Does the hegemonic stability theory explain the rise of China?
Hegemonic Stability Theory versus International Regime Theory
Essay 2018 12 Pages
Does the hegemonic stability theory explain the rise of China?
Presumably Napoleon Bonaparte once stated: “Let China sleep; for when she wakes she will move the world”, around two hundred years later he seems to be proven right. By having the second largest economy ($US 14tn), being the biggest exporter ($US 2.26bn) and being increasingly more actively participating in world politics, many observers consider that China “is waken up” and is moving the world (World Bank 2018). More generally, China is about to transform from an agent in international politics towards a principal not only in economic terms but in a variety of other areas also. These include foreign policy (the largest UN Security Council contributor of troops to UN peacekeeping missions); development (from recipient towards donor) and institutional behaviour (from a rule-taker towards a rule-maker) (Fung 2016a; Griffiths 2017; Wang 2017). This is particularly the case given that the United States as a dominant and shaping power of world politics, since the end of the second world war, perceives China’s rise as a challenge to its’ hegemonic position.
While neither the rising Ottoman, German or British Empire nor the United States did face a global system significantly shaped by institutions and regimes, rising China does. Most of this web of actors, norms, interests and veto-players was created in the Post-World War II era. Each and every possible hegemonic Chinese aspiration needs to deal with this inevitable matter of fact. The present international order clearly resembles the premises of the international regime theory (IRT). However, hegemonic stability theory (HST) correctly describes China’s current rise and aspiration. This essay therefore argues that in the short-to-medium term the IRT will sustain correct, while there is a probability that the HST will be proven correctly in the long term.
International regimes theory proves to be correct by being inevitable. The current international order exists on many levels (locally, regionally, internationally) and consist of several layers of “sets of implicit or explicit principles, norms, rules and decision-making procedures” (Krasner 1982:186). This include global economic institutions such as the WTO, more practical orientated institutions such as Médecins Sans Frontières, human rights regimes, regional organisations such as ASEAN or universal organisations such as the United Nations. A rising China, in comparison to the fragility of previous “orders” as the Concert of Europe, cannot escape these multiple-layers of international order.
Due to this inevitability of international regimes, China is actively participating within the given order. China joined almost every central international organisation and multilateral treaty but notably, likewise the United States, denies to accept the International Court of Justice (Allison 2016; Combes 2011:2). Chin (2012) describes Chinese behaviour in the international arena, since the reforms of Deng Xiaoping, as a “Two-Way Socialization”. China generally adjusts to exiting rules and norms. However, for example within the World Bank, China demands adjustment for the World Banks “general principles” or a shift in the lending rules (Chin 2012:222–23). A changing behaviour can also be observed in regard to the norms. While China vehemently opposed the Responsibility to Protect (R2P) in the early 2000s, since 2009 a slight shift towards adaption can be attested (Fung 2016b).
Within established institutions China noticeable also strongly opposes current structural mechanisms. While the US, due to its hegemonic position, owns around 17% voting rights within the IMF, China only owns around 6% (International Monetary Fund 2018; Ishbashi 2017). This applies for other institutions as well and seems generally unfair due to its overall economic significance for the world economy. China therefore tries to enhance its (IMF) voting power gradually (Ross and Bekkevold 2016:182). Ikenberry and Lim (2017:7) describe this as “authority-seeking” behaviour and warn that China might attempt to challenge the overall “liberal-orientated characteristics of the international order” (Ikenberry and Lim 2017:8).
“Authority-seeking” behaviour can be interpreted positively and negatively. The negative interpretation perceives China as a possible “spoiler” to decision-making processes, undermining the effectiveness of norms and institutions (Ikenberry and Lim 2017:8). This is especially true when it comes to the norms of human rights, where China continuously blocks NGOs from reporting about human rights abuses in China (Kellogg 2017). The positive interpretation understands China’s drive for more stakes in institutions, or the own creation of them, simply as part of becoming more accountable and reliable to the international system. As part of China’s Belt and Road Initiative (BRI) it founded, for example, the Asian Infrastructure Investment Bank (AIIB) (Kynge 2016). Generally the BRI, set-up in 2013, aims to spend trillions of dollars in more than 70 countries, which currently account for half the world’s population and a quarter of global GDP, to improve cultural exchange, infrastructure trade and connectivity between China and the rest of the world (Buranelli 2018:219; Hong Kong Trade Development Council 2018).
The BRI, as well as the creation of AIIB, can be interpreted as primary elements of a Chinese dominated alternative hegemonic system. According to HST, a hegemon acts “purely in its self-interest and uses symbolic, economic and military power capabilities to entice or compel others to accept an open trading structure” (Kindleberger 1987:292; Krasner 1976:322). This open trading structure will accordingly be supported by the providence of a hegemonic currency (Krasner 1976:323). China’s BRI is often considered to represent exact this behaviour. John Mearsheimer argues, rising China will inevitably strive to become a hegemon and therefore shape global rules and promote trade openness, in their own interest, predominantly through coercion or persuasion (Mearsheimer 2010). Consequently, an open trading structure seems to be the most attractive way for China to pursue the maximisation of political power, national income, economic growth and social stability (Krasner 1976:318). Another suggested hegemonic feature China would need to fulfil to become a hegemon is control over raw material, sources of capital and markets as well as competitive advantages in the production of highly valued goods (Keohane 1984:34). Through the lens of the China’s BRI, China clearly pursues to open trade through the use of symbolic, economic and military capabilities and increasingly wins control over resources, capital and markets.
