The Future of the Global Economic Order
- Arda Tunca
- Nov 13, 2024
- 5 min read
Having spent the first half of the 20th century with two world wars and the Great Depression of 1929, the world was trying to create common political and economic values under the leadership of the USA after World War II. The main outlines of these values were as follows:
The universality of human rights.
The rule of law.
Application of the free market economic model.
The state should not intervene in social and political life except under certain conditions.
After World War II, the United States had a profound influence on global politics and economics. The United States established hegemony over a significant part of the world.
With the fall of the Iron Curtain, it was predicted that the values listed above would be values that the entire world would embrace without compromise. We observe that this prediction has not come true due to the shape that global politics and the economy have taken today.
Today, the United States’ power to influence global political and economic balances has relatively weakened. This weakening has been brought about by the rise of China, not Russia.
Xi Jinping has taken a more authoritarian and harsher stance than previous leaders in expanding his country's global influence. He is pitting China's economic management philosophy against the US and is trying to place China, rather than the US, at the centre of global politics and economics.
Xi Jinping states that the East is rising and the West is declining. He says the Pax Americana era is over.
China opposes US values with the following values:
The state has control over social life.
Limited freedoms in the international arena.
The existence of practices that restrict the free market rather than regulating it.
State control over the flow of information.
The practices required by this philosophy are valid in China. However, the aim is to guide the future of global capitalism on these philosophical foundations. International relations and military power also serve this purpose.
Taiwan is considered by China to be its own territory, and China has been making efforts to include Taiwan within its territory for years.
The one country, two systems model that was implemented after Hong Kong was incorporated into China in 1997 is no longer accepted. This model was ended with the national security law enacted in 2020. There is a struggle for dominance in the South China Sea.
China launched the Belt and Road Initiative in 2013, trying to impose its own business culture, ways of thinking and perception of the capitalist system on the countries along the old Silk Road. It is making infrastructure investments in these countries. The African continent has been of particular interest to China since the early 2000s.
The US also has a large presence in Africa. However, there are reasons why China has shown particular interest in Africa:
To obtain high marginal returns on a relatively untouched continent by eliminating infrastructure deficiencies and to establish its own economic management culture.
To keep the trade routes it has created safe, China needs to import and export on a large scale to keep its economy afloat.
Keeping US military power and attention away from Chinese territory.
China built a naval base in Djibouti in 2016. According to reports by the Pentagon, new bases will also be opened in 13 African countries.
As China tries to replace the United States as the leading global actor after World War II, it has the following important characteristics:
The world's largest trading partner. The world realized the risks of excessive dependence on China's supply chains when the supply mechanism in China collapsed in the early days of the Covid-19 outbreak.
The world's largest creditor.
The world's most populous country and military power.
The innovation center of the world.
It is expected to have the largest economy in the world by 2030.
China-US relations had hardened during the first Trump term. However, US policy towards China under the Biden administration has not been soft either.
The fall of France in 1940 and the attack on Pearl Harbor in 1941 ended the isolationist policies of the United States. China's rise began with the reforms of 1978 and the subsequent fall of the Iron Curtain.
Economy, international relations and military strategies are intertwined with each other in order to become a global power or establish hegemony.
During the Cold War, there were opposing economic systems. While the US, as the representative of capitalism, was spreading all over the world, the USSR was closed to itself. China, on the other hand, remained within the capitalist system but with a single-party, autocratic regime, taking the wind of globalization that lasted for about 30 years, spread to various geographies. Drawing strength from globalization but also standing against the economic and social order understanding that the US had been trying to spread all over the world since World War II.
There seems to be no turning back from the point globalization has reached today, at least not yet. Therefore, there is a US-China hegemony struggle that is much more complex and difficult to manage than the world of isolated systems in which the US and the USSR lived.
Despite the differences in principle between them and China, US companies are constantly investing in China. What makes China so attractive is its enormous scale and the market depth created by this scale. The size of the mutual direct investments between the two countries was $162 billion at the end of 2020. $124 billion of this figure is from the US to China.
The size of trade between the US and China was again $615 billion at the end of 2020. The annual size of trade in the South China Sea, which is of great importance to both countries, is approximately $3.4 trillion.
Russia is also against the US, although not as much as China. There has not been a country as widespread as the US since the Roman Empire. China and Russia are seeking to break a power that has been building since the 1940s.
The US is trying to bring countries that adhere to its values closer to its side.
While the US is trying to export democracy and freedom to other countries, chaos has been seen in those countries in the past. The main purpose is, of course, to protect the US's international interests and to establish hegemony. The Carter Doctrine of 1980, the Arab Spring, and the invasion of Iraq under the pretext of non-existent nuclear weapons are concrete examples of these aims.
The global struggle centered on the USA-China-Russia is also of great importance for other countries in the world. In order to be strong, consistent, and economically independent on the world stage, each country must first protect democracy within itself.
The transformation of the power provided by democracy into economic independence and power depends on the creation of economic strategies based on reason and science. Countries that achieve these may not be subject to the US's "export of democracy" and may not be affected by "US hegemony". Successful countries cooperate instead of being subject to hegemony.
The developing difficult conditions will increase the emphasis on the social state. There are many complex reasons for this that go far beyond the scope of this article. The importance of making preparations for the coming decades today is increasing. There will be winners and losers in the struggle described in this article. However, no gain or loss is permanent. The historical process offers us this valuable information from which lessons must be learned.
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