In its One Belt, One Road initiative, China is making a bid to dominate the economy of the 21st century. But the real value in today’s economy isn’t in ports and railroads. The real value is in people – and in the networks that connect them, writes Salvatore Babones.
Salvatore Babones is an American sociologist at the University of Sydney. His research takes a long-term approach to interpreting the structure of the global economy, with a focus on China. He will discuss his newest book “American Tianxia. Chinese money, American power, and the end of history” with EURACTIV Poland’s editor-in-chief Karolina Zbytniewska at the European Forum for New Ideas taking place in Sopot, September 27-29. EURACTIV is a media partner of the Forum.
The United States has always been the EU’s most important global partner. In the security sphere, of course, most EU countries are also members of NATO, in which the US is overwhelmingly the dominant party. In politics, too, the EU is closely aligned with the US, despite clashes over presidents and personalities.
People who think that Donald Trump changes everything might do well to remember the mass protests against George W. Bush in 2003 and Ronald Reagan twenty years earlier.
Economics is a different matter. In the economic sphere, many Europeans now look to China. After all, China has managed to maintain 8.5% compound average annual growth in GDP per capita for the last forty years.
So, when China’s President Xi Jinping announced in 2013 his One Belt, One Road (1B1R) initiative, designed to create an integrated Afro-Eurasian economy with China at its centre, many Europeans cheered.
The “Belt” in 1B1R is the Silk Road economic belt connecting China to Europe through Russia and Central Asia. The “Road” is the 21st century Maritime Silk Road connecting China to Africa and the Mediterranean via Southeast Asia and the Indian Ocean.
In support of 1B1R, China has pledged to invest untold billions (literally “untold”: there is no publicly available budget or plan) in developing infrastructure throughout Afro-Eurasia.
One of the most visible 1B1R investments in Europe was the purchase of a majority interest in Athens’ Piraeus port by COSCO, China’s state-owned shipping company.
Another is the continuing Chinese investment in trans-Eurasian rail freight, which reached record levels in 2016. The total freight carried by these trains in 2016 was less than the capacity of five large container ships, but with the EU struggling to maintain 2 percent real economic growth, any boost is welcome.
In Chinese international relations writing, 1B1R is portrayed as an effort to return China to its “rightful” place at the centre of the Afro-Eurasian world. The very word for “China” in Chinese is Zhongguo, literally “Central State”, but more poetically translated as “Middle Kingdom.”
In traditional Chinese cosmography, China is the central state of the known world or tianxia, literally “heaven encompassed” but more loosely translated as “all under heaven.” The historical Chinese tianxia was a Chinese world of which China itself was indisputably the central state.
The central state of the 1B1R economy may well be China, but contemporary Afro-Eurasia is no Chinese tianxia. The 1B1R initiative is often compared to America’s post-war Marshall Plan, and with good reason: like the Marshall Plan, it is a program designed to create an integrated modern industrial economy.
The problem for China is that the postmodern economy has long since made modern industry irrelevant, if not obsolete. China is the global leader in steel, textiles, plastics, and a host of other modern industries. It is even emerging as a leader in nuclear power.
But these are industries of a bygone age. Europe is selling its ports, railroads, and nuclear power plants to China precisely because these are the industries of the past, not the industries of the future.
An American Tianxia
In the 21st century, the infrastructure that matters – the infrastructure that supports the most profitable companies and best-paying jobs – is the postmodern virtual infrastructure of networked systems.
Many though not all of these are technology-based. They range from the latest blockchain technologies for financial transactions to small team collaboration on creative projects in art and design. The highest value added activities in today’s global economy have little to do with steel and cement. They are all about coordination and collaboration in virtual networks.
The most iconic of these global networks is perhaps Facebook, but the most profitable may be the Apple App Store, which together with Google Play and other Android stores accounts for substantially all of the world’s mobile application downloads. Other online networks are more obscure, known only to specialists in their respective fields. And many important knowledge networks aren’t online at all.
Other online networks are more obscure, known only to specialists in their respective fields. And many important knowledge networks aren’t online at all.
What most of these networks have in common is that they are centred on the United States, and even when they are not, they incorporate American business practices and ways of thinking.
Europeans who want to succeed in the postmodern network economy learn English as a matter of course, but they also internalize distinctively American attitudes and work practices. Most of all, participation in the postmodern economy reinforces American-style individualism, as people become more attached to their own, highly personalized networks than to the broad, undifferentiated societies in which they actually live.
The centrality of the United States in the 21st-century network economy has made it the central state of a new kind of tianxia, an American Tianxia based on individual participation in global networks that are predominantly (though not exclusively) centred on the United States and managed on American models.
This American Tianxia is a “world” in the sense of the classical Chinese tianxia, but it’s a world in which postmodern individuals strive for success in US-dominated virtual networks, not China-dominated industrial networks.
In its 1B1R initiative, China is making a bid to dominate the economy of the 20th century. It is offering to subsidize infrastructure development all across Afro-Eurasia to accomplish this goal. Europeans might as well take the money.
But in economics, even more certainly than in security and politics, the EU and its citizens will remain aligned with the United States. The real value in today’s economy isn’t in ports and railroads, or even in the things that move through them. The real value is in people – and in the networks that connect them.