By Andrew K.P. Leung (International and Independent China Strategist. Chairman and CEO, Andrew Leung International Consultants and Investments Limited)
At the start of his “military operations” in Ukraine, President Vladimir Putin seemed to be losing his grip. Massive armors and combatants were sacrificed with little territorial or strategic gains. As a result, there was a prevailing sense of triumphalism in Washington and the US-led NATO coalition that Putin’s “adventurism” had spectacularly backfired.
The Western commentariat has been busy speculating on a looming ignominious Russian defeat, the emergence of a more unified Ukraine, a united Europe and NATO rallying behind America’s global anti-Russia leadership, a probable collapse of Putin’s regime, and even his eventual retreat to a health sanitorium in Russia.
For good measure, America’s China strategists were quietly rubbing their hands that finally the United States would enjoy a much better geopolitical advantage in subjugating China. “China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to do it”, says Secretary of State Antony Blinken in a China policy address at George Washington University on 26 May, 2022, trumpeting velvet-glove rhetoric of not wanting a Cold War against China. Some quarters in America’s intelligentsia are cheerleading for an enduring American Century.
However, Ukraine President Zelensky confirms that Russia has now controlled some 20% of Ukraine. This is seen as President Putin’s “Plan B” focusing instead on occupying the Donbas region with a possible land bridge linking Russia-occupied Crimea. He has reaffirmed that Russia will not let up until all his goals are reached, banking on a prolonged war of attrition with Ukraine and its Western backers.
Europe has been bearing the brunt of energy and food shortages with price hikes, inflationary pressures and prolonged recession fears.
Now over 100 days into the War, a sense of “Ukraine fatigue” in the Western coalition is beginning to set in, according to the Financial Times.
Gazprom has cut off at least 20 billion cubic meters of its annual gas supplies to six European countries —Poland, Bulgaria, Finland, Denmark, Germany and the Netherlands, because they failed to make payments in rubles, a retaliatory demand of President Putin in March. This amounts to nearly 13% of the European Union’s total annual gas imports from Russia.
While some of the European countries are wriggling out of these strictures by converting their Euro payments into Russian currency at Putin’s designated Russian bank, replacing Russia’s readily-available piped gas-supply through maritime oil or gas imports from the Middle East or America is unlikely to be a smooth logistical and economic solution.
Even as Europe is stocking up energy supplies in preparation for the coming winter, such precautions are unlikely to be adequate for households, let alone Europe’s wide-ranging economic activities.
Additionally, Russia is the world’s largest exporter of wheat, accounting for more than 18% of international exports. In 2019, Russia and Ukraine together exported 25.4% of the world’s wheat, according to the Observatory of Economic Complexity (OEC).
Russia also exports nearly 20% of the world’s nitrogen fertilizers and, combined with its sanctioned neighbor Belarus, 40% of the world’s exported potassium. Most of these commodities are now off limits to the world’s farmers, thanks to Western sanctions and Russia’s recent fertilizer export restrictions. That’s why the Chairman of the African Union, Senegal’s President Macky Sall, called on President Putin on 3 June to ask for help freeing up Ukrainian grain exports.
Meanwhile, energy and agricultural price hikes worldwide are boosting Russian coffers, strengthening instead of weakening the ruble.
After branding Saudi Arabia as a “pariah state” over the murder of journalist and Saudi dissident Jamal Khashoggi in 2018, President Biden’s planned goodwill visit to meet Crown Prince Mohammed bin Salman is unlikely to yield adequate results, given Saudi Arabia’s long-established prudent oil production and pricing policies. Moreover, windfall energy price hikes are a bonanza to the Saudis and other major oil producers in the Middle East.
Meanwhile, President Biden’s domestic ratings are back in the doldrums, raising the odds of losing Congress at midterm elections in the autumn. He risks becoming a “lame-duck” President for the remainder of his term.
Nevertheless, the United States seems turbo-charged to segregate the world into two camps, framing this as a contest of the century between democracy and authoritarianism.
However, notwithstanding draconian across-the-board sanctions and other restrictions, according to the Center for China and Globalization (CCG) in Beijing, in 2021, “global trade hit a record $28.5 trillion, up 25% year-on-year and 13% higher than in 2019, before the pandemic struck. For all the talk of decoupling, U.S.-China trade swelled more than 20% last year, to $687.2 billion. Even with war in Ukraine, global trade is forecast to grow in 2022, albeit at a slower pace“. “ China, in particular, is more integrated into the global economy than ever. In 2021, its foreign direct investment inflows rose by a third to an all-time high of $334 billion. In the first quarter of this year, they grew by more than 25% year-on-year“. Click here
This shows how robust China’s centrality remains in the world’s inter-connected supply and value chains. After all, China remains the largest trading partner for 130 nations worldwide, compared with 57 for the United States. This centrality is being cemented by the Regional Comprehensive Economic Partnership (RCEP). This consists of ASEAN and its main trading partners including China, Japan, South Korea, Australia and New Zealand, representing a third of the world’s population and a third of the world’s GDP. China is at the trading and logistical heart of it all.
