America’s Withdrawal From the International Scene and China’s Increasing Leadership

Despite facing pressures from Pope Francis to German Chancellor Angela Merkel to keep the United States in the Paris Climate Accord during the 43rd G7 Summit last weekend, President Trump has announced his decision to withdraw from the agreement. This decision is only one of several recent inward-looking international positions taken on by the Trump administration. During the May 24-25 NATO meeting in Brussels, Trump declined to affirm America’s commitment to Article 5 of the North Atlantic Treaty, which outlines the principle of collective defense. Trump also accused NATO members of “chronic underpayments” to the alliance despite the fact that all members have met their formal payment requirements. Trump also called the Germans “very bad” on trade and allegedly threatened to stop the import of German cars, echoing his trade policy agenda’s emphasis on standing up to “unfair” trade practices and his administration’s claim that Germany is depressing the Euro to increase the competitiveness of its exports.

Each of Trump’s withdrawals from America’s international commitments appeared to prioritize some of America’s domestic interests over global, cooperative issues. Trump emphasized that while the environment was important to him, the Paris Climate Accord would be bad for (oil industry) jobs in the United States. Trump’s claim that NATO members “owe” the United States money and that the United States has been paying an unfairly large portion of NATO’s costs is unfounded in legal terms, as the U.S. is supposed to pay 22 percent of the costs according to a formula based on national income. Gary J. Schmitt, a scholar at the conservative American Enterprise Institute, argues that Trump “doesn’t care whether [his statement is] technically accurate.” Trump’s conspicuously rough demeanor at Brussels—which included him shoving the Prime Minister of Montenegro aside—accompanied his consistent and intense demands for greater payments.

While Trump has not stuck to all his campaign promises, these recent inward-looking moves show that Trump is sticking to the promises that are linked to his core political supporters. The coal industry has pushed hard for Trump to roll back Obama’s climate change policy, and Trump’s coal-state Republican supporters were especially eager to get the United States to withdraw from the Paris Climate Accord. At a rally in April 2017, Trump reiterated the claim that “our government rushed to join international agreements where the U.S. bears the burden while other countries get the benefit and pay nothing.” In his trade policies, Trump emphasizes the protecting “American workers” whom he claims represent the core of the country. Since America’s low-skill workers are experiencing hardship as a result of competition from international trade, “job protection” translates into thinly veiled protectionism.

Trump meeting with European Union Leaders in Brussels on May 25. (Image credit: The New York Times)

 

China has been stepping up to the plate on the issues of climate change, globalization, and free trade and has been making efforts to cooperate with other states. Premier Li Keqiang’s visit to Europe from May 31 to June 2, which includes the 19th EU-China Summit, aims to deepen cooperative ties and to stem the tide of protectionism. As demonstrated in the May 14-15 Belt and Road Forum, China is also willing to pay massive costs of the Belt and Road Initiative to advance global trade and international cooperation. At the World Economic Forum in Davos in early 2017, Xi lectured Trump on the dangers of protectionism for global welfare and the importance of combating climate change for future generations.

President Xi Jinping speaking at the World Economic Forum at Davos in January 2017. (Image credit: EPA)

It appears, then, that while the United States has been retreating from its responsibilities as the global hegemon and a contributing member of the liberal international order, China is willing and able to assume the mantle of global leadership. But is this really the case?

Some questions that a global citizen may wonder about are: Is America’s retreat from an international stage just a blip under Trump, or will it be a long-term trend? What are the effects of U.S. retreat for the world? If China were to become the new global leader, would it support the world order that the United States has created and led or would it impose its own? What does America’s retreat mean for current U.S.-China relations?

Why America’s Retreat May Be A Long-Term Trend

While Trump’s presidency will only last for eight years at most, the impulses that demand social and economic protection and a rejection of international cooperation are the product of larger, structural changes that cannot be reversed without adverse effects on global welfare. The world has witnessed a new wave of right-wing populism, from Trump’s election to the popularity of France’s Marine Le Pen and Brexit. Populism can be qualitatively summarized as a movement or ideology that is driven by (1) the frustration of the “true people” of the nation about what they perceive to be the loss of economic and social status despite their honorable, historically-linked identity, (2) a feeling that the “true people” are being disregarded or exploited by the establishment elites, and (3) socioeconomic inequality in which the “outsiders” and disingenuous elites are perceived to get the better deals. Populism is linked with globalization its resultant economic, demographic, and social effects.

