of Amazon Web Services being essentially shut out of the market, and Google and Facebook being severely restricted and banned, respectively. And these policies predate the China–US trade war, which further threatens US-based businesses in China as well as Chinese business going overseas, particularly to the United States. The trade war has resulted in tariffs being imposed on a wide range of products, from steel and aluminum imports into the US to agricultural products exported from the US to China.

While the recent US–China trade tensions are likely to die down, the emerging world order is sure to create more frequent risks for companies engaging in international business, making risk management a priority going forward. A risk management strategy can be sketched broadly by looking at the methods available to MNEs for this purpose. Companies can explore the establishment of production and distribution facilities located outside of the two main protagonist countries. For example, electronics could be assembled in Vietnam or in Thailand rather than only in China; and Mexico or Colombia could be used for additional assembly of electronics, autos, and textiles. Companies also can diversify their business activities such as sales and input purchases into additional countries, again to reduce the dependence on the two main protagonists. A wide range of steps could be taken to mitigate the risks, from the use of insurance contracts for insurable risks to partnering with local companies in the US and China to reduce the liability of foreignness. So, we present a second research proposition:

Proposition 2:

MNEs need to develop risk management strategies to deal with the US-China competition that will occasionally produce trade barriers and other policy interventions .

The remainder of our analysis proceeds as follows. In Sect. 2 , we discuss China’s rise and demonstrate that US and China are approximately equally powerful hegemons. Next, in Sect. 3 , we introduce our theory, which posits that global economic integration will persist through an era in which China and the United States are each global superpowers, drawing on theories of international relations. In Sect. 4 , we present the evidence so far, which suggests that little shift in global economic engagement can be attributed to China’s rise. In Sect. 5 , we discuss in more detail the implications for multinational enterprise (MNE) strategies and we lay out a framework for managing this geopolitical risk. Finally, we note challenges to long-term stability in a world with two global superpowers.

2 Changing Power Dynamics in the Twenty-First Century

China’s rise is, perhaps, the single most important economic and political phenomenon in the twenty-first century. It has implications for global security (Toje 2018 ), for international development (Gallagher and Porzecanski 2010 ; Lin 2018 ), for global governance (Beeson and Li 2016 ; Economy 2018 ), and for human rights (Gamso 2019 ), among other things. While China’s status in international trade is especially noteworthy, it is also growing by other measures of international power. China’s growing clout in international production and financial markets are evident in terms of its global leadership in overall manufacturing, in the offshore assembly of electronics and textiles, and its growing financial leadership through owning the world’s four largest banks. China is also growing in global leadership through development of new institutions such as the Asian Infrastructure Investment Bank (AIIB), the recently signed Regional Comprehensive Economic Partnership (RCEP), and its Belt and Road initiative (Soong 2018 ). The Belt and Road scope is pictured in Fig.  1 .

One (land) belt and one (ocean) road initiative. Source: OECD 2018 , p. 11

In terms of total market size, China is nearly as large as the US and much larger than any other country, whether measured in current dollars or in purchasing power parity dollars. In 2019, US GDP was $US 21.4 trillion, while Chinese GDP was $US 14.1 trillion in nominal terms and in purchasing power parity terms, Chinese GDP was $US 27 billion. In terms of company competitiveness, China had 119 Fortune Global 500 companies and the US had 121 in 2019. In terms of innovation, measured as R&D spending in the country, the US led the world by far with spending of $US 581 billion in 2018, while China was second with $US 293 billion, and both countries were far ahead of the third leader, which was Japan at $US 193 billion. Footnote 2 Table 1 presents a comparison of China and the US in terms of some key economic/business indicators.

China has also modernized the People’s Liberation Army (PLA) in order to counter potential invasion (Montgomery 2014 ), while asserting its dominance over the South China Sea (Morton 2016 ; Thayer 2011 ; Turcsányi 2018 ). Likewise, China has become a major producer of science and technology, owing to public investment in the sciences such as the 2006 Medium to Long Term Program of Science and Technology (MLP) and Made in China 2025 initiative (Cao et al. 2006 ; McBride and Chatzky 2019 ; Xie et al. 2014 ). Taken together, this expansion of Chinese power suggests the emergence of a new world order, in which there is a roughly equal distribution of power between the United States and China.

While the US and China are rivals on some political issues (Scobell 2018 ), they do not necessarily have different visions for the global economy, as both operate open economic policy regimes, even with some significant differences in structure (for example, China has many more state-owned companies than the handful in the US). Moreover, there is an economic symbiosis, in which each country offers features that are helpful to the other. China offers low-cost manufacturing capabilities that complement US design of manufactured goods and a market for selling them. The US offers manufactured goods that are not made in China to the Chinese market, plus ones assembled in China but developed in the US, as well as primary products such as agricultural and mining goods, and also a wide range of services. And of course, the US offers China the world’s largest market for selling Chinese goods and services.

3 Global Stability in a Two-Hegemon World

The modern era of globalization coincided with the era of US hegemony, and US support for the global economic order was crucial for its success and its persistence. Despite occasional protectionist policies, the US offered global public goods that compelled other countries to trade and invest with the US and with one another (Kindleberger 1973 ). These public goods included the provision of global security, which reduced transaction costs for traders around the world, a large import market to absorb goods produced abroad, and lending facilities that helped to promote development and financial stability in developing countries, so long as those countries remained open to international trade and investment.

There were challengers to US dominance in the years after WWII, with the Soviet Union being especially noteworthy, but they were not ultimately able to match US power or to credibly challenge the open economic order that US leadership established after WWII. While the Soviet Union never presented a viable economic threat to US dominance of the capitalist global economy, its nuclear capabilities allowed the Soviet Union to present a military threat to the US that led to a bipolar balance of power in the years after WWII. The result was the Cold War, with tensions, hostilities, and sometimes outright minor skirmishes. But the overwhelming threat of “Mutually Assured Destruction” (MAD) if either side were to strike first deterred each country from engaging in more aggressive behavior, which prevented more major conflict from occurring (Brennan 1971 ; Schelling 1966 ).

As we have shown, China now, even more than the Soviet Union, is a viable challenger to US dominance, not just militarily, but economically as well. We argue, however, that just as the bipolar balance of power between the US and the Soviet Union led to a relatively stable outcome, albeit with significant tension and minor skirmishes, a similar outcome will prevail now between the US and China. These days it is not the threat of mutually assured destruction that prevents more aggressive behavior on both sides, but, as others have noted, the threat of “mutually assured recession” if either side were to engage in actions that could result in an outright trade war, or even worse, the destruction of the liberal economic order. For this reason, we expect both the US and China to provide support for globalization, even as they vie for global power.

3.1 A Theory of Dual Hegemonic Stability

According to the international relations theory of hegemonic stability in the tradition of Kindleberger ( 1973 ), the hegemon is understood to provide public goods that, in turn, encourage and facilitate economic openness among weaker countries. These public goods include an import market for producers around the world, lending facilities for countries in crisis, and international security, which reduces transaction costs for traders and investors. Kindleberger argued that public goods provision will become difficult where two or more states are bargaining with comparable leverage, due to collective action problems (Olson 1965 ). Thus, by his estimation, economic globalization will collapse as unipolarity wanes, much as it did in the early twentieth century.

However, scholars have noted that multiple states can provide public goods, should they see the benefits of doing so (Lake 1993 ; Snidal 1985 ). Within this context, it is perfectly plausible that China and the US can act as ‘dual hegemons’. We argue that to promote their own national interests, each will provide public goods that facilitate free trade, such as support for the multilateral trade regime, lending to countries in crisis, and providing large import markets. That said, in order for two states to provide public goods that advance the same outcome—that being an open global economic order—it is necessary that they both have a common perspective on how the global order should look and act. In other words, they must both support the international ‘regime’.

Krasner defined regimes as “principles, norms, rules, and decision-making procedures around which actor expectations converge in a given area of international relations” (Krasner 1983a , p. 2). As a Realist, Krasner argued that states pursuing their own self-interests could create and use regimes to help attain objectives that they perceived to be in their national interest, such as continued economic openness. For example, as the hegemon, the US persuaded other countries to become contracting parties to the General Agreement on Tariffs and Trade (GATT) free trade regime, which required that they adhere to the GATT’s principles of reciprocity and non-discrimination in trade, encouraged them to use the GATT’s dispute settlement process to resolve contracts in a multilateral way, and commited them to regular ‘rounds’ or multi-year negotiations to reduce barriers to trade. This clearly served US national interests because it made US trade relations with other contracting parties to the GATT more stable, predictable, and open. Once the regime was established, however, it would exert an influence of its own on the behavior of countries that joined the regime, making it easier for them to comply with the rules of the open global economy for a time at least, even after the hegemon’s power declined (Krasner 1983b ).

Keohane used a modified version Realist rational actor model to explain why countries would continue to support the free trade regime even in the absence of US hegemony. He argued that as the relative power of the US diminished, countries that were part of the regime would continue to adhere to its rules, norms, and operating procedures, and it would continue to constrain their behavior, in part because it served the national interests of these governments to continue to belong to the regime (Keohane 1984 ). While Keohane agreed with the Realist view that countries would pursue their own national interests, he argued that this did not prevent them from cooperating in adhering to the trade regime, or even changing the rules in a cooperative way, if needed, to create a modified regime. Regimes could help reduce uncertainty about other governments’ actions, thereby creating an environment more conducive to cooperation. If countries had at least some idea about how their trading partners would behave, then it would be easier for them to perceive that cooperating with each other to maintain an open global economy could be more beneficial to their long-term, overall national interests than responding to every trade dispute with retaliation.

Building on these concepts, we argue the United States and China are today acting as dual hegemons . Both have benefited from economic globalization and now, to advance their own national interests, both are committed to the principles of free trade and open foreign investment, despite some deviations from those principles on both sides (e.g., Steinberg and Josling 2003 ; Wu 2017 ).

China began opening its economy to imports and FDI in 1978 under the leadership of Deng Xiaoping. China reaped the benefits of the free trade regime as it prospered in the 1980s and 1990s. For this reason, it sought officially to become a permanent and full-fledged member of the regime, a goal it fulfilled when it became a full member of WTO in 2001. In that step the country cemented its commitment to an open trade regime, while domestically the economy continued to open further to domestic private-sector businesses and foreign investors (Garnaut et al. 2018 ).

