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FINANCIAL TIMES
The US, China and the return of a two-bloc world
Technology, not military power, will be the basis for this
new global split
GIDEON RACHMAN
During the cold war, there was an “east” bloc and a “west” bloc and
nations were defined by whether they were closer to Washington or
Moscow. Now,
nearly 30 years after the fall of the Berlin Wall, rising tensions
between the US and China are re-creating a geopolitical dividing line.
And countries are increasingly expected to make clear whether they stand
with Washington or Beijing. The
latest example of this came last week, with the news that Italy is close
to becoming the first G7 country to sign a memorandum of understanding
endorsing China’s giant infrastructure project, known as the Belt and
Road Initiative. Within hours, a White House spokesman had criticised
the BRI as “made by China, for China”, and suggested that it would bring
no benefits to Italy. The Chinese foreign minister fired back, reminding
the Americans that Italy is an independent nation. President Xi Jinping
is planning to visit Italy later this month to seal the deal. The
tug of war over Italy underlines that the US-Chinese rivalry is now
global. China’s economic and political pull reaches well beyond its
Asian hinterland and stretches deep into Latin America and western
Europe, areas that were once seen as naturally part of the American
sphere of influence. This
Sino-American struggle is also increasingly overt. The Trump
administration’s decision to launch a trade war on China ended the era
when both sides could insist that trade and investment were neutral
territory that could be kept separate from strategic rivalry. At the
same time, the sheer ambition of the BRI has stoked fears in Washington
that China is entering a new phase in its rise to great power status. If
the BRI succeeds it will link the whole of the Eurasian landmass much
more closely to China, potentially undermining the importance of
transatlantic links. In
Washington, big Chinese investment projects are now routinely scanned
for their strategic implications. The fact that Chinese firms are
investing heavily in ports around the world is seen through the prism of
an emerging naval rivalry with the US. And the international expansion
of Huawei, the Chinese telecoms company, has become part of a broader
struggle over technological supremacy and espionage. American officials
have spent recent months imploring their allies not to allow Huawei to
run 5G networks, arguing that this would be an intolerable security
risk.
Several key US allies, including Japan and Australia, have already taken
the American line on Huawei. But others, such as Britain, are still
thinking about it. If the British allow Huawei in, they will be taking a
security risk that could damage their precious intelligence-sharing
arrangements with the US. But if they block Huawei, British hopes for a
post-Brexit trade surge in trade and investment from China will be at
risk.
Getting squeezed between Washington and Beijing can be very
uncomfortable. After Canada obeyed an American extradition request and
arrested Meng Wanzhou, the chief financial officer of Huawei, the
Chinese response was fierce. Within days, Canadian citizens were
arrested in China, and Canadian executives are now wary of travelling
there. Similarly, when South Korea agreed to a US request to deploy an
American anti-missile system called Thaad, Chinese tourists were
directed away from South Korea and stores owned by Lotte, a South Korean
retailer, were shut in mainland China after failing “safety
inspections”. The
fact that China is increasingly willing to put direct pressure on US
treaty allies is testament to the growing confidence of Beijing. That,
in turn, reflects a shift in economic prowess. When countries along
China’s Belt and Road consider whether to accept Beijing’s
infrastructure packages, there is almost never a counter-offer from the
US to consider. Nor is there yet an American firm that can offer an
alternative to Huawei’s 5G technology. In
the battle for influence with China, the US’s trump card is often
security rather than trade. Countries including Japan, South Korea,
Germany and Australia now all do more trade with China than the US. But
they all still look to America for military protection. The
US could undermine this security advantage if President Donald Trump
goes through with his reported desire to charge allies for American
protection. But China is not currently in the business of offering
security guarantees. As a result, an emerging two-bloc world is unlikely
to be based around rival military alliances as it was in the cold war,
when the Warsaw Pact faced off against Nato.
Instead, it is technology that could become the basis of the new global
split. China long ago banned Google and Facebook. Now the US is
struggling to thwart Huawei. With concern mounting over the control and
transfer of data across borders, countries may increasingly come under
pressure to choose either the US tech-universe or the Chinese version —
and they may find that the two are increasingly walled-off from each
other. But a division that started with technology would not stay there.
Data and communications are now fundamental to almost all forms of
business and military activity. The
two-bloc world of the cold war was replaced by an era of globalisation.
Now globalisation itself may be threatened by the re-emergence of a
two-bloc world. |