Joel Slawotsky, of the Radzyner School of Law, Interdisciplinary Center, Herzliya, Israel, and the Law and Business Schools of the College of Management, Rishon LeZion, Israel has guest blogged for "Law at the End of the Day" on issues relating to globalization, international law and relations, and corporate liability under international law. He has served as Guest Editor of the Sovereign Wealth Fund special issue of Qatar University International Review of Law (IRL) (2015).
He has very kindly produced a marvelously insightful essay: China's Long March. The title is meant to allude both to the famous "long March" of the Chinese Communists in the 1930s, as much as recent reporting on the way in which some have written about a "Long March" strategy that appears to the core of Chinese strategic choices in its engagement with the United States (e.g., The new Long March -- Xi's 15-year battle plan with the US), a connection that Xi Jinping has himself deployed in his for-public-consumption-globally statements (China Faces New ‘Long March’ as Trade War Intensifies, Xi Jinping Says). Professor Slawotsky concludes that "developments described above point to an ascendant China and corroborate China’s status as a potent and effective hegemonic rival. Furthermore, U.S. allies perhaps sensing a transformation underway seem to be hedging their bets or at least unwilling to openly embrace the U.S. open confrontation with China. Therefore, the risks over the longer-term of U.S. allies aligning with China cannot be discounted. U.S. allies’ self-interested embrace of China, should it gain critical mass, would constitute a transformative geo-strategic shift imperiling the hegemonic status of the United States."
To read more essays, see e.g., "Rethinking Financial Crimes and Violations of International Law", Jan. 9, 2013; "Corporate Liability Under The Alien Tort Statute: The Latest Twist" April 26, 2014) and on issues of multilateral trade and finance (Joel Slawotsky Reports From Chinese University of Hong Kong: Asia FDI Forum II--China's Three-Prong Investment Strategy: Bilateral, Regional, and Global Tracks; Joel Slawotsky--Essay "On the potential shift from the present-day architects to new architects on the definition of international law" (March 16, 2017); Joel Slawotsky: "Principled Realism: Thoughts on the New National Security Strategy" (Jan- 11. 2018); Joel Slawotsky: "The Longer-Term Ramifications of China’s BRI Jurisprudence".
The Essay follows below.
Thank you Larry for allowing me to share some thoughts on your excellent post, CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States, and the Belt and Road Initiative—Looking to a Critical Gloss on Xi Jinping’s Speeches to the BRI Conference, which astutely and insightfully points out, the short-term thinking by the United States policy-makers and governing elites risks failure to comprehend the overall strategic goal ensconced in China’s long-march.
The goal of the long-march is the crossing of the rubicon to global hegemonic status and is linked to the rejuvenation of the Chinese nation. Understanding the march in this fashion is in no way a critique of China. As Tears for Fears put it, “Everybody Wants To Rule The World.”
The United States seeks the same status and acts no differently. Since the end of WW2 the United States has in fact “ruled the world” and dominated and controlled the trade rules, international financial institutions, i.e., the global governance orders (The Clash of Architects: Impending Developments and Transformations in International Law). Indeed, “[t]he U.S. business model, [is] built into the bones of the current framework for global trade.”(CPE Working Group on Empire: U.S.-China Trade Talks).
Naturally, other nations, including China, would prefer to be the hegemon. With respect to Chinese governing elites, ascension to hegemony is probably not viewed as a rise (or as the United States may perceive as an “insurrection” by “revisionists” against the existing U.S.-led global order) (see, The Joint Force in a Contested and Disordered World (14 July 2016)), but merely as restoring China to its glorious historical position as an international leader, sea power, trade center and innovator (See, China's Age of Invention).
In fact, by most measures, America has rarely been stronger relative to the rest of the world … From Europe to Asia, we are the hub of alliances unrivaled in the history of nations…. So the United States is and remains the one indispensable nation. That has been true for the century passed and it will be true for the century to come. (Remarks by the President at the United States Military Academy Commencement Ceremony 28 May 2014).
