Department of Government The Global Financial Crisis, China’s Rise and the West’s Decline:...

Department of Government

The Global Financial Crisis, China’s Rise and the West’s Decline:

Welcome to the New World Order!

Dr. Andrew Cottey


University College Cork, Ireland


Introduction

• President George H. W. Bush, 1990-91 Gulf War:– A ‘new world order’.

• Noam Chomsky:– ‘The 500 Year War’.


The Global Financial Crisis

• The end of capitalism?– Capitalism historically rather robust– Absence of viable alternatives.

• What kind(s) of capitalism?– The end of the neo-liberal ‘Washington

consensus’?– The ‘Brussels consensus’?– The ‘Beijing consensus’?


The Global Financial Crisis

• Medium and long-term impact?– To date, worst case scenarios have been

avoided.– Instability in the financial sector and the

liquidity crisis, however, continue.– …


China’s Rise

• 1978-2000s average annual economic growth rate approximately 9%.

• 1990s global impact of China’s rise limited – primarily an exporter.

• 2000s China ‘goes global’:– Multilateral institutions and political alliances; e.g., WTO, UN Security

Council, UN Human Rights Council, Shanghai Cooperation Organization, East Asian Community.

– Search for energy and raw materials (Sudan, Africa, Iran, etc).– Aid policy: emergence of China as an aid donor rather than recipient (esp

in Africa).– Sovereign wealth funds: China Investment Corporation (CIC) established

September 2007 (- US $200bn, est. US $30bn to invest overseas in 2008)– ‘Soft power’ strategy: e.g. Confucius Institutes, ‘Beijing consensus’.


China’s Rise

• China and the global financial crisis:– ‘Bucking the markets’?– Chinese capital as a solution to the global

liquidity problem?


The Rise of the Non-West

• India, Brazil, Mexico, South Africa, etc high economic growth rates since mid-to-late 1990s:– BRIC (Brazil, Russia, India, China) group likely to

become economically larger than G7 (Group of 7).

• Economic power now being converted into political influence:– E.g., WTO negotiations; UN Human Rights Council;

‘Beijing consensus’; debates on military intervention (Darfur, Zimbabwe, Burma); UNFCCC – Kyoto II a potential ‘train wreck’?


US Decline?

• Symptoms of decline:– Budget deficit; 2008 financial crisis; defeat in Iraq and

Afghanistan?; military overstretch; global public opinion and decline in ‘soft power’.

• Relative or absolute decline?– Relative rise of other powers.

– Economic assets.

– Per centage of GDP devoted to defence sustainable.


US Decline?

• Foreign policy challenges for the next US President:– Recognising the limits of American power.– Building coalitions.– Restoring America’s soft power.


Europe: Resurgence or Decline?

• European economies show some signs of life.• Global financial crisis:

– Re-inforces the value of the European model of regulated capitalism.

– European states and the EU have responded at least as convincingly as the US to the crisis.

• Europe continues to struggle with ‘hard power’…• …but in an era of multilateral coalition building

the ‘European way’ is a significant force– Mark Leonard ‘Why Europe will run the future’.


The New World Order

• Central long-term trend = the rise of the non-West.• Global financial crisis likely to re-inforce this :

– Non-Western economies have weathered the crisis reasonably well – likely to strengthen their relative economic and political power.

– Weakened material power and ideological/ normative power of the West.

• Multipolarity rather than non-polarity.


The New World Order

• Global challenges: climate change, managing global capitalism, poverty in Africa, proliferation, terrorism:– Requires building global political coalitions in

a post-Western world:– Need to reform global political institutions (UN

Security Council, the G7, the IMF, the World Bank).

Department of Government The Global Financial Crisis, China’s Rise and the West’s Decline:...

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