Yan Xuetong on Counter-Globalization and China’s Foreign Policy
The Tsinghua IR professor's recent lecture at the Danube Institute in Budapest, Hungary.
Professor Yan Xuetong of Tsinghua University gave a lecture entitled “Counter-Globalization and China’s Foreign Policy” on April 18, 2024, at the Danube Institute in Budapest, Hungary.
Prof. Yan is serving as the Dean of The Institute of International Relations at Tsinghua University. He obtained Ph.D. from the University of California, Berkeley in 1992 and was named one of the world's Top 100 public intellectuals by the American journal Foreign Policy in 2008. He has been listed in Most Cited Chinese Researchers by Elsevier since 2014. Some of his books have been translated into English, Japanese, Korean, Farsi or Albanian.
Prof. Yan’s lecture was on the intersection of counter-globalization, China's foreign policy, and the evolving global order, focusing on the implications and strategic responses in the digital age. It starts by linking counter-globalization with China's foreign policy, emphasizing that these topics, while seemingly distinct, are closely interconnected due to the changing global dynamics.
He reflects on China's position in the global power structure and its strategic adaptation to current international trends, particularly the rhetoric around a new Cold War. The term "Cold War" is critically analyzed, suggesting it traditionally refers to ideological competition rather than mere geopolitical rivalry. Prof. Yan argues that the conditions and dynamics of the Cold War era are fundamentally different from today's geopolitical climate, particularly highlighting the digital age's influence on international relations and power competitions.
In addressing the notion of "Cold War" dynamics, Prof. Yan shifts to the concept of counter-globalization, which has emerged in response to globalization's impacts on democracy and marketization. It outlines how recent geopolitical events, like the UK's Brexit and the US's trade policies, have contributed to a shift away from the principles of a free-market economy, emphasizing the role of "decoupling" policies in reducing economic interdependencies among nations.
He also criticizes the decline in respect for human rights, particularly pointing to the conflict in Gaza as an example of the international community's failure to uphold human rights norms. This shift is contrasted against the historical liberalist order that emerged post-World War II, which prioritized human rights and economic cooperation.
Turning to the digital economy, Prof. Yan underscores its growing importance and how China must prioritize its development to remain competitive, particularly against the US. The discussion elaborates on how advancements in digital technology and artificial intelligence (AI) are critical not only for economic growth but also for national security. The focus then shifts to the US's strategic approach towards China, which involves limited containment rather than the broad strategies used during the Cold War with the Soviet Union.
Furthermore, he explores China's strategic goals to shape a favorable geopolitical environment and its challenges due to the US's strong alliance network. It advocates for China to engage constructively with the international community to establish norms and rules that are not solely dictated by US interests.
Lastly, Prof. contemplates the shift from globalization to counter-globalization, attributing it to growing inequalities and the rise of populism, which challenges the liberalist norms that have governed international relations in the post-Cold War era. The speaker calls for a critical examination of current trends and policies that promote de-globalization and advocates for efforts to reverse these trends towards a more cooperative and progressive global order.
The following text has been edited for brevity and clarity and has been reviewed by Prof. Yan.
It is my pleasure to have the opportunity to share my thoughts on international relations with all of the distinguished guests here today. The topic we have chosen to discuss is counter-globalization and China's foreign policy. Although these may seem like two distinct topics, they are in fact closely related. The reason we are discussing counter-globalization is because of the changing global landscape that everyone is talking about. As we try to understand where the world is heading, it is important to examine the global order and China's role in shaping it. In fact, during my recent trip to Europe, I was asked numerous questions about China's foreign policy and its impact on the global order.
When we talk about the global order and China's foreign policy, we must consider how China adapts its approach based on the prevailing trends and circumstances. Currently, there is a debate about whether we are headed towards a new Cold War, with many citing the competition between China and the United States as evidence. However, the question remains: can we define the global order solely based on power structure? In other words, is it possible to avoid a Cold War in a multipolar world, or could a Cold War arise even in such a scenario? These are important questions to consider as we seek to navigate the complex landscape of international relations.