As China adopted the norms of the open international order founded by the US, it became a beneficiary of that system. Within this context, China should see benefits in bolstering the norms of the system under which it has flourished. Therefore, it would not be in China's interest to implement policies that could threaten the open economic order. Likewise, the US should similarly continue to support the system that it established and has led, since it has benefitted the US itself as well as the other members of the system. Therefore, neither China nor the United States should take actions that could threaten this situation, for example by causing a destructive trade war with each other. Of course, the trade war started by the Trump Administration has led to Chinese retaliation—but despite the verbal and political positioning, US-Chinese trade had not declined dramatically prior to COVID 19. Footnote 3

By the same token, both countries should take efforts to provide the sorts of public goods that promote the open economic order. This dual willingness and ability to provide the public good of supporting the global open economic system has been demonstrated by both the US and China. The US took on this role after World War II and has not renounced this position despite ups and downs of populism at various times along the way, especially after 9/11 and during the Trump Administration. China has continued to increase its openness over the years after 1978, and has demonstrated a willingness to support other countries in trade, finance and FDI through the Belt and Road Initiative, the Asian Infrastructure Investment Bank, the BRICS Bank (now called the New Development Bank), and the Contingency Reserve Agreement.

The challenge to this system comes when one or both countries no longer see benefits to supporting it. The WTO can prevent protectionist backsliding by securing commitments to its rules and by providing a forum for governments to settle trade disputes. However, if one or both of the hegemonic powers renounce their obligations or take actions that significantly weaken the WTO, then there are few formal safeguards to prevent economic disputes from escalating into intensive protectionism. Worryingly, the Trump Administration has taken efforts to undermine the WTO and the multilateral trade regime more generally (Petersmann 2019 ; Skonieczny 2019), leading many scholars and analysts to declare the Post-WWII world order as dying or dead (Kagan 2017 ; Mearsheimer 2019 ; Walt 2016 ).

In practice, however, it is not clear that ‘Trumpism’ has undermined the global trading system. For example, his argument that “NAFTA is the worst trade deal ever” (e.g., Gandel 2016 ; The Economist 2017 ) led to its replacement by a renegotiated treaty (USMCA) in 2019 with very similar conditions, adding a higher local content requirement for automobile assembly and some additional labor protections. Likewise, Trump’s harsh criticism and rejection of the Trans-Pacific Partnership in 2017 has been replaced by his effort to negotiate a bilateral trade agreement with Japan and the continuation of existing bilateral treaties with other countries involved (e.g., Peru, Chile, and Australia). Additionally, in 2020 Gallup polls showed US people favor trade more than ever, suggesting that trade openness will persist going forward, Footnote 4 and the incoming Biden Administration is likely to show less overt hostility to the WTO or to existing US agreements.

At the same time China is opening up its financial services sector. New rules announced in January of 2020 allow foreign banks full ownership of their operations in China, and remove the limit on the size of their activities (Xinhuanet 2020 ). In March of that year, both Goldman Sachs and Morgan Stanley were permitted to take majority ownership of their securities businesses in China (Yang 2020 ). China also has begun opening up the automobile market to foreign firms. In 2018 the Chinese government announced that electric vehicle production could be 100% foreign owned, and that by 2022 passenger vehicle production will be fully open to foreign ownership (Shirouzu and Jourdan 2018 ). In short, despite frictions between the two countries, openness to trade and investment have not declined in recent years. Footnote 5

Even if the US or China were to step back in their commitments to the WTO, there are hundreds of regional trade agreements (RTAs) that can fill the void in the multilateral trade regime left by a potentially weakened WTO (Murphy and McLarney 2018 ). RTAs began emerging in large numbers in the mid-1990s, as it became clear that successful WTO negotiations would be rare in the coming decades (Crawford and Laird 2001 ). These RTAs reduce tariffs between members, but also often provide many additional features that build upon existing WTO rules, such as robust intellectual property rights rules, dispute resolution mechanisms for trading partners, and investor protections (Hofmann et al. 2019 ). This patchwork of agreements covers even more countries than the WTO, and these agreements reinforce and even enhance WTO-level commitments. In doing so, they provide an extra guardrail against sharp protectionist backslides from the US, China, or other powerful states.

The US and Chinese economies are both reliant on economic globalization, with exports constituting approximately 12% of US GDP and 20% of China’s GDP in 2018. Moreover, these countries are highly dependent on one another, with the US being China’s largest import market and China being the US’s third largest import market (World Bank 2020a ). As noted previously, just as the fear of “mutually assured destruction” (MAD) provided a deterrent to war between the US and the USSR during the bipolar cold war era, the fear of “mutually assured recession” today should prevent either the US or China from taking actions that threaten the open economic order.

For these reasons, we expect that economic globalization will not suffer the sort of downturn predicted by realist international relations scholars and other observers. Instead, commitments to international organizations and agreements, as well as the threat of economic harm, should lead the US and China to support the open economic order for the foreseeable future.

3.2 Changes to Globalization in an Era of Dual Hegemons

This is not, however, to say that the character of the open economic order cannot be altered. As noted above, the US and China waged a costly trade skirmish in 2019 and the US has recently focused on restricting the access of Chinese technology firms to the US market (Pham 2020 ). It seems likely that isolated disputes such as these will occur with some frequency in the future, as the US and China each seek to limit the other’s influence. The likely result will be selective decoupling, as China finds itself partially or entirely excluded from certain sectors in the US, and vice versa. This has important implications for US companies, which might be inclined to seek Chinese investment or to build supply chains through China. While these companies will surely still seek Chinese engagement, the likelihood that disputes will flair up periodically suggests that a more diversified strategy will be necessary, even if it increases costs.

It is also likely that China and the US will each take efforts to build strategic alliances with other countries, such as through the formation of trade and investment agreements. For example, the US has offered Mexico and Canada preferential access to its market through USMCA, while China has offered countries such as Japan, Thailand, and Australia preferential access to its market through RCEP. As noted above, these agreements promote economic integration, going beyond what is agreed upon through WTO, but they also can foster trade diversion (Dai et al. 2014 ). Trade agreements are typically exempt from most favored nation (MFN) rules in the WTO, and so the proliferation of agreements with China or the US will affect trade patterns in ways that distort existing trade relationships. For example, a country like Thailand may trade more with China than with the US, even in areas where the US actually has a comparative advantage to China, simply because Thailand gains preferential access to the Chinese market through RCEP.

An additional concern about trade agreements is that they may be constructed in ways that prevent partners from forming subsequent agreements with certain countries. For example, USMCA has a clause that prevents member countries from forming trade agreements with “non-market” economies, which implicitly refers to China (Scissors 2019 ). This clause, or others like it, could be used by the US in future agreements to prevent their partners from forming trade agreements with China, and China could include similar provisions in its subsequent trade agreements to prevent partners from forming trade agreements with the US. This will not have the effect of ending trade between any of the countries involved, but it will likely lead to further trade diversion as countries such as Canada and Mexico are unable to establish agreements with China to lower trade barriers. This has important implications for supply chains, as MNEs must seek suppliers with an eye to trade diverting effects of future trade and investment agreements.

4 Economic Globalization in an Era of Dual Hegemons

As discussed above, international relations theorists in the realist tradition predicted that a decline in global integration would accompany China’s rise and earlier work shows data appearing to support this prediction (Witt 2019 ). However, we show below that, despite the massive economic opening in China and increasing competition with the US for global economic leadership, economic globalization has remained quite stable. Consider Fig.  2 , which shows the trends in world trade since before China first opened its market, in 1978.

World exports and world GDP, 1960–2018

The figure shows that the growth of global trade has plateaued in the 2010s, but that it has not declined and that it remains at or near its peak. This is true whether we look at trade as a share of GDP, as Witt ( 2019 ) does, or if we simply look at trade volume independent of GDP. We believe that the latter measure is preferable, insomuch as trade growth may be obscured by faster growth in global GDP, as occurred in the 2014–2016 period. In any case, the figure clarifies that global trade has not declined, suggesting that deglobalization has not been occurring. Footnote 6

The major drop-offs in world trade growth since the early years of the Great Depression in the 1930s have been during World War II, and then, as shown in Fig.  2 , during the early 1980s emerging market debt crisis, as well as the 2008–2009 Global Financial Crisis, a global economic slowdown in 2016, and most recently during the Coronavirus crisis of 2020 (not shown). These events each had short-term impacts on globalization, but they did not lead to a sustained reduction in global trade (Coronavirus notwithstanding).

The 2008–2009 Global Financial Crisis illustrates this point and, in the process, offers support for our dual hegemonic stability theory framework. Caused by a malfunction of the US financial system, in which banks and investors overexposed themselves to the real estate loan market and related derivatives, this crisis spread worldwide and caused a recession in many countries. Globalization did indeed decline for that brief period during the crisis. However, this decline proved short-lived, as the US government implemented policies to bolster the global financial system, while China began lending more money to countries around the world. Consistent with dual hegemonic stability, the two global leaders each provided global public goods that prevented what might otherwise have been a dramatic decline in globalization, akin to the one that occurred in the Great Depression.

The trend in trade regulation over time is similarly at odds with the deglobalization narrative. Looking at average tariffs of major trading countries, it is evident in Fig.  3 that tariff barriers have continued to fall, from an already low level, since China joined the WTO in 2001.

Tariff rates in major trading countries

Non-tariff barriers to international trade, such as import quotas and subsidization of domestic firms to fend off imports, as well as subsidization of exports, have also remained low during the twenty-first century.

While tariffs have decreased steadily overall, there have been exceptions. The US continues to impose restrictions on steel and auto imports, as has frequently been done since Lyndon Johnson imposed steel import quotas in 1969. Ronald Reagan imposed restrictive policies in 1981 (on autos) and 1984 (on steel). Subsequent US Presidents, from George W. Bush (in 2002) to Barack Obama (in 2015) have restricted steel imports with tariffs or quotas, often as a result of claims that foreign governments were unfairly subsidizing their steel exports. These examples suggest that the Trump Administration’s protectionism is not out of line with US policy in the past, contrary to suggestions that the Administration is leading a decline of the global economic order (Walt 2016 ). Of course, the Trump Administration has implemented its share of protectionism, such as the recent ban on Huawei from selling its telecom equipment in the United States, based on a claim that Huawei was supplying or could supply information about users of the telecom system to the Chinese military (Swanson 2020 ).

