09.05.2014 Author: Ulson Gunnar

China and the Follies of Megatrading

562321As if to stroke the egos of those ruling Beijing, the West’s financial journals in chorus announced with enthusiasm that China has become the first ‘megatrader’ since the British Empire. The Wall Street Journal would report that Standard Chartered economists would even go as far as suggesting Beijing would shed the very economic policies that have led to its rise, and become a champion of ‘free trade.’

The WSJ article titled, “Will ‘Mega-Trader’ China Turn Into a Free Trader?” claims, “once a country reaches such an exalted status, Standard Chartered reasons, it recognizes that its interest lies in opening markets overseas and at home.”

The Standard Chartered report included a global map showing China’s increase in global trade from the 1990’s to 2012. It also reveals China’s premier trading partner, the European Union, the Middle East and North Africa (MENA) from which it derives its oil, and Africa from which it seeks to procure mineral resources to fuel its expanding production-based economy, all lie along what is known as Chian’s “String of Pearls.” This global spanning logistical corridor represents perhaps China’s largest vulnerability, a vulnerability it is fully aware of and has been engaged in for years attempting to defend.

Beijing realizes that global trade is both a threat and an opportunity. It has taken steps to maximize that opportunity in the short-term, and eliminate the threat in the long-term. This includes attempts to invest in science and technology to reduce its dependency on research and development from abroad, the expansion of its nuclear power network to reduce its reliance on hydrocarbons, and attempts to forge trading partnerships closer to and within its own boundaries. In other words, Beijing is attempting to become as self-sufficient as possible in the long term, while it takes advantage of its “megatrading” in the short term. The latter is providing the fuel for the former.

However, China is described as a “trade policy laggard,” by Standard Chartered, for maintaining protectionist polices at home and resisting the temptation to commit fully to “free trade.” This is probably because China realizes that perpetual expansion is unsustainable and that “free trade” will come at the cost of Chinese sovereignty and self-determination.

The Future of Globalization 

Globalization is in fact nothing more than a euphemism for the international order built by and for the benefit of the US and its partners after the conclusion of World War II. It represents the economic, strategic, and even cultural hegemony of the West over the rest of the world, and by necessity for its implementation, the concept of “free trade,” which in fact is not “free” at all.

It is a one-way street on which established monopolies deconstruct protectionist barriers around the world and fold foreign economies and their resources into their perpetually expanding sphere of influence. For China, giving in to “free trade” would be repeating the humiliation of foreign occupation by the British, Americans, and Japanese prior to the World Wars. It’s “laggard’ status is not due to its inability to commit to “free trade,” but rather its disinterest in doing so.

As the United States continues wane in terms of geopolitical influence around the world, its economic influence will ebb as well. As it does, developing nations will fill the void with technology reducing both the disparity between competitors, as well as the likelihood of large-scale conflicts due to the proliferation of deadlier means of martial deterrence. Nations will turn toward each other, and inward, away from “globalization” under the unipolar West, and toward a more inclusive multipolar world.

The future of globalization can already be seen unfolding. US sanctions against nations like Iran have long since forced the Iranian people to look toward alternatives to the “international order” abroad, and more inward among themselves to foster socioeconomic progress. Similar sanctions now being aimed at Russia have unsettled a growing community of developing nations that realize any one of them could be next. This has caused them to begin thinking of a world without “globalization.”

China is chief among them. While it is indeed the most dependent on globalization for its current development, it is most acutely aware of this dependence and the realization that it must hedge against it. Being please with being a “megatrader” is folly, no matter how attractive prominent Western financial journals attempt to portray it. China appears to know this.

Ulson Gunnar is a New York-based geopolitical analyst and writer especially for the online magazine “New Eastern Outlook