Counter-globalisation and the new era
Prominent Chinese foreign policy thinker Yan Xuetong recently held a lecture at the Danube Institute in Budapest about China’s foreign policy and counter-globalisation. We sat down with the Dean of The Institute of International Relations at Tsinghua University to discuss the future of US-Chinese relations, de-risking and Hungary’s role in the BRI.
Counter-globalisation and the new era

Counter-globalisation and the new era

Photo: Róbert Hegedüs
Mariann Őry 31/05/2024 10:35

Prominent Chinese foreign policy thinker Yan Xuetong recently held a lecture at the Danube Institute in Budapest about China’s foreign policy and counter-globalisation. We sat down with the Dean of The Institute of International Relations at Tsinghua University to discuss the future of US-Chinese relations, de-risking and Hungary’s role in the BRI.

- How do you see China’s role in the changing world order? Do you think a lasting bipolar world order or a truly multipolar system is more likely? How do China’s relations with the Global South rearrange the status quo?

- Being the second largest power, China’s impact on shaping the global order will only be less significant than the US in the coming decade. Due to its principle of peaceful coexistence, China will be unlikely to involve itself in military clashes. In contrast, China will have influence on the global economy. China’s impact on the global security order will be limited while it has a large influence on shaping the economic order. It is very possible for the current bipolarity between China and the US to last for a decade or more because other countries are unlikely to catch up to the US or China in terms of capability.

There is a lack of consensus on the definition of “the Global South.” The Global South is not a replacement for the term “developing countries.” For instance, Russia is a developing country, but does not consider itself part of the “Global South.” Meanwhile, Singapore believes that it belongs to the Global South despite being a developed country. It is also unclear whether Hungary views it as part of the Global South or not. Despite the lack of clarity on its membership, China wishes to be viewed as part of the Global South to maintain positive relations with developing countries.  

- You have previously warned that deteriorating US-China relations and Washington’s decoupling efforts are leading to deglobalisation. What could change this trend?

- To clarify, anti-globalisation refers to the people’s opposition to economic globalisation, de-globalisation refers to governmental policy of reducing international economic interdependence, and counter-globalisation refers to the general trend of the current global order. The decoupling efforts by Washington is a type of de-globalisation policy, which is leading to the current trend of counter-globalisation. 

Anti-globalisation has existed since the early 1990s, but it did not bring about the trend of counter-globalisation. The trend emerged when major powers adopted a de-globalisation policy under the name of protecting their national economic security in the late 2010s, such as the trade war initiated by the Trump administration against China in 2018. Nowadays, all major economic entities, including the EU, Japan, India, the UK, and Russia, are emphasizing economic security and tightening control over foreign investment. 

At present, the middle and small states have a stronger motivation to resume globalisation than major powers because their economy is more negatively impacted by counter-globalisation. A noteworthy phenomenon is that the North and South distinction does not correlate with whether a state is for or against reglobalisation. For instance, among the “Northern” countries, the US, UK, Germany and France are adopting de-globalisation policies, while New Zealand, Portugal, and Greece are looking for reglobalisation. The situation is quite similar among “Southern” countries. When major powers cannot provide leadership for reversing the trend of counter-globalisation, middle and small states will need to rely on their collective efforts to establish new international regimes for reglobalisation.

Photo: Róbert Hegedüs

- From the Western point of view, China not only wants to challenge the US hegemony but also wants to replace it. What is this view based on, and how would you describe China’s actual mindset?

- The phrase “national rejuvenation” refers to China’s desire to resume its status as the world centre in the future. The US will inevitably lose its dominant position if China achieves that goal. Therefore, many people regard China’s desire for national rejuvenation and the US’s global domination as a structural conflict. Unquestionably, both the Chinese government and its people would like for China to be stronger than, or be at least as strong as the US. Nevertheless, the question is not what China wants but whether China can achieve that goal and how long it will take to achieve it. 

The national capability gap between China and the US is too large to be closed in the coming decade. In 2023, China’s GDP is less than 70 per cent of the US’s and the military gap is even larger. It is true that China is devoting great efforts to prevent the gap from enlarging with the hope of reducing the gap if possible. However, I do not think that Beijing has any plan to replace the US as the world's dominating power in the coming decade.

- How do you expect the EU’s “de-risking” policy to evolve? Will this policy remain with us, or will Europe sooner or later seek a more balanced approach, as some national leaders are urging?

- The EU started de-globalisation, officially called de-risking policy, because of the war in Ukraine. However, this policy will likely continue long after the war ends. The de-risking policy targets not only Russia but also China and some other countries. I believe this policy is also concerned with preventing American companies’ domination of the EU digital market. The main driver of this policy is no longer the war in Ukraine but the EU leaders’ fear of economic independence.     

However, the trajectory of the EU de-risking policy will not be linear. With the concern of so-called “economic security”, the EU will strengthen its de-risking policy in the near term, but poor economic growth may convince the leaders to deregulate in the future. De-risking policy will inevitably hinder the EU’s growth and policymakers will suffer backlash from people’s anger at the poor economy. If Trump wins the presidential election this year, he may reduce military aid to Ukraine and take a tough stance on EU’s market protection. This scenario may drive the EU policymakers to adjust de-risking policies earlier than predicted.

- Both China and Hungary are interested in strengthening Eurasian connectivity via platforms like the Belt and Road Initiative (BRI). What do you think the BRI should focus on during its second decade?

- The BRI has achieved progress by finishing some infrastructure projects, meanwhile, it also faces some financial difficulties. Financial problems could be a persistent problem in the future. How to use limited financial resources is a crucial issue for strengthening Eurasian economic cooperation through BRI projects in the future. The world economy has entered the digital age, and the digital economy is growing faster than the traditional economy, accounting for an increasing share of the global GDP. For the sake of sustainable BRI development, it is necessary for the BRI to shift its core projects from transportation infrastructures to those closely related to the digital economy, such as digital technology R&D, AI standards and regulations, digital service industries, etc. If the BRI projects are designed according to the paradigm of digital economy, the Eurasian economic cooperation will be upgraded substantially. 

- How do you see Hungary’s policy towards China and the country’s role in European-Chinese relations?

- Hungary’s policy towards China is very positive and helpful for improving China-EU relations. However, China-EU relations are so complex that China-Hungary relations' impact on it is limited. When China and the EU cannot get along with each other, the strategic cooperation between China and Hungary becomes even more valuable. China-Hungary relations are better than China’s relations with other EU members. However, there is still room for the two countries to further improve their strategic cooperation. In the digital age, technological cooperation serves as an important base for stable strategic relations between countries. This is also true for China-Hungary relations. For the sake of sustainable strategic relations, China and Hungary should consider developing more joint programs on digital education, research, development, networks, products, services and markets.

The author is managing editor of Eurasia

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