For its part, China also restricts auto imports with high tariffs and subsidies for domestic producers (including subsidiaries of foreign automakers). China also keeps foreign firms out of what they consider sensitive industries such as telecommunications, and they limit foreign financial services firms to a tiny market share in China. China restricts imports of several agricultural products, such as wheat and rice—just as the United States has done for decades. In short, while both countries have exceptions to a free trade policy, over half of the products imported into both countries enter without restrictions, with an overall average tariff of 1.6% in the US and 3.4% in China in 2019 (United States Trade Representative 2020 ; World Bank 2020a ).

Considering other measures of economic openness, FDI is often seen as an indicator of countries’ willingness to allow foreign business to operate locally. The growth of FDI after World War II has been more rapid than growth of GDP for most of the period. As shown in Fig.  4 , the Global Financial Crisis of 2008–2009 was accompanied by a major downturn in FDI, and since then the growth of this investment has been volatile, though still positive overall. The key point with respect to globalization is that FDI has remained at or near its peak in the years since China emerged as a global power on-or-near par with the US.

Global and regional FDI inflows, 1970–2018

Likewise, global financial flows such as international portfolio investment and foreign exchange transactions have trended upward, albeit with considerable volatility and with a decline during the Global Financial Crisis. Foreign exchange transactions, mainly in London and New York, exceeded $6 trillion per day in 2019 compared with $1.2 trillion in 2001 (Bank for International Settlements 2019 ). Global portfolio investment grew at an average rate of 44% per year during the 2010s, but it has been very volatile, as shown in Fig.  5 . It is clear that globalization has not declined by these financial measures.

Source: World Bank 2020b

Cross-border portfolio investment, 1960–2018.

International immigration flows are another measure of economic openness, involving people as the factor that crosses borders. People and capital are generally viewed as the two mobile factors of production, while land is not. And final products and services also may or may not be mobile, as measured by trade flows. It is clear in Fig.  6 that global migration flows have not decreased during the 2010s, but rather they show an increasing rate since the turn of the century.

Source: de Haas et al. 2019 , p. 888. Authors' calculations based on the Global Migrant Origin Database (World Bank) (1960–1980 data) and UN Population Division Trends in International Migrant Stock: The 2017 Revision (1990–2017 data)

International migration flows, 1960–2017.

The evidence presented in this section contests the deglobalization narrative, showing instead that the global flows of products, money, and people have increased in the twenty-first century and remain near their peaks, and supporting our Proposition 1 .

5 Dual Hegemonic Stability and International Business in the Twenty-First Century

While much of the discussion above has focused on macro indicators of international openness and government policies, it all relates to business, mostly to international business. Our principal measure of openness is the amount of trade and investment taking place, and of course it is companies that are carrying out those exports, imports and investments. International bank lending and foreign exchange are mainly carried out by multinational banks, operating principally in London and New York. Footnote 7 Likewise, some international movement of people occurs within multinational firms. These indicators all show positive growth trends in the twenty-first Century, even after the Global Financial Crisis.

From a business perspective, dual hegemonic stability means that countries will maintain an open market environment of the sort that has been demonstrated to attract FDI and also international trade (Ahlquist 2006; Büthe and Milner 2008; Gamso and Grosse 2020 ). In this context, global companies will continue to engage in trade and investment around the world and do not need to dramatically reorient themselves in response to, or in anticipation of, a wave of tariff hikes or other non-tariff barriers. Supply chains can continue to function and may even deepen as China’s Belt and Road projects bring more countries into the globalized economy. Companies around the world can also expect both China and the US to remain largely open to global business, with positive implications for those firms that are interested in expanding into these markets. Of course, globalization creates losers as well as winners, and our analysis suggests that import-competing companies will not see their fortunes improve in a world of dual hegemonic stability.

That said, US–China skirmishing to build greater economic and political power will produce some policy changes that do constrain firms. Economic issues such as ‘unfair’ trade restrictions on both sides can lead to higher-cost exports if new tariffs are imposed on specific products, even though tariff barriers overall are quite low in both countries. Specific restrictions, as the US has imposed on auto and steel imports from several countries on and off over the past six decades, do raise significant barriers in those sectors. Likewise, China’s refusal to allow foreign telecom companies to provide various services in China, and precluding trans-border transfer of information from China, severely restrict leading US companies in that sector. Chinese government subsidization of state-owned companies in many sectors enables them to compete overseas with an advantage that is difficult to measure and restrain, although it is possible to deal with this challenge through the WTO.

Multinational firms interested in operating in China will continue to have to deal with the restrictions there in sectors such as automobiles, financial services, telecommunications, electric power and operation of any business that requires cross-border transmission of customer information. Constraints there have hobbled the businesses of Google, Facebook, and Amazon Web Services. Auto companies since the 1980s have faced the requirement to operate only with a joint venture partner that owns at least 50% of the company in China. This last point suggests that a strategy for other kinds of firms may be to use a joint venture partner to avoid potential limitations that the government might impose (Zhu and Sardana 2020 ). And from the opposite perspective, at least for Chinese SOEs, their performance has been better when they have foreign investors involved, such as SAIC with GM and Volkswagen and foreign listings that attract portfolio investors (Zhu et al. 2019 ).

To deal more comprehensively with these risks, we suggest a geopolitical risk management framework within which companies can design strategies to reduce the potential negative impacts of US–China government decisions. The framework is depicted in Fig.  7 .

Geopolitical risk management framework

The framework points out four categories of responses to geopolitical risks. First is to simply run the risk when it is perceived to be low or manageable. This strategy will be useful for companies that are not exposed to business activity in the US or China, or for companies that operate only domestically in the US or China. For example, European firms that operate hotels, restaurants, local professional services, and other businesses that are highly local can likely avoid the risk. The more local or regional the business and the supply chain, the more likely that the avoidance strategy can serve well.

Another aspect of this avoidance strategy to deal with US–China conflict suggests that companies should look to avoid putting their business in one of the risky countries, if that risk indeed is very significant for the particular firm or industry (e.g., US defense contractors staying away from Chinese operations, and Chinese companies such as Huawei, TikTok and other Internet companies that could transfer US information to the Chinese military staying away from the US). Many times this is not possible, but when the US-based or Chinese firm can operate in other countries, this can help reduce their bilateral risk.

A second category of response to geopolitical risk is to transfer it to a third party. Insurance is the most common mechanism to accomplish this goal. A political risk insurance policy for a US company from the US International Development Finance Corporation (DFC) can insure its business in an emerging market against political violence including terrorism, currency inconvertibility and government interference in the firm’s business activities, including expropriation. Similar policies are available from the Multilateral Investment Guarantee Agency (MIGA) in the World Bank group for companies from any member country operating in an emerging market. Private sector insurance policies against political risk are available from companies such as AIG and Zurich Insurance. This category of response could serve the interests of companies that require significant capital investment in facilities in the host country, such as manufacturing companies, hotels, mining companies, and agricultural companies.

Additional means of transferring geopolitical risks to third parties include measures for guaranteeing delivery of a product that may be a part of a company’s supply chain. For example, if oil is needed for the company’s business, (deliverable) futures contracts exist that guarantee a price and the delivery of a specified quantity of oil at a particular future date (e.g., for 1000 barrels per contract at the New York Mercantile Exchange). Similar contracts exist for some other commodities and at some other exchanges as well. Options contracts and swaps for commodities provide additional sources of protection against the risk of breakdowns in a supply chain.

A third strategy dimension is to  adapt the company’s business to deal with the risk. This strategy includes setting up plants or offices or other facilities in countries other than China or the US to avoid the direct threat of government intervention. Footnote 8 A company such as Apple can contract out with other companies to provide components for their iPhones and even assembly of those phones, as Apple has done for many years. If key suppliers are in the US or China, then Apple can look to providers in third countries. For any company, if China is the location of production facilities, then adaptation could involve moving to another emerging market in Asia, from Vietnam and Thailand to India.

Chinese firms interested in operating in the US are likely to find more constraints in the way that Huawei and ZTE have experienced in telecommunications equipment and TikTok is experiencing in online video sharing. National security concerns easily could be extended to other sectors, from agricultural products to pharmaceuticals. A Chinese company in many industries would be best served by adapting its business via operating with a US partner, and maybe even operating through a subsidiary in another country such as the UK or maybe Dubai/UAE or the Cayman Islands. Populist pressures as well as national security concerns will likely make it more difficult for a range of Chinese companies to enter the US in the future.

Adapting the company’s business financially may also be beneficial, for example, by taking on local debt in the country where local assets are exposed to risk. Just balancing accounts payable and receivable for a western company in China or a Chinese company in the US could limit the exposure of assets to some extent. Broadly speaking, building up local liabilities where local assets are at risk will help to protect the company.

Many additional possibilities exist to adapt the company’s business activities so that geopolitical risk can be reduced. For both US-based and Chinese companies, finding a joint venture partner in the other country may reduce the risk of negative government policy changes toward that company (Johns and Wellhausen 2016 ), as might working with an intergovernmental organization such as the World Bank (Gamso and Nelson 2019 ). For European or emerging market-based companies, finding production locations outside of the US and China can reduce the risk, as can looking to additional markets in other countries such as the EU, India, and other large economies. Aiming directly at the government of China or the US to curry favor, through corporate social responsibility programs (Darendeli and Hill 2016 ) or just lobbying (Keillor et al. 2005 ) can also be useful tools.

The fourth and final category of responses is to diversify the company’s business outside of the US and China. This diversification of business activities does not reduce the risk to a particular facility or supply source in the US or China, but it does enable the firm to have alternative(s) in the event of adverse policy moves by either of those governments. So, as with any diversification strategy, moving some activities outside of the two protagonist countries will enable a company to reduce the overall impact of adverse policies on its total business worldwide. An MNE also could aim to denominate more of its business in currencies other than dollars or renminbi, to avoid possible harmful exchange rate changes in response to policies in either the US or China.

This current reality suggests that companies should look to diversify their markets and supply chain activities. Already, a significant amount of reshuffling of offshore production in textiles and electronics has seen assembly activities move from China to other countries in Asia such as Malaysia, Thailand and Vietnam, as well as India (Hufford and Tita 2019 ). China’s large market remains very attractive to many multinationals, but India’s market has grown faster in several recent years and provides possible diversification opportunities. And on the other side of the Pacific, the US has recently used policies to dissuade companies from dealing with China, so that a strategy of focusing more on Europe, Japan, and non-China emerging markets makes sense as well for multinationals, even though a significant decoupling of the US and Chinese economies seems unlikely in the foreseeable future.