This post  speaks to the role of BRI as a key strategic element of a well thought out objective to reshape the rules of global trade, and eventually to isolate and contain the U.S. and its own economic area (CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States).
Therefore, the failure to evaluate the various Chinese initiatives in the context of a hegemonic rivalry by focusing solely on specific issues in isolation such as “the trade deficit” misses the mark (Anchors From Fox and Chinese State TV Hold Live Debate on Trade).
“A recent series of events—taken as substantially unconnected by the Western Press and those in intellectual and policy circles who ought to know better (but can’t help but be victims of their own self-reflexive ideological vision-constraints)—appear to point to an interesting turn in the re-construction of empire (without the baggage of its mostly European past.” (CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States,).
China is going to eat our lunch? Come on, man — They can't even figure out how to deal with the fact that they have this great division between the China Sea and the mountains in the West. They cant figure out how they’re going to deal with the corruption that exists within the system. They’re not bad folks, folks … They’re not competition for us."
The March to Hegemony
Whether China is ultimately successful in attaining hegemonic status is unknowable but the prospect certainly exists. A review of all three pillars of hegemonic power is instructive in evaluating the prospect. And keep in mind that within the ambit of these spheres of power, there are sub-parts which are all inter-related. For example, strong economic links will generally lead to mutual self-interested geo-political alliances. Just as numerous nations allied with the U.S. in economic self-interest, China can utilize the identical strategy to gain allies and have them move out of the U.S. orbit.
China’s economy is on-track – and within striking distance – of overtaking the United States in the near future. China already has surpassed the United States GDP on a PPP basis and even on a nominal basis is number two and projected to dethrone the United States within a few years. Crucially, economic power is inextricably linked to global power projection and forms an important part of the triage of hegemonic power (wielding a strong economy and thus being able to fund military and technological advancement links all three pillars).
While the IMF and World Bank are still pre-eminent, China’s successful establishment of the AIIB demonstrates the diminishing exceptionality of a U.S.-led order, and “the moment the United States lost its role as the underwriter of the global economic system” (Summers, "Time US leadership woke up to new economic era"). Significantly, the fact that the U.S. urged close partners not to join the AIIB but these nations in fact did so demonstrates that allies were in essence “hedging their bets.” Former U.S. Treasury Secretary Summers commented:
I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of it. (Summers, "Time US leadership woke up to new economic era").
Moreover, China’s BRI is set to challenge the U.S.-led Western dominance in dispute resolution ("China’s ‘Belt and Road’ court to challenge current US-led order"). "China's top court said the country's two international commercial courts will play a bigger role this year in helping resolve disputes related to the Belt and Road Initiative and improving the global credibility of the judiciary" ("International commercial courts eye expanded role"). By astutely establishing special courts to mediate, arbitrate and litigate BRI-related commercial disputes, China’s imprint on global governance will significantly strengthen ("Joel Slawotsky: "The Longer-Term Ramifications of China’s BRI Jurisprudence"").
U.S. allies which have been pressured not to join the BRI are showing signs of interest and Italy is signing on. (See, e.g., "Italy’s Deal With China Signals a Shift as U.S. Influence Recedes" (“This is not being isolated from Europe, this is Italy leading,” Michele Geraci, Italy’s under secretary for economic development, and the driving force behind the deal, said in a telephone interview from China’s southern Hainan province"); and "China tackles worries about Belt and Road debt as it notches a Swiss endorsement" (“Cooperation will be based on five key principles: private capital for private projects, sustainable handling of debts, consideration of social impacts, environmental protection criteria, and transparency,” according to a press release from the Swiss embassy.")).
Furthermore, dominating crucial trade links can also positively impact the internationalization of the Yuan, the ramifications of which are serious.
“BRI also serves as the conduit through which another quite public Chinese policy can be realized—the internationalization of its currency. More aggressively, the policy means eventually not merely to internationalize the yuan but to displace the dollar.” (CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States).
