Author: Shin-wha Lee, Korea University

The international community has faced an unprecedented social and economic shock due to three ‘big bangs’ — increasing US–China strategic competition, the fourth industrial revolution and the COVID-19 crisis.

These three big bangs are interrelated and pose important challenges and consequences for world trade, regional stability and the future of the liberal international order.

First, the US–China trade conflict and strategic competition that began in earnest in 2018 stemmed both from a sense of crisis within the United States about China’s unfair trade and industrial espionage and from the rapid economic growth, advanced technological development, and strengthening military power achieved through them.

Faced with an increasingly vulnerable global supply chain stemming from COVID-19, countries rushed to reorganise their supply chains to strengthen security. As the link between technology and security became more important, the US enacted a ‘Special Act on Semiconductors’ and hastened the ‘internalisation’ of the semiconductor industry. The reorganisation of China-centred global value chains is restructuring the world economy and trade.

The United States and other developed countries are abandoning offshoring to China to cut costs and instead are reshoring, nearshoring or ally-shoring them. The trend of shifting value chains away from China is based on the judgement that leadership in advanced technology is the only means to maintain strategic hegemony.

Second, the pandemic confirmed that the postwar world order is unravelling. Although the global organisations and norms that have led international affairs and the economic order for the past 75 years are still in place their practical role and binding force are waning. It is unlikely that new organisations and norms will emerge to fill the gap, and the great powers show no sign of global leadership. Instead of cooperating to combat the pandemic, the United States and China aggravated mutual distrust and antagonism. The relative decline of the United States and growing international distrust of Chinese leadership has created a ‘G-Zero’ era, in which the existing global governance centred on major powers has reached its limits and there is increasing instability and uncertainty.

Third, while the United States and China both advocate multilateralism; the two nations have different strategic goals, methods and approaches to its implementation. In their strategic competition, they are each mobilising multilateralism as a tool for mutual exclusion. US President Joe Biden has criticised Donald Trump’s ‘America First’ policy and declared alliances and multilateral cooperation as his top foreign policy priority. But at the heart of Biden’s multilateralism, much like Trump’s, lies the separation and containment of China. This reflects how the United States cannot cope with the rise of China by itself. Beijing criticises Washington’s multilateral approach as ‘closed and exclusive’ and seeks to empower anti-Quad solidarity by strengthening traditional North Korea–China–Russia relations. Along with Iran, Beijing aims to construct a ‘coalition of sanctioned states’.

The accelerating US–China confrontation is forcing middle powers to re-evaluate their strategic positioning. In the international realm, middle powers protect the interests of small and medium-sized countries, providing a third ground in which to weather the storm of great power competition. Should a middle power choose either side, it risks retaliation or exclusion from the other — the limits of the strategic base and capabilities of middle powers are now clear.

Cooperation among democratic middle powers is important, because they share norms, values and rule of law to set economic and technological standards that help counter China’s unfair and predatory behaviour. However, in relations with China, there are ‘temperature differences’ among many of the United States’ middle power allies. What if they are ‘like-minded,’ but not quite ‘like-situated,’ when considering their respective national interests and priorities?

Australia, for example, cites its close relationship with United States and Europe as an important reason to move towards greater solidarity with the United States. That middle power seems determined to defend its values and norms and abandon China despite strong trade retaliations. How then to explain Germany and France, equally traditional democratic allies of the United States, and their ambivalence towards the two great powers? They are deeply connected to China through trade and technology and also seem hesitant to fully invest themselves in technology coalitions such as the US-led democratic alliance and Clean Network. South Korea is in an even more difficult position to make the binary choice between the United States and China. Unlike Australia — which is rich in natural resources and has the advantage of geopolitical distance — South Korea faces a strategic dilemma wherein to align with the United States for security and with China for the economy, risks its being abandoned by both.

There are doubts as to whether South Korea’s diplomatic and strategic concerns about China’s expanding influence can be resolved simply through participation in democratic alliances. Yet cooperation with like-minded countries, notwithstanding China’s growing strength, increases the likelihood of upholding liberal values and norms on trade and technology, and ultimately serves the national interest. The United States therefore needs to understand the unique positions of Korea and other middle powers facing the dilemma of this choice, and devise measures to compensate for the damage it may inflict.

Middle powers may often have felt dissatisfied with the framework of the postwar US-led liberal international order. At the same time, their participation in this order allowed them to maintain security and pursue a market economy, democracy and multilateralism. Their preferences lie in improving and renewing, rather than eliminating or replacing the status quo. Given the United States’ technological capabilities, many countries are also likely to continue to be dependent on US semiconductors, software, and other advanced technologies for some time yet.

The international community is doubtful about the sincerity of China’s multilateral initiatives. Beijing’s predatory behaviour in the South and East China seas, trade retaliation against South Korea and Australia, and human rights issues in Hong Kong and Xinjiang are among the reasons for this scepticism.

Middle powers can assume a leading role in resolving problems that are important to the international community such as vaccine research, climate change and maintenance of open trade. They can also have some opportunity to exert influence over the great powers through numerical superiority and a united voice.

A coalition of middle powers may not exert enough influence to challenge the dynamic of great power politics. But, if a coalition of middle powers can fill the gaps in the multilateral system and serve as a bridge connecting US and Chinese economic or security interests, both powers will recognise its utility and give it standing. The future of the liberal international order no longer depends only on the ability and willingness of the United States to continue providing global public goods but also the ability of the middle powers to ensure the order’s maintenance and development.

Shin-wha Lee is a Professor of the Department of Political Science and International Relations, Korea University and President of Korea Academic Council on the UN System (KACUNS).

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