Monday, November 21, 2016

The moment the US gave the world to China

The moment the US gave the world to China


The Chinese didn't imagine that the US would walk away from global leadership so readily.
But it has happened, in plain view.
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On Friday. In Peru, of all places.

In April, Barack Obama said: "If we don't write the rules, China will write the rules out in that region," the Asia-Pacific.MORE NEWS VIDEOS

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Illustration: Dionne Gain
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A week ago, he gave up his final, forlorn effort to write the rules of the Asia-Pacific.
Donald Trump and Hillary Clinton had both promised to veto the 12-nation trade deal known as the Trans-Pacific Partnership.
The Obama administration, after years painstakingly negotiating the deal, yielded to the reality that the American people have come to regard free trade as their enemy.
Obama reluctantly gave up his effort to have the TPP ratified by the US Congress in his final days in power.
President Barack Obama reluctantly gave up his effort to have the TPP ratified by the US Congress. President Xi Jinping ...
President Barack Obama reluctantly gave up his effort to have the TPP ratified by the US Congress. President Xi Jinping says China will not shut the door to the outside world but will open it even wider. Photo: AP...and then they kissed
Instead, China took over the task of writing the rules, just as Obama had foreseen.
"Openness is vital for the prosperity of the Asia-Pacific," China's President Xi Jinping declared at the annual summit of the Asia-Pacific Economic Co-operation group, meeting in Lima.
"China will not shut the door to the outside world but will open it even wider."
Already, China is the biggest source of growth in the world economy. China accounted for two-thirds of all global growth in the past 15 years.
It's not just Australia that counts China as its biggest trading partner. More than 120 countries out of the world total of 196 have China as their main trading partner.
And so Xi's stance is tremendously appealing to governments and companies around the world.
As NZ Prime Minister John Key said at APEC: "The reason that President Obama pursued the TPP was all about the United States showing leadership in the Asia-Pacific region. We like the US being in the region.
"But if the US is not there that void needs to be filled, and it will be filled by China."
The US hasn't just shut its door to further trade liberalisation. Donald Trump promises to clog up existing trade routes with new tariffs on goods and new rules restricting investment.
The historic significance of this is that America has provided a global public good for the past 70 years.
An open, global trading and investment system has allowed poor countries to trade their way to prosperity. And it allows rich countries to grow even richer. On the proviso that it is well managed. 
But the US is now saying that it will not provide this global public good any longer. It is not interested in maintaining a well-proven road to prosperity. 
And China is saying that it will: "We will fully involve ourselves in economic globalisation," said Xi.
He promised to support the multilateral system, but he also specified three initiatives, all Asia-centric. One is China's alternative to the American-led TPP. 
"This is playing out in real time," said the US Trade Representative Mike Froman, explaining the realpolitik to reporters outside the APEC summit.  
"We see people around the table here that are now saying that if the TPP doesn't move forward they are going to have to put their eggs in an RCEP basket," referring to the China-sponsored Regional Comprehensive Economic Partnership. 
The TPP does not include China. RCEP does not include the US.
Australia, intelligently maximising its options, is a member of both. RCEP also includes the 10 countries of Asean plus India, Japan, South Korea, NZ and China.
It's not just leadership in the global route to prosperity that America is abandoning.
It's also a question of leadership on another big, shared global problem – climate change. The US and China have been co-leaders in recent years in world progress towards curbing carbon emissions.
Here too, Trump promises to take the US out of the picture. Though he may have trouble quickly extricating the US from the Paris accord, it's clear that he will not take any further initiatives in dealing with climate change, which he says is a Chinese hoax to con America into de-industrialising.
Third is the other great public good, security. Trump, who has spent the past 30 years criticising US allies for "free riding" on American defence spending, said during the election campaign that he'd be prepared to walk away from US allies Japan, South Korea and NATO unless they paid more.
He's now making reassuring noises about some allies. We wait to see what the final US position will be, but in the interim a destabilising set of doubts and fears is afflicting America's traditional allies.
Future historians might well look back on this moment as the threshold event in what the late Australian strategic analyst Coral Bell foresaw a decade ago as "the end of the Vasco da Gama era".
The Portuguese explorer made the first ocean link from west to east, opening the way for European colonisation of Asia and India, more than 500 years ago. It was a threshold moment in Occidental ascendancy over the Orient.
But American abandonment of leadership is one thing. It's quite another for China to assume the mantle.
It's inevitable that China will dominate by sheer scale. But size alone is not the qualification for leadership.
To become the true leader of the world's most dynamic zone, the Asia-Pacific, and perhaps even further afield, Beijing will need to supply the global public goods that other nations crave, the goods that the US has offered in recent decades: routes to prosperity; security; and leadership in solving shared problems like climate change. 
China has shown a capacity for some magnanimity, but its behaviour in the South China Sea and East China Sea has been narrowly and aggressively nationalistic. 
America is relinquishing leadership. But what sort of road rules will China write? A rules-based system for the good of all, or a selfishly chaotic zone of clashing interests?
The opportunity is now open.