A Trump rally at the Pennsylvania Farm Show Complex and Expo Center in April 2017 to celebrate the President’s first 100 days in office. (Image credit: AP Photo/Carolyn Kaster)

 

In a nutshell, trade increases the overall economic welfare (or prosperity) of every state that is involved. But it does harm some segments of the populations within states. Because of factor price equalization, international trade contributes to the falling wages and increased unemployment of low-skilled workers and increased inequality in developed economies like United States and Europe. The demands of populism are for the state to withdraw into itself: To protect industries at the cost of overall welfare, to “build a wall” between itself and its neighbors, to prioritize the interests of the “true people” at the cost of international cooperation, and to reject the “establishment elites” and their manners in favor of the rough, honest ways of the people. These impulses have translated into protectionist trade policies and migration quotas in the past—which strongly echo the Trump Administration’s promises.

The social and economic forces that drive America’s inward retreat will last unless policy steps are taken to alleviate the immiseration of low skill workers. The solution to address the economic inequality and social dislocations is not for America to withdraw into itself in the face of its international commitments. Such a policy would prevent those low-skill workers from moving into more competitive industries and would reduce national and international welfare. The solution is to find a way to address the social and economic dislocations under globalization through policy, such as by offering better trade adjustment assistance.

The Consequences of an Inward-Oriented America for the World

The consequences of a continued American withdrawal from its international commitments could change the international order as we know it. The United States has played two important roles since the beginning of its ascendancy after World War II: It has acted as (1) the global hegemon that the world needs to maintain free trade and other public goods and as (2) the leader of the current international order that is characterized by rules-governed international cooperation, free trade, and a pro-democracy and human rights lens.

Free trade, collective defense, and a clean environment are public goods. Public goods are subject to the free rider problem: All states have an incentive to not contribute their share to provide the good and to free ride on the contributions of others. The free rider problem can be easily located in everyday life. Suppose, for example, that a large group of neighbors all want the public good of a clean and pleasant park. Each neighbor says that they will work in the garden, mow the lawn, and clean up the trash. But each neighbor has an incentive not to put in their share of the work. They think that even if one person shirks from the task and does not work, others will take care of the park well enough and would not notice the shirking. The shirker thinks that they would be able to enjoy strolling in the clean park anyway. The overall outcome, then, is an unclean park.

U.S. Secretary of State Henry Morgenthau at the Bretton Woods Monetary Conference on July 8, 1944. (Image credit: The World Bank)

The solution to the free rider problem is to have a hegemon (the richest and most powerful state) take on the leadership role of providing the public good. The hegemon offers to take up the time-consuming and expensive task of monitoring its neighbors directly or by establishing international institutions. It has an incentive to do so because it benefits most from the public good—by virtue of its size and influence—and it can afford to do so. The United States has acted as such a hegemon to uphold international free trade and finance by playing key roles in the creations of the General Agreement on Tariffs and Trade (GATT) (which is now enshrined in the World Trade Organization) and International Monetary Fund (IMF). The United States’ role in NATO and in global climate cooperation has been similar.

While the United States’ relative decline in military and economic power points to the possibility that it may no longer be a global hegemon, its has been a leader in upholding the rules and norms of free trade, global climate protection, and collective security in the form of NATO. America’s international retreat, then, has the effects of (1) directly harming the provision of those public goods, (2) suggesting to other states that it is okay to retreat from international treaties and rules, (3) signaling to the international community that American promises are not credible. But perhaps most importantly, America’s retreat tells ambitious challengers and allies alike that the rules-governed, cooperative, free trade, and pro-democracy international order spearheaded by the United States is fragile.

