Friday 23 August 2019

Dan O'Brien: 'Ireland will face biggest diplomatic challenge in years as China rises to top dog in global economy'

Rivals: U.S. President Donald Trump and China's President Xi Jinping. Photo: Kevin Lamarque/Reuters
Rivals: U.S. President Donald Trump and China's President Xi Jinping. Photo: Kevin Lamarque/Reuters
Dan O'Brien

Dan O'Brien

Status matters. Being top dog affects the way one thinks. For generations, Americans have known that they have the biggest and most successful economy on the planet. They overtook Britain to lead the global league table in 1872, according to the estimates of economic historian Angus Maddison. The primacy of the US economy paved the way for the "American century".

The current generation of Americans will experience the loss of the top-dog status their country has enjoyed for 150 years. On decades-long trends, and barring something going very wrong in China, that country will overtake the US sometime in the foreseeable future. As the 21st century proceeds, it is likely to extend its lead at the top of the world economy league table.

China's economic overtaking of the US amounts to one of the biggest changes in world affairs in recent centuries. The shift is already having profound implications. Relations between the existing superpower, the US, and the rising superpower China are deteriorating rapidly, with a full-scale trade war between the two countries.

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Much of this is driven by - to understate - an unusual US president. Donald Trump is prepared to run risks that his predecessors would not have run. But it would be wrong to view Sino-US tensions as having been caused by any one individual. While the 'bull in a china shop' expression could have been invented to describe the US president's approach to diplomacy, there is something much deeper going on, and it extends to Europe and much of the rest of the world as well.

China is not just a dictatorship, it is becoming more dictatorial. The iron rule of the Communist Party has always meant that there is no rule of law in China. Externally, the Beijing regime has been much more delicate. It is deft and usually subtle in reassuring the world that its rise to superpowerdom is not a reason to worry anyone. Chinese officials and diplomats almost always speak of "win-win" situations and are careful to ensure that other countries gain from their interactions with China.

But as one foreign diplomat commented to your columnist recently, win-win for Beijing is "we win 80pc; you win 20pc". More fundamental than who gets what is basic security. When push comes to shove, as it inevitably does at some point in international relations, other countries worry to what extent Beijing pushes them and others around.

There had been a hope that China would accept the rule of international law as it modernised and became more integrated with the rest of the world. For instance, other countries hoped that their companies would be treated in China as Chinese companies are treated in theirs. But that hasn't happened. What's more, as Chinese businesses become more globalised they are facing growing allegations of acting at the behest of the regime in Beijing, and to the detriment of others.

The concerns over Huawei's technological dominance of the next generation of mobile telephony is the most high-profile case in point. Spooks across the world believe that China will use the company's technology to spy on individuals, organisations and states. As all significant-sized businesses in China are intimately linked to the regime, whether they like it or not, these concerns are very real. As there is no rule of law within China, it would be naïve to believe that Beijing will be constrained by international rules and law if it can get away with it.

In Europe, there has been a quite sudden change in attitude towards the rising superpower. The European Commission this year labelled China a "strategic rival" and new EU laws will allow Chinese purchases of European companies to be blocked if they pose a security risk.

What is happening in Hong Kong now has the potential to supercharge the descent into a new cold war between China and the West.

If the protests that have been going on for weeks are crushed, as similar protests were on the mainland 30 years ago, Europe and the rest of the democratic world will have to respond. Just as it responded in the aftermath of the 1989 massacres, and it did to the annexation of Crimea by the regime of Vladimir Putin five years ago, sanctions of some sort can be expected.

Those more recent Russian sanctions were economically damaging for the countries which imposed them, including for Ireland.

Last year, China was Ireland's fifth-biggest export market for goods, and those exports were worth 10 times the value of products sold to Russia. At a time of so much uncertainty around Ireland's trading relationships, further disruption is not what is needed. But for democracies, values sometimes have to take precedence over economic interests.

Hopefully, the situation in Hong Kong can be settled peacefully. But even if it is, relations between the West and China are likely to become more strained over time. In some respects, they are likely to resemble relations with the Soviet Union before the collapse of communism three decades ago. In other respects, however, any new cold war will be different from its predecessor.

Unlike the Soviet Union, China is deeply integrated into the world economy - not for nothing is it called the workshop of the world. This gives Beijing more leverage over many countries than the Soviets ever had, and it has proved adept at using that leverage.

Nor is the sort of leadership that existed in the past available today. Donald Trump is no Harry Truman, the US president who presided over the beginning of the Cold War and the strategy of containment which lasted for four decades. This will make maintaining unity among the democracies harder.

Whatever happens in Hong Kong, the relatively harmonious rise of China to date is giving way to a more adversarial relationship with the democratic world. Navigating that, and the shift in global power from Washington to Beijing, will be one of Ireland's biggest diplomatic challenges as far into the future as one can see.

Irish Independent

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