Diplomat and historian George F Kennan, writing as “Mr X,” sent an 8,000-word telegram to the US State Department in 1946 about Joseph Stalin’s aggressive foreign policy, warning “there would be no permanent peaceful coexistence” between the United States and Soviet Union, whose analysis provided an influential underpinning for America’s Cold War policies. On the Soviet challenge to the US-dominated capitalist and liberal order, Kennan wrote, “the main element of any United States policy toward the Soviet Union must be that of a long-term patient but firm and vigilant containment of Russian expansive tendencies.”

The Soviet Union, historically one of the most powerful rivals of the United States, collapsed decades ago. Nonetheless, as author Mark Twain reputedly said, “History often rhymes”, and threats to the US-led liberal international order have not yet been eliminated.

China is a member or signatory to hundreds of global institutions, conventions, treaties, agreements and committees. (Rand Corporation, 2018)
China is a member or signatory to hundreds of global institutions, conventions, treaties, agreements and committees. (Rand Corporation, 2018)

The current order wrestles with both external interference and internal division. On one hand, the US leadership faces widening bifurcation between “American first” policies and keeping to the path of globalisation. On the other hand, a growing China dangles strength with assertive industrial policies and barely disguised ambition to transcend its rival, interpreted by some as the harbinger of a new Cold War between China and the United States.

There are many ways to address the question on whether China challenges the current world order – from Beijing’s intentions or its de facto role in the current system. Many express concern that China is likely to challenge US leadership, and incantation of a “China threat,” the title of a book by Bill Gertz, recalls the Cold War era.

Minxin Pei, a political scientist, likewise claimed China is “undermining the Western liberal order” in terms of ideological threats. Meanwhile, China, once a poor and weak country, now sets rules for a number of industries from infrastructure to AI technologies and from trade regulation to international law. For example, Huawei, a China-based telecommunications equipment company, has been a leading actor in the 5G network.

The answer to this complicated question can be divided into three layers: China reshaping itself to engage actively in the current world order, rising and gradually asserting its global influence while also contributing innovations.

The current world order, renovated at the end of the Cold War, has operated for decades under US dominance. Political democracy and capitalism market economy are the most prominent characteristics, with the United States and the European Union typically supporting democratic movements and globalisation, regarded as liberal values that strengthen ties and foster respect for the rule of law both within and among countries. Free trade, the engine of economic growth, binds countries together so that war is deemed too costly to wage.

In retrospect, China abandoned its Soviet-like planned economy model in 1978, starting market-oriented reforms and gradually opening the market to private and foreign sectors. China partially adjusted its financial institutions and industrial establishment, and became a major component of the current order. The government ultimately lifted price controls and actively engaged in the global trade system, joining the World Trade Organisation in 2001 and becoming a major exporter. During the recent waves of anti-globalisation, China portrays herself as a firm advocate of multilateralism and free trade with President Xi Jinping repeatedly emphasising that economic globalisation is “inevitable and irreversible”.

Furthermore, China is one of five countries with a UN Security Council veto, and welcomes development support from international institutions, such as the World Bank and the International Monetary Fund. China is now the second-largest funder of UN peacekeeping forces, participating in multiple UN programs. In 2015, Beijing joined with Washington in developing new norms for dealing with climate change and cyberspace conflicts. China’s economic institutions are still complicated, distinguished from those in western countries with its conspicuous state intervention. In general, China so far cannot overthrow or challenge the current world order, from which it receives significant benefits. Rather, China adapts.

Secondly, a rising China exerts global influence in many areas. Despite an authoritarian regime, China has achieved rapid economic growth, gaining stakes to fill the power vacuum caused by wavering US positions. According to the Atlantic Council, the United States still maintains a lead in global influence, but its share is declining. Not only in East Asia, but also outside the region, including in NATO member states and parts of Africa, China has surpassed US influence.

The United States is cutting support to a number of international institutions and agreements. For example, the Trump administration announced US withdrawal from the 2015 Paris agreement on climate change, denied the value of global cooperation to tackle global warming and abandoned the Iran nuclear deal. Despite an onslaught of criticism, the United States left Unesco and the UN Human Right Council, cutting $1.3 billion from the UN budget while suspending support for some refugee programs. The US played a crucial role in global politics and its absence, regardless of reasons, will leave many problems unresolved and others in disarray.

Source: Atlantic Council
Source: Atlantic Council

Meanwhile, China increases its influence on the international stage with financial backing. China’s UN contribution will rise to just over 12% for the period 2019 to 2021, granting the country more power in international affairs. China’s voting rights in the International Monetary Fund have increased, and it holds a deputy director position.

In Europe and the United States, Chinese expansion of overseas investment, both in terms of quantity and quality, reflects the Chinese economy’s growing sophistication and desire for greater global influence. In particular, the fact that Chinese foreign direct investment targets cutting-edge technologies and the role played by the Chinese government in mergers and acquisitions has prompted an urgent response to determine if Chinese investments threaten EU security and public order.

In the United States, China also utilises methods such as co-optation and acquisitions to complete corporate transfers. Many of these technologies – such as supercomputing, artificial intelligence, robotics, semiconductors, drones, hypersonic and 3D printing – will help determine the future of global economy.

Chinese and American scholars devote particular attention to analysis of the international order in anticipation of the changes that China’s rise might bring, with anxiety over redistribution of power. The United States defends its international dominance from shrinking and China seeks to strengthen its international influence, the so-called Thucydides trap.

Thirdly, with growing economic strength, China is gaining confidence to provide innovations to the current order, pointing out that maintaining the current system is not enough to cope with emerging challenges. For example, with globalisation, trade does not benefit all countries. The income gap is growing between developed and developing countries, rich and poor, South and North. Chinese leaders repeatedly stress that China remains a powerful supporter of the current order, taking action not to replace existing organisations, but supplementing them to strengthen that order.

China is building the Asian Infrastructure Investment Bank, with more than 65 countries signing on as members. The new institution provides funding for China’s ambitious Belt and Road Initiative, aiming to enhance regional connectivity and prosperity. On this basis, China has proposed the concept of building a “community of human destiny”, a natural result of interactions between China and the international order. China portrays itself as a responsible alternative, rejecting trade protectionism and economic nationalism.

One way or another, China’s rise challenges the balance of the US-led order, among the many forces contributing to its deterioration including refugee crises, climate change, and terrorism. The United States does not offer a grand narrative appealing to large majorities domestically, much less to other states. A new equilibrium is underway, and the process will last until the United States and China find a balance on power.

Xueying Zhang is a Fox Fellow at Yale University. She is pursuing her PhD degree in International Relations at Fudan University, China. Her research interests include East Asia economic strategies, international institutions, and the world order. She is also devoted to youth contributions to global affairs and represented China in the G20 Youth summit 2017.

Yue (Hans) Zhu is a graduate student at Yale Economics Department whose concentration is public policy and development economics. His current research focuses on China’s state-owned enterprises reform and economy’s efficiency improvement.

This article first appeared on YaleGlobal Online.