In the eyes of Professor Kishore Mahbubani, the strategic rivalry between the US and China is one between a flawed incumbent superpower and a challenger who is growing stronger each passing day.
The veteran diplomat and former United Nations Security Council president has been a keen observer of the ongoing US-China rivalry, calling it “by far the biggest geopolitical contest the world has seen since human