Source: World Affairs

There are some new and complex trends emerging in the current international situation. As for how to look at the trend of the international situation in 2018 and years to come, the author puts forward the following observations.

I. Sino-US relations will face serious uncertainty in 2018

Such uncertainty is not constructive but negative. The core is not the potential military conflict between China and the United States, but economic confrontation, and the United States is prepared for this. The US National Security Strategy released at the end of last year, no matter what field is involved, or even the field of values, is all about economic issues. It’s all related to the economy. The United States believes that China’s “aggression” against the US economy has threatened its core security interests. So there is likely to be a trade war between China and the United States, whether on a large, medium, or small scale. This is one of my biggest concerns, that is, there will a real trade war between China and the United States. We have to be mentally prepared, so that when it does come, we will be less vulnerable and able to withstand the blow.

II. The United States strategically positions China as a “rival”

Based on this positioning, the United States will work out a series of policies, for example, restrictions on China’s economy, science & technology, education and cultural exchanges, and will introduce a comprehensive policy prototype. Some issues that used to be considered easier to communicate between China and the United States are now very difficult to deal with. Of course, it cannot be called the Thucydides Trap. It’s not that far, but the atmosphere has been badly damaged. What areas that could once have been negotiated or discussed are now impossible to be negotiated or discussed, and dozens of small mechanisms under four major mechanisms have been closed. This will affect not only Sino-US relations, but also regional security and global governance.

As a result, the region now called “the Indo-Pacific region” by the United States will undergo geopolitical structural changes. Specifically, there are two levels of change. One is the hot spots that we already know, that is, the situation on the Korean Peninsula, Taiwan Strait and South China Sea. There is also a small “point” on the issue of Malacca Strait Passage. Then, the quasi-alliance of the United States, Japan, Australia and India wishes to draw more Indo-Pacific countries into the alliance. This is a less fixed alliance, they are also called partners, but such partnership has a lot of implications. So, it’s a severe strategic challenge facing us, as to whether we can foil the attempt of the United States to build an alliance in the Indo-Pacific region. We cannot afford to wait until it’s finished in order to figure out a way to break it down, but must take actions before it’s built, because once it is established, the price would be too high for us to break it down again.

III. Russia’s relations with Europe and the United States have entered a period of adjustment, or “intermission”

After the U.S. has made China its number one rival, Russia has clearly felt much more relaxed. Its withdrawal from Syria is just part of this move. On the issues of the Ukraine and Crimea, the United States is likely to loosen up a bit. Actually, it was something Trump wanted to do in the early days of his presidency, however, because of the "Russia scandal", he was unable to do anything. He would still make a deal with Russia, that is, what would Russia give to the United States if I loosen up on Crimea? The result is, Russia will reduce its cooperation with China. This will produce tremendous pressure on China, for example, while we used to carry out joint exercises with Russia in the Yellow Sea, Japan Sea and even the East China Sea, now Russia has stopped or reduced them. Though Russia wants something from China economically, whether Russia can cooperate with China as it used to in terms of security is a problem. The triangle of the United States-Europe-Russia and the triangle of the United States-China-Russia may all undergo adjustment.

IV. The situation in the Middle East is complicated. The situation in the Middle East has changed as a result of the withdrawal of Russia, which has become a contradiction between Turkey and the United States

Turkey is determined to destroy the Kurdish Independence Movement, while the United States actually wants to establish a Kurdish state, which has led to a struggle over the Kurdistan issue amongst the US allies. This is far more complicated than the fight against the Islamic State (ISI) together. Of course, the United States will still move towards the overthrow of Mr.Assad.

So, following the withdrawal of Russia, the internal struggle in Syria, together with the struggle between Turkey and the United States, has formed a new struggle situation in the Middle East. It is a form of local war, not a fight on a small scale, or a one-off attack on terrorists. It's going to be a very complex question as to what changes will take place in the Middle East, whether Iran and Saudi Arabia will be involved and in what way.

Israel has made a new demand to China, that is, hoping to discuss Middle East issues and regional order with China. If the United States withdraws, or reduces its responsibilities in the Middle East, Israel feels that its security is in question. So cooperation with China is becoming one of Israel’s security guarantees in the region. But how we work with Israel needs serious consideration, because we have a lot of Arab friends. There’s going to be a big change in the Middle East, which should not be underestimated. Such change will also affect Europe and even East Asia.

V. Changes in the world economy, trade, and finance

In my opinion, the core of the next international order is the dispute over international economic rules. The United States wants to change the WTO rules or re-regulate China within the scope of the WTO. Structural changes in the world economy are linked to changes in rules to a large extent, which is equivalent to redistribution of resources in the world economy.

Now, China's industrial structure has undergone great changes. China is no longer an exporter of purely labor-intensive products, but has moved towards the middle and advanced levels of equipment manufacturing and electronic products. This results in an obvious competition with the United States, Europe, and Japan in the low end part of the high-end industrial chain. Recently, some people in the United States have clamored that "China steals technology", while Europe and Japan have also accused us in this way. Market competition is linked to rule competition, and China’s investment in Europe, the United States, and Japan will be affected by it.

