When China Rules the World

by Martin Jacques

  The future of China ’s relationship with Iran is open-ended. China remains constrained by the need to maintain good relations with the United States, and nowhere are American sensitivities greater than in the Middle East. The US regards Iran as an alternative power broker in the region and a major potential threat to its interests — hence its long-running hostility towards Iran. In the long run, China would probably be content to see Iran playing a major, perhaps even dominant, role in the Gulf region, given that it will be a long time, if ever, before China itself could perform such a role; every global power needs allies and Iran is China ’s natural ally in the Middle East. As the international relations expert John Garver argues, a dominant China in East Asia combined with a dominant Iran in West Asia could ultimately become ‘a central element of a post-unipolar, China-centred Asia in the middle of the twenty-first century’. [1106] Possibly China is thinking in these terms for a future multipolar system. [1107] Meanwhile, in order to keep its options open, China is likely to continue to help build up Iran while seeking not to antagonize the United States. The desire of the Obama administration to bring Iran in from the cold could make life easier for the Chinese on this score.

  There are other possible long-term scenarios. China ’s highest priority is Taiwan, and the biggest obstacle in the way of reunification is American military support for the island. The most likely cause of military conflict between China and the US is Taiwan; and in the event of war, China would be extremely anxious about the security of its maritime oil supply routes, especially in the Malacca Strait and the South China Sea, which could easily be severed by the US ’s superior air and naval power. In such an eventuality, Iran could at some point offer the possibility of a land-based supply route from West to East Asia. But there is another possible future scenario, namely that China and the US could arrive at some kind of trade-off involving Taiwan and Iran in which the US agrees to stop sending weapons to Taiwan and China volunteers to do the same with Iran. In effect, China would agree to sacrifice Iran in return for Taiwan, its greater foreign policy priority. Such a deal would represent a tacit recognition that East Asia was China ’s sphere of influence and the Middle East, America ’s. [1108]

  RUSSIA

  During the 1980s, after two decades of bitter antagonism, China ’s relations with the Soviet Union began to improve. It was the collapse of the Soviet Union in the early nineties, however, that was to provide the conditions for a complete transformation in the relationship between the two countries. Russia became a pale shadow of its former Soviet self, with only half of its former GDP and less than half of its previous population, though still with around 80 per cent of its old territory. [1109] Meanwhile, China embarked on its reform programme and enjoyed non-stop double-digit growth. Together, these two developments represented a huge shift in the balance of power between the two countries, with China now in a far more powerful position than its erstwhile rival. During the nineties the two countries finally agreed, after centuries of dispute, on a common border, which, at 2,700 miles, is the longest in the world. From being a highly militarized region, the border became a centre of trade and exchange. The resolution of the frontier issue enabled Russia and China to withdraw large numbers of troops from either side of the border, Russia to Chechnya and (in response to NATO’s expansion) its Europe-facing territory, and China to the Taiwan Strait. [1110] In the steadily improving atmosphere between the two, they established, along with several newly independent Central Asian nations, the Shanghai Cooperation Organization, for the purpose of promoting collaboration and improving security in the region. A shared, overarching Sino-Russian concern about the overweening power of the United States in the post-Cold War world, with Russia feeling particularly vulnerable following the collapse of the Soviet Union and China relatively isolated after Tiananmen Square, was a major factor in the signing of a strategic partnership agreement between the two countries in 1998. [1111]

  Nonetheless, there must be severe doubts as to the strategic potential of their relationship. The underlying problem is Russia ’s sense of weakness, on the one hand, and China ’s growing strength, on the other. Although the rapprochement had much to do with Russia ’s sense of vulnerability following the collapse of the Soviet Union and its desire to make peace with its neighbours, that frailty also left it feeling insecure and suspicious of China. The most obvious expression of this anxiety is to be found in the Russian Far East, where a population of a mere 7.5 million confronts a population of 112 million in the three provinces of China’s north-east. Now that the border has been made porous, numerous Chinese have crossed into Russia to seek work and ply their trade. In 1994 Russian estimates put the number of Chinese residents in Russia ’s Far East at 1 million, compared with a Chinese estimate of less than 2,000. According to some demographic projections, Chinese could be the second largest minority ethnic group in the Russian Federation by 2051. Exacerbating these fears is the demographic crisis facing Russia since the collapse of the Soviet Union, with one estimate suggesting that its population will fall by 3 million between 2000 and 2010 to 142 million. [1112] The Russian fear of being overrun by Chinese immigration speaks both of old prejudices and new fears. The size of the Chinese population tends to arouse these anxieties elsewhere, but they are compounded in Russia ’s case by a long history of prejudice and conflict, the huge demographic imbalance between the two countries, and their long border.