Each of these strategies implies a move to greater emphasis on risk management and less focus on lean supply chains that has dominated in recent years. In fact, multinational firms would be well-served by implementing a range of risk-management tools, as suggested by our Proposition 2 and shown in Fig.  7 and Table 2 in the “ Appendix ”.

An open global economy does not mean that companies should naive the risks associated with international business in the context of a changing world order. More short-term trade or investment barriers could be implemented, as the US and China use these policies to compete with one another in various areas of international business and international relations. The bilateral jockeying for position in the international system between China and the US will be a feature that firms will need to contend with for the foreseeable future. Additionally, trade and investment diversion stemming from new bilateral and regional economic agreements must be factored into firms’ assessments as they identify suppliers and consider investments.

6 Long-Term Dual Hegemonic Stability

There are challenges to the long-term persistence of dual hegemonic stability. These include political tensions between the United States and China, the rise of political nationalism around the world, and the COVID 19 pandemic. The first challenge is the emerging tension between the US and Chinese governments. Tensions over China’s economic policies generated a serious trade dispute between the two countries, which has been partially resolved with the 2020 Phase One trade agreement (Setser 2020 ). These economic tensions are likely to reemerge and other disputes will surely arise as well. If tensions become sufficiently intense, there is a possibility that the countries will engage in a Cold War-type standoff, perhaps leading other countries to trade intensively with one party or the other. As discussed above, we do not see this as a likely outcome, given the membership of China and the US in the WTO, as well as the enormous economic benefits that both countries obtain from allowing the open economic system to operate. Nevertheless, it is worth mentioning, as this outcome is seen as likely by some analysts (e.g., Khong 2019 ).

The second challenge is the rise of political nationalism around the world. In the latter half of the 2010s, nationalist governments came to power in the United States, Brazil, countries of Western Europe, the Philippines, Turkey, and elsewhere (Snyder 2019 ). China’s government may also be described as nationalistic (Economy 2014 ), even though it sometimes shows support for global governance (Kastner et al. 2020 ). Despite some new tariffs, this political nationalism has not led to widespread protectionism, but it has been accompanied by efforts (some successful) to undermine organizations like the WTO (Brown and Irwin 2019 ). If political nationalism leads to more sustained economic nationalism, particularly from the United States and China, which are the world’s two largest traders, then it may lead to a deterioration of hegemonic stability. This is not currently in the interest of either state, but interests may change in the future.

Military conflict, such as a possible skirmish in the South China Sea, is also conceivable. Any attack by a Chinese ship or plane on a US ship operating in international waters that the Chinese claim as their own could lead to escalation of some sort. Ramped-up military attacks are not likely, but economic sanctions certainly are. This would push each hegemon to raise more economic barriers on the other, and hurt MNE interests. While this is far from a Pearl Harbor or a frontal attack on the other hegemon, still such skirmishes are likely, and their policy implications are something that companies should plan for.

COVID 19 may exacerbate the first two challenges. The virus appears to be worsening relations between the United States and China, at least in the short term (Buckley and Myers 2020 ). Likewise, there are some indications that COVID 19 is encouraging countries to turn inward, in an effort to increase self-sufficiency (Irwin 2020 ). However, it is too soon to say how exactly the 2020 pandemic will affect global commerce in the coming years and decades, and there are reasons to suspect that its long-term impacts on globalization will not be severe (O’Neill 2020 ). Nevertheless, this unprecedented challenge must be acknowledged.

These possibilities notwithstanding, the most likely scenario for world order in the twenty-first century is ongoing economic globalization, led by two states that have persistently supported and benefited from this status quo. Continuing to support globalization is in the best interests of both of these states, and so we expect them each to continue providing global public goods that incentivize global trade and investment. Therefore, contrary to the increasingly common journalistic narrative, globalization should persist for the foreseeable future. Even with a continuation of globalization, companies need to be prepared to deal with bilateral frictions between the US and China, so the four-pronged risk management strategy described above can help them to manage future shocks.

It should be noted that there are dissenting opinions to this emerging conventional wisdom, as some analysts are skeptical of US decline (e.g., Brooks and Wohlforth 2016a , b ), others are skeptical of China’s rise (e.g., Lynch 2019 ), and still others propose that a multipolar world order has emerged (e.g., Mearsheimer 2019 ).

While one could debate the appropriateness of R&D spending as a measure of innovation, the US-China dual leadership also is evidenced by patents and trademarks granted, and by other measures collected by the World Intellectual Property Organization ( 2019 ). While no measure of innovation is complete, the various indicators all point toward US-China leadership.

US-China trade was valued at $578 billion, with a US deficit of $347 billion, in the last year of the Obama administration (2016). US-China trade was valued at $558 billion, with a US deficit of $345 billion, in 2019.

“More Americans than Gallup has seen in a quarter century view foreign trade positively, with 79% calling it "an opportunity for economic growth through increased U.S. exports" (Saad 2020 ).

This is not to deny the real trade barriers that have been imposed on US-China trade by President Trump since 2017, and the retaliation by China’s government. These restrictions, mainly tariffs, have had some impact on that trade, though it continues fairly similar in volume and value to previous years, with some exceptions.

Of course, this does not take into account the impacts of COVID 19 on global trade.

It would be logical to expect Hong Kong, or even Shanghai, to join London and New York as the chief global financial centers. For several reasons, mainly to do with political risk of the Chinese government in Hong Kong, this last center has not (yet) developed on the level of the London or New York.

If the company is changing an existing activity, such as moving production out of China, or contracting production to a third party, then this is adaptation. If the company adds new operations outside of China or the US to deal with this geopolitical risk, then this would be diversification, as discussed in the next category.

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Grosse, R., Gamso, J. & Nelson, R.C. China’s Rise, World Order, and the Implications for International Business. Manag Int Rev 61 , 1–26 (2021). https://doi.org/10.1007/s11575-020-00433-8

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Aggressive or Peaceful Rise? An Empirical Assessment of China’s Militarized Conflict, 1979–2010

The recent years have witnessed a heated debate on China’s rise. Using various theoretical arguments, existing research has generated quite divergent conclusions on whether China rises peacefully. Liberals argue that China has significantly benefited from the existing international economic system and therefore China is rising peacefully. On the other hand, realists such as John Mearsheimer argue that because China is likely to challenge the status quo, a rising China poses a threat to international security. Surprisingly, despite the ample scholarship on this topic and the existing divergent conclusions, a large-N empirical evaluation of China’s rise is missing in the existing research. This study fills this important gap by providing a large-N empirical investigation of militarized interstate disputes between China and other states from 1979 to 2010. We find that although China’s GDP, military spending, and CINC score have increased remarkably since the start of its economic reform, no empirical evidence points to more conflicts between China and other states. Furthermore, trade exerts only a weak effect on China’s conflict, a surprising yet interesting finding that revises the conventional wisdom in the literature.

1 Introduction

In recent years, the topic of China’s rise has attracted a great deal of attention in both the media and in academia. As a result of China’s increased and steady economic growth since the early 1990s, China has often been perceived as an emerging potential threat. All of the major American newspapers – The Chicago Tribune, The Los Angeles Times, The New York Times, The Wall Street Journal , and The Washington Post – have devoted increasing attention to China’s rise. The New York Times , for example, has significantly expanded its coverage of the topic of “Chinese military spending,” from just four articles published in 1999 to 30 articles in 2013. [1] Many articles in these newspapers argue a rising China poses a threat to the US, and they tend to focus on China’s economic strength and military strength and how its political system is fundamentally different. [2] The title of one article published in The New York Times in 2006 adequately sums up this view, “Letter from China: Is it a ‘peaceful rise’? U.S. shouldn’t bet on it.” In that article, Howard French argues that China is set on challenging America’s standing in the world, and that “the first element in China’s recent playbook is to stay out of the way while the United States undermines its own position in the world” (French 2006).

Similarly, the topic of China’s rise and its implications has been extensively debated in academic writings since the early 1990s. Using various theoretical arguments, existing research has generated divergent conclusions on China’s rise. On the one hand, many scholars argue that China rises peacefully. China has significantly benefited from growing trade with other countries, and an increased participation in existing international organizations has led China to be more cooperative. Moreover, the history of Chinese international relations demonstrates significantly more peace than conflict, which predicts China will continue in that trajectory. On the other hand, realists argue that because China is likely to challenge the status quo, a rising China poses a threat to international security. One well-known example is that John Mearsheimer, one of the most influential scholars in this field, has consistently argued since the early 2000s that China’s rise is likely to be unpeaceful (e.g. Mearsheimer 2001, 2006, 2009, 2010).

To provide a more comprehensive picture of the existing debate, we conduct a search of journal articles that examine China’s rise and list them in Table 1 . [3] To significantly reduce the number of search results, our search is restricted to the articles that investigate China’s militarized conflict. In the table, the articles are ordered by their proposition on China’s rise, from peaceful to non-peaceful. As shown in Table 1 , the conclusions on China’s rise are quite divergent: while many scholars propose a peaceful rise, a lot of other scholars are uncertain of China’s rise or argue that China’s rise is likely to be non-peaceful. A more thorough discussion of these articles will be provided in the theoretical section.

Overview of studies on China’s rise.

Surprisingly, despite the ample scholarship on this topic and the existing divergent conclusions, a large-N empirical assessment of China’s rise is missing in the existing research. [4] Although a glance of China’s history reveals that China has not been engaged in a major militarized conflict since its war with Vietnam in 1979, it does not necessarily mean that China’s rise is peaceful up to today. Likewise, an observation of China’s increased territorial disputes in recent years (e.g. on the South China Sea and the Diaoyu Islands) does not necessarily imply China’s rise is characterized by aggressiveness. To assess whether China rises peacefully, we need to examine whether China’s growing GDP and military spending increase its militarized conflict in a systematic way . In addition, the success of this empirical investigation depends on our control of other important factors that also influence China’s use of force. Without taking into account all the relevant independent variables, the inference on China’s rise can be highly biased due to the well-known omitted variable bias. As a result, a systematic empirical analysis is necessary and critically important.