We should be fully prepared for the dispute over the rules of the world economy. One is that the rules we have accepted may change; the other is new rules will be added to limit us; and the third is to prevent us from participating in the formulation of new rules.

VI. On the Belt and Road Initiative

In the B&R international cooperation mechanism, we are the initiator and other countries are the recipients; we are the leading party and other countries are the followers. So, as some projects hit the ground, various risks and contradictions will surface. Problems such as the distribution of benefits and the issue of project ownership are not terrible. They are the pain that have to be endured when transforming from an originally free-aid model to market investment.

The B&R initiative has entered the stage of substantive examination. China wants to examine what can be done and what cannot be done after the landing of the B&R; and the other parties want to examine if they will benefit or lose more after the landing of the B&R. Therefore, we should implement B&R research into specific countries and specific projects, rather than talking about B&R in a general way.

What relates to this is the geo-economic issue. Japan has continued to engage in the Trans-Pacific Partnership Agreement (TPP), seized the leadership, superficially transformed it into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and signed it. It remains to be seen as to whether the United States will rejoin or not. The United States is focusing on renegotiating the North American Free Trade Agreement (NAFTA), by which we originally hoped to enter the Mexican and Canadian markets. As a matter of fact, a lot of Chinese goods entered the US market through Mexico and Canada previously. Now the United States is going to close many of NAFTA’s back doors and set up a few more new barriers. Moreover, it will re-screen the countries that enter NAFTA and its original members. In addition, in Southeast Asia, Asia, and in the Asia-Pacific region, there will be problems with regional cooperation mechanisms, and we will face new challenges in terms of geo-economics.

VII. We will participate in some major activities this year, such as the Forum on China-Africa Cooperation, the G20 Summit, and the China International Import Expo held in Shanghai.

The import expo is very important. It is the first time for China to hold such an expo, and many countries around the world will attend it. China must turn imports into new strategic resources. The United States regards its market as the most important strategic resource: whoever is good to it will have more market access, whoever is not good to it will get less market access, and whoever is seen as problematic in its eyes will not be able to share the market. We’re not going to be so tough as the United States, but imports are indeed a new and important international economic card for China. We have to import a large amount of energy resources, advanced equipment, cutting-edge technologies and luxury goods. Nowadays, Chinese people spend one or two trillion dollars a year on luxury goods when they go abroad, so it's better to import them, so that people can spend their money at home. This year’s G20 Summit is to be held in Latin America, through which the political and economic influence of China in Latin America can get expanded. Now, Latin America has a particularly friendly attitude to China and the relations between the two sides are developing very quickly. The world is so big, the fact that the United States is bad to us doesn’t mean the whole world is bad to us, when our relations with other regions have improved, the United States will regret losing Latin America and losing China, too.

VIII. The relationship between ideology and national strategy

We must conscientiously implement some important concepts put forward at the 19th CPC National Congress: A community of shared future for mankind, China's choice of roads, the road to self-confidence, and the revival of socialism in the world. At the same time, we should also seek truth from facts and find out what is the most urgent thing in our international strategy.

To sum up, I think the above eight points are a new starting point for the world political and economic system, or the beginning of the strategic competition stage of great powers, not only China and the United States, but also other major countries, including India, Japan, Russia and the European Union, etc. The beginning of the strategic competition stage of great powers is the beginning of geopolitical reshaping and also the beginning of the reconstruction of global governance strategy rules. It is reflected in three “Re”: reappearance, reshaping, and reconstruction.

For our part, we have three things to do, which can be summarized as follows: First, to understand the intentions and abilities of our adversary, what exactly does the United States want to do? Have the new edition of the US National Security Strategy and a series of other reports really defined the new strategy of the United States? Or is it just the voice of some hardliners in the United States? Or even though the United States wants to say that and to act in that way, but doesn’t actually have such abilities? There's a difference between different answers to them; Second, we should defuse some means taken by the United States, India, Japan and other countries to attack us; Third, we should crack new strategic thinking of the United States. The relationship between big powers depends on the strategic thinking of such powers. Now the thinking of the United States is a mixture of geopolitics, military theory, Cold War thinking, and the Thucydides Trap. There is also a theory that weapons alone decide the outcome of war, so it wants to be ahead of China in weapons and equipment, while that depends on technology leadership. The strategic choice of the United States against China will be different depending on its weapons leading China by five years, ten years, or twenty years. If leading China by ten years or twenty years, it will choose aggression; if leading China by five years, it will not be able to fight, only able to sit down and talk with China on an equal footing. These are the basic characteristics of the US strategies, so it is necessary to break the strategic thinking of the United States. It can be summed up in three new words - understand, defuse, and crack.

(The author is a member of the Academic Committee of Shanghai Academy; the original title is The International Situation in 2018: A New Starting Point for the World System)