 

The World Under China’s Leadership

China’s increasing commitment to international institutions may signal that China seeks to replace the United States as the global leader in both bearing the material costs of global initiatives and in championing the norms of international cooperation. But if the United States were to decline in its global role (either as a result of populism-driven policies under Trump or in the long-term as its economic and military power eventually declines relative to those of other states), it is not clear whether China will support the current international order. International relations scholars Randall Schweller and Xiaoyu Pu argue that a rising power like China may become (1) a supporter who pays their share to maintain the existing international order, (2) a shirker who free rides to gain the benefits of the existing order without paying, or (3) a spoiler who seeks to tear down it down and replace it with their vision.

China’s willingness to pay the Belt and Road Initiative may indicate that it is unlikely to be a shirker. China’s material support for and advocacy of the Paris Climate Accord, the United Nations, the World Trade Organization, and the protection of free trade could be interpreted as support for the existing liberal, rules-governed, and cooperative international order and a disinclination for shirking. But China’s support of the U.S.-led order could also be interpreted as the rising power buying time for itself to grow stronger, seeking to improve its reputation, increasing its soft power, and finding opportunities to criticize the United States and challenge the legitimacy of its leadership role.

World leaders at China’s Belt and Road Initiative Forum on May 14-15, 2017. (Image credit: The Astana Times)

Schweller and Pu observe two long-term Chinese visions of the future international order. The first vision seeks to install a new Chinese order that emphasizes the superiority of Chinese traditional philosophical views over western ones, the failure of the American “empire” to maximize “the interests of all people,” the superiority of China’s political and social system to those of democracies, and a better international future based on China’s collective welfare-focused datong (Great Harmony) social model. One philosophical view of the world that is believed by many Chinese is the concept of tianxia (all under heaven), which emphasizes the the unity of all peoples (under the benign guidance of superior Chinese ways.) The second vision that Schweller and Pu identify advocates for the continuation of the current liberal, democratic, and cooperative order but in a more inclusive form and on a larger scale. This second vision finds it in China’s interests to eventually democratize.

What do China’s recent foreign policies show about its inclinations for the future? Despite China’s liberal initiatives and moves to expand and deepen free trade and to support international institutions, China has also demonstrated behavior that is not in the spirit of the current liberal, rules-governed, pro-democratic order. The most blatant rejection of international norms is China’s refusal to abide by the South China Sea ruling against its territorial claims and its continued unilateral actions in the South China Sea. This behavior suggests that China may be inclined to cooperate only when it is convenient and will disregard international rules and norms when its core interests are challenged. China has also recently moved to effectively censor all non-state news media. China’s closed capital account, overproduction of steel, and resource misallocations under its state-directed economy remain challenges to full financial and economic liberalization. China’s continued moves against political and economic liberal reforms are signs that it will resist integration into the liberal, democratic international order.

 

The Present & U.S.-China Relations

Where do America’s potential retreat from the international stage and the uncertain implications of China’s rising global role leave us?

President Trump and President Xi on a walk together at Mar-a-Lago in April 2017. (Image credit: AP Photo/Alex Brandon)

The United States should re-evaluate its behavior of pulling back from its leadership roles, putting pressure on other states to pay more for institutions and alliances, advancing protectionist trade policies. President Xi is right in identifying that much of the backlash against globalization may be misplaced. While globalization does hurt certain segments of the population, the remedy is not to reverse trade-induced welfare increases, but to address the inadequacies in America’s social safety net. Improved social assistance could help low-skill workers move up the skill ladder and join more competitive industries in the long run.

The uncertainty of a future under China means that America may be better off hedging its bets on the relative stability of the present. America’s retreat from its international commitments affects the material resources available to cooperative institutions, America’s credibility as a leader and an ally, and the stability of the liberal, democratic, rules-governed international order. These international considerations are not divorced from domestic concerns. They could impact America’s national security, its natural environment, and its economic wellbeing. America should engage China in more dialogue to learn more about China’s inclinations for the future and to help China address the challenges that it faces—which are largely in the domains of its economic and political institutions. It is on the United States to not pull back from the world and to help rising great powers like China integrate peacefully into the international order.

 

(Featured image credit: TaorminaToday)

 

By RUKA WANG JUNE 2 2017

Ruka Wang is a Summer 2017 intern at The Carter Center China Program.