In this study, we conduct an empirical analysis to examine how China’s increased economic power and military power affected China’s interstate conflict from 1979 to 2010. [5] While it is also important to investigate other aspects of China’s rise, [6] this study focuses on militarized conflict because it is arguably the most salient issue in security studies. Based on a number of regression analyses, we find that China’s increased GDP, military spending, and Composite Index of National Capability (CINC) score did not lead to more conflict with other states during the period 1979–2010. Furthermore, our empirical analysis demonstrates that both trade and international organizations exerted little or no effect on China’s militarized conflict. These surprising yet interesting findings revise the conventional wisdom that participating in trade and international organizations significantly reduces China’s involvement in militarized conflict.

Finally and importantly, this study argues that the time period 1979–2010 is salient for the analysis of China’s rise. Figure 1 shows a comparison between China and the US on GDP, military spending, and CINC score during this time period. In the figure, the horizontal axis indicates year, which is from 1979 to 2010, and the vertical axis denotes the ratio of China to the US. It demonstrates that when based on GDP and military spending, [7] while China’s power was still not comparable to US power during this time period, China’s power was increasing quickly. Furthermore, when the widely employed CINC score is examined, the story becomes more striking. China’s CINC score increased sharply since the early 1990s and exceeded the US’s CINC score in the middle 1990s. [8] Since CINC scores capture states’ overall national capability, the finding of Figure 1 suggests that our empirical analysis of China’s rise from 1979 to 2010 is critical to the existing research on whether China rises peacefully.

Comparing China and the US on GDP, Military spending, and CINC.

The rest of this study proceeds in three sections. First, we discuss the theories on China’s rise. Next, this study conducts an empirical evaluation of China’s militarized conflict from 1979 to 2010. Finally, we provide a concluding remark.

2 Theories on China’s rise

In this section, we offer a detailed discussion of the theories on China’s rise. Our discussion focuses on the Kantian peace, soft power, Chinese history as prelude, realism, and power transition theory.

2.1 The Kantian peace

According to the Kantian peace theory, countries that are joint democracies, trade with each other, and share common memberships in international organizations (IOs) are less likely to engage in war or military conflict (Russett and Oneal 2001). Maoz and Russett (1993) discuss a normative model and a structural model to support the argument that wars are less likely to occur between democracies. The political norm of “regulated political competition through peaceful means” (p. 625) and the structural requirement of “the mobilization of both general public opinion and of a variety of institutions that make up the system of government” (p. 626) both lower the probability of war between democracies. Other scholars suggest alternative explanations for the democratic peace theory (e.g. Bueno de Mesquita et al. 1999). States that trade with each other are less likely to engage in conflict. The game-theoretical analysis shows that the opportunity cost argument and the costly signaling proposition both predict an inverse trade conflict relationship (Gartzke, Li, and Boehmer 2001; Polachek and Xiang 2010). Opportunity costs arise because trading states tend to forgo the benefits from trade when a war erupts. Because of the opportunity costs, trade can also serve as a costly signal to reduce the probability of war in an incomplete information game. In addition, ample empirical evidence demonstrates this inverse relationship in the data. (e.g. Oneal and Russett 1999; Polachek 1980; Xiang, Xu, and Keteku 2007). In an influential study, Russett, Oneal, and Davis (1998) argue that international organizations can promote peace through six functions: “coercing norm breakers; mediating among conflicting parties; reducing uncertainty by conveying information; problem-solving…; socialization and shaping norms; and generating narratives of mutual identification” (pp. 444–445). Other studies supply additional arguments and empirical evidence to support the pacifying roles of international organizations (e.g. Caruso 2006; Oneal, Russett, and Berbaum 2003; Pevehouse and Russett 2006).

Because China has significantly increased its international trade and participation in IOs since the economic reform at the end of 1978, the Kantian peace theory suggests that China is rising peacefully. [9] For illustration, we compare China’s figures on international trade and participation in IOs for the years 1979 and 2010, which are the starting and ending years of our data analysis. Based on WTO trade statistics, [10] China’s total trade volume was 29.2 billion USD in 1979, compared to 2.97 trillion USD in 2010. [11] This is an increase of 10,071%. In terms of percentage of world trade, China accounted for less than 1% of the world’s trade in 1979, whereas in 2010 China accounted for almost 10% of world trade. The same is true for China’s participation in IOs. China was a member of 27 IOs in 1979. This number almost tripled in 2005, as China became a member of 75 international organizations. [12] Given the pacifying effects of trade and IOs, all these figures suggest that China should become less likely to be involved in conflict over this 30-year time period.

Numerous scholars who write on China have utilized the Kantian peace theory (i.e. trade and IOs) to argue that China rises peacefully. For example, Broomfield (2003), Tammen and Kugler (2006), Brandt, Rawski, and Zhu (2007), Goldsmith (2007), and Weede (2010) all argue that since China has substantially benefited from growing trade with other countries, China is rising peacefully. The bilateral relationship between China and Japan clearly exemplifies this argument (e.g. Beeson and Li 2012). Despite the “traumatic history” between these two countries, the deep and growing economic interdependence [13] makes China “adopt a more conciliatory attitude toward Japan in pursuit of long-term gains” (Beeson and Li 2012, 48). [14] Similarly, an increased participation in IOs has led China to be more cooperative with other states. China has become more willing to embrace the norms and to preserve the status quo of the existing IOs (e.g. Beeson 2009; Chin and Thakur 2010; Hempson-Jones 2005; Johnston 2003, 2008; Reilly 2012; Zhang and Tang 2005). As a result, China’s increased involvement in IOs implies it rises peacefully.

2.2 Soft power

When a country possesses soft power, it is able to achieve many of its objectives in international relations without the threat to use or the actual use of force (Nye 1990, 2004, 2008). Soft power is defined as “the ability to affect others to obtain the outcomes one wants through attraction rather than coercion or payment,” and a country may use soft power to “obtain the outcomes it wants in world politics because other countries want to follow it, admiring its values, emulating its example, and/or aspiring to its level of prosperity and openness” (Nye 2008, 94). Therefore, assuming its objectives are fixed , a country that has more soft power will be less likely to employ military force.

Many scholars argue that China has employed soft power in its long history and China has increased its use of soft power in recent years. [15] Based on these arguments, it is expected that China is unlikely to increase its use of military force and as a result China rises peacefully. Ding (2008) and Li and Worm (2011) argue that soft power is not a novelty to China and the essence of soft power has been part of China for 2000 years. Ding (2008) states that “such ideas as attraction and agenda-setting have always embedded in ancient Chinese philosophy and culture” (p. 195). In recent years, the Chinese government has invested substantially in several main areas to advance its soft power. First, the Chinese government has attempted to promote educational and cultural exchanges. To establish Confucius Institutes that teach Chinese language and culture around the world (e.g. Paradise 2009) and to attract international students to study in China are clear examples of China’s attempt to advance its soft power. In addition, the Chinese government has expanded its news programs throughout the world. For example, the China Central Television (CCTV) broadcasts news in the world’s major languages – English, French, Spanish, Arabic, and Russian – in an effort to present a friendly China (Zhu 2010). Third, China has increased its involvement in multilateral organizations. China has significantly increased its UN peace keeping missions and joint military exchanges with the Shanghai Cooperation Organization, which Nye (2008) argues can generate soft power.

2.3 Chinese history as prelude

Some China scholars argue that because the history of Chinese international relations demonstrates significantly more peace than conflict, China will continue in that trajectory and rise peacefully (e.g. Ding 2011; Hsiung 2009; Li and Worm 2011; Shih and Huang 2013). Hsiung (2009) and Ding (2011), among other authors, use the example of Zheng He’s peaceful explorations to argue that China is more peaceful than other great powers in history. Although China was significantly more advanced than any other country at the time of his expeditions (1405–1433), Zheng He traded with countries in Africa and Asia instead of conquering the lands or people. This contrasts with other great powers (e.g. the UK, Germany, and Japan) of aggressive risings. [16] As a result, Li and Worm (2011) conclude that “Chinese history does not support that kind of prediction that China will use non-peaceful means to rise” (p. 71).

Kang (2007) and Shih and Huang (2013) provide an explanation why the history of Chinese international relations is mainly characterized by peace. Shih and Huang (2013) state: “In the first place, there is no tradition in Chinese political thought, modern as well as pre-modern, that recognizes or even lays the intellectual foundations for recognizing potential duties of the state beyond its borders” (p. 351). Similarly, Kang (2007) proposes that it is “a shared understanding among East Asian states that although China will most likely reemerge as the regional core, its aims are limited” (p. 198).

2.4 Realism

Realist scholars tend to be pessimistic and argue that a rising China poses a threat to international security. Arguably “the oldest and most dominant approach to international relations theory” (Rathbun 2010, 3), realism assumes the primary goal of all states in an anarchic international system is to survive and military power is of fundamental importance to this goal. The balance of power theory proposes that an equilibrium of power enhances national security. It argues that “the equilibrium must aim at preventing any element from gaining ascendancy over the others” (Morgenthau 1985, 189) and that “states fight wars to prevent others from achieving an imbalance of power in their favor” (Waltz 1979, 204). Therefore, based on the balance of power theory, when a state acquires inordinate power war will become more likely. Offensive realism contends that “great powers are primed for offense” (Mearsheimer 2001, 3). For great powers, “[t]he overriding goal of each state is to maximize its share of world power,” and when opportunity arises, “they will use force to alter the balance of power” (Mearsheimer 2001, 2). Although it uses a different argument than the balance of power theory, offensive realism reaches the same conclusion that a rapidly rising great power will lead to an increased probability of war.

The realists’ arguments suggest that China rises aggressively. In a number of publications, Mearsheimer puts forth the influential argument that China’s rise is likely to be unpeaceful (Mearsheimer 2001, 2006, 2009, 2010). He argues that China will strive to establish hegemony in Asia, and in response the US and China’s neighboring countries (e.g. India, Japan, Russia) will seek to thwart China from achieving this goal (Mearsheimer 2006). Furthermore, a rising China is possible to pursue a foreign policy similar to that of “Imperial Germany, Imperial Japan, and Nazi Germany” (Mearsheimer 2009, 252). Therefore, it is likely “[t]he result would be an intense security competition between China and its rivals, with the ever-present danger of great-power war hanging over them” (Mearsheimer 2001, 4). [17]

In addition, other scholars argue that China is likely to rise non-peacefully. For instance, Panda’s (2013) discussion of the rivalry between China and India throughout Asia over the issues such as the South China Sea and pipelines in Central Asia suggests that China’s rise is aggressive as predicted by realism. Shambaugh (2011) argues that since 2009, China has become increasingly a self-interested power maximizer. This contrasts with China before the global financial crisis and the Beijing Olympic Games, which Shambaugh (2005) characterizes as having a benign regional security posture. Because China has significantly elevated its status after 2008, this contrast supports realists’ argument that China’s rise is likely to be non-peaceful.