Beijing is doubling down on its global footprint. Witness the latest round of island-hopping in the South Pacific, signing a number of cooperation and law enforcement deals.
This represents a further extension of China’s massive Belt and Road Initiative (BRI), now being reformed to address concerns about debt-sustainability, transparency, corporate governance and environmental sustainability. The BRI already covers land and sea in Asia, Africa, Eurasia and Europe. Added to this is a “Polar Silk Road” capitalizing on the much shorter Arctic Circle route linking the Pacific with the Atlantic, thanks to global warming, and a “Digital Silk Road” linking businesses across the globe including undersea fiber-optic telecommunication cables.
A key strategic consideration of the BRI is to neutralize the threats posed by transit choke points such as Singapore’s Malacca Strait controlled by America’s Seventh Fleet. Energy and international trade, China’s economic life-blood, can now transit overland through China-friendly countries in Eurasia, the Middle East, and the China-Pakistan Economic Corridor (CPEC), including the port of Gwadar.
Except for bipartisan unanimity to confront China, the United States remains a politically deeply-divided country, undermining its unrivaled advantages in geography, natural resources, technology, popular culture, Western allies and financial and military dominance. It is now engaged in war on two fronts, against both Russia, the world’s largest landmass, and China, the world’s second largest economy, soon to become the world’s largest. It is struggling with how best to keep using its “exorbitant privilege” of money-printing to prop up its economy without undermining global trust in the greenback.
Meanwhile, China is pushing ahead with completing its own single-handedly-built “Tiangong” Space Station by the end of this year. This will eventually replace the US-led 21-year old International Space Station (ISS), whose useful life has been repeatedly extended to 2031. The ISS has been excluding China right from the start.
This speaks volumes about China’s technological capabilities, including a head start in certain domains of 5G, Big Data, and Internet of Things (IoT), technologies set to change lives and how businesses are conducted in a “Fourth Industrial Revolution” of the 21st century. China already dominates the world in e-payment systems. It is fast developing a digital sovereign currency (digital yuan), which is set to erode the dollar’s hegemony on multiple fronts, considering China’s status as the world’s largest trader, manufacturer and logistical hub.
China is also achieving a breakthrough in nuclear fusion, a source of endless, sustainable energy, according to the South China Morning Post of 11 November, 2021. This complements China’s leading positions in solar, wind, and hydro renewable energies, in addition to becoming the world-largest electric vehicle producer and sales market. The country seems on track to realize its Paris Agreement pledges of “carbon peak” by 2030 and “carbon neutrality” by 2060.
China has launched the world’s fastest programmable quantum computers, a million times more powerful than its nearest competitor, Google’s Sycamore, according to a report of 26 October 2021 in the South China Morning Post.
According to a research paper dated August 2021 of GeorgeTown University, by 2025 Chinese universities will produce 77,000 STEM (Science, Technology, Engineering, Mathematics) PhD graduates per year, compared to 40,000 in the United States. If international students are excluded from the U.S. count, Chinese STEM PhD graduates would outnumber their U.S. counterparts more than three-to-one.
China has some critical technological bottlenecks, such as high-end micro semiconductor chips (smaller than 10 nanometers). However, to assume that China would for long be crippled technologically underestimates the nation’s technological resilience.
Militarily, China is catching up by leaps and bounds. According to a report of 18 December 2019, The New Missile Gap in The National Interest, America is losing to Russian and Chinese hypersonic weapons. This includes China’s “Fractional Orbital Bombardment System (FOBS)” that can circumnavigate the globe in all directions before striking targets with guided, hypersonic, multiple warheads, neutralizing extant missile defense systems.
A Harvard Kennedy School Belfer Center Report of December 2021 shows that the era of US military primacy is now over; every domain —air, land, sea, space, and cyberspace is now being contested by Russia and China. As for Taiwan, the report admits that thanks to satellite-guided Anti-Access/Area Denial (A2/AD) aircraft-killer missile capabilities, “China has the capability to deliver a fait accompli …. before Washington would be able to decide how to respond“.