The topic at hand is of utmost seriousness, and it is imperative for China to consider its status, the core of the competition, and the role played by other countries in shaping the global order. In my personal opinion, the term "Cold War" is meant to describe a specific competition between major powers in history and is not indicative of any special type of competition between them. Thus, it is worth pondering why we never use the term Cold War to describe the period between World War I and World War II or before World War I. My understanding is that the "Cold War" mainly refers to the competition between major powers for ideological expansion. For thousands of years, major powers have competed for power, but each time, the dynamics behind the competition are different. During the Cold War, major powers competed for ideological expansion, which meant turning other countries into the same political system or ideology as the great power itself. The belief was that if more countries adopted their political system, they could win the competition.
Do you agree that the current state of affairs can be likened to a "Cold War?" If we accept this premise, then China must evaluate whether it is one of the poles in this bipolar world and a key competitor. Should we vie with the US for ideological dominance? And can such expansion actually help China win this competition? This is my perspective, but I don't believe that any side can come out on top by expanding their ideology.
The reason for this is quite simple: we now live in the digital age. Ideology is no longer the tool that helps you keep up with advancements in technology. If you cannot develop more advanced digital technology, then you cannot win the competition. Proxy wars were once useful for expanding ideology, as they allowed you to change the regime of a country and make it more similar to your own. However, today you can change a country's regime without necessarily achieving greater technological advancements than your rivals. You can occupy land, but this doesn't necessarily mean that you can generate more wealth or make progress with your technology faster than your competitors. Proxy wars are outdated and won't help any major power become stronger. So, what characterizes the global order today? The Cold War existed before globalization, and therefore represents a historical period of pre-globalization. We are now in a new age called "counter globalization," a term that could not have existed before globalization. The current global order is defined by the main feature of this counter-globalization. So, how do we define this counter-globalization?
Globalization consists of two main aspects: democratization and marketization. Marketization does not mean promoting your own economy domestically, but rather joining the global marketized economy. Since the Cold War, we have seen an increase in economic cooperation among major powers and international cooperation, resulting in rapid wealth accumulation in just 20 years, which is much faster than the previous century. In terms of political aspects, globalization is centered around the norms of sovereignty established after World War II and based on the UN Charter, which was further strengthened after the Cold War with the acceptance of the concept that human rights should be protected. The government's responsibility has shifted from solely protecting national security to also protecting individual security, under the concept of R2P (responsibility to protect). The post-Cold War period is labeled as a liberalist order due to these two basic norms: a free market economy with free trade and investment, and the protection of human rights.
The current state of international cooperation has undergone a significant transformation with the implementation of the decoupling policy, which has considerably weakened the principle of free markets. Decoupling refers to the reduction of international cooperation between certain countries, which has been attributed to the UK's withdrawal from the EU, thereby reducing economic interdependence. The US is often attributed as initiating the trade war against China in 2008; however, this is not entirely accurate as the UK was the first to implement the decoupling policy. In 2022, the conflict in Ukraine resulted in the EU prioritizing its economic security and developing the concept of "de-risking," which was inspired by the US's "de-coupling" policy. Essentially, the decoupling policy entails the segmentation of the global market, marking an end to free trade principles at a global level.
From a political perspective, the respect for human rights has declined considerably in recent years. This is particularly evident in situations like the Gaza conflict, where Israeli troops killed numerous civilians, including women and children. Policymakers in Washington and European capitals have shown little to no empathy for the loss of life, and human rights violations have become increasingly common. While it is true that Hamas killed thousands of Israeli civilians, killing innocent civilians to punish criminals is a violation of human rights. The argument that Hamas used civilians as human shields does not justify the killing of innocent people. This is a principle that even Hollywood directors uphold in their movies, where police officers are not allowed to kill innocent bystanders to apprehend criminals. The United Nations has passed resolutions that state that governments have a responsibility to protect the lives of civilians in other countries, not just their own.
