How the US’ retreat and China’s rise changed the world in this decade
The decade was marked by the US retreat from its traditional commitments; the rise of economic protectionism, nationalism, illiberalism; and the emergence of China as the other pole in the global order
Exactly a century ago, in 1919, US President Woodrow Wilson, in the backdrop of the first World War, decided that there had to be a new way of governing the world. From the anarchy that prevailed in the international system, it was time to devise both a set of principles — he came up with 14 — and an institutional framework to guide inter-state relations.
The world, devastated by the war, saw potential in the idea to establish sustainable and just peace. At the Paris Peace Conference after the war, which eventually culminated in the Treaty of Versailles, the US president himself presided over the committee to draft the covenant of what came to become the League of Nations, the precursor to the United Nations.
But there was a twist. The US Senate did not ratify the Treaty, and the US did not join the League. The architect of the international organisation could not convince his own country. This stemmed from a range of reasons, including the terms of the Treaty. But fundamentally, while Wilson represented a school of thought rooted in viewing US interests as inextricably tied with developments in the rest of the world, which saw the US as a leader of the global order and which believed in greater international engagement, there existed isolationists who saw US interests being best served by keeping away from the turbulence elsewhere and focusing on the domestic realm.
This tussle between the two schools has been a strand in the US through its modern history, but hundred years after the isolationalists trumped Wilson, they again regained the upper hand in the United States — partially during Barack Obama’s administration, but substantially during the presidency of Donald Trump. This manifested itself in the partial retreat of the US from its role as the international system’s security provider, as the lynchpin of global commons, and as the force pushing its own values in the world — notwithstanding the fact that the US does remain the most dominant political, economic and military power in the world.
And this US ambivalence about its global role, which goes beyond merely Trump’s presidency as seen in the policy positions of a range of Democrat leaders, will, perhaps, rank as the fundamental change of this decade. It has been accompanied with, is a reflection of, and has shaped, the rise of economic protectionism and end of the globalisation dream; the ascent of nationalism and illiberalism; and the return of a more uncertain, even anarchic, international order. And of this order, the most significant element is the emergence of another pole in global politics — China, the effort to constrain its exercise of power, and the weakening of multilateralism at a time when the world needs it the most, for the world is confronting its most serious challenge, one that goes beyond the purview of one nation-state — the climate crisis.
To understand this decade, go back to the end of the last decade. The 2008 global financial crisis — which began with a subprime mortgage crisis but eventually hit banking, finance, manufacturing, investment, and employment across the board, but particularly in the developed countries of the modern capitalist world — caused deep anxieties. Governments responded by providing stimulus. Keynesian principles — after two decades of the steady withdrawal of the state from core economic activities — were rediscovered, as public money was pumped in to revive the economy.
There was, indeed, a degree of recovery, more in the US than in Europe, where smaller countries struggled to meet the aspirations of citizens while complying with fiscal discipline. But something had changed.
Citizens of the West, particularly the working class, began questioning the fundamentals of the economic order. Who had benefited from the era of global economic integration? Didn’t trade help workers elsewhere, at the cost of jobs at home? Didn’t the entire world of abstract finance only benefit elites within their countries, who monopolised a disproportionate share of the wealth without anything tangible to show for it? Hadn’t the relatively liberal flow of labour ended up giving access to citizens from elsewhere to opportunities in their countries, while they lagged behind? Why are we fighting wars elsewhere when there is so much to do at home?
These were questions the global Left had been asking of the entire economic paradigm since the Reagan-Thatcher era. But when these questions began to assume a greater political salience, it was the Right which came up with its own set of answers — for many, these were flawed answers, but they were answers nonetheless which tapped into the raw anxieties of a large section.
Their answers were deceptively simple. Yes, trade deals had hurt workers and helped China; yes, immigration — both legal and illegal — had hurt those native to the homeland; yes, it was time for tighter borders; yes, an elite had hurt the economy and it was time to take the country back.
These answers, then, took the form of electoral outcomes, be it the victory of Brexit in the United Kingdom or Donald Trump in the United States, and translated into a set of policy prescriptions that have shaken the very foundations of the global economic order. The global flow of goods, services and labour was no longer as smooth. global trading arrangements like the World Trade Organisation became passé. Trade deals were reviewed. Borders were more closed. They also had a political impact in these societies. Suddenly, liberalism was conflated with elitism. Minorities were frowned upon at best, and even worse, discriminated against or expelled. Institutional constraints on power — be it in the form of a free media or civil society activism — were seen as impediments.