  The fact that Russia is rich in oil, gas and many other commodities — as well as being its major supplier of weapons — clearly makes it a very attractive partner for China. But Russia has proved a difficult collaborator, loath to meet its needs, certainly on the terms desired by China. In a long-running saga over the route of a new Russian east-west oil pipeline, with Russia reluctant to concede that it should go to China, as proposed by the Chinese, an agreement was finally reached in February 2009 that there would indeed be a branch to China, in return for Chinese loans to Russian firms. [1113] The Russians are wary of becoming trapped in a relationship with China where they are reduced to being the provider of raw materials for their economic powerhouse neighbour. [1114] Since the turn of the century, indeed, the Russians have become increasingly protective of their oil and natural gas interests, aware that, in its weakened state, these are hugely their country’s most valuable assets, especially in a global market where prices, until the credit crunch, were moving rapidly in their favour. Having rolled back American, European and Japanese stakes in its oil industry, Russia is hardly likely to grant Chinese oil companies a similar interest in the future. Moreover, having embraced resource nationalism under Vladimir Putin, Russia is now driving very hard bargains over its oil and gas with both Europe and its former territories. The Russian suspicion of Chinese intentions extends to the Central Asian nations that previously formed part of the Soviet Union. Russian sources, it has been reported, revealed in August 2005 that one reason for Moscow’s haste in seeking to enter the former American base at Karshi Khanabad in Uzbekistan is that China had made discreet expressions of interest in acquiring it themselves. [1115] China has found itself confronted with many obstacles in its desire to acquire oil interests in Central Asia, even in Kazakhstan, where it has its only major oil stake in the region; the considerable resistance and suspicion would seem to have been encouraged by Russia, which regards Central Asia as its rightful sphere of influence. [1116]

  None of this is to suggest that the relationship between China and Russia is likely to deteriorate, though that is not inconceivable should Russian fears about the rise of China become acute, perhaps even persuading Russia, in extremis, to turn westwards and seek some kind of solace with the European Union or NATO. It does, however, indicate that serious tensions arising from the major imbalance of power between them are likely to constrain the potential for the relationship becoming anything more than an arrangement for maintaining their bilateral relations in good order, which, given their troubled history, would in itself be no mean achievement. [1117] For the t
ime being, at least, a strong mutual concern about US power is likely to bind the two countries together, as it has already, in a limited but significant way, on issues like Iraq and Iran. At the same time trade between the two has been increasing very rapidly, with a five-fold rise between 2000 and 2007. Russia ’s intervention in Georgia and subsequent recognition of South Ossetia and Abkhazia as independent states in 2008 were not well received in Beijing although there was no official criticism, simply an expression of concern. It was a further reminder that relations between the two powers are far from simple. [1118]

  INDIA AND SOUTH ASIA

  China and India have much in common. They are both hugely populous countries, demographic superpowers, which are in the process of dramatic economic transformation. Between them they account for almost 40 per cent of the world’s population. They are both continental giants, China a dominating presence in East Asia and India similarly in South Asia. By the mid twenty-first century, they could both be major global powers. Together they threaten to redraw the shape of the world, tilting it massively towards Asia while at the same time projecting a new kind of nation-state of continental proportions in terms of both territory and population, a very different kind of global order from when the world was dominated by a handful of small- and medium-sized European nation-states. It is hardly surprising, then, that China and India are frequently bracketed together. Despite these similarities, however, in many respects the differences between them could hardly be greater, as symbolized by their long border running through the Himalayas, the greatest natural land barrier in the world, which serves to mark out what can only be described as a political and cultural chasm between the two countries. China has the longest continuous history of any country while India is a much more recent creation, only acquiring something like its present territory, or at least two-thirds of it, during the later period of the British Raj. [1119] Chinese civilization is defined by its relationship to the state whereas India ’s is inseparable from its caste society. India is the world’s largest democracy while in China democracy remains a largely alien concept. China has a powerful sense of identity and homogeneity, in contrast to India, which is blessed with a remarkable pluralism embracing many different races, languages and religions. These cultural differences have served to create a sense of otherness and distance and an underlying lack of understanding and empathy. It is true that India gave China Buddhism, and that there were many other intellectual exchanges between the two countries during the first millennium and beyond, but these are now largely forgotten. [1120]

  For over fifty years relations between the two countries have been at best distant and suspicious, at worst antagonistic, even conflictual. After 1988 they took a turn somewhat for the better, but despite the warmer diplomatic words, there remains an underlying antipathy. There are two main causes. First, notwithstanding joint working groups and commissions, the two countries have failed to reach agreement on their border. And it was conflict over the border which led directly to the Sino-Indian War in 1962 when China inflicted a heavy military defeat on India which still rankles to this day. [1121] Second, far from exercising unchallenged hegemony in South Asia, India finds itself confronted by Pakistan, Bangladesh, Nepal and Myanmar, all of which China has deliberately befriended as a means of balancing against India, with these countries embracing China as a way of offsetting India ’s dominant position in South Asia. Of these relationships, the most important is that between China and India ’s sworn foe Pakistan, which, thanks largely to China, possesses nuclear weapons. China ’s shrewd diplomacy has meant that India has constantly been on the back foot in South Asia, unable to assert itself in the manner which its size would justify. India has proved much less diplomatically adept, failing to establish its hegemony over South Asia and not even trying to develop a serious influence in East Asia, notwithstanding the large Indian diaspora in South-East Asia, with which it has singularly failed to establish any meaningful kind of relationship. [1122]