It is worth noting that the majority of the world has accepted human rights norms, which prohibits the police from killing civilians even if they are being used human shields. The trend towards globalization has been halted, not only in terms of the economy and climate change, but also in consolidating human rights norms. While it is difficult to make any value judgments, it is essential to question how to manage this transformation. Should we push forward with this trend, or should we slow it down? The historical trend is often powerful, and human beings may not be able to solve it. However, it is still essential to consider whether we should follow this trend or do something to slow it down.
Moreover, the digital age has brought about significant changes. The wealth and security of human beings are now inextricably linked to cyberspace, which is an area we have never experienced before. Digital technology has given rise to the digital economy, which accounts for an increasing share of the GDP, not only in one country but globally. As such, cyber security has become an essential part of both national and individual security, and digital technology plays a critical role in this regard. All of this is based on the progress of digital technology, which makes it increasingly important to consider cyber security as a vital aspect of security in the "natural space."
The focus on the development of digital economy is a crucial component in maintaining a strong and growing economy. China recognizes this and acknowledges that in order to compete with other nations and achieve economic growth, it must prioritize the development of its digital economy. The increased growth rate of the digital economy is 1.5 times greater than the global GDP. This means that the more a country invests in its digital economy, the faster it accumulates wealth. The US, Germany, Japan, and Hungary have all seen similar results in terms of economic growth as a result of prioritizing digital economy development. Additionally, advanced digital technology is essential for protecting cyber security. Countries that lack this technology are vulnerable to cyber attacks, making the development of digital technology a national security concern.
China's foreign policy is driven by the desire to remain competitive with the US in terms of technology innovation. However, current international relations reveal that the US has more strategic partners compared to China. China adheres to the non-alignment principle while the US fosters military alliances. Despite this, considering the GDP pie chart, the US accounts for 24% while China accounts for 17%. This translates to a significant economic gap between the US and other countries. In the next decade, both China and the US will continue to expand their economic gap with other powers. If the US increases its GDP by 1%, other countries will have to increase their GDP by 5% to match it. If the US increased by 2%, other countries would need to increase their GDP by 10%.
In light of these projections, it is likely that the Bipolar Configuration will be strengthened rather than weakened. China cannot rely on anyone as a human shield in this scenario. It must face the fact that the US will consider China a major rival regardless of who is elected president.
The question of which US president is preferred, Biden or Trump, is one that I am frequently asked. My response has consistently been that, regardless of who holds the position, the perception of China as a major rival will remain unchanged for the next decade. Therefore, it is imperative that we accept this reality and that China acknowledges the fact that the US has significantly more allies than it does. Consequently, our strategic position and balance of power are currently at a disadvantage, and we must address this issue. Should the world continue to progress positively, we can expect to see an increase in human rights, morality, and cooperation. Fortunately, such progress is relatively beneficial for China.
Regrettably, history has taken an "U-turn" for the worse, with a significant regression in recent years. The Chinese government has coined the term "profound changes unseen in a century" to describe this transformation, which poses a considerable threat to China's modernization, development, and national rejuvenation. Over the last century, there has been a linear progression from traditional industries and labor-intensive enterprises to capital-intensive, technology-intensive, knowledge-intensive, and now data-intensive businesses. Similarly, our political relationships have undergone significant shifts. The period before World War 1 was characterized by 100 years of peace, followed by World War 1, which resulted in the deaths of over 10,000 people. After 22 years of peace in the inter-war period, World War 2 began, resulting in millions of casualties. The Cold War was a marked improvement over the previous two wars, with fewer casualties, although millions of lives were still lost. Despite the existence of proxy wars, no major global conflicts occurred during the Cold War. Post-Cold War, each war has resulted in fewer civilian deaths. However, the recent surge in civilian casualties in conflicts such as the war in Gaza is alarming, with over 30,000 deaths recorded within three months. This represents a historical high for the post-Cold War era.
