The decadent West has come face to face with the future - and the end of its dominance

U.S. President Joe Biden gives thumbs-up as he walks with Chinese President Xi Jinping
U.S. President Joe Biden gives thumbs-up as he walks with Chinese President Xi Jinping

We in the West like to imagine that liberal democracy spread because others were attracted by its intrinsic merits. It didn’t. It spread through military victories – a fact that the rest of the world has not forgotten.

Only now, perhaps, are we learning how limited its appeal is. Several countries which we thought were in our camp turned out to be pro-Western only contingently and transactionally. The moment they saw our power waning, they began to look elsewhere.

We see the shift in the reluctance of states beyond Europe, the Anglosphere and a handful of East Asian democracies to join sanctions against Russia. We see it in the UN votes positing an implicit equivalence between democratic Israel and terrorist Hamas. When the world’s dominant power declines, violence and disorder rush to fill the vacuum.

It is against this background that Joe Biden and Xi Jinping held their meeting in San Francisco this week. Biden came across, as usual, as a dotard, fluffing his lines and horrifying his officials by referring to his guest as a dictator.

Xi, by contrast, looked comfortable and confident, convinced that time is on his side. Like Winnie-the-Pooh, to whom he has been compared so often that Chinese censors ban references to the portly bear, Xi radiated the Taoist virtues of patience and imperturbability.

The two sides had very different takes on the summit. For the Americans, it was all about encouraging China to take up its responsibilities as a member of the international community. They know that Xi wants to escape from the economic restrictions imposed by Donald Trump in 2018. The Chinese economy is faltering, partly because of exceptionally long lockdowns, and partly due to the rise in expropriations leaving people reluctant to invest.

Sensing that they have leverage, the Americans want to draw China into collaborative structures on climate change, artificial intelligence and drugs. To have secured understandings with Xi on these issues, as well as establishing military backchannels, is no small achievement.

From the Chinese perspective, though, all that was fluff. The real business of the summit, as they saw it, was to make plain that they intended to annex Taiwan. Sure, they would rather do so without a war. To win without fighting is, as Sun Tzu says, the ultimate achievement. But Xi left Biden in no doubt that reunification is not some vague aspiration, but the policy on which he has staked his leadership.

The Chinese autocrat is aware of American concerns about the economic impact. Taiwan produces most of the world’s semiconductors, especially the advanced models on which the global economy depends. How long, Xi asks, would it take the United States to build up a domestic manufacturing capacity? Five years? Fine, then use it. But understand that, after that, Taiwan will be reabsorbed.

Talk of semiconductors brings us to why the world has suddenly become so chaotic. The relative peace and prosperity that followed the Second World War rested, to a greater degree than most people realised, on globalisation.

International commerce reduces both the incentive to wage war (without trade barriers, it doesn’t matter where resources are) and the capacity to sustain it (a bellicose country can be deprived of critical materials).

This consideration, more than any other, motivated the original campaigners for liberalisation. “Do you suppose that I advocated Free Trade merely because it would give us a little more occupation in this or that pursuit?” asked Richard Cobden in 1850. “No; I believed Free Trade would have the tendency to unite mankind in the bonds of peace, and it was that, more than any pecuniary consideration, which sustained and actuated me.”

Cobden was right. While no one has found a way to eliminate war altogether, globalisation has a pacifying effect, because countries like to remain on good terms with their customers. In 1860, Cobden signed the modern world’s first trade agreement with his counterpart, Michel Chevalier, a rare French classical liberal. Since then our two nations, which had spent the previous six centuries in a state of semi-permanent war, have not fought.

Cobdenism began to run out of steam in the early twentieth century, as challenges to British power led to calls for retaliatory tariffs. The horrors that followed were to a degree products of the end of the Victorian economic order.

By 1945, there was a recognition that protectionism, autocracy and war were interconnected. The victorious powers grasped that the dictators had been products, as well as supporters, of autarky, and set up the General Agreement on Tariffs and Trade (GATT) to ensure that the world did not slide back into beggar-my-neighbour mercantilism.

“The whole world is concentrating much of its thought and energy on attaining the objectives of peace and freedom,” declared President Truman in 1947, the year that the GATT was established. “These objectives are bound up completely with a third objective: reestablishment of world trade. In fact, the three – peace, freedom, and world trade – are inseparable.”

Truman, like Cobden, was right. As the barriers came down over the next 75 years, we saw not only a global enrichment beyond the dreams of previous generations, but an unprecedented decline in the number of wars. The relative stability of the Victorian age had rested on the Pax Britannica; that of the post-war boom rested on the Pax Americana. When American power surged after 1989, so did peace and prosperity.

Then came the banking crisis, a fall in world trade and, before long, a return to protectionism – a process accelerated by the pandemic.

“Trade wars are good and easy to win,” declared Donald Trump as he ordered tariffs on Chinese imports. Joe Biden accelerated America’s retreat into autarky, notably through the disastrous (and comically misnamed) Inflation Reduction Act, a classic piece of protectionism disguised as greenery. The EU is now pursuing a similar scheme.

China’s leaders are determinedly building their own versions of the global companies that withdrew from Russia in 2020. Xi has made clear that he does not want to depend on imports. “You should not rely on international markets,” he told his rubber-stamp parliament when Russia blockaded Ukrainian exports. “China must depend on itself.” His solution? To reserve 296 million acres of agricultural land for food production – precisely the kind of policy that caused the breakdown of the 1930s.

Protectionism always does the most damage to the country pursuing it. The US Tax Foundation calculates that tariffs on China are “equivalent to one of the largest tax increases in decades,” destroying 173,000 American jobs.

Similarly, had Xi not reversed his predecessors’ policy of liberalisation, China would not only be growing faster, but would be a trusted partner investing in our nuclear power stations and communications infrastructure.

Xi’s swerve to economic nationalism has also wrecked the prospect of peaceful reunification with Taiwan. Many Taiwanese had been prepared to countenance some form of political union as long as China was becoming more pluralist, but the authoritarianism of the current regime, and its crackdown in Hong Kong, killed such talk.

As during the early twentieth century, a unipolar world order is being succeeded, not just by great power rivalries, but by a return to the disastrous illusion of self-sufficiency, what the North Koreans call “juche”. We can already see the consequences in the cascade of conflicts around us. If the West, with all its collective strength, is unable to dislodge Russia from Ukraine, that cascade will become a torrent. The time of troubles is just beginning.

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