USA-China: Striving for friends

China, Geopolitics, and the Global South

Uwe Hoering, September 30, 2022

Applying the principle ‘winner takes all’ to the competition between China and the USA would probably mean, according to widespread view, that the one of them takes over world hegemony, either ‘authoritarian’ or ‘free’. However, the situation is far from that point, and the battle between the two rivals is continuing to rage unabated.

Indo-Pacific Economic Framework

A recent move by the U.S. government to snatch all, or at least as many, of the pieces from its Chinese opponent on the global Go playing field is the Indo-Pacific Economic Framework, IPEF. Launched in May by U.S. President Joe Biden and packaged with the strong message of bringing economic benefits to “families, workers, and businesses in the United States and the Indo-Pacific region”, the third meeting took place in Los Angeles during the second week of September. Since the U.S.’s reinforced turn to Asia (‘Pivot to Asia’) under the Obama administration, this is another attempt to contain China’s rise and isolate the competitor in its regional sphere. Such economic alliances and promises form a complement to Washington’s military-political Pacific strategy.

In addition to the U.S., members include other industrialized countries from the region such as Japan, South Korea, Australia and New Zealand, as well as India and more than half a dozen countries around the South China Sea, some of which, such as Vietnam and the Philippines, have territorial disputes with Beijing. In mere arithmetic, IPEF appears to outstrip the Regional Comprehensive Economic Partnership, or RCEP, which was agreed to in November 2020 and was hitherto considered the world’s largest trade area, both in terms of population and gross domestic product. There is a broad overlap in membership between the two – but each group lacks a heavyweight: China was not invited to IPEF, and the U.S. is not in RCEP. The adversaries are clearly trying to stake out and consolidate their economic spaces and alliances with essentially the same personnel.

Advantage China

Like similar initiatives of the USA (B3W) and Europe (Global Gateway), however, IPEF offers little in concrete terms. At least two of its four pillars are very shaky to build lasting economic cooperation on: The advertised ‘fair trade’ would probably not bring the reduction of U.S. tariffs and other market access barriers that the other countries would like to see. As a result, India has already opted out of this segment. The ‘fight against corruption’, for its part, is seen in many countries as an internal matter that they do not like to be regulated into. The third pillar, ‘security of supply chains’, is subject to diverse and fluctuating interests and uncertainties. This leaves the ‘environment and green technology’ as the least controversial pillar, but in this area the USA is not exactly one of the countries that can make attractive, credible offers – in contrast to China.

While the USA has lost further economic ground in the region in recent years, for example as a result of Donald Trump’s withdrawal from the Trans-Pacific Partnership, TPP, China has been able to continuously strengthen its position, among other initiatives with Belt&Road and the agreement on RCEP as an economic policy coup that sent shock waves through the Western industrialized countries. There is also the Comprehensive and Progressive Trans Pacific Partnership, CPTPP, another transpacific partnership. This follow-up organization to TPP, which in addition to Canada, Mexico and Chile also includes numerous members of the other two alliances, has so far not involved either the USA or China.

One can see: many countries are putting their eggs in several baskets. But as a blog on the commentary page of the Institute for Security and Development Policy (ISDP) notes: “Most Indo-Pacific countries are not going to sacrifice their trade and economic interests for superpower geopolitics”. Compared with IPEF, which has so far not progressed beyond the stage of a talkshop with vague promises, RCEP offers considerably more advantages as a binding agreement for the countries that are economically highly integrated with China. In view of the reluctance in the USA to enter into multilateral economic agreements, this will probably not change much for years to come.

This diversified interconnectedness has its consequences: As each country forges closer economic ties with all the others, the question of decoupling becomes less and less feasible: ‘Globalization’ marches on, at least in major geo-economic areas. Secondly, Europe is losing ground in these dynamic tree-changing games in Asia.

It also shows how difficult it is for the hegemonic contenders to fully engage countries of the Global South. They use the room for manoeuvre, sometimes dealing with one side, sometimes with the other – economically more with China, in terms of security policy more with the USA – while waiting to see what happens. Apparently, the attempt to use the Ukraine war to lure them away from China has done little to change this.

Swing State India?

A crucial issue: How do heavyweights such as Brazil, South Africa and, above all, India, the most populous country after China, the fifth-largest economy, and allied with Russia and China in the five-country BRICS club, position themselves? Despite strong economic ties, for instance through a growing bilateral trade despite the Corona crisis, relations of India with China are strained by a variety of conflicts, not the least of which is China’s massive economic and military support for Pakistan, and border disputes in the Himalayas that have repeatedly led to military clashes, as they did two years ago.

Thus, since the Himalayan clash in April 2020, a frosty atmosphere has dominated the political stage between the two regional powers. Chinese companies in India such as Xiaomi and Vivo are being covered with lawsuits for tax evasion and money laundering. There have been no bilateral meetings between the respective foreign ministers at the recent UN General Assembly, and at official meetings such as the Shanghai Cooperation Organization, SCO, and BRICS, India’s President Narendra Modi and China’s Xi Jinping did not exchange a glance – “no smiles, no handshake,” as reported by the SCMP. Media speak of a continuing “split.”

But there are also signs of approaches. India’s Foreign Minister S. Jaishankar met his Chinese counterpart Wang Yi on the side lines of a ministerial meeting of BRICS delegations in New York and expressed a desire to “normalize” relations with China. And in a sign of goodwill and willingness to ease tensions, troops in disputed border regions in the Himalayas are again keeping more distance.

In addition, there are joint alliances with BRICS and the Shanghai Cooperation Organization. Even if these alliances are currently simmering on a low flame due to differing interests and differences of opinion, they could form the basis for much closer coordination and cooperation or, like the SCO, even become a “Euro-Asian counter-model to the EU”. Plans are repeatedly circulated to expand the alliances to include countries in Africa and in Arab regions, as was already the case recently with Iran as a new member of the SCO.

India’s traditional position of strategic independence is now increasingly being squeezed between the fronts because the United States and other Western countries are increasingly trying to pull the Modi government over to their side. Diplomatic contacts are being intensified, as is military cooperation in the so-called Quad, a security-strategic quadruple alliance with Australia, Japan and the United States, or with joint military exercises in the Indian Ocean. In turn, however, India also participated with China in the week-long Vostok 2022 war game organized by Russia in the Far East and the Sea of Japan during the first week of September.

In terms of opinion in Western countries, China is clearly the ‘bad guy’ at the moment. In terms of betting on the winner in the competition, on the other hand, it still seems to be ahead in the Global South. And the U.S. and its Western allies need to put far more ‘butter to the fish’ with which they want to catch allies.

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