The healing of democracies starts at home

The principal threats to western values come not from China but from inside our own societies

Martin Wolf

    © James Ferguson

The alliance of democracies is back. 

Moreover, its principal goal is to counter China. 

These were the big themes of Joe Biden’s recent trip to Europe. 

The desire to revive US alliances after the Trump era makes sense. 

But the new focus carries risks.

Jeffrey Sachs of Columbia University has written that “we don’t need the G7”. 

I disagree. 

It makes sense for high-income democracies to co-ordinate policies in areas of common interests and shared values. 

This is particularly true when democracy itself is in recession and power is shifting away from the US and its allies, especially to China. (See charts.)

China’s rise is the most important strategic reality. 

This year, according to the IMF, it will generate 19 per cent of world output measured at purchasing power parity, up from 7 per cent in 2000. 

Yet in aggregate, high-income democracies remain the world’s greatest economic power. 

The G7 nations will generate 31 per cent of output and the world’s 37 high-income democracies, together, 42 per cent in 2021.

In trade, too, the G7 still generates 31 per cent of world merchandise exports and absorbs 36 per cent of world imports, against 15 and 12 per cent for China, respectively. 

The high-income democracies generate 55 per cent of world exports and absorb 57 per cent of world imports.

The high-income democracies also have the world’s most productive economies in terms of output per head, while China’s only ranks 75th. 

They are home to the great majority of the world’s leading companies, largest international financial markets, leading universities and most influential media. 

The US also has the world’s most powerful military. 

Moreover, for all its failings, the ideal of liberal democracy remains attractive to many of the world’s people.

Having similar economies and political systems, high-income democracies need to co-ordinate regulation in areas like finance, digital technology and competition. 

They also have to defend their core values, such as freedom of expression, against outside interference, notably from China.

In sum, high-income democracies have their own values and interests, as well as the ability to defend them, especially if they act together. 

This is the case for co-operation. 

But Sachs also has a point: telling the rest of the world what to do is both wrong and unworkable.

As Stanford’s Ian Morris writes in his provocative book, War! What is it Good For?, “Europeans waged a Five Hundred Years’ War on the rest of the world”. 

The latter have not forgotten. 

The decades since the Soviet Union’s collapse have further undermined trust in the west’s competence and values, bringing the follies of the “war on terror”, wars in Afghanistan and Iraq, the global financial crisis, the UK’s exit from the EU and Donald Trump’s election. 

The G7 communiqué talks of a shared commitment to “international co-operation, multilateralism and an open, resilient, rules-based world order”. 

Today, this evokes a hollow laugh. 

Biden hopes Trump was an aberration. Alas, he may yet be back.

If a renewed democratic alliance is to have weight, it needs coherent and sensible policies. 

These are lacking, most strikingly on the pressing task of vaccinating the world against Covid-19. 

The G7 recognises that “ending the pandemic in 2022 will require vaccinating at least 60 per cent of the global population”. 

This would mean at least 9.4bn doses. 

But it committed to sharing just 870m doses over the next year. 

It also stated that “Since the start of the pandemic, we have committed $8.6bn . . . to finance the procurement of vaccines, including $1.9bn since we last met in February. 

This provides for the equivalent of over 1bn doses.” 

In total, then, they will provide 2bn doses. Many more will be needed.

Yet the G7 also notes that it has spent over $12tn on support for its citizens and businesses. 

It should have been self-evident, given this colossal spending on the consequences of Covid, that the G7 had an obligation to fund the IMF’s plan to vaccinate the world by mid-2022 at a cost of $50bn.

This is sheer folly. 

But there are also longer-term dangers in the planned new alliance against China. 

The high-income democracies are right to wish to protect their core values. 

But the principal threat to these comes not from China, but from closer to home. 

It is the failure to ensure widely-shared prosperity and defend democratic norms that matters most. 

It has, alas, been our elites, not China’s, that have caused this damage. 

Meanwhile, we must recognise the overwhelming need for global co-operation in preserving peace and protecting humanity against global threats, such as pandemics and environmental disasters.

Almost as important, nothing is more likely to drive the Chinese people even further into the arms of their communist regime than unremitting hostility from the democracies. 

In the long run, confidence in our values of openness and freedom is far more likely to change China. 

Yes, the democracies must defend core economic and strategic interests. 

But they should also remain as open to trade and ideas as possible. 

Sanctions will not change China. 

Only the Chinese people can do so. 

The west must give them a reason to wish to do so.

It is good to see a renewed attempt at western co-operation. 

But the high-income democracies must avoid some dangerous traps. 

