A Case for Easternization - Rise of China as Global Power

If I may propose this idea, then I must, as it is not unheard of earlier – China being the global power, Yuan being the global currency, and Mandarin the language of the new world? What if the eastern influence defined a new wave of globalization – Easternization? Extensively explained in his book Easternization: Asia’s Rise and America’s Decline From Obama to Trump and Beyond, Gideon Rachman divides the discussion into two parts – Easternization in Asia and Easternization Beyond Asia. 

As absurd as it sounds, one must not think it to be impossible. Two years ago, even Brexit seemed remotely plausible. Who had known how this year would turn out to be and who knows how the pandemic will further unfold? And, assuming – as economists do best – that this is feasible, I intend to, in this piece, describe this phenomenon and draw insights from Rachman’s book. 

Now I am no expert on politics and international affairs, but I do understand economics and the role it plays in power shifts. Economic power is the primary conditionality of global domination, along with the military. Before the First World War, Europe dominated the world economy with a mighty soldiery, a network of colonies, and external markets across the globe. Political stability was at its decline by the end of the war as Britain crumbled in superimposing its position of power on the West. The era saw a shift of power to the West. 

Cut to the 21st century, theories amongst political scientists suggest that a shift in the global world order from the West to the East is on the horizon. The inevitable cyclical transition of global power does resonate with the Hegemonic Stability Theory, introduced by Stephen Krasner, Robert Gilpin, and Robert Keohane, explaining these mechanisms.

In further additions to this, a liberal international economy would require a hegemon to commit to liberal economic principles – free markets, an open economy, and a non-discriminatory policy. Hegemony, liberal ideology, and interests in common are the prerequisites for the emergence and expansion of the liberal market system within the world economy. 

The United States, since the World War, led the world affairs as a liberal hegemony, controlling the flow of trade and finance. An open economy policy was also prevalent, along with high foreign security and a stable international currency. An exchange system, pegging to the dollar, was set up, with the formation of global financial institutions. Known as the Bretton Woods system, it comprised of three core institutions – GATT or the General Agreement on Tariffs and Trade (present-day World Trade Organisation), IBRD or the International Bank for Reconstruction and Development  (part of the present-day World Bank Group), and IMF or the International Monetary Fund. It created a financial order, with the United States at its epicenter. 

Easternization would mean de-railing five hundred years of Western domination – European and American – from European Imperialists to Columbus and other explorers to America, in the 20th century, and a passing uprise of the Soviet Union. The East Asian economies like China, but also Japan, South Korea, Singapore, and India, have grown into developed and transitioning economies, starting towards the end of the 20th century. Not alone growth will lead to a shift in global power but the size and extent of markets.

According to the World Bank, Gross Domestic Product (GDP) for the United States and China were $21.374 trillion and $14.343 trillion, respectively. Adjusting it to Purchasing Power Parity (PPP), China’s GDP, PPP is $23.46 trillion as opposed to the same $21.374 trillion for the United States. Comparing the Purchasing Power Parity (PPP) is vital as it standardizes different countries’ currencies through a “basket of goods” approach, allowing for a comparison of economic productivity and standards of living between countries. 

China is thus on an uprise, moving towards world domination. In the article, China has two paths to Global Domination by Foreign Policy, Brands and Sullivan propose two roads for China to achieve global dominion. The first focuses on building regional primacy through the home to the Western Pacific, closely resembling the path America took. 

The second, which seems to be the case now, relies on outmaneuvering the prevailing order to force presence by developing financial, strategic, and political influence on a global scale.

However, in the United States, there is skepticism around this idea, primarily influenced by previous predicaments of Japan’s rise due to internal political turmoil and small population size. To their benefit, confrontation with the West inspired domestic reforms during the reign of the emperor Meiji from 1868 to 1912, equipping them with a formidable industrial and armed capacity. Post the Second World War, this legacy fell into an alliance with America, as Japan became the home to the American military base. 

On the contrary, China was not a part of any such alliance but a geopolitical rival to the United States. It is home to a population much larger than the United States and is ambitious to capture the global economy. Being at the heart of the Silk Road and the 21st century Belt Road Initiative with an overland economic belt and a maritime silk road, it has signed agreements with around sixty countries – including Pakistan – to create an alternate route for oil trade. A network, as such, according to President Xi Jinping, would extend the international use of Chinese currency, the Renminbi, breaking the bottleneck in Asian connectivity and eventually rising to global domination.

There is no disputing in chances for this to happen, but they seem meager, and if it were to happen, the world would need a profound transformational catalyst, such as an oversight or a faux pas on account of the West. 

Interestingly, Rachman presents an anecdote in his book, showing how the Shanghainese were aware of the early 1900s being Shanghai’s glory days that declined following the Communist revolution of 1949. Drawing an inference from this, they associated the West with prosperity and dynamism rather than humiliation. He points out the abundance of awareness that lacked in the West, which can become as dangerous as possessing half knowledge.