The United States has just said it will defend Taiwan in the event of a Chinese invasion. Even more interestingly, Japan – a country that has not taken military action since 1945 – is now taking a similar stance. Militaryly, this hasn’t changed much; The Americans could retaliate with their missiles in an amphibious assault before Chinese troops reached Taiwan’s shores. That’s why Beijing speculates a lot about a possible invasion without actually attacking. But the political environment will be changed dramatically by the US announcement – not least because of the economic impact.
America and Japan are not only the world’s largest and third largest economies, respectively, but they are also important customers of China. Military warnings are implicitly combined with economic warnings. Additionally is the declaration of what Washington calls the “Indo-Pacific Economic Framework”, which will reportedly include Japan, Australia, New Zealand, South Korea, India, Singapore, Malaysia, Indonesia, Vietnam, the Philippines, Thailand and Brunei. . It is not clear what exactly this group intends to do and when they will implement it. What is clear, however, is that many Asian countries are willing to participate in a coalition of shared economic interests, which is essentially sponsored by the United States and Japan is the first member.
China will lose competitiveness
This is no small thing. China is in economic trouble, and President Xi Jinping is in trouble as a result. China’s economic miracle relies on exports to generate domestic capital. However, due to various reasons, the demand for export goods has declined, which, together with other problems, has led to the destabilization of China’s financial system. India wants to overtake China as the world’s biggest exporter, and Malaysia, Indonesia, Vietnam, the Philippines and Thailand also want to take part. So if any of them get free (or at least better) access to the American and Japanese markets, China will lose its competitive edge.
However, the starting point of China’s problems is politics. The US was (and still is) China’s biggest customer, though not on the scale it used to be, and this has hurt many sections of society in the United States. Former President Donald Trump imposed tariffs on goods sold to the US, signaling a shift in American policy. For the Chinese side, this means abandoning the idea of unlimited exports and turning to ways of dealing with potentially falling exports. In the long term, this has led to a crisis of confidence that is eating away at China’s financial system, as it is property-based – and which now needs to be stabilized amid the difficulties of economic restructuring. This in turn leads to a political crisis that creates new rulers or leads to more repression.
There are currently two weapons aimed at China. One of them is military in nature, which includes a four-way security dialogue between Japan, India, Australia and the United States. The other is economic and poses a serious challenge to China’s export strategy long before the country is ready to shift to domestic consumption. War can solve economic problems, as World War II did for the United States. However, it is highly unlikely that an anti-China military coalition will start a war. On the other hand, Beijing also knows that it will have to deal with powerful coalitions if it is to start the war itself.
Russia has speculated
All this happened at a time when the Russo-Ukrainian war was raging. Russia decided to attack, believing that Ukraine would collapse quickly. That didn’t happen, mainly because of massive arms shipments to Ukraine and economic sanctions against Russia. China is also facing a growing military rival, and the country is increasingly isolated. It had formed some sort of alliance with Russia a few months ago, but it was never clear what the benefits of that alliance would be for the two countries. Now we will never know, thanks to Russia’s failed invasion of Ukraine. China can no longer support Russia politically or economically. And Russia cannot afford to support China militarily.
The conclusion from all this is that the US has re-emerged as a global hegemon (though it never really disappeared as such). The growth of Russia and China has caused the United States to seek a return to the position it held between 1945 and 1991. The United States is now engaged in Russia and China and, for that matter, in Europe.
I predicted back in 2009 that Russia would invade Ukraine – although I was wrong about the timing of the invasion and how well Russia would go. I also predict that the war will cause a crisis in Russia and meanwhile the economic crisis in China will trigger a political crisis there. With that result the United States effectively regained its role as the dominant power in the world.
So now that some of my predictions have come true, I want to go back to how my predictions for the next 10 to 20 years look in other areas. I think it is very plausible that Poland will emerge as one of the leading powers in Europe and that Japan will return as the dominant Asian power. Likewise, that we will see an increase in Turkey. Indeed, the current Ukraine war places Poland in the position of a major military power and decision-maker in Europe. Japan will become a major power factor in the Asian continent as its military and economic power is revived – especially when China weakens.
Indeed, there is currently little evidence for my predictions about Turkey. But I stick to it.
