Multipolarity: Disruptions and Opportunities in a New World. An Interview with Einar Tangen

December 26, 2023

About the author:

 

TIO

Considering recent global tensions, what do you think of the development of multilateralism and the multipolar world? Are we heading towards a diverse system of global cooperation, or a more protectionist, siloed reality?

 

Einar

There are several time frames, short, medium, and long term, involved. Over the short term, the political pressures are enormous. About 40 countries will be holding elections in 2024, and that means politics will take precedence over reality.

 

Why? Because for the last four decades, and especially today, conflicts, polarization, isolationism, economic headwinds, and geopolitical rivalry have stoked voters disenchanted with the status quo. Voters have turned to populists who use fear and paranoia to fuel their futile simplistic solutions. Enormous economic disparities have voters asking who is standing up for them. The latest example was in Argentina (with Javier Milei), and it is a scenario likely to be repeated in America and other countries around the world.

 

The point is, over the medium and long term, few leaders, old or new, are bringing realistic sustainable solutions. For example, inflation continues to be a problem that central banks are addressing with rate cuts. This ignores the root cause of their inflation, which isn't in an overheated economy, but service industry wage increases unrelated to productivity. Efficiency is what brings down inflation, not self-promotion and trumpeting, "we're number one" or something in that vein.

 

In the medium and long term, things must be efficient. The countries that are most efficient are going to win. It's not an issue where those who build the longest, tallest walls will win. All this accomplishes is walling in inflation and increased prices. It's very difficult over the medium and long term to win with a short-term strategy.

This is the tension that you see happening around the world. There is desire to look strong to achieve results, without understanding that the best results come through competition, or finding a place where a country can do better than other countries. If we can return to a more results-efficient paradigm, it will be very useful. China has put forward an idea based on Global Security Initiative, Global Development Initiative, and Global Civilization Initiative, which is all about creating a platform like a three-cornered stool.

These three pillars work together to create, not a world order, but a conceptual framework of how countries can work together. There should be a development path, countries should feel secure, and they should be able to make their own decisions in terms of being sovereign nations. This is what China believes. The world can no longer rationally go forward with the idea that one country is going to dictate all policies for all other countries. The US post-World War II era model is finished. This doesn't mean that this mentality won't return in the future. It just means that the world and times are dynamic. There are certainly points in time which seem to rhyme with other points, but at this juncture, we are looking at a more diverse, multipolar world in which countries must reach consensus rather than be dictated to.
 

 

TIO

As China and the U.S. had multiple rounds of high-level meetings recently, do you expect tensions between China and the West to relax, and could the world-wide rise of protectionism melt? How should we understand this change?

 

Einar

This goes back to my first answer. Quite frankly, there are so many short-term political pressures. People are feeling defensive. America 45 years ago had over 60% of its population in the middle class, today, 45 years later, it's 50% and dropping. The U.S. has the highest number of mortgage defaults, car loan defaults, personal credit card defaults, and student loan defaults, ever. This shows that despite the numbers that the Biden administration touts about growth and low unemployment, there is a lot of stress within the US economy.

 

This stress is also felt in China. Less trade has resulted in less orders globally. This does not mean that China is not exporting. China is not in danger of going into reverse growth like Germany, but numbers are certainly lower than before. This comes at a time when China is trying to transition from an investment-led economy, where investments in infrastructure, like roads, rail, ports, and city infrastructure are becoming less important than consumption, where a populace with larger disposable income can, in essence, keep the economy going through these demand cycles.

 

So, this couldn't come at a worse time for China, but as indicated, you must contrast where these two countries are. They share the same world, but at different development points, and this causes friction. Medium and long term, it really is about efficiency. China continues to be one of the most efficient nations in terms of manufacturing. Part of this is they have offset the increased cost of labor with cluster development zones, where if you're making a laptop, basically everything you need to make that laptop is within a walking distance of you. Quite different from the U.S. where they must get things imported from Japan, China, and other countries.

 

This helps with development cycles. It makes Chinese products, especially consumer products, much more responsive. You have seen this in areas like electric vehicles. The simple fact is you have BYD which has 40 or 50 different models versus Tesla, which has five. BYD can better and more quickly respond to consumer preferences. This is important in terms of fast-moving consumer goods and anything that relies on rapid response to market trends.

