A wealth of uncertainty
To what extent does a wealthy and assertive China complement or jeopardize these goals? This question is impossible to answer at this point because of key areas of uncertainty. A first area of uncertainty involves the preferences of the transatlantic partners themselves. Recent developments in the US, Canada and Europe call into question the partners’ own commitment to a liberal agenda – suggesting perhaps that they, not China, will be responsible for the unravelling of the post-war order.
In the US, Donald Trump’s victory in the 2016 presidential election rocked Washington’s long-standing commitment to NATO, to Asian alliances, and to the multilateral institutions that underpin the transatlantic relationship.5 To what extent will the Trump presidency be a blip from which transatlantic relations can rebound? On the one hand, Trump’s rise is a sign of broad social pressures that may not be easily quelled; on the other, public opinion data show that Americans still support US alliance relationships, while the Washington foreign policy establishment constitutes a powerful force in favour of returning to a globalist approach.6 If the US pulls away from NATO and the liberal international order more broadly, this would further undermine transatlantic relations from within.
To what extent will the Trump presidency be a blip from which transatlantic relations can rebound?
Europe’s continued cohesion and policy agenda are also in doubt. A backlash against immigration and resentment of Brussels prompted the UK’s 2016 vote to leave the EU. Right-wing parties have gained influence all over Europe. In particular, the countries of ‘middle Europe’ are experiencing a shift in mainstream sentiment that is ‘antithetical to, even contemptuous of, the liberal, pro-integrationist ideals of the European Union’.7 To what extent will Europe continue to embrace globalist, multilateral policies, or even remain a coherent international actor?
Great uncertainty also exists about China’s future trajectory. To what extent will China’s rise continue? While China has already become an important economic and key diplomatic player, its economy has begun to slow. GDP growth softened to 6.6 per cent last year, the lowest rate in three decades.8 And by 2020, China’s national debt is expected to reach a massive 275 per cent of GDP.9 Nervousness about long-term trends and Beijing’s trade war with Washington has roiled Chinese stock markets, leading to a 22 per cent drop in share price values in 2018.10
Because China is experiencing rising labour costs and diminishing returns to capital, its future growth is highly uncertain. Previous cases have shown that countries must shift their development models from input-based to innovation-based growth; this transition requires sweeping reforms – trade, judicial, regulatory, financial and so on. A failure to implement such reforms will delay China’s transition to the ranks of high-income economies.11 China may settle into a sustainable growth level of between 1 and 2 per cent,12 but alternatively it might experience economic crisis or stagnation, which would absorb the resources and the energies of its leaders, thus reducing their ability to construct a China-led international order.13
Just as China’s future capabilities are unknown, so too are its future goals. There has been much speculation over the extent to which China will accept or seek to undermine the liberal principles of the order created through the transatlantic relationship. The Communist Party of China (CPC) has vowed to restore national unity, putting to rest China’s national ‘humiliation’. Pessimists argue that China’s goals will expand along with its power; optimists, however, contend that China will embrace the status quo because it is economically dependent on the rest of the world, and because it has been welcomed into the post-Second World War order.14
5 On the Trump administration’s foreign policy, see Wright, T. (2016), ‘Trump’s 19th Century Foreign Policy’, Politico, 20 January 2016, https://www.politico.com/magazine/story/2016/01/donald-trump-foreign-policy-213546 (accessed 22 May 2019); Jervis, R., Gavin, F., Rovner, J. and Labrosse, D. (eds) (2018), Chaos in the Liberal Order: The Trump Presidency and International Politics in the Twenty-First Century, New York, NY: Columbia University Press; Pajon, C. (2017), ‘A Brave New World For Trade, Lettre du Centre Asie’, Institut Francais des Relations Internationales, No. 72; and Cohen, E. (2018), ‘America’s Long Goodbye: the Real Crisis of the Trump Era’, Foreign Affairs, 97(6) (accessed 2 May 2019).
6 Valentino, B. (2016), ‘At Home Abroad: Public Attitudes toward America’s Overseas Commitments’, in Suri, J. and Valentino, B. (eds) (2016), Sustainable Security: Rethinking American National Security Strategy, New York: Oxford University Press; and Porter, P. (2018), ‘Why America’s Grand Strategy Has Not Changed: Power, Habit, and the U.S. Foreign Policy Establishment’, International Security, 42(4): pp. 9–46 (accessed 2 May 2019).
7 Lloyd, J. (2017), ‘Middle Europe Turns its Back on the EU’, Reuters, 20 October 2017, https://www.reuters.com/article/us-lloyd-austria-commentary/commentary-middle-europe-turns-its-back-on-the-eu-idUSKBN1CP26M (accessed 22 May 2019); and Hockenos, P. (2017), ‘The Austrian Elections Should Terrify Europeans’, CNN, 17 October 2017, https://edition.cnn.com/2017/10/16/opinions/austria-nationalism-hockenos-opinion/index.html (accessed 2 May 2019).
8 IMF (2019), World Economic Outlook Database, April 2019, https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/weorept.aspx?sy=2014&ey=2020&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=35&pr1.y=6&c=924&s=NGDP_RPCH&grp=0&a= (accessed 23 Jul. 2019).
9 Fensom, A. (2018), ‘China’s Economic Slowdown is Inevitable’, National Interest, 29 December 2018, https://nationalinterest.org/feature/chinas-economic-slowdown-inevitable-39992 (accessed 2 May 2019).
10 Ibid.
11 On the challenges of reform, see Doner, R. and Schneider, B. (2016), ‘The Middle-Income Trap: More Politics than Economics’, World Politics, 68(4): pp. 608–44. On ‘inclusive’ institutions and growth, see Acemoglu, D. and Robinson, J. (2012), Why Nations Fail: The Origins of Power, Prosperity, and Poverty, New York, NY: Crown Business; and Lardy, N. (2018), The State Strikes Back, Washington, DC: Peterson Institute for International Economics.
12 Pritchett, L. and Summers, L. (2014), ‘Asiaphoria Meets Regression to the Mean’, National Bureau of Economic Research, Working Paper 20573, https://www.nber.org/digest/mar15/w20573.html (accessed 2 May 2019).
13 Kharas, H. and Kohli, H. (2011), ‘What is the Middle Income Trap, Why do Countries Fall into It, and How Can it Be Avoided?’, Global Journal of Emerging Market Economies, 3(3): pp. 281–89, doi: https://doi.org/10.1177/097491011100300302 (accessed 2 May 2019); and Foxley, A. and Sossdorf, F. (2011), Making the Transition: From Middle-Income to Advanced Economies, New York, NY: Carnegie Endowment for International Peace.
14 Pessimists include Mearsheimer, J. (2014), The Tragedy of Great Power Politics, New York, NY: Norton. On the ‘Thucydides Trap’ during power transitions, see Allison, G. (2017), Destined for War: Can America and China Escape Thucydides’s Trap?, New York, NY: Houghton Mifflin Harcourt. For a more optimistic assessment, see Ikenberry, G. J. (2008), ‘The Rise of China and the Future of the West’, Foreign Affairs, 87(1); and Jia and Rosecrance (2010), ‘Delicately Poised: Are China and the US Heading for Conflict?’.