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China is not the Soviet Union

Published at: 16-04-2023

Posted on: April 16th, 2023 by RaduC No Comments

While all eyes are on the tragedy in Ukraine these days, there is a consensus among political and military analysts that the defining issue for this century will not be US relations with Russia, but those between the US and China. In this sense, the quasi-unanimous belief is that a new cold war is about to break out.

Using the same terminology as in the case of the geopolitical and military competition between the US and the Soviet Union, in a simplistic approach, there is a temptation to extrapolate the strategy of the Western world at that time also for the envisaged US-China cold war with the more or less declared hope that China will also be forced to have a similar involution to the Soviet Union. That would be a mistake with potentially disastrous consequences. And not just for the two countries.

The error of judgement stems from the fact that China, like the Soviet Union, is a follower of communist ideology, cultivating an autocratic regime that limits the individual and collective freedoms of the population. Indeed, the cult of personality of political leaders, the single party, the curtailment of freedom of expression or the permanent surveillance of citizens and organizations in China are traits also found in the communist regime of the Soviet Union. But the really important similarities end here, as a number of other essential elements put China in a totally different position from the Soviet Union.

Even though some analysts or politicians in the US tend to present the US-China competition in ideological terms, similar to that between the US and the Soviet Union, looking at the world map we see that the “communist camp” is now totally insignificant compared to the USSR period. Today China is joined only by Vietnam, North Korea, Cuba and Laos. In these circumstances, I think it is difficult to argue that, similar to the USSR, China has ambitions to establish global communism. Moreover, unlike the Soviet Union, China does not have a rich tradition of establishing communist regimes in third countries.

Equally, a totally different situation is brought about by the economic picture. The Soviet Union was a huge economic failure. Its isolationism, its centralized economic decisions lacking vision and objective performance criteria, its subsidization of the states in its orbit meant that the regime’s economic feet of clay ended up breaking. It is incredible how a country with the vast mineral and human resources of the Soviet Union was unable to turn them into an engine of widespread and sustainable economic development of the country.

China’s leadership, by contrast, realized at some point that economic isolationism would cause the country to continue to wallow in poverty and underdevelopment. It took an “enlightened despot” like Deng Xiaoping to enable the development of free enterprise, of the market economy and to connect China to global capital flows. In other words, the very measures that the Soviet leaders opposed so fiercely. China began to flourish and was probably the most important beneficiary of the globalization process. In this context, China’s development was made possible primarily by the transfers of capital and know-how that Western companies brought in, attracted by low labor costs, the work ethic and the existence of a huge potential market. Double-digit economic growth rates have for years been a hallmark of China, which is growing at an unprecedented pace. In this way, the country has become not only an emerging economic power, but also an increasingly important cog in the wheel of the world economy. A status the Soviet Union never had.

In fact, this makes isolating China behind a new Iron Curtain a near-impossible mission. In 2022, despite all the restrictions initiated since President Trump’s term in office, the volume of trade transactions between the US and China was $690 billion, a record according to Bloomberg. In the 1980s the value of trade between the US and the USSR peaked at around $4 billion (Rand Report, 1987), or about $12 billion in current prices. And with that I think I’ve said it all…

But the situation is even more complicated because of Europe’s significantly greater dependence on China. The EU economy is essentially an export-driven economy that generates a traditional trade surplus, with Germany being the largest exporter. So for Europe’s economic development, access to growing foreign markets is perhaps even more important than the development of domestic markets. This is not the case in the US, a country with a tradition of external deficits and which relies primarily on domestic consumption. This is one of the reasons why we are seeing growing concern in Europe today about US plans to isolate China economically. While existing supply chains in China could be partially or totally replaced by those created in other emerging countries, an export market like China’s will be almost impossible to replace.

This makes an economic escalation of a geopolitical conflict, unlike in the Soviet Union, far more costly for Western economies. There is much speculation that the West’s reaction to Russia’s invasion of Ukraine is a lesson for China, should it have similar expansionist intentions. But equally, recent developments are also a lesson for Western states that have had major difficulties in economically decoupling themselves from Russia, a country with which they had significantly less foreign trade and with a less complex structure than their trade with China.

In the same context, much is rightly said about the renewed solidarity that the war in Ukraine has brought to NATO and its increased attractiveness to new members such as Finland or Sweden. In the mirror, however, the war has also brought unprecedented solidarity between China and Russia, undermining the “divide et impera” strategy that the US has promoted in relation to the two superpowers. And the economic significance of these solidarities is not to be overlooked.

For the sustainable economic development of a country the size of China, access to mineral resources will be essential, as evidenced by its constant interest in resource-rich African countries. Such a situation suits Russia for which, lacking the outlet offered by the West for its resources, the only solution at hand will be to redirect exports to China. But, nota bene, for China it will not be the only source of mineral resource procurement. This different positioning between the two superpowers gives China the opportunity to impose its negotiating terms and to obtain favorable prices from a Russia without many alternatives to export its resources. Such a combination of high economic/technological development and access to resources will not only increase China’s economic resilience, but also give it a competitive edge over Western countries. Something, again, the USSR never had.

In view of the above, the scenario of China’s defeat following the Soviet Union scenario is illusory and extremely dangerous in terms of its global military and economic consequences. Unlike the Soviet Union, China does not aspire to change Western regimes and drive these countries into irrelevance. China aspires to a significant geopolitical role and a realistic assessment should recognize that the world will become a multi-polar system that will require more dialogue and compromise.

Geopolitical competition will remain and perhaps even increase. But lucidity should make the major powers understand the power of complementarity and that a lose-lose scenario is least desirable. The mutually assured military destruction between the US and the USSR, is now, in the case of the US and China, matched by mutually assured economic destruction. Without fail, the red lines of great power relations will continue to exist, but it will all depend on the wisdom and lucidity with which they are drawn, and the understanding that the era of unipolarism is a thing of the past.

Both China and the USSR had autocratic regimes, most often one-man rule, their futures being played at the roulette of their fortune of having an “enlightened despot”. The Soviet Union had it much too late and it was fatal. And this suggests to me that the great risk to China’s future development will not come from outside, but rather from within, from the arbitrariness and excesses that one-person, illiberal regimes often bring.

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