The measurement of progress in history is a topic that has generated significant debate. While some argue that it should be determined by factors such as industrial and technological development, others contend that the value of human life must be taken into account. In this regard, the use of casualty as an indicator has been proposed to assess whether history is moving forward progressively or stepping back.
China, for instance, must be aware that the world may not continue to make progress, but may turn towards a negative trend, which is termed as counter-globalization. Therefore, it is vital that China adapts its foreign policymaking to the specialty of the digital age. This is because the digital economy differs significantly from the traditional economy that is based on natural resources. In the digital economy, data, which is an artificial resource, is the main source of wealth. Unlike natural resources where consumption leads to depletion, data generation increases with consumption. Even everyday activities such as taking taxis and purchasing goods can generate data, which can be analyzed, categorized, and made usable through digital technologies.
Data analysis has become a discipline that is being taught in universities, and data analysis jobs are now available. Once data becomes usable, it can be marketized through technology, such as selling data, using data to produce goods and services, and then consuming those goods and services to generate wealth and more data. This cycle enlarges the data "reservoir" and induces more data marketization, leading to exponential growth of the digital economy. Therefore, it is necessary to appreciate the magnitude of the digital economy for the success of progression. Failure to realize this cycle of data and wealth will make it impossible for China to compete with the US in the coming decade. The economic competition between China and the US will focus on data technologies, and the speed at which a nation can integrate these technologies and generate wealth with them will determine its capability.
Moreover, the importance of artificial intelligence (AI) in generating wealth and protecting security cannot be overemphasized. AI-powered machines and weapons are already being used on the battlefield, and productions can be empowered by AI, with an individual, with the help of robots powered by AI, able to produce products equivalent to a factory. This demonstrates how powerful AI can be in generating wealth. Consequently, China must focus on competing with the US in AI rather than ideological confrontation. Failure to do so will only hurt its development and undermine its progression. As such, China has expressed no interest in ideological confrontation with the US, regardless of the latter's stance or actions.
Then how about the US? The United States' containment policy towards China is distinct from its previous containment strategy against the Soviet Union. While the containment of the Soviet Union was all-encompassing, involving technology, education, culture, military, and sports, the one of China is not as comprehensive. The US views an all-encompassing containment of China as unnecessary, and recognizes the need for the Chinese market. Therefore, the competition between the US and China is limited to technological progression and innovations, with the US employing the "small yard, high fence" strategy. This strategy involves the creation of a technological development club with a select few of its allies, excluding China. By working with its allies to develop their technology, the US seeks to prevent China from catching up in speed.
Although the US government has claimed that it has no intention of decoupling from the Chinese economy, this statement is only partially true. The US needs the Chinese market to consume its products, particularly chips, of which China is the largest consumer. However, why would the US want to help China improve its digital economy by selling chips to it? This is because data technology requires swift integration, which necessitates continued investment in research and development (R&D). The money for R&D is generated from selling products for profits and then channeling the profit back into R&D. The competition, therefore, lies in the repetition of this process.
It should be noted that the Biden administration has abandoned the term "globalization" in official documents, signaling a shift away from advancing and advocating globalization. The US government views globalization as no longer favorable to the country, but instead to China. The administration now uses the term "internationalization" to describe relationships involving more than two countries. This shift represents a significant downsizing from globalization. With the US withdrawing from globalization, counter-globalization has become impossible to halt. The US defines China as a major competitor, and its containment strategy is unlikely to change. Currently, the US is partially decoupling from China and employing the "Small yard, high fence" strategy at a multilateral level.