 

Regarding China and the U.S., competitiveness has been impacted. The U.S. has been at the high end in terms of chip design, but they don't manufacture. As a result, they find themselves with a kind of lopsided economy where at the very technical high end, there are plenty of jobs and opportunities, but when you start moving down the scale into the middle and lower middle classes, those opportunities have started to deplete.

 

The U.S. needs to concentrate on how it can make its economy more productive, how it can use its existing situation to lead to a position in the world which makes it more relevant. I don't believe that "small yards and high fences" are going to save the US economy, but the U.S. can certainly argue this is all about security. It seems a bit threadbare.

 

There must be recognition of this change once it occurs, and the world must start adopting policies that train people prepare for the imminent digital economy. There is some hope, but that realization must come, because there's no other way to continue to be competitive just by saying, "I'm number one," you must deliver. So, you have two countries at different points in the development scale. There is a lot of friction between them, but they're on the same path, which is trying to deliver prosperity to their people, and that's better done together than separately.

 

 

TIO

Given all the problems between China and some Western nations, we have witnessed strengthening ties between China and the developing, or the Global South countries, which stirred criticism and worries from the West, implying that China is expanding its global influence, or even building a hegemony. What are your perceptions on this?

 

Einar

Once again, there are fundamental differences in how the U.S. and China approach international affairs. The U.S. still adheres to some patterns of the post-World War II model, defined by American exceptionalism and the belief that America is necessary to protect the world from World War III, and eggs will be broken to make the omelet.

 

The problem is that many have lost patience with this idea, especially in the Global South, where they saw, and still see, themselves as the victims of victory, first by physical colonialism from Europeans, and second by economic colonialism from the U.S.

 

The rest of the world is not willing to wait. The world order is not better today than it was after World War II. In fact, you could argue that it has deteriorated. New enemies have arisen to threaten that fabric, not only globally, but also from within countries in the form of separatism.

 

You see that in developed countries a plague of terrorism has become a scourge. The U.S. moves in terms of creating and starting unilateral wars, in Afghanistan, Iraq, and other places. This is in addition to US support for regime changes in countries through what they believe are legitimate means. The National Endowment for Democracy (NED) is a group funded and directed by the US Congress. They will spend USD 330 million this year, and that is just their personal budget. They have USD 90 billion worth of additional assets, which are available through the government and other means. They are in 90 countries, as we speak, trying to manipulate governments into accepting the US norm.

So American exceptionalism is still alive, and China's approach has been non-ideological. China basically said, "we want to trade with you." This has been successful, reflected by the fact that at the Belt and Road Initiative, you had 152 countries represented and USD 1 trillion over 10 years of investment. These are real returns.

 

China is growing. The U.S. is going through a period like the rest of the developed countries where they are having difficulty maintaining high growth rates. If you go back 20 or 30 years ago, everyone would point to the US or European economy. Developed countries led the world in terms of GDP, but today they're the ones who are lagging in terms of economy. Developed nations are dragging the global economic growth down year by year, and in some countries, especially in Europe, they're actually going into negative territory. This causes a lot of friction.

 

An offshoot of this for the U.S. has been a growing isolationism. At the same time, they have started issues in the Middle East. Walking away from Afghanistan was a perfect example. After 20 years and trillions of dollars, the U.S. just left. As a result, there has been a tremendous amount of suffering.

 

The world sees this as the U.S. retreating. It creates a vacuum. China isn't stepping into the vacuum. It's being pulled into the vacuum, because countries are looking for economic security, which does not include domination through military or politics. So, it's less about an expanding China, and more about a retreating U.S. status quo.

 

Hopefully, at some point, it will reach equilibrium. The U.S. will realize that it cannot retreat from its responsibilities, that there must be a way to cooperate, especially on issues that are not going away, including climate change, global economic development, the debt situation, and how to achieve some sort of fair system for trade. If that can't be realized, there isn't much hope. I think eventually all sides will realize this, but it's difficult to see in the midst of battle, especially with a presidential election less than a year away.

 

Events are going to heat up over the short term. But long term, I think there are a lot of positive developments, like keeping lines of communication open, and realizing that in the long term, there are really not many other rational ways to proceed. War is not an answer, negotiation is.

 

 

 

 

 

Please note: The above contents only represent the views of the author, and do not necessarily represent the views or positions of Taihe Institute.

 

This article is from the November issue of TI Observer (TIO), which explores global views on multipolarity for both China and the rest of the world. If you are interested in knowing more about the November issue, please click here:

http://www.taiheinstitute.org/Content/2023/12-04/1212075245.html

 

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