Structurally many of the BRI projects do not only involve the construction of giant infrastructure but the processing of raw materials for the Chinese market. Raw materials processing crosscuts the entire project list (De Laubier et al. 2018). The skyrocketing of Chinese demand for metals and minerals since 2015 explains the increasing investments of Chinese companies within the BRI (Farooki 2018). The seven billion US-Dollar investment of Minmetals in Peru (2014) or China Molybdenum’s $US 2.6 billion investment in the Democratic Republic of Congo, illustrate the high levels of commitment (Farooki 2018:8). Financially this is supported by the so called “Angola Model”, which describes the providence of low-interest lends to states with abundant natural resources with difficulties to lend from international financial markets (Begu et al. 2018). This takes these countries into greater asymmetrical dependencies and helps China to enforce its own conditions (Ikenberry and Lim 2017; Sun 2014).
Economically BRI-projects often carry requirements linked to the involvement of Chinese capital, companies and labor. The deployment of Chinese workers is in some partner countries so extreme, that is increasingly generating anti-China sentiments. Notably non-WTO countries such as Uzbekistan still (can) rely on local legislation to favor local workers, while WTO members are not allowed to apply fixed employability terms for the local population (Buranelli 2018:222). China extremely benefits from this and can easily contract Chinese workers into the projects. The (violent) protests against Chinese involvement (Sri Lanka) and the heavy reliance on Chinese labor (Vietnam) may emphasize the involved tension and resistance to the BRI and China’s rise beyond the US (Elmer 2018; Shepard 2017).
The capital for the BRI is often supplied by the AIIB. As discussed earlier, loans are recurrently to be repaid in raw materials (Begu et al. 2018). Symbolically these loans also seem to try to contrast the lending paradigms from Washington Consensus institutions (Subacchi 2015). Notably, Chinese president Xi Jinping emphasized that China will politically not interfere via the BRI into partner states, in contrast to the IMF, which set conditions such as privatisation or market deregulation (Gallagher, Irwin, and Koleski 2012; Gui Qing 2015). Though, the AIIB may not only serve as a pure financial but political institution. Remarkably, the AIIB does not provide loans in RMB (which is also pegged to the US-Dollar) but in US-Dollar, thus still relying on the global hegemonic currency (Wildau and Mitchell 2016). By negotiating more than thirty bilateral currency swap agreements since 2008, China nevertheless improves the conditions for a raising circulation of the Renminbi (Zhang et al. 2017). However, the rise as RMB as a global currency could lead to a Chinese account deficit, erode Chinas economic export model and run against domestic political targets. As Germain and Schwartz (2017:767) state, a currency issuer can only provide its currency on global markets on a net basis through a surplus of imports, or by lending in its currency, which naturally leads to an account deficit. Therefore the probability of China aiming, in the short to medium run, to become a global currency supplier is still unlikely. However, these developments probably aim to promote the RMB as a global currency in the long-run, but currently could aim to simply reduce transaction costs (Ikenberry and Lim 2017:11).
Chinese BRI investments and RMB promotion efforts to encourage and simplify trade with China can also be explained by growing global interdependencies. Interdependence refers to reciprocal effects between actors. Effects are defined as all international transactions, such as the movement of capital, goods and people, as well as the exchange of information and ideas (Keohane and Nye 1977:12). The BRI offers the possibility to further deepen Chinese global economic integration, supporting Chinese companies to “go out”, promote the Chinese model of development, erode US/European influence and increase asymmetric interdependence (Ikenberry and Lim 2017; Wang 2016). Admittedly many countries welcome China’s alternative credit and development model, which works for some better than for others (Alves 2013; Reeves 2018; Yu 2017). Taking it from the Chinese domestic perspective, “going out” also proves crucial for China’s manufacturing sector that needs to go up the value chain due to rising labour costs and increasing international competition (Ikenberry and Lim 2017).
Securing China’s investments around the globe is another crucial factor to consider within this context. BRI-projects are increasingly secured by Chinese private security companies accompanied by strategic Chinese military presence on crucial transport routes (Ali and Stewart 2018; Nouwens and Legards 2018). Through the enormous size the BRI inevitably exposes Chinese capital and workers to potential security risks. Therefore an increasing Chinese global security presence is highly expectable. The presence of Chinese troops in South Sudan, where Chinese firms already invested in oil and infrastructure or China’s first military base in Djiabouti on the horn of Africa, illustrate this inevitable trend (Becker and Downs 2018; Bokhari and Stacey 2018).