Author: Editorial Board, ANU
Many now believe that the aggressive strategic competition that has emerged so suddenly between the United States and China is driving the global order towards a new bipolarity. The destructive trade conflict between the world’s largest and second largest trading nations will visit instability and division upon the global economy and shrink the potential for global prosperity and amity.
Calculation of the exact trajectory of this course is difficult. But the direction and the broad magnitude of its impact are possible to estimate. These are global order-destroying choices on which the United States is now settling and to which China seems impelled to respond with little regard for what standing up to Washington bilaterally might do to the order under which China and the rest of the world have prospered.
These are not two-bit players slugging it out in a trade brawl of little consequence to the whole system. It may still be difficult to predict which side will be damaged most in this game and how the rest of the world will bear the cost. But deal or no deal between the two big powers, huge costs there will most certainly be. And on the current path the whole world will take an almighty pasting.
It won’t simply be the trade and income losses inflicted by the restrictions on trade upon which the micro modellers focus in their analysis of the effects of higher prices on the scale and structure of production and trade, although those losses will, on a variety of estimates now, be high. It is the fracture of confidence in doing business in the international economy and infection of political suspicion about global economic partners — the core assets of the postwar multilateral economic order — that will impose vastly higher costs on the global economy. Those effects are already visible as investors in global enterprise and prosperity pull back in nervous expectation of continuing and deepening policy unreliability in the two biggest centres of world economic power. And beyond the economic chaos, there’s destruction of what’s commonly called ‘Pax Americana’ — though wrongly since the influence that the United States has exercised around the world for the past three-quarters of a century was never only or largely the product of raw military power. It’s the dream of American liberalism that has wielded greater influence than any other ideology over these decades. And China’s rise today, though it will expand the influence of that country’s traditional values, will do so widely if, and only if, it can accommodate that American legacy.
It may also be possible to explain what will determine the direction of transition from the post-Cold War unipolar order that was led by the United States. But, despite the entrenched power of the incumbent states and where the psychology in the exercise of their power is currently leaning, it’s perhaps not too optimistic to hope that there’s still room for choice.
‘Moral realism explains the transition from a configuration with one dominant state to a configuration with a rising state…