And these answers had an impact on the world order. Under Obama, the US decided it would not intervene militarily in Syria. Under Trump, talks were initiated with the Taliban to extricate the US out of Afghanistan. Older alliances — be it the North Atlantic Treaty Organisation or bilateral security arrangements with a range of partners — were suddenly uncertain. Regional forces began to reassert themselves and rivalries shaped their geographies — the Iran-Saudi tussle, for instance, has had an impact on every West Asian country. The old order was collapsing.
But there was one clear, indisputable, element of the emerging new order — China.
Since Deng Xiaoping’s economic reforms four decades ago, it had been clear that China — with its size, population, its historical footprint, its self-imagination as the central kingdom and as a victim of an unfair international order — would no longer be relegated to the margins of the system. But it adopted an approach that rested on domestic political consolidation of the Chinese Communist Party and a relentless focus on economic growth, while convincing the world that its rise would be peaceful and it had limited interests elsewhere. This changed over this decade. And it changed under the leadership of Xi Jinping, the strongest figure since Mao in modern China. The 2008 economic crisis was a sign to Beijing that the West was losing its dominance. It became more confident of its strengths. It redefined its interests in Asia, particularly in the South China Sea and even the Indian Ocean; it began confronting rivals such as Japan and India; it invested politically and economically in South Asia; it became a geopolitical player in Afghanistan and West Asia; it intervened more energetically in Africa; it even began shaping the politics and economy of regions as varied as Australia and parts of Europe. But its power projection was most visible with its announcement of the Belt and Road Initiative — an ambitious connectivity plan spanning both land and the water.
There was a pushback, however. The US was down, but not out. And its older policy — where its cooperative element with China surpassed its competitive element, where it had even enabled China’s rise with economic interlinkages, and where it had hoped that economic freedoms would eventually pave the way for political reforms and freedom in China — gave way to a consensus that China was the real threat to its power and values. Neighbours, particularly Japan, began seeing the dangers in China’s untrammelled rise — and Tokyo moved away from its pacifist policy to a more assertive approach, including by building its military strength. India saw that while it needed a working relationship with China, its historical border dispute, the Tibet factor, its soaring trade deficit and China’s steady inroads in its neighbourhood could no longer be wished away. South-east Asian nations, particularly Vietnam, too recognised the need to do business with China, but also was more acutely aware of how its dominance would erode their own sovereignty. Smaller countries began to get trapped by Chinese debts for unviable projects. There was concern in Australia about Beijing undermining its political system.
Very tentatively, collaboration grew between these countries to constrain China — not “contain” it, for they all recognised China’s rise was structural and inevitable. The Quad — a grouping of the US, Japan, Australia and India — was quietly revived. All of this, it was hoped, may slow Beijing’s aggression, would make it fall in line with the current rules of the international order. But none of this — it must be emphasised — have taken strong roots, for no one quite has the capability or the intention to confront China beyond a point.
A NEW DAY
But all of this — the US retreat, the churn in Europe, the Chinese rise, the constellation of actors who wish to maximise advantages from China’s rise yet coalesce together to prevent its dominance — has meant that the old multilateral order, with its established power hierarchies, is dead.
And it is dead at a time when the world requires multinational cooperation on a range of themes — terrorism, cyber threats, piracy, epidemics, and most crucially, the climate crisis. This was the decade when climate change became a climate crisis as its impact began to be felt by citizens across the world in their everyday lives. But developed countries refused to do their bit in meeting their obligations; developing countries were still torn between their economic needs and environmental compulsions; and incentives to work together dipped. The US decision to withdraw from the Paris agreement — which itself was only an incremental, insufficient way out — was perhaps the final nail.
The 2010s marked the beginning of the end of the old world order, which grew in the wake of the Second World War and consolidated following the collapse of the Soviet Union after the 1990s. It has marked the beginning of the emergence of a new order, but it is not quite clear what will be the shape of this order. In that transition lies today’s uncertain world