For almost 20 years, the US bet on China first offering to be a responsible stakeholder and then being a member of the G2. Yet, according to the US, China turned down both suggestions, and now the bilateral trust is gone.
Once trust is gone, it’s gone forever, or at least for a long time. How can China recover the confidence of America, which props up a general trust from the world? The US apparently feels right or wrong; it doesn’t need to have China’s faith since it has that of the world.
But what about China: Can China do without trust? When there is no trust, there’s some kind of conflict and attrition that can slip into war. This, in a tiny nutshell, is China’s predicament.
Moreover, China wants wealth, but it needs a real capitalist market to have wealth.
No country has created a market economy as efficient as the US, at least so far. Both Japan and Germany tried to beat the US economy, and both failed.
Japan challenged the US in the 1980s, starting a tech race at the height of the Cold War—and it lost. In the past 20 years, Germany tried a three-pronged platform to de facto challenge US supremacy: the EU as the home market and currency, Russia’s cheap gas, and China’s market and industrial base. It flopped because Russia went mad by invading Ukraine, China went off the US course and thus became less reliable, and the EU remained split.
Neither Japan nor Germany exploded, but they had to revise their ambitions.
The failure of their models also means that state leading business companies, as happened with Japan and Germany, can’t be trusted. These countries need a different destiny that starts from their geopolitics.
In the past 200 years, Japan went through several phases of change in the region. In the second half of the 19th century, it was the “Western nation in Asia.” Starting in the 1920s, it followed the path of Italy, feeling betrayed by the World War I victory, and it challenged the American and European presence in Asia. Then after World War II, it became the US proconsul in Asia, challenging US tech and failing.
For some 20 years, after the 1980s, it was undecided whether to choose China or the US as the main partner, while the US was switching towards China. Then because of clashes with China over the Senkaku islands, Japan turned against China.
Now Japan is becoming the new chemical glue to bond Asia together against China. Japan, Thailand, India, Indonesia, Vietnam, and Australia are a new geopolitical reality. South Korea is the only odd piece in the puzzle because of its old controversies with Japan. But this can and will be managed because Seoul fears Pyongyang, supported by Beijing, more than Tokyo. South Korea is the US’s insurance against Japanese second thoughts.
Russia’s likely loss against Ukraine could open new spaces in the Siberian far East, and Japan could move in as a new stabilizing force.
A similar destiny is with Germany. After the war in Ukraine, a new Europe could be powerful, coalescing around Poland, the Baltics, Romania, and Ukraine, the countries that immediately sided against Russia. Germany could either be squashed by it or accommodate it and become the new glue of Europe, holding the continent together and leading the transformation of Eastern Europe.
This leaves space for China.
US President Trump’s 2018 proposal for a sudden market opening was impossible to accept for Beijing. An abrupt market opening could bring a market crash and then a political upheaval. Chinese politics has to be fixed first, and China needs to have democratic structures that can sustain the possible push of an open market with a fully convertible currency.
Will China do it? Past experiences would suggest Beijing will be very cautious, but the recent move of dropping the drastic Covid lockdowns proves that China is willing to take huge bets. The end of the Ukrainian war could be critical to pushing China in one direction or another. If Russia loses badly, China could do a lot of soul-searching and we don’t know what will happen next.