If they are to lead, they need far more coherent ideas than they showed at the G7. 

Moreover, they must try to avoid a calamitous conflict with China. 

Like it or not, co-operation is essential for humanity. 

In the long run, above all, the high-income democracies must look within if they are to save themselves. 

China is not the greatest threat to our interests and values: we have met the enemy and it is us.

Accommodating China Is Unavoidable

"Absolute national security" might have been a reasonable goal for the US when the country stood at the helm of a unipolar world order. But in today’s world, attempting to “contain and confront” those with different values or systems, rather than negotiating a new global compact that accommodates them, is a recipe for conflict.

Andrew Sheng, Xiao Geng

HONG KONG – In their latest communiqué, NATO leaders declared that China presents “systemic challenges to the rules-based international order.” 

The response from China’s mission to the European Union was clear: “We will not present a ‘systemic challenge’ to anyone, but if someone wants to pose a ‘systemic challenge’ to us, we will not remain indifferent.” 

Such a tit-for-tat rhetoric is unnecessary, and most of the world’s population probably does not want it to escalate. 

Yet escalation is becoming more likely every day.

That is largely because China is one of the few policy areas where US President Joe Biden has largely upheld the approach of his predecessor, Donald Trump: compete fiercely, cooperate when needed, and confront when necessary. 

So, as China’s response to the NATO communiqué implies, it has adopted its own three-pronged response: don’t look for a fight, don’t be afraid to fight, and fight when necessary.

NATO is hardly the only forum where Biden is pushing the US approach. 

At the recent G7 summit and during his meeting with EU leaders, Biden also sought to convince America’s allies to form a united front against China (and Russia).

US Senator Bernie Sanders sees the problem. He recently warned that, by casting China as an existential threat, the US political establishment is effectively “beating the drums” for a new cold war, which will have no winner. 

As he put it, organizing US foreign policy around a “zero-sum global confrontation with China” would be “politically dangerous and strategically counterproductive.”

America’s flawed approach to China is rooted in an enduring belief in the concept of absolute national security. 

But, while this might have been a reasonable goal for the United States in the decades after World War II, when the country stood at the helm of a unipolar world order, it is not realistic in today’s multipolar system.

In today’s world, attempting to “contain and confront” those with different values or systems, rather than negotiating a new global compact that accommodates them, is a recipe for conflict. 

It certainly impedes the ability to pursue mutually beneficial economic engagement and cooperation on shared challenges like climate change. 

As a spokesperson for the Chinese embassy in London noted after the G7 summit, “The days when global decisions were dictated by a small group of countries are long gone.”

But the problem runs deeper: even within this “small group of countries,” decisions like courting conflict with China do not necessarily reflect the will of the majority. 

As Joseph E. Stiglitz has argued, the US today looks more like a plutocracy – with the top 1% of income earners able to steer most public policy in their favor – than a representative democracy.

If the top 1% in a country that accounts for 5% of the world’s population pushes the two largest economies into conflict, the entire world will suffer immensely, with the vast majority of people getting no say in the matter. 

If the US and its Western allies genuinely believe in democracy, they should find this unacceptable.

A better approach – and one that reflects the values Western liberal democracies claim to hold dear – would account for the interests of “One Earth,” encompassing all of humanity and the planet on which we depend. 

That means expanding our perspective beyond national security to pursue global security – the greatest good for the greatest number – and ensuring that every human being has a say in determining our collective future.

We are not arguing for global government. 

The natural and social sciences have shown the fragility of monoculture. 

In human civilization, as in nature, diversity brings stability and progress. 

Even competition can be a good thing, but only if it is balanced by effective cooperation, and violence, against humans or the environment, is eschewed.

So, how would a One Earth system be realized? 

Bottom-up feedback mechanisms, enabled by technology, will be crucial. 

The objective must be to break the silos that global elites, aided by abstruse language, have traditionally created. 

This would enable more people – with expertise in more areas – to contribute to discussions.

The obsolete, siloed approach is also reflected in the facile narrative that the US and China are locked in a “clash of civilizations.” 

Empires clash. 

Civilizations should be “civil” to one another, not least because we are all sharing the same Earth.

To that end, leaders must move beyond a narrow focus on national security to broad, inclusive discussions about how to deliver global security, in the form of peace, stability, adequate nutrition, and environmental sustainability. 

But, first, the US must give up on containing China and start accommodating it.

Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission. His latest book is From Asian to Global Financial Crisis.

Xiao Geng, Chairman of the Hong Kong Institution for International Finance, is a professor and Director of the Research Institute of Maritime Silk-Road at Peking University HSBC Business School.