The Role of Modern China in a Changing World

We are currently witnessing the greatest change in the Geo political landscape that has ever occurred in the lives of those alive today.

At the end of the Second World War there were two major powers in the world: Russia and the United States. Only one, the United States, then had the atomic bomb, which they had used in July 1945 in a live experiment on the people of two Japanese cities, Hiroshima and Nagasaki. From the United States point of view, the experiment was a success. It killed and maimed hundreds of thousands of Japanese.

Importantly from the United States point of view it demonstrated that they alone possessed an awful means of mass destruction. The United States retained its nuclear monopoly for a further three years until August 1948 when the Soviet Union successfully tested its first nuclear bomb at the Semipalatinsk test site in Kazakhstan.

They were followed by the United Kingdom in 1952, Israel in 1963, China in 1964, France in 1968, Pakistan in 1972, India in 1974 and North Korea in 2006. To date they are the only known nuclear armed powers. It has contributed to an uneasy peace being maintained between the great powers ever since. An attack by one upon the other would result in immediate retaliation and the probable extinction of life on this planet.

It would be a mistake however, to call the past 77 years a time of peace, notwithstanding the uneasy peace that has existed between the great powers. The United States has bombed and invaded at least 31 countries since the end of World War II, none of them possessing either the means to defend themselves or to retaliate. The number of countries that have experienced United States interference in their internal affairs is at least double that number.

By comparison, China has fought border wars with Tibet, India, the USSR and Vietnam. Tibet is a special case and regarded by China as part of its own territory. China is now allied with India as common members of the Shanghai Cooperation Organisation. It similarly now has good relations with Vietnam. Russia is a special case. The two countries are now close allies, not the least because of the unrelenting hostility of the Americans. Interference in the internal affairs of China is waged nonstop, and the American attitude to Taiwan is only one example of blatant interference in China’s internal affairs.

The beginning of the close relationship can be traced back to their formation of the Shanghai Five Mutual Security Agreement formed in 1996. In that year the five founding countries, China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan signed a mutual security agreement.

Then later in June 2001 those same countries formed the basis of the Shanghai Cooperation Organisation. It currently has eight member states, having added India and Pakistan in 2009 and Uzbekistan in 2015. There are four observer states, including Afghanistan which joined in 2012 and Iran which joined in 2005. There are six dialogue partners of whom the largest is Turkey with nearly 79,000,000 people in its population.

The existence of this organisation is almost totally invisible in Australia which maintains a remarkably ambivalent attitude towards the Asian nations that are its closest neighbours and include its most important trading partners. The recent hostility manifested by the Prime Minister and largely echoed by the leader of the Opposition toward China is a remarkable example of pursuing policies that are the antithesis of what one would expect toward its neighbours and major trading partners.

In this context it was therefore somewhat surprising that Australia joined the Regional Comprehensive Economic Partnership, a grouping of Asian nations plus New Zealand and including China. It remains to be seen whether Australia actually utilises that relationship or whether its antipathy to China prevents Australia from gaining full benefits from its membership.

The dominant geopolitical feature of recent years has been the growth of the economies of the Shanghai Cooperation Organisation countries and their association with the other Asian regional grouping of the Eurasian Economic Union (EAAU) which consists of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan. Three of those five are also members of the SCO. The pattern is becoming clearer all the time. An association of Asian neighbours with a consistently growing economic relationship. They represent the powerhouse of world economic development at the present time and for the foreseeable future.

The very success of this growing economic relationship and with their social and political ties has prompted attempts to disrupt their growing strength. Last year there was a rather clumsy United States inspired bid to overthrow the government of Kazakhstan. Russia’s rapid reaction to the attempted coup in association with its EAEU Partners nipped the attempted overthrow of the Kazakhstan government in the bud.

All the while the ties between China and Russia grow progressively stronger. The visit of Mr Putin to Beijing in February this year when he met with China’s Mr Xi was clearly a watershed moment in the world’s geopolitical development. The meeting received very little coverage in the Australian media, yet it clearly marked a watershed moment in the history of the two nations and their vision as to the future.

It is clear that Russia has given up on Western Europe, a decision undoubtedly prompted by European reaction to Russia and the events in Ukraine. The western powers have seized approximately $600 billions of Russia’s foreign exchange holdings, an astonishingly brazen example of blatant theft. It undoubtably had a major influence on not only Russian but also Chinese thinking.

The Chinese government holds $3.25 trillion in foreign exchange reserves as at the end of 2021. The exact composition of China’s foreign exchange reserves is classified information, although China’s foreign exchange administration announced that at the end of 2014 that 58% of China’s foreign exchange reserves were held in United States dollars, down from 79% in 2005. It is believed to have fallen much further over the past seven years.

At their February 2022 meeting, Putin and Xi agreed on a program to accelerate their dealings with Asian, African and Latin American countries. A number of important decisions were made at that meeting, including the highly significant decision to accelerate the use of alternatives to the United States dollar. The control exerted by the world’s use of the United States dollar has been a principal factor in United States global dominance in the post-World War II period. The decision by Russia and China to move out of the dollar is of enormous significance, and its implications are again missing from Australian media discussion.

Ironically, the United States theft of Russia’s financial assets (together with that of the European powers,) has accelerated the trend for other countries, especially among the so-called developing regions, to also move their assets out of the United States dollar. One example of the major shift occurring in world trade is that China has recently agreed a major deal with Saudi Arabia to pay for the purchase of Saudi oil using the Chinese yuan. This decision reflects the deterioration of Saudi – United States relations in recent times. It sent a shockwave through the United States financial system.

The Saudis hold >15% of the world’s known oil reserves and is the largest exporter of crude oil in the world. The Saudis are the world’s second largest producer of oil, exceeded only by Russia. China has only 1.5% of the world’s oil reserves, and is ranked 14th in the world. Both Russia and Saudi Arabia are therefore crucial to China’s economy which in parity purchasing power terms is now the world’s largest economy, with the gap between itself and United States growing wider by the day.

None of this is acceptable to the United States which has used its economic and military power to pretty much do what it wanted to do to the rest of the world. This is now changing, and at an ever-increasing pace. The decision by Russia and China to create a new world financial system is going to celebrate the relative United States decline at an ever-faster rate. Again, there has been minimal discussion of this world shaking event in the Australian media.

The blunt fact is that the world economic and financial centre of gravity has moved away from Europe and the United States from where it had ruled the world for a very long time.

The United States shows no signs of accepting that reality and their reaction poses potentially the greatest threat the world has faced. Australia has willingly accepted an inferior role in this blatant bullying.

China is showing that it can lead the world in a different way, without invasions, bullying and waging war on others. The challenge for Australia is to recognise that the world has changed and to adapt to the new reality. Frankly, the signs are not encouraging.


By James O’Neill
Source: New Eastern Outlook

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