Thursday, August 25, 2022

The China Deal

 2022 will be remembered for the Russian assault on Ukraine, an extraordinary choice by the Russian leadership. I still believe there is a dimension to the situation that is not yet in the public domain, because otherwise the decision seems not just reckless but seriously ill-judged; indeed it seems likely that ultimately it will lead to the fall of the regime. Sadly, there will be a lot more blood to spill and nuclear risk to endure before that endgame can be reached.

 

As far as countering the Russians is concerned, I still believe that the Biden administration has performed excellently. The CIA (and MI6) are clearly still very strong in matters Russian, and on this occasion being set up to fight yesterday’s war has yielded a bonus. The western strategy, unspoken because of its cynicism and cost in Ukrainian suffering, is to play for a winning draw. Once initial defeat was averted by Russian ineptitude, accepting a defeat became unnecessary and politically unacceptable. But playing to win carries too many nuclear risks to countenance. Hence we see a stalemate, a situation likely to endure for several more months or even years.

 

I am also convinced that 2022 will go down as a year of lost opportunity by that same Biden administration. The Russian invasion created a window of opportunity for a reconciliation with China. The Russians provided the pretext to reset the narrative, and the strategic incentives for both China and the US to be partners are huge. Sadly, most political incentives in the US work in the opposite direction, but I do believe that a more far-sighted State department could have perhaps pulled off a historic deal.

 

Rather than merely sniping about their lack of vision, I spent some time pondering what the parameters of such a deal could look like. That way I could confirm my belief that the strategic conditions exist and go further in assessing what the blockers are and how they might still be overcome.

 

Any holistic deal with China must have three broad components. There would have to be a chapter for sustainability and development, a chapter for trade and a chapter for defence and strategic interests. Each chapter could be supported by a set of reformed institutions for global governance.

 

The first chapter would be the easiest to draft and enforce and have the most obvious benefits to the signatories and to the rest of humanity. The world faces a climate crisis for which the solutions are clear but the political will lacking. Much has been done to reduce poverty, infant mortality and malnutrition, but the task is far from complete.  Covid has highlighted a different set of risks, but science has the demonstrated potential to mitigate these too. For me one of the saddest moments in the whole pandemic was witnessing Doctor Fauci being forced by political imperative to equivocate in having worked with China to understand Covid and other pathogens. Surely such cooperation can only serve to benefit all of us?

 

Strong goals already exist for all of these challenges, from the updated UN millennium development goals to the latest COP climate goals. China clearly sees the benefits available, and already actively participates in many global fora, while the US quietly and valiantly takes the lead in scientific research and funding. But too often the execution is stymied by narrow national and commercial interests and by political cowardice. It would not take a huge stretch to eliminate most of these obstacles. Perhaps the most significant step would be to reform the governance and mandates of the World Bank and the IMF to be more representative of global population and GDP. It was worrying to see how both of these bodies were able to sanction Russia: the cause was just in this case, but a truly global body (rather than a western dominated one) would not have been able to take such steps. A reformed global aid structure could reduce the incentives for individual nations to plough their own furrow with schemes such as Belt and Road.

 

The second chapter would be about trade, and this also need not be difficult to draft or to execute. There have been backlashes against trade in many parts of the world, but the potential net benefits remain huge. Countries need stronger policies to help those citizens negatively affected, and the true costs of transport (including environmental costs) should be considered, but otherwise specialisation will lead to cheaper and more abundant goods for all, notably those most in need.

 

Once again, the “rules based” system needs some reform so that it is no longer a “western imposed” system. China needs to agree to follow the rules, including for intellectual property. But trade is good, and the EU provides excellent templates for its governance, including for regulations around product quality and items such as privacy. Over time, trade pacts can develop to include more services.

 

An annex to the trade chapter would be required to handle controls on human movement, including for education. It feels weird that the US appears to be drifting towards a cold war with China, while its streets and its educational establishments become ever more populated by Chinese faces. Goals of free movement are laudable, but politically tough and requiring long transitional periods and stipulations on those choosing to migrate.

 

The tough chapter would be the one for defence and security. Again, the goals are not too difficult to envisage; the challenge would be to provide a palatable and trustable path and to find roadmaps to deal with a host of thorny issues.

 

China, the US and everybody else (except the leaders of Russia and North Korea and a few other renegade places) have a clear interest in progressive nuclear disarmament, and indeed in disarmament generally. One neat provision that most might accept in a more trusting climate could be that every dollar spent on national defence should be matched by a dollar committed to global peacekeeping. The global bodies to keep the peace are those with the greatest need for reform, and the Russian veto would initially be insurmountable, so a parallel security body to the UN, including all but the renegades, may be necessary during a transition.

 

Then there is a long list of conflicts and frozen conflicts and historical anomalies to handle, and therein lie the toughest nuts to crack. In most cases it will be impractical to reach an immediate solution, notably because such diplomacy tends to brush over the reasonable wishes of local actors. The places where clear agreements up front would be required are Taiwan, Russia and North Korea. For Taiwan, a Hong Kong type process envisaging eventual reunification would be the major concession to China to make the whole deal possible. In return China would need to clearly distance itself from Russia in its conflict in Ukraine (and its frozen conflicts elsewhere). China can still maintain a policy of not interfering in domestic affairs of other countries, yet be clear that the Ukraine situation is in no way domestic. In the case of North Korea, it is a matter of agreeing an endgame while waiting for the dynasty to implode. China would need to accept refugees and a responsibility to finance redevelopment of North Korea, but the US and its allies would need to agree to some regional disarmament in return.

 

For sure such a deal would be tough to pull off even in propitious circumstances, and the context today is far from helpful. Yet I would argue that it will only get more difficult over time, and Russia’s belligerence does offer a window. Other parties, most especially the EU but also the parts of the UN and existing institutions that are not western puppets, would need to be closely involved.

 

It is clear to me that the main block towards such a deal lies with the American mindset and its politics. With Trump in the wings, China would be mad to agree to anything without a US legal basis that could not be reversed. And Biden’s domestic capital to spend on this deal would be miniscule while the Republicans are in full MAGA mode. But it would be nice to see any evidence that the Biden team could even contemplate such a historic outcome and would start to chip away at public attitudes towards China.

 

I will dream on.   

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