Daily Times

For the last few years there has been debate around one point: who will dominate the world in the future? Will it be the US or China? In other words, will China replace the US, attract the world towards itself and be the new superpower? Some think that China will replace the existing superpower while others feel that the rise of China will not necessarily mean the US’s decline. Instead, the world is becoming multi-polar with the rise of states like China, Brazil, India and South Africa, and filling the space once reserved for the US. China has a uniqueness: its giant land mass with the largest population, military advancement and the continuous social and economic progress since Deng Xiaoping’s reforms helped China to rise, stand up and take on international stature. Now it has become an obvious candidate to balance the US’s influence in the world. But China’s rise has less to do with the US’s diminishing as a world power. Rather, it is the US itself that is responsible for leaving space for China.
The recent developments in the US’s domestic and foreign policies reveal the political and institutional fragmentation in the US, directly affecting the US’s interests abroad. Its economic power has been minimised through decisions made unilaterally in Washington, which does not serve well the US’s interests.
Let us take the case of the International Monetary Fund (IMF). The present world order is characterised by interdependence and cooperation among states. The process of globalisation has accelerated the growth of supranational institutions managing the global economy and the IMF is one of them. It detects looming financial crises and cooperates with countries that are in economic trouble. The economically troubled countries look towards the IMF as a lender of last resort to help them regain stability and undertake economic reforms. But the way the IMF works has reduced the confidence countries once placed in this institution. For example, in recent years, it failed to anticipate the financial crisis of 2009, which disturbed the economies of the west. When countries knocked on the door of the IMF to resolve the crisis, it went too far in imposing harsh conditions on the borrowing countries. Resultantly, IMF critics see the organisation as a tool of the US to perpetuate its economic pre-eminence. In the US, it is seen as another organisation that feeds on taxpayers. Thus, for them, only the US should have a voice and its role in the IMF decision making process should remain unchallenged.
Such thinking acted as an obstacle to IMF reforms, which were necessary to bring it in line with the ground realities of the 21st century. Unfortunately, the IMF and such other institutions reflect the power structures of post-World War II. In order to reform the IMF, the Obama administration in 2010 tried to make a series of reforms. For example, it proposed raising China’s voting share in the IMF’s board from 3.8 percent to six percent. The reforms also included increasing the weight of emerging economies like Brazil and India in the IMF. The board, which also reflects the world order of 1944, unanimously approved all the reform proposals.
However, the Obama administration has not been able to get Congressional approval. Frustrated by Congress delays, China managed to launch its own rival institution: the Asian Infrastructure Investment Bank (AIIB). The AIIB is the Chinese reaction to its downgrading by the US in international institutions. China, for a long time, asked to increase its role in the IMF and the Asian Development Bank led by Japan but to no avail. Therefore, the creation of the AIIB is, indeed, a bigger step for the diminishing of the US’s economic superiority. In order to downgrade the AIIB, the Obama administration launched an aggressive diplomatic campaign to dissuade countries from joining it. The basic reasons given by the US were: the AIIB would not take into account environmental and human rights factors while providing aid to countries. Despite the US’s campaign, 57 countries joined the initiative, which also include stalwart US allies like Australia and the UK. Now, the AIIB is likely to become the bank for large infrastructure projects in Asia, in which the US will have no influence. Japan also announced a fund of $ 110 billion to satisfy Asian infrastructural needs. This will be another policy mistake: the policy of competition and confrontation will lead the world nowhere, but Sino-US cooperation will definitely work for international peace and development.
So, what are the lessons learnt? It is not China’s rise that is diminishing the US’s economic influence; it is the US’s flawed policy of under-representing China on the international stage. China’s rise is bound to take place and the US’s containment strategies will not work now. The best policy would be to cooperate with China, to give China its due role in international affairs. That involves substantive reforms in international organisations to bring them in line with the present ground realities. A good start will be the Congressional approval of IMF reforms undertaken by the Obama administration. If the US and China cooperate, the world can fight common threats like international terrorism, climate change and cyber crime.

The writer is a political scientist based in Islamabad. He tweets @hassanshahjehan