Crouching Tiger, Hidden Dragon
As the world enters a rapidly changing, more dangerous chapter, China is well-placed to enter the new era with dynamic growth, a vibrant economy, and increasing room to manoeuvre on the world stage. 
Crouching Tiger, Hidden Dragon
The Economics of Geography

Crouching Tiger, Hidden Dragon

Photo: iStock
Zoltán Koskovics 06/04/2023 08:00

As the world enters a rapidly changing, more dangerous chapter, China is well-placed to enter the new era with dynamic growth, a vibrant economy, and increasing room to manoeuvre on the world stage. 

Having emerged from the COVID shutdown as abruptly as they entered it, Chinese companies are chomping at the bit to increase production. Western sanctions on Russian natural gas and oil mean that Beijing now has a virtually unlimited supply of cheap energy at a time when its long-term investments in renewables are also bearing fruit. With the “Northern World” embroiled in a bloody proxy conflict in Ukraine, a vicious propaganda war on the Internet, and an economic confrontation unparalleled in recent history, China could reap all the benefits.

The world has been changing for well over a decade, and China’s growing economic and political influence has been in evidence for even longer than that, but the war in Ukraine has given new impetus to rapid and irreversible changes in the structures that underpin global order. Washington hopes to use the conflict to isolate and weaken the Kremlin while at the same time cementing its grip on allies in the Western World. This strategy comes at a significant cost.
Photo: iStock
The steepest price is being paid by a European economy that relied on cheap Russian gas and oil and Americans who are getting used to higher inflation levels and paying far more than is palatable at the pump. The third world bears an indirect but heavy burden: as supply chains are disrupted first by COVID, and then by Western sanctions on basic Russian exports, countries in the Middle East and Africa are facing unaffordable food prices and even the spectre of famine - a calamity they had hoped had been left behind.

Economic changes will further dilute Western influence in international trade, weaken the position of the euro and the US dollar as global reserve currencies, and shift the centre of the world economy even closer to China. The image and reputation of the West will continue to suffer as billions of people in the global South refuse to understand why they should endure the negative consequences of a quintessentially Western conflict in faraway Ukraine. A severely weakened European economy is fast approaching the point where joining possible future American sanctions against China would bring it to a certain collapse.
Photo: iStock
Meanwhile, Beijing is investing heavily in its own energy sector, which could soon turn it into an energy superpower, in conjunction with growing imports from Russia. Already last year, the Middle Kingdom sold billions of tons of surplus LNG to the gas-starved EU. As the central hub of global logistics, China will play a crucial role in rebuilding supply chains after the disruptions caused by the pandemic, war, and sanctions - giving it additional leverage in international affairs. The crouching tiger is about to leap, and the hidden dragon will soon be revealed.

The author is a geopolitical analyst at the Center for Fundamental Rights (Alapjogokért Központ)

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