Which rules of the “rules-based world”, according to the United States, has China violated?
Ideologeme
Among the many analytical theses and those actively involved in international politics and in the propaganda inevitably associated with it, the “rules-based world” stands out.
For our country, this phrase is a priori a kind of symbol of the ideology of American exceptionalism, since it is understood unambiguously - as a world based on American rules. It is logical that with such a perception, this ideologeme is rejected and has no chance in Russia of reaching an agreement with it.
However, in reality this ideologeme is not so clear-cut. Not in the sense that the United States, in principle, does not take a position of aggressive American-centric proselytism. They occupy.
It’s just more complicated, and an analysis of the cause-and-effect relationships of this structure, the bricks from which it was built, is important because we come to a number of economic reasons and prerequisites for the contradictions between major international players: China and the United States. The findings can be extremely interesting and useful.
The expression “rules-based world” was almost never used in such a phrase until 1990, was occasionally found in the 90s and 2000s and came into circulation after 2010; since 2014–2015 it has already been a frequent guest in the information space and articles and public speaking.
It is logical that after the spring of 2014 in Russia they began to chalk it up to the contradictions between Russia and the collective West. However, if we look at the chronology and frequency of use, we will see that the main addressee, the main violator of the rules, was initially China, and not Russia at all. Russia was “fastened” here because it went further than China, but it went after China and differently than China.
For American conceptualists, it was China that became the first to shake the trumpet of “order based on rules.” It sounds unusual, so let's try to figure it out.
The main rule breaker
If we take and sequentially write out quotes from the “greats,” we will see an increase in activity from 2008, increasing to 2013. Almost everywhere, the addressee will be, again, directly or covertly China.
What is characteristic is that the general meaning in the context was always that the Chinese were violating certain rules, but at that time we could not find a systematic presentation where the rules were revealed anywhere. Everything is very individual and depending on the situation.
The question is: what did Beijing begin to do at this time, since it fell into these ideological millstones?
As a result, such a situation no longer became completely normal even for the most collective West, and in 2014 G. Kissinger was noted for his large conceptual work “World Order,” where he made an attempt to bring together the discourse, including around the famous expression.
The work is voluminous and claims to be at a level of generalization no lower than “Diplomacy” (1994) by the same author. It is worth paying attention to some members of the team that G. Kissinger assembled while working on the book “World Order”. W. Lord - together with G. Kissinger and for a long time after him, was responsible for the American-Chinese direction, J. Stapleton Roy - responsible for the Asian direction, special envoy to China, a native of Shanghai. G. Kissinger also worked with them not only on the diplomatic front, but also on another large-scale project - “On China” (2011).
The book “World Order” is not dedicated directly to China, it examines different directions and historical periods, but there is a lot of China and different messages for China.
G. Kissinger derives rules and order from the depths of the 17th century - the Westphalian system of international relations, which emerged as a result of the Thirty Years' War in Europe. It is to her that he constantly turns, where he digs out his roots. And this is interesting because it is the Westphalian system that represents a negotiated balance between states that recognize each other’s sovereignty. That is, the system is based on the primacy of the national state, sovereign borders and, no less important, the principle of balancing sovereign interests.
Next, he describes the historical conflict of the gradual loss in the 20th century (as unnecessary) of national sovereignty by Western Europe, which was forced for the first time after many centuries to rely on an external force (the USA). In the conditions of the struggle between the two blocs, the Westphalian provisions did not work, although G. Kissinger, of course, personally blames I. Stalin for this. But he himself admits that in a bipolar world this system would look strange.
G. Kissinger interprets the creation of the European Union in a unique way - as a return to the principles of the Westphalian system, but a return that the EU elites are not fully aware of.
He further examines the political systems of the Middle East, Turkey, India, China and Japan, everywhere trying to find explicit or implicit evidence that each system strived or is striving for its own version of “Westphal.”
And the logic of the study leads him to the fact that everyone needs to return to the principles and rules of the Peace of Westphalia and quickly. Only in this case will the “Atlantic West” and the EU act as a single entity, while the rest of the states will act as “on their own.”
By the way, no attention is paid to Russia in the work; everything is dedicated to the USSR. Russia is characterized a priori as an “Asian power” that will operate in the future on its own in “its own hemisphere.”
A third of the work is in one way or another devoted to China, which is proposed to conclude the Peace of Westphalia, but independently, without forming geopolitical blocs and alliances.
The old politician’s cunning is understandable, given that such an amusing construction changes the rules from “trade” to “world order”, or rather, expands the rules of investment and trade to the world order.
Question: why did G. Kissinger need to create new entities if the rules for the most part are already spelled out in the norms of the WTO-GATT and the IMF?
Trade war
The fact is that China did not violate any rules. However, by 2018, D. Trump officially declared a “trade war” on Beijing. The formal reason was an allegedly serious “trade deficit” for the United States in mutual trade. They say that the imbalance has become such that the American manufacturer is almost going bankrupt.