The following discussion pertains to the ideological and strategic interests of China and the United States. While some suggest that the primary source of tension between the two nations is rooted in ideological differences, this view is not entirely accurate. For instance, countries like Vietnam and Saudi Arabia, which are not democracies, are still considered as US allies. Thus, the US uses ideology as a tool to garner support against China, but it is not necessarily a core value that guides its foreign policy. This is evidenced by the US's disregard for democracy and human rights in Gaza, where the strategic objective superseded the ideological one.
Similarly, China's unique political model, which is often referred to as "Chinese characteristics," is not intended for global expansion. Unlike the Soviet Union during the Cold War, China does not seek to promote its ideology worldwide. As such, ideological confrontation with the US is not a priority for the Chinese government.
In terms of strategic objectives, China's low-level goal is to avoid a Cold War, which is perceived to be more favorable to the US than China. Rather than engaging in a Cold War, China seeks to work with the US to prevent it. However, this requires that both countries refrain from ideological competition. A mid-level goal for China is to prevent the widening of the power gap between the two nations, particularly in areas such as technology, military, and culture. While China has made progress in some of these areas, achieving parity across all fields would be challenging.
China's highest strategic goal is to shape a favorable geopolitical environment, but this is also the most difficult to achieve. The US was able to shape the global environment during the unipolar era, but China does not possess the same level of status or capability. Furthermore, the US has many allies in the Asia-Pacific region, making it difficult for China to shape the regional order. While some have voiced concerns about China's intentions to establish a new order in the region, it is challenging for China to do so without facing opposition from the US and its allies.
The US emphasizes the importance of establishing an order based on rules, but China also believes in the necessity of having rules to maintain order. However, the US chooses which rules to follow based on its interests, which can lead to inconsistency and confusion. In this context, China could work with other countries to develop a set of rules for global issues that are not dictated by the US's interests. Although this would be a challenging task, it could help China shape a more favorable geopolitical environment. Nonetheless, the US's allies may not be supportive of China's involvement in this process.
I would also like to delineate and summarize the differences between the Cold War order, post-Cold War order, and the upcoming world order. Global order is contingent on three parameters, namely value, norms, and power distribution. During the Cold War, a value competition ensued between capitalism and communism. Subsequently, American liberalism values emerged as the dominant force, leading to the rise of the free-market economy and human rights norms. However, the liberalism principles are no longer preeminent in the world. Populism has emerged as a potent force, undermining liberalism's principles, not due to socialism or communism but because of the rise of populism. Western democracies have witnessed populism's rise, leading to challenges for liberalism at the domestic level. Consequently, advancing liberalism at the international level has become increasingly difficult. The sovereignty norm governed nation-states during the Cold War, and human rights norms gained prominence post-Cold War. However, the influence of both norms has dwindled, and their ability to govern countries' behavior has been severely compromised.
The power distribution during the Cold War was bipolar, with the Soviet Union and the US dominating the global power distribution. In the post-Cold War era, the US emerged as the sole superpower, dominating the global power distribution. However, presently, power is decentralized, but there is still a significant gap between China and the US, leading to an uneven distribution of power.
The question that remains is why did the world move from globalization to counter-globalization? This is a common puzzle that academia wants to unravel. I argue that globalization led to polarization at the international and domestic levels. The G20 countries now account for 85% of the global GDP, leaving the rest of the world with only 15%. The discrepancy has led to dissatisfaction among the non-G20 countries. In developed countries, globalization has caused significant wealth gaps between the rich and middle-class, leading to middle-class dissatisfaction. This dissatisfaction has led to the rise of populism, which is against liberal elites advocating globalization. Populist leaders, disguised under the banner of "economic security," address people's concerns by anti-immigration and anti-foreign investment measures. The concept of economic security is unhealthy and negative as it lacks a clear definition, scope, and boundaries. Policymakers use this concept to legitimize policies reducing international cooperation. Major powers have adopted de-globalization policies in the name of economic security, leading to counter-globalization becoming a trend. We are presently in an unhealthy age where the world has stopped moving forward. Every country and individual should contemplate ways to reverse this trend.
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