  There are two possible outcomes in terms of their future relationship. First, China could accept that South Asia is, in effect, India ’s rightful sphere of influence. In practice, this seems rather unlikely. Chinese influence in the region is too extensive and too well established for it to be rolled back or for China to concede that this should happen. It is an outcome which both China and its formal and informal allies in the region would resist. Furthermore, given China ’s growing strength relative to India, it is probably less likely than at any time in the last half-century. Second, India could accept that China ’s presence in South Asia is permanent and resolve to accommodate itself to this reality by, for example, conceding that an Indian- Chinese partnership is necessary for handling security problems in the region. In the longer run, this could even mean that India acquiesces in China ’s pre-eminence in South Asia as well as in East Asia. [1123] In this context, a major Chinese objective is to prevent the creation of any barriers which might impede the long-term growth of its presence, role and influence in Asia; other examples of this are its resistance to the widening of the US-Japan alliance and its refusal to accept any multilateral approaches or solutions to the sovereignty of the disputed islands in the South China Sea. [1124] The latter scenario — Indian acceptance of China ’s role in South Asia — would be consonant with this objective. In reality, of course, India has been obliged over many years to adapt — de facto at least — to the growing power of China in South Asia, so elements of this scenario already exist in tacit form. [1125]

  China ’s rapid economic growth has underpinned its growing strength in South Asia. In 1950 the per capita income of India was around 40 per cent greater than that of China; by 1978 they were roughly on a par. By 1999, however, China ’s was not far short of being twice that of India ’s. [1126] Furthermore, although India ’s growth rate has steadily risen in recent years, it still remains significantly below that of China: in other words, China is continuing to extend its economic lead over India. Although India enjoys some economic advantages over China, notably its prowess in software, the software industry only accounts for a very small proportion of its labour force. Manufacturing accounted for a little over a fifth of India’s GDP in 2003 compared with over a half of China’s, while 59 per cent of India’s population was still employed in agriculture in 2001 compared with less than half in China. [1127] China ’s economy is now three times as large as that of India, [1128] with the gap extending. Even if India ’s growth rate overtakes that of China, it would take a very long time for the Indian economy to become as large as the Chinese. In short, China ’s economic power is likely to overshadow that of India at least in the medium term, if not much longer.

  This makes the second scenario — India being obliged to live with and adapt to China ’s power and presence in South Asia — rather more probable. It also increases the likelihood that China will emerge over time not only as the dominant power in East Asia but in South Asia as well. There is, however, an important rider to this, as the rules of the game appear to be chang-ing in a significant way. During the second term of the Clinton administration, the United States established a strategic partnership with India which was extended in 2006 by the Bush administration to include nuclear cooperation, an agreement which was eventually approved by the Indian parliament in 2008. [1129] The agreement violated previous American policy by accepting India ’s status as a nuclear power, even though it was not a signatory to the Non-Proliferation Treaty. This was a pointed reminder that US policy on nuclear proliferation is a matter of interest and convenience rather than principle, as the contrasting cases of Iran and Israel in the Middle East also illustrate. The reason for the American volte-face was geopolitical, the desire to promote India as a global power and establish a new US- India axis in South Asia as a counter to the rise of China. [1130] During the Cold War relations between India and the US were distant and distrustful, and even after 1989 they improved little, with the US pursuing an even-handed approach to India and Pakistan and imposing
sanctions on India after its nuclear tests in 1998. It is testimony to the growing American concern about China that the US was persuaded to engage in such a U-turn. For its part, India ’s position had previously been characterized by its relative isolation: apart from its long-standing alliance with the former Soviet Union, its determinedly non-aligned status had led it to resist forming strategic partnerships with the major powers or even second-tier ones. [1131] But there is unease amongst sections of the Indian establishment, especially the military, about China ’s growing power. [1132] Depending on how the US- India partnership evolves, it could dramatically change the balance of power between China and India in South Asia, persuading China to act more cautiously while at the same time emboldening India. [1133] The US-India partnership raises many questions and introduces numerous uncertainties. If it proves effective and durable, then it could act as a significant regional and global counter to China. How China will respond remains to be seen: the most obvious move might be a closer relationship with Pakistan, but it is not inconceivable that China might decide to seek a strategic rapprochement with India as a means of fending off the United States and denying it a major presence in South Asia.