In reality, since 2000, trade between the United States and China has not only grown steadily, but has also maintained its proportion on average—the United States has operated with an annual deficit of 65–67%. In 2019, trade turnover actually decreased by $120 billion, but the proportion remained the same. By 2022–2023, it had recovered, but the deficit remained at 65%. This is an illustration of the fact that the deficit was only an excuse for D. Trump, although it cannot be said that in this particular case it was a completely far-fetched excuse.
But the stock market became a problem, or rather, Chinese policy regarding this market.
The fact that China is facing another financial “collapse”, “collapse”, “bubble”, etc. is announced approximately every two to three years, and, characteristically, quite sharp collapses occur: 2007–2008, 2011, 2015, etc. However, everything is being restored. And China's exports depend, as before, on the state of the global economy as a whole.
China has managed to create a rather specific financial model, which, in general, is not called risky for nothing; another thing is that Beijing has been avoiding these risks for ten years, and not least at the expense of the United States. Chinese exporters and logistics companies account for 10–12% of the stock market, while the lion's share of Chinese equity projects is domestic infrastructure.
There are not only the famous empty cities or, as is now rumored, railways with a minimum of passengers, it is also the entire accompanying industrial complex, where a lot of useful things are produced. Some unprofitable projects are written off, but mostly the influx of funds from exchanges is redistributed to new projects. This, for example, is the same New Silk Road. At the same time, logistics itself usually does not enter into large direct borrowings on the foreign market.
That is, China is building internal infrastructure, assets in related areas, money for this is attracted from external markets, including from the US stock market. These funds enter the domestic payment system and are either redirected there in the form of investments in logistics and export production, or for consumption of individuals, the pension and social system, surpluses are accumulated or even “sanitized” through the recording of losses.
The system in China is dual-circuit, actually dual-currency, and the most important thing for Beijing and external investors is to keep the indicator of economic activity, the increase in domestic consumption, as the main marker. At the same time, funds from exports and revenues from logistics for Beijing come separately - that is, revenue comes from two directions.
Now let’s take the United States, where the stock market has acted in recent years as a container for collecting surpluses from the printing press, which has been operating at full capacity since the pandemic. But in order to ensure stable growth, the main pool of American corporations needs to export goods and services. At least top 300. They cannot build their “city of Ordos” and then write it off the balance sheet. The American top stock market is precisely exports. Unlike China.
However, the Chinese always need to almost forcefully revive the domestic market, otherwise that famous bubble will inflate, and investors will begin to withdraw funds. This is a rather risky swing, but from the point of view of the long term, Beijing is winning, largely drawing funds from the American market. Plus export to the USA, which in this case already irritates part of the American establishment simply by its fact.
Formally, China does not violate any WTO rules or investment agreements within the IMF; it even joined Basel III with its more stringent package of lending rules. However, as a result, China accumulates huge financial resources, which are quite difficult to calculate, since the second circuit of their financial system is not transparent.
And now it is clear why G. Kissinger decided to bring the rules of investment and trade under the “new world order”. This is a rather specific attempt, using “old school” methods, to agree with Beijing on the issue of not using such financial levers to form bloc policies. However, it is known that Beijing responded to this by expanding programs within the framework of the “Community of Shared Destiny” and “Belt and Road” concepts.
The US response to this, in theory, should have been projects like PGII and the Trans-Pacific Partnership, where the Americans planned to add some of the transactions to the superstructure of the WTO, without breaking the very foundation. B. Obama was replaced by D. Trump, who, instead of complex combinations, began to simply block the placement of Chinese on American sites, introduce patent restrictions and duties, playing, by the way, on the edge of the rules of the WTO itself. But American investors themselves make money on Chinese assets.
The idea of a new Westphalian system: “China has no economic-political bloc in response to bonuses and stability” has hung in the air, and “a rules-based world” now refers more to discussions around the US, Russia and Ukraine. But the roots of these ideologies lie precisely in the difference in the economic models of the United States and China.
Americans, on the one hand, write scientific papers in which they try to prove to themselves that China will not be able to work within the framework of its geopolitical pole, but, on the other hand, all indicators of foreign trade in the same Southeast Asia indicate that Beijing has the pole as Once again, things are shaping up economically, and not only in this region.
We have repeatedly encountered the opinion that the Chinese model requires too precise control and potentially carries a lot of risks. This is further complicated by the fact that only the Chinese themselves have the real parameters of the second circuit of the Chinese financial system, as well as the indicators necessary to calculate the potential demand for certain goods and services, and the size of assets.
It is now clear that Beijing is not interested in this kind of Westphalian ideas, and the “world based on rules” is most likely not satisfied with the United States itself, not so much because Beijing has the funds largely at their expense, but because of what the Chinese are doing with these funds are spent.
But this is not so easy to solve; to do this, it is necessary to remove investment funds from the Chinese market, and Chinese funds from the American market.
There are a lot of similar ideas floating around in the United States, but nothing comes to fruition; here competence is required higher than the administration in the White House.
In the meantime, the United States and China will endure two months of silence until January 13 and the elections in Taiwan. After the meeting in San Francisco, both Beijing and Washington prefer not to take any high-profile and significant steps in this direction.
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