The status as global reserve currency is not merely a prestigious talking point; a nation whose currency is the world’s reserve currency reaps substantial benefits:
The dollar’s position as the world’s primary reserve currency allows the United States to run a permanent budget deficit funded by printing dollars, as central banks around the world hold US treasuries in reserve ("As trade war rages, China may step up efforts to create an alternative to US dollar hegemony").
The unique ability to promote and enforce US interests extraterritorially is a crucial factor enabling U.S. hegemony.
[S]anctions are the perfect American weapon. They are cheap, put no American lives at risk and elicit no equivalent response. Thanks to the centrality of the dollar to the global financial system, only the United States has the power to fully wield them. Sanctions’ power was demonstrated in April when penalties against the Russian aluminum producer Rusal for its connections to President Vladimir Putin of Russia, and against the Chinese telecommunications company ZTE for doing business with Iran and North Korea, crippled the two global giants. ("Trump Has Only Sticks, No Carrots")
Another exemplar: From Dubai to London crude oil is traded in United States Dollars – the premium global reserve currency. The only non-Dollar contract is in Shanghai where black gold began trading in Yuan in 2018 and is considered a very successful product ("Insight from Shanghai: China’s international crude contract marks first birthday"). And the fact that the only non-U.S. Dollar oil futures contract traded internationally is denominated in Yuan speaks volumes ("A Chinese Oil Slick for the Dollar?"). Should the Yuan become accepted by oil producers rather than U.S. Dollars the demand for Dollars would plummet thereby eroding the Dollar’s premier reserve status ("Petro-yuan may prove a bigger headache to US than trade war").
Another pillar of hegemonic leadership is command of and supremacy in technology – particularly the emerging new and powerful technologies. While historically military capabilities to attack and conquer was the focal point of national security concerns, pure military power has been trumped by the importance of emerging technology such as AI, 5G, robots and space exploration. Moreover, technology is the key component in the triage of hegemonic power because technological supremacy can be used for both economic gain/defense and offensive military power/defense.
Dominating powerful emergent technologies will likely crown the hegemonic winner for two reasons: One, the offensive capabilities of emerging technology is potentially devastating. From a military perspective, technologically-advanced weapons could pave the path to an overwhelming victory - e.g., deployment of 24 hour fighting robot soldiers requiring no food, rest or questioning any directive. Robots – coupled with AI - will substantially impact future wars and conflicts. Emerging technology will certainly have military applications ("Why the U.S. Is Backing Killer Robots"; se also "Robot-soldiers, stealth jets and drone armies: the future of war"; "14 Ways AI Will Benefit Or Harm Society" ).
Moreover, technological empowerment can also effectively “attack” (non-militarily) another state. Election hacking to run a desired candidate and/or influence public opinion; the power to shut down electricity, water, transportation and other critical infrastructure are all potential effective and efficient paths to virtually conquer or seriously degrade a strategic adversary with no/reduced risk of military conflict (unless of course the nation under virtual attack responds) . AI, for example, will have a tectonic impact on global governance with extremely important unforeseen consequences.
Two, huge new industries and profitable sectors will arise and greatly enrich the sovereigns that can commercialize and exploit economically these new technologies. As an exemplar, the World Economic Forum estimates that AI will add nearly $16 Trillion to Global GDP by 2030 ("The global economy will be $16 trillion bigger by 2030 thanks to AI " ("Regional gains will be most strongly felt in China, which will receive a 26% boost to GDP in 2030, followed by North America (14.5%). Together, these regions will account for almost 70%, or $10.7 trillion, of AI's global economic impact.")). Reaping the lions’ share of this vast newly created wealth will be the leaders in AI. Therefore, dominating these new powerful technologies is critical in the context of the hegemonic rivalry for both reasons outlined above.