2.5 Power transition theory

The power transition theory makes a prediction of the relationship between the existing dominant state, the US, and the rising potential challenger, China. Contrary to the balance of power theory, the power transition theory argues that “wars are most likely when there is an approaching balance of power between the dominant nation and a major challenger” (Organski 1958, 376). This probability of war is higher when the challenger is dissatisfied with the existing international order and the challenger rises rapidly. To support his theory, Organski (1958) states that “the major wars of recent history have all been wars involving the dominant nation and its allies against a challenger who has recently risen in power” (p. 376). [18]

A direct implication from the power transition theory is that a rapid rising great power China is likely to challenge and wage war against the US, and this implication has inspired many studies to explain and predict the future Chinese-US relations. Some scholars argue that while it is possible China will surpass the US to become the dominant power, it is uncertain whether or not China will challenge the US (e.g. Efird, Kugler, and Genna 2003; Lemke 2003; Lemke and Tammen 2003; Rapkin and Thompson 2003). For example, Efird, Kugler, and Genna (2003) employ a simulation to demonstrate that “levels of joint satisfaction” determine the forecast outcome: “a reconciliation of preferences between the U.S. and China” prevents war whereas dissatisfaction with each other raises the possibility of a major war (p. 308). Organski (1958) uses the example of “the transfer of power from England to the United States” to argue that it is also possible China overtakes the US without a war (p. 372).

Other scholars contend that possibly China may never replace the US to become the dominant power (e.g. Beeson 2009; Chan 2004). Chan (2004) argues that “there is scant evidence pointing to an ongoing or impending power transition between China and the United States and suggest[s] instead that concerns about this possibility are founded less on material conditions and more on ideational construction” (p. 106). In addition, scholars propose that because China has significantly benefited from participating in the existing international economic system, the probability that China challenges the US is reduced (e.g. Beeson 2009; Chan 2004).

3 An empirical assessment of China’s rise

3.1 research design.

This study conducts a dyadic analysis of China’s use of militarized conflict to empirically test whether China rose peacefully from 1979 to 2010. [19] It uses all state dyads that include China as one member, and the dyads are non-directional. To measure our dependent variable, we rely on the widely employed Militarized Interstate Disputes (MIDs) data. The dependent variable is coded 1 if a threat to use force, a display of force, or an actual use of force is observed between China and another state in a year, and 0 otherwise. This study begins its analysis from 1979 because the Chinese economic reform started in December 1978. It is widely observed that China’s economic achievements today are a direct result of the Chinese economic reform, and therefore, an appropriate assessment of China’s rise should examine the time period since the Chinese economic reform. The analysis ends at the year 2010 because MIDs data ends in that year.

The debate on China’s rise points to China’s significantly increased economic power and military power. We measure them using China’s GDP and Military Spending . Furthermore, CINC score is used to measure China’s overall capability. The central task of this study is to empirically assess whether or not a larger value in China’s GDP, military spending, or CINC score led to more China involved conflict. If this relationship holds, it suggests that China rose aggressively. On the other hand, if this relationship does not exist in the data, it demonstrates that China rose peacefully during this time period.

In addition, this study follows the existing conflict literature to include the following independent variables: GDP of Other State, Military Spending of Other State, CINC of Other State, GDP/Military Spending/CINC Ratio, Trade, GDP Per Capita of China and Other State, Alliance, Contiguity, Distance, International Organizations and Regime Dissimilarity. Finally, this study includes three Peace Year variables to control for the temporal dependence presented in the binary dependent variable. To reduce the potential endogeneity problem, all independent variables are lagged by 1 year.

GDP data is measured in constant 2005 USD, which is downloaded from the World Development Indicators. [20] We use two measures of military spending: one from the National Material Capabilities data (Singer, Bremer, and Stuckey 1972), [21] and the other from the SIPRI Military Expenditure Database. The former data is available till the year 2007 and the latter is available since 1989. As previously mentioned, CINC scores measure each country’s share of the interstate system’s total military, industrial, and demographic resources (Bremer 1980). This variable is also taken from the National Material Capabilities data, and it covers the years up to 2007. In addition, we create GDP ratio, military spending ratio, and CINC ratio to evaluate the hypothesis that the more unbalanced the powers, the less likely they are to engage in conflict. [22] Trade is defined as dyadic   trade total   trade, China × dyadic   trade total   trade, other   state , a measure introduced by Barbieri (1996) and employed by many trade conflict studies. The trade data is from the Bilateral Trade dataset (Barbieri and Keshk 2012; Baribieri, Keshk, and Pollins 2009). It is expected that China is less likely to have conflict with a state that has more bilateral trade with China. GDP per capita is measured by real GDP per capita taken from the Penn World Table 7.1. [23] This variable is used to address the argument that high development reduces the probability of conflict. Alliance is a dummy variable that equals 1 if China and the other state within a dyad have a mutual defense treaty, a neutrality pact, or an entente; otherwise, it is coded 0. This data is from the Formal Alliances dataset (Gibler 2009). Allied states are expected to engage in less conflict. Contiguity is also a dummy variable, which is equal to 1 when China and the other state share a land border or are contiguous across up to 400 miles by water, and 0 otherwise. We obtain this data from Stinnett et al. (2002). It is often argued that contiguous states are more likely to engage in conflict. Distance is calculated as the distance between Beijing, China and the other state’s capital. It is expected that when China and the other state have a greater distance they are less likely to have conflict. We download this variable from the Expected Utility Generation and Data Management Program (Bennett and Stam 2000). The variable international organizations is calculated as a simple count of the number of international organizations joined by both China and the other state in a dyad, with its data from Pevehouse, Nordstrom, and Warnke (2004). Regime Dissimilarity is computed using the larger Polity2 score minus the smaller Polity2 score within a dyad. We collect the Polity scores from the Polity IV Project. It is expected that a larger regime dissimilarity increases the probability of conflict. Finally, following the suggestion in Carter and Signorino (2010), this study creates three Peace Year variables to control for the temporal dependence in the binary dependent variable.

3.2 Empirical results

In this section, we present our empirical results to show whether or not China has increased its use of force from 1979 to 2010. Since our three measures of China’s rise – GDP, military spending, and CINC – are highly correlated with each other, three regressions are estimated to avoid the multicollinearity problem: one using GDP, one using military spending, and one using CINC. A logit regression is employed to estimate the binary dependent variable.

The main regression results are presented in Table 2 . Since military spending is measured by both COW data and SIPRI data, it occupies two columns. For each regression, we list the time period of the analysis. As clearly demonstrated from all models in Table 2 , GDP of China, military spending of China, and CINC score of China all fail to show a statistically significant effect on China’s conflict. These findings shed light on the debate on China’s rise. If China rose aggressively from 1979 to 2010, the coefficients of China’s GDP, military spending, and CINC score are expected to be positive and statistically significant . On the other hand, if China rose peacefully during this time period, their coefficients are expected to be statistically insignificant . The findings in Table 2 lend consistent and strong support to the argument that China rose peacefully from 1979 to 2010.

Dyadic assessment of China’s peaceful rise: main results.

Standard errors are in parentheses. *p<0.10, **p<0.05, ***p<0.01.

The results of the other independent variables in Table 2 are to a large extent consistent with the existing theoretical arguments. GDP, military spending, or CINC score of the other state increases the probability of conflict with China. This finding does not contradict the result that GDP, military spending, or CINC score of China has no effect on conflict. The positive effect of GDP, military spending, or CINC score of the other state is largely driven by the cross-state variations rather than the time variations. However, GDP ratio, military spending ratio, or CINC ratio has no effect on the dependent variable. One interesting finding from Table 2 is that except for the regression using GDP, international trade fails to show a pacifying effect on conflict. This finding of trade is a little puzzling since the existing trade conflict research overwhelmingly argues a pacifying effect of trade on conflict. [24] Nevertheless, this study suggests that trade exerts only a weak effect on militarized conflict between China and its trade partners, a surprising yet interesting finding that has not been predicted by the existing research on China’s rise. [25] The explanations of the remaining variables are straightforward. Development level in general and alliance do not affect the probability of conflict. [26] More conflicts occur between China and its neighboring states, and geographical distance decreases the probability of conflict.

Due to the significance of the Kantian peace theory, we add international organizations and regime dissimilarity to the existing regressions and rerun the analysis. [27] These new regressions are important robustness check, and their sample of analysis is from 1979 to 2006. [28] The results are presented in Table 3 . Once again, the findings from Table 3 unanimously suggest that China’s increased GDP, military spending, or CINC score did not lead to more militarized conflict with other states. All the coefficients of China’s GDP, military spending, and CINC are statistically insignificant. These results echo the conclusion of Table 2 that China rose peacefully from 1979 to 2010.

Dyadic assessment of China’s peaceful rise: robustness check.

The findings of the other independent variables from Table 3 largely reinforce the findings in Table 2 . [29] One difference comes from GDP ratio: it shows that more balanced powers tend to engage in more conflict. [30] Regime dissimilarity supplies weak evidence to buttress the argument that a larger regime difference between China and another state is likely to increase the probability of militarized conflict. In addition, participating in international organizations has no effect on China’s militarized conflict. In short, Table 3 provides little support of the Kantian peace argument during China’s rise from 1979 to 2006. Put differently, the findings in Table 3 revise the conventional wisdom that participating in trade and international organizations reduces China’s involvement in militarized conflict. Nonetheless, Table 3 provides additional and consistent evidence to suggest China rose peacefully during this time period.