Additionally, Beijing has been carefully learning lessons from Russia’s stalling military operations in Ukraine.
However, on 23 June, 2021, Chairman of the Joint Chiefs of Staff Gen. Mark Milley testified to Congress that he saw no near-term risks before 2027 for China to invade Taiwan, owing to lack of full military capability to prevail on all domains.
President Xi has stressed that Taiwan’s unification remains an essential part of the “China Dream” to be realized before 2049, the hundredth anniversary of the People’s Republic of China. However, following Chinese sage Sun Tzu’s The Art of War, peaceful unification remains the first option.
A major hurdle for China to overcome is its worsening demographics. Along with robotics and digitization, a three-child policy with childbirth incentives and support, China counts on boosting productivity through nationwide high-speed transport connectivity.
China’s high-speed rail network accounts for two-thirds of the global total. This will be nearly doubled to 70,000 km over the next 15 years. It will link up all cities over half a million people, while an additional 200,000 km of modern railway would connect all towns of 200,000 habitants and above. Even the remotest parts of the country are to be connected. This would hasten China’s urbanization rate from 60.6% in 2019 to 65%, doubling China’s consumer middle class to 800 million by 2035. Various city clusters are formed, capitalizing on mutual transport connectivity. All these will boost the country’s overall productivity.
To address widening socio-economic inequality, China is adopting a strategy for “common prosperity”, targeting monopolistic or predatory behavior of the nation’s biggest and wealthiest conglomerates. This is part of President Xi’s strategy to build “China 3.0”, creating a fairer, healthier, stronger and ecologically more sustainable nation in fulfillment of the China Dream.
China’s miraculous economic transformation in recent decades explains the Chinese people’s overwhelming support (over 90%) of China’s Communist Party (CCP), multiple ranks above many countries including the United States, according to recent Harvard Kennedy School studies.
As pointed out by Kishore Mahbubani, a world-renowned Singaporean academic, diplomat and geopolitical consultant in his book Has China Won? (Public Affairs, New York, 2020), while America’s bottom half have seen their incomes stagnate over the past thirty years, China’s bottom half have the best lives ever, for the past 4,000 years! A resounding riposte to the West’s continuing aspersions about the CCP’s legitimacy.
When the Ukraine war eventually comes to an end, a weakened and ostracized Russia and a devastated, partitioned Ukraine are likely to ensue, along with an extended NATO encompassing Finland and Sweden. A resilient yet nervous Russia surrounded by enemies at the gates is likely to double down on embracing friendship with China “without limits”, both countries being America’s arch enemies.
In particular, Russia would rely on China as its largest customer for energy and agricultural exports, the latter production likely to expand thanks to global warming. China’s trade and investments are expected to take up Russia’s domestic markets vacated by Western enterprises and brands.
As a gateway to the rest of Europe, Ukraine is likely to resume having China as its largest customer for wheat and minerals. What is more, the BRI would be welcomed as a white knight with deep wallets for Ukraine’s reconstruction.
Wary of the perceived “China Threat” to its values and security, the European Union is unlikely to return to its former coziness with China. While relying on America’s leadership and NATO’s combined military might to deter an embittered Russia, leading countries like Germany, France, Italy and Spain are likely to foster growing European capabilities, including the military, to conduct the EU’s own independent affairs of state, less dictated by the United States.
Europe’s overall attitude towards China, therefore, may not be on all fours with America’s. On the one hand, it would erect firewalls and safeguards against perceived China threats, on the other hand, it is likely to capitalize on its own excellent institutions and traditions to foster a more constructive relationship with a more powerful China pivoting more to Europe and Eurasia in preference to a hostile United States. This is likely to translate into more EU-China trade, investments, research, and people-to-people exchanges, to say the least.
All told, the War in Ukraine promises to be a global game-changer. It exposes Russia’s and Ukraine’s vulnerabilities as well as resilience. It is ushering global dynamics more in tune with China’s quest for its China Dream of national renaissance than with the United States’ hope of not having to share power ever with a rising peer competitor of diametrically different civilization, culture, race and ideology.
Ultimately, it would beg the question whether the United States’ current hard-wired anti-China Manichean mindset and policies needs major modification if the world order is to be properly managed to maintain peace and prosperity for all nations.
Author: Andrew K.P. Leung (International and Independent China Strategist. Chairman and CEO, Andrew Leung International Consultants and Investments Limited)
(The views expressed in this article belong only to the author and do not necessarily reflect the views of World Geostrategic Insights).
Image Credit: Rodrigo Abd/AP