In the technological realm, China is scoring several impressive achievements. China was the first nation to land on the far-side of the moon – by all accounts an extremely impressive feat ("China Lands Spacecraft on the Far Side of the Moon". Indeed, NASA believes that China is on the path of dominating space in the coming decades and currently is the only nation which is a serious challenger to American space supremacy ("China's Secretive Space Program Threatens NASA's Dominance"). Chinese achievements and possible leadership in 5G ("The 5G Fight Is Bigger Than Huawei") and AI are at hand ("China will be the AI superpower" ("If this sounds overly alarmist, consider this: China is already ahead in the number of AI patents filed, AI venture capital invested, and research papers cited worldwide. The number of Chinese students studying AI and graduating from universities worldwide exceed the total number of other countries’ AI students combined.")).
The United States is exerting tremendous pressure on strategic allies and trade partners to limit economic engagement with China. For example, the United States is concerned about Chinese economic ties and investment in Israeli technology companies ("Exclusive: Israel's chip sales to China jump as Intel expands" ("The data will be welcome news for the Israeli government as it pushes for deeper ties with China and because semiconductors accounted for $3.9 billion of overall goods exports in 2018, according to the institute, a government agency.")) and the U.S. has requested the Israeli government to re-consider its economic ties with China ("Israel Is Stuck in the Middle of Trump's Conflict with China" ("The flurry of U.S. interventions in Israel has drawn a rebuke from China, and adds to tensions spurred by Trump’s trade conflict and the standoff over Huawei.")). Further demonstrating this emerging factor vividly is the Huawei 5G controversy. The United States has argued that Huawei should be banned from deployment of 5G because of security risks. Allies such as Britain, Germany and Poland ("In 5G Race With China, U.S. Pushes Allies to Fight Huawei") are all being lobbied with varying degrees of pressure to choose the United States over China with respect to 5G. The U.S. position is that nations must select either the U.S. or China and openly stating that allies selecting China will find their U.S. partnerships at risk.
Over the past year, the United States has embarked on a stealthy, occasionally threatening, global campaign to prevent Huawei and other Chinese firms from participating in the most dramatic remaking of the plumbing that controls the internet since it sputtered into being, in pieces, 35 years ago ("In 5G Race With China, U.S. Pushes Allies to Fight Huawei")
The German government looks likely to avoid an outright ban of Huawei Technologies' equipment and allow the Chinese company to participate in its high-speed communications infrastructure in some form, as the country seeks to balance its relationships with the U.S. and China.”("Germany follows UK in casting doubt on US Huawei ban").
Indeed, Italy is illustrative of a U.S. ally welcoming Chinese investment despite U.S. objection .
In a move certain to cause consternation among American officials and leaders of the European Union, Italy appears poised to help China extend its vast global infrastructure push deeper into Western Europe, part of Beijing’s sweeping plan to advance its economic interests and influence around the world ("Italy May Split With Allies and Open Its Ports to China’s Building Push").
London's hesitation to support the Trump administration with an outright Huawei ban may also be linked to political calculations. ‘In its current state, on the back foot on Brexit negotiations with the EU, the British government cannot afford to entirely antagonize China,’  With no signs that bilateral trade deals with the U.S. or Japan are making progress, ‘Britain is increasingly isolated’. ("Germany follows UK in casting doubt on US Huawei ban").
The “hub of alliances” may be at risk of fissure.
With respect to the current trade deal delays, as astutely noted:
Might the Chinese have adopted a particular style of negotiation in order to buy time for the development of its BRI? That is, might the Chinese have no real interest in reaching an agreement at all; might they instead be seeking a way of distracting the Americans form the larger and more ambitious project of actually setting up a new trading order around the Americans while they remain oblivious to it—or to the protection of their own interests? ("CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States").
But regardless, China’s long-march is already yielding victories as outlined briefly in this Essay. Any hubris induced notion that America has “no rival” “no equal” and “no peer” – the brag that American exceptionalism will be unchallenged (and unchallengeable) for the next century will simply expedite the march. While current United States national security policy has evidently transformed, to the extent that that American decision-makers continue to treat each element of Chinese strategy as autonomous and unconnected and fail to conceptualize the larger context, China’s long-march has an excellent chance of being successful.