Finally, to address the influential argument that China has turned into an aggressive rise since 2008, we conduct an analysis to compare China’s pre- and post-2008 conflict behavior. In the existing research on China’s rise, many studies argue that the year 2008 is a turning point in the trajectory of China’s rise (e.g. Buzan and Cox 2013; Hughes 2011; Shambaugh 2011; Yahuda 2013; Zhao 2013). Both the success of the Beijing Olympic Games in 2008 and China’s continued high economic growth in spite of the global financial crisis of 2007–2008 have significantly elevated China’s international status. Therefore, many scholars argue that China has since then turned into an aggressive rise.

The implication of this theoretical argument for our statistical analysis is that we need to treat the year 2008 as a structural break point and to test if China rises aggressively since 2008. We follow the common approach to use a dummy variable and an interaction term to empirically test this hypothesis. This dummy variable is named Post-2008 Dummy , taking the value of 1 for the years after 2008, and 0 otherwise. Two interaction terms are created, which are GDP of China×Post-2008 Dummy and Military Spending of China×Post-2008 Dummy . If China has turned into an aggressive rise since 2008 as predicted in the existing research, the dummy variable and/or the interaction term will show statistically significant coefficients. In addition to these new created variables, our regressions include the same independent variables as in Table 2 . Because the COW military spending data and the CINC data end in the year 2007, they are not available for this empirical test.

The regression results are shown in Table 4 . Contrary to the existing argument that China has turned into an aggressive rise since 2008, our regression analysis shows that China rose peacefully during this post-2008 era. Across both models, the coefficients for GDP of China and military spending of China remain statistically insignificant. Furthermore, our post-2008 dummy and both interaction terms are statistically insignificant. All these findings demonstrate that China rose peacefully during both the pre-2008 and the post-2008 time periods. Scholars have pointed to China’s more assertive stance on sporadic issues such as the South China Sea and the Diaoyu Islands to conclude that China has become more aggressive in recent years. Our large-N empirical analysis, however, demonstrates that their conclusion is biased by observational selection. When we take into account all conflicts, an increase in China’s GDP or military spending did not cause more conflict between China and other states during the post-2008 era.

Dyadic assessment of China’s peaceful rise: Pre- and Post-2008.

Although our post-2008 sample (i.e. 2009–2010) is relatively short due to data availability, we argue this sample nevertheless constitutes a good test of the hypothesis. Since the effects of the Beijing Olympic Games and the global financial crisis tend to decline over time, we will be more likely to observe China’s aggressiveness during the immediate years after these events. If, on the other hand, our analysis of 2009–2010 suggests no evidence of China’s aggressive rise, it is very likely that we will reach the same conclusion based on a longer post-2008 time period. Overall, our empirical analyses in Tables 2 – 4 suggest the same conclusion that China rose peacefully from 1979 to 2010.

4 Conclusion

The recent years have witnessed a heated debate on China’s rise. Using various theoretical arguments, existing research has generated very divergent conclusions on whether China rises peacefully. Surprisingly, despite the ample attention on this topic, a large-N empirical evaluation is missing in the existing research. This study fills this important gap by providing a large-N empirical investigation of militarized conflict between China and other states from 1979 to 2010. While China’s rise can be examined in other contexts, such as China’s support of dictators, we focus on China’s threat to use force, the display of force, and the actual use of force. Future empirical research can further explore China’s rise by analyzing these different issue areas.

We conduct a number of regression analyses to empirically test whether China rose peacefully from 1979 to 2010. Because many scholars argue that China has turned into an aggressive rise after 2008, this study also compares China’s pre-2008 and post-2008 conflict behavior. All the results suggest that although China’s GDP, military spending, and CINC score have increased remarkably from 1979 to 2010, no empirical evidence points to more conflicts between China and other states. In short, China rose peacefully during this time period. Furthermore, our empirical analysis demonstrates that both trade and international organizations exert little or no effect on China’s militarized conflict. These surprising yet interesting findings revise the conventional wisdom in the literature. Finally, we acknowledge that this study does not offer an analysis of China’s rise from 2011 to 2014 nor a prediction of its rise in the future. That being said, many findings of this study can still shed light on our understanding of the trajectory of China’s rise.

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Article note:

Christopher B. Primiano and Wei-hao Huang contributed equally to this article. This project is funded by the Rutgers Research Council Grant source #202088. We presented an earlier draft of this paper at the 2014 American Political Science Association annual conference, 2014 International Studies Association annual conference, 2013 New York Conference on Asian Studies, 2013 American Association for Chinese Studies annual conference, and World Politics workshop at Binghamton University, and received helpful suggestions. We would like to thank Dean Chen, David Clark, Yale Ferguson, Benjamin Fordham, Edward Friedman, James Hsiung, Amanda Licht, Greg Moore, and Solomon Polachek for comments and helpful suggestions.

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CAN CHINA RISE PEACEFULLY? CHALLENGES AND OPPORTUNITIES FROM SOUTH-EAST ASIAN REGION

2021, CAN CHINA RISE PEACEFULLY? CHALLENGES AND OPPORTUNITIES FROM SOUTH-EAST ASIAN REGION

China's growth is expected to have rapid growth due to the best control of the pandemic but mean while there is a question asking whether China will risen peacefully? In this writing it will give a glance idea towards this rising and you shall understand the situation based on the evidence from south-east asia.

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“The False Promise of Liberal Hegemony” and “Can China Rise Peacefully?” by Mearsheimer Essay

Liberal democracy is a political philosophy that focuses on political rights. This paper introduces the main arguments presented in two Mearsheimer’s lectures, “The False Promise of Liberal Hegemony” and “Can China Rise Peacefully?”, to reveal the criticism of the liberal hegemony and to analyze the theory that explains the possible future of China. The arguments in the first lecture relate to the explanation of the liberal hegemony and how it leads to failure, concluding that it contradicts the country’s values. In the second lecture, his arguments are based on three assumptions: the United States is seen as Anarchy, it has the offensive military capability, and it cannot know the intentions of other States.

Mearsheimer has an opinion that the United States “are addicted to war” that happen due to the promotion of liberal democracy (Yale University, 00:29:30-00:29:37). The speaker gives an example of NATO expansion that is considered a cause of the war between Russia and Ukraine, and this war was not driven by a realist logic, just as the war between Russia and Georgia in 2008. For instance, the purpose of the conflict in Iraq was “to turn it into a liberal democracy to stop wars in the Middle East” (Yale University, 00:30:40-00:30:45).

He calls the idea of democratizing the Middle East foolish as that region did not have a democracy before, and the United States decided to do so at the end of a rifle barrel. This statement is opposite to the theory that states that democracies are more peaceful than authoritarian regimes as the wars are liberal driven. Hence, it proves that democratic countries have as many conflicts as other political philosophies, which can mean that liberal democracy may not be worth implementing all over the globe. I agree with the presented opinion as interfering in other nations’ business that has a different cultural background, and trying to change it is not a convenient approach.

Moreover, liberal hegemony leads to failure in many cases. The speaker presents various examples of countries, such as Iran, Iraq, and Syria, where the conflict happened on the grounds of “promotion of the liberal democracy” (Yale University, 00:35:20-00:35:45). As this regimen leads to conflict and promotes war, it prevents society from pursuing freedom. The United States is engaged in continuous warfare due to liberal hegemony, which contradicts the core values of the country.

Mearsheimer criticizes liberalism and liberal hegemony specifically, and he provides three reasons to explain why liberal hegemony is doomed. The first reason is that “social engineering in foreign countries is a difficult enterprise” (Yale University, 00:31:35-00:31:41). Foreign countries do not want foreigners to occupy their land. He gives an example of the U.S. blaming Russia for interfering in the 2016 election.

The U.S. tends to intervene in various circumstances and take steps that violate sovereignty to promote liberal democracy, and the consequences of this do not benefit American society. He then explains in the lecture, “Can China Rise peacefully?” that the United States can interfere in the other countries’ business as they have no security threats. This makes sense as it explains why the United States is the only country that has such a power to intervene in other countries’ business and why it desires to remain in this position.

The second reason is that nationalism is a remarkably powerful force. Mearsheimer puts it as “It’s not an easy sell” (Yale University, 37:18-37:20). A semi-authoritarian system may work better for people than liberal democracy as this system is not easy to achieve. Moreover, not all people are willing to accept liberal democracy for a variety of reasons. I think that the cultural and national background may create conditions in which a person would feel more satisfied with the semi-authoritarian or other similar systems rather than liberal democracy. Even though it promotes peace in the world, it may not be accurate for specific countries; hence, it complicates the process of spreading liberal democracy.

The last reason states that individual rights are important to most people around the world, but “they are rarely of great importance”, meaning that the concept of individual rights is oversold (Yale University, 00:35:12-00:35:35). Therefore, the rights are not privileged by how theory implies, and people are willing to sacrifice rights for stability. Thus, by explaining three primary reasons, he argues that liberal hegemony does not have enough ground to exist. Even though I support liberal hegemony opposition, I believe that individual rights will remain the most important individual concept as it becomes the ground for the further development of society.

To present arguments in the second lecture, “Can China Rise peacefully?”, Mearsheimer first assumes that China will rise and develop over the next twenty to thirty years. He describes a situation that is more likely to happen when China becomes more powerful. The first assumption states that the United States is the principal in international politics; they operate in the Anarchic system that declares that “there is no higher authority above the States” (UChicago Social Sciences, 00:05:20-00:06:12).

The second assumption asserts that every State has some offensive military capability. The third assumption states that intentions cannot be predicted. The difficulty of intentions is in the inability to know how decision-makers will choose to act in the future. Therefore, it is opposite to the capabilities that can be measured. Moreover, the prediction is complicated as it is impossible to be certain who will be a president in the next ten years.

Therefore, the United States needs to be extremely powerful to provide security and avoid other countries’ capabilities and intentions that can cause a potential threat. Mearsheimer states that the United States needs “to make sure you don’t have peer competitors” to be secure (UChicago Social Sciences, 00:18:57-00:19:00). That means that the United States does not want any other country to have such power. Other countries are more focused on their threats, which implies that they are not interested in the Western Hemisphere, which is the goal of the United States. This view presents the basic theory Mearsheimer describes in his lecture. The view makes sense when putting it together with the argument regarding the ability of the country to interfere in other countries’ business, as it explains why the United States wants to remain such an influential country.

Regarding the peers, the United States had four of them: “Imperial Germany, Imperial Japan, Nazi Germany, and the Soviet Union” (UChicago Social Sciences, 00:23:30-00:23:37). The United States contributed to defeating all of the listed unions as they did not want to allow any of them to dominate. This example can be tightened to the theory the speaker presents in the first part of his lecture, as it clearly shows that the United States has not been tolerating peers.

The last argument he brings is that China will imitate the United States as the country will try to maximize its domination to ensure that the power gap between them and other countries such as Russia or Japan is wide. Chinese are powerful enough to imitate the United States as they can supply the military and implement the Monroe doctrine. However, the United States will not allow China to dominate Asia.

He also explains that India and the United States started having better relationships as both countries fear China (UChicago Social Sciences, 00:31:00-00:31:19). Hence, most Asian neighbor countries will be in the balance coalition of the United States as “China is much more of a threat to them than the United States is” (UChicago Social Sciences, 00:31:00-00:31:19). The last issue he brings up is the security dilemma, stating that “anything that State does to defend itself looks offensive to the other side” (UChicago Social Sciences, 00:32:21-00:32:28).

That means that it is challenging to distinguish between offensive and defensive capabilities. Hence, the United States can go into defense, which will make China feel offensive, and the conflict will take place. I believe that this course of events is possible only if China becomes as powerful as the United States. However, I also accept that China may decide to predict the United States’ opposition and choose a different path that does not require conflict with the U.S.

Therefore, the first lecture gives an understanding of why liberal hegemony is doomed and clarifies how it negatively affects society. This understanding helps to explain why the United States is actively involved in warfare and how liberal hegemony is connected to such events, which allows concluding that liberal democracy may not be accurate for every nation. In the second lecture, clear historical examples allow accepting the theory that Mearsheimer presents, and predict the possible course of events in the next 20 years. His assumptions help to reveal a branch of events in which China succeeds and gets into the conflict with the United States, which is one of the possible courses in the future.

UChicago Social Sciences. (2013). Can China rise peacefully? Web.

Yale University. (2017). The false promise of liberal hegemony . Web.

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IvyPanda. (2022, February 10). "The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer. https://ivypanda.com/essays/the-false-promise-of-liberal-hegemony-and-can-china-rise-peacefully-by-mearsheimer/

""The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer." IvyPanda , 10 Feb. 2022, ivypanda.com/essays/the-false-promise-of-liberal-hegemony-and-can-china-rise-peacefully-by-mearsheimer/.

IvyPanda . (2022) '"The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer'. 10 February.

IvyPanda . 2022. ""The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer." February 10, 2022. https://ivypanda.com/essays/the-false-promise-of-liberal-hegemony-and-can-china-rise-peacefully-by-mearsheimer/.

1. IvyPanda . ""The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer." February 10, 2022. https://ivypanda.com/essays/the-false-promise-of-liberal-hegemony-and-can-china-rise-peacefully-by-mearsheimer/.

Bibliography

IvyPanda . ""The False Promise of Liberal Hegemony" and "Can China Rise Peacefully?" by Mearsheimer." February 10, 2022. https://ivypanda.com/essays/the-false-promise-of-liberal-hegemony-and-can-china-rise-peacefully-by-mearsheimer/.

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Guest Essay

China’s Dead-End Economy Is Bad News for Everyone

By Anne Stevenson-Yang

Ms. Stevenson-Yang is a co-founder of J Capital Research and the author of “Wild Ride: A Short History of the Opening and Closing of the Chinese Economy.”

On separate visits to Beijing last month, Secretary of State Antony Blinken and Treasury Secretary Janet Yellen bore a common message : Chinese manufacturing overcapacity is flooding global markets with cheap Chinese exports, distorting world trade and leaving American businesses and workers struggling to compete.

Not surprisingly, China’s leaders did not like what they heard, and they didn’t budge. They can’t. Years of erratic and irresponsible policies, excessive Communist Party control and undelivered promises of reform have created a dead-end Chinese economy of weak domestic consumer demand and slowing growth. The only way that China’s leaders can see to pull themselves out of this hole is to fall back on pumping out exports.

That means a number of things are likely to happen, none of them good. The tide of Chinese exports will continue, tensions with the United States and other trading partners will grow, China’s people will become increasingly unhappy with their gloomy economic prospects and anxious Communist Party leaders will respond with more repression.

The root of the problem is the Communist Party’s excessive control of the economy, but that’s not going to change. It is baked into China’s political system and has only worsened during President Xi Jinping’s decade in power. New strategies for fixing the economy always rely on counterproductive mandates set by the government: Create new companies, build more industrial capacity. The strategy that most economists actually recommend to drive growth — freeing up the private sector and empowering Chinese consumers to spend more — would mean overhauling the way the government works, and that is unacceptable.

The party had a golden opportunity to change in 1989, when the Tiananmen Square protests revealed that the economic reforms that had begun a decade earlier had given rise to a growing private sector and a desire for new freedoms. But to liberalize government institutions in response would have undermined the party’s power. Instead, China’s leaders chose to shoot the protesters, further tighten party control and get hooked on government investment to fuel the economy.

For a long time, no one minded. When economic or social threats reared their heads, like global financial crises in 1997 and 2007, Chinese authorities poured money into industry and the real estate sector to pacify the people. The investment-driven growth felt good, but it was much more than the country could digest and left China’s landscape scarred with empty cities and industrial parks, unfinished bridges to nowhere, abandoned highways and amusement parks, and airports with few flights.

The investment in industrial capacity also generated an explosion in exports as China captured industries previously dominated by foreign manufacturers — mobile phones, television sets, solar panels, lithium-ion batteries and electric vehicles. Much of the Chinese economic “miracle” was powered by American, European and Japanese companies that willingly transferred their technical know-how to their Chinese partners in exchange for what they thought would be access to a permanently growing China market. This decimated manufacturing in the West, even as China protected its own markets. But the West let it slide: The cheap products emanating from China kept U.S. inflation at bay for a generation, and the West clung to the hope that China’s economic expansion would eventually lead to a political liberalization that never came.

To raise money for the government investment binge, Beijing allowed local authorities to collateralize land — all of which is ultimately owned or controlled by the state — and borrow money against it. This was like a drug: Local governments borrowed like crazy, but with no real plan for paying the money back. Now many are so deep in debt that they have been forced to cut basic services like heating, health care for senior citizens and bus routes . Teachers aren’t being paid on time, and salaries for civil servants have been lowered in recent years. Millions of people all over China are paying mortgages on apartments that may never be finished . Start-ups are folding , and few people, it seems, can find jobs.

To boost employment, the party over the past couple of years has been telling local governments to push the establishment of new private businesses, with predictable consequences: In one county in northern China, a village secretary eager to comply with Beijing’s wishes reportedly asked relatives and friends to open fake companies. One villager opened three tofu shops in a week; another person applied for 20 new business licenses.

When mandates like that fail to create jobs, the party monkeys with the employment numbers. When monthly government data revealed last year that 21 percent of Chinese youth in urban areas were unemployed, authorities stopped publishing the figures. It resumed early this year, but with a new methodology for defining unemployment . Presto! The number dropped to 15 percent.

But Mr. Xi’s policy options are dwindling.

With the real estate market imploding, the government can no longer risk goosing the property sector. It has begun touting a revival in domestic consumption , but many Chinese are merely hunkering down and hoarding assets such as gold against an uncertain future. So the government is again falling back on manufacturing, pouring money into industrial capacity in hopes of pushing out more products to keep the economy going. With domestic demand anemic, many of those products have to be exported.

But the era when China was able to take over whole industries without foreign pushback is over. Many countries are now taking steps to protect their markets from Chinese-made goods. Under U.S. pressure, Mexico’s government last month reportedly decided it would not award subsidies to Chinese electric vehicle makers seeking to manufacture in Mexico for export to the U.S. market; the European Union is considering action to prevent Chinese electric vehicles from swamping its market; and the Biden administration has moved to encourage semiconductor manufacturing in the United States and limit Chinese access to chip technologies, and has promised more actions to thwart China.

China won’t be able to innovate its way out of this. Its economic model still largely focuses on cheaply replicating existing technologies, not on the long-term research that results in industry-leading commercial breakthroughs. All that leaves is manufacturing in volume.

China’s leaders will face rising economic pressure to lower the value of the renminbi, which will make Chinese-made goods even cheaper in U.S. dollar terms, further boosting export volume and upsetting trading partners even more. But a devaluation will also make imports of foreign products and raw materials more expensive, squeezing Chinese consumers and businesses while encouraging wealthier people to get their money out of China. The government can’t turn to economic stimulus measures to revive growth — pouring more renminbi into the economy would risk crushing the currency’s value.

All of this means that the “reform and opening” era, which has transformed China and captivated the world since it began in the late 1970s, has ended with a whimper.

Mao Zedong once said that in an uncertain world, the Chinese must “Dig tunnels deep, store grain everywhere and never seek hegemony.” That sort of siege mentality is coming back.

Anne Stevenson-Yang ( @doumenzi ) is a co-founder and the research director of J Capital Research, a stock analysis firm. She spent 25 years in China as an entrepreneur, analyst and trade advocate.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

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3 Can China rise peacefully?

• Published: August 2017
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The case that China must be contained rests on the premise that it is – or is about to – engage in a coercive expansion of its influence in ‘Central Asia, the South China Sea, the internet and outer space’ and it is only a matter of time before China tries ‘to push the United States out of the Asia-Pacific region, much the way the United States pushed the European great powers out of the Western hemisphere in the 19th century’. China’s rise is cast as dangerous for the security of its neighbours and world peace, with the only guarantee of regional and global stability the maintenance of the leading role of the US, particularly in Asia itself. This chapter examines the truth of these claims in the light of the China’s own explanation of the direction of its foreign policy. It argues that while China’s foreign policy has become more emphatic in pursuing its international interests, especially relating to trade and energy security, that there is a great deal of difference between greater confidence in pursuing China’s national interests and a new aggressive stance.

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Putin backs China's Ukraine peace plan, says Beijing understands the conflict

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Reporting by Ron Popeski in Winnipeg; Editing by Lincoln Feast.

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Dozens of countries signing up for Ukraine peace summit, Switzerland says

Switzerland has had over 50 registrations from the more than 160 delegations the neutral country has invited to a summit next month that Bern hopes will pave the way for a peace process in Ukraine, President Viola Amherd said on Wednesday.

Russian missile and guided bomb strikes on Ukraine's southern cities of Mykolaiv and Kherson injured at least 25 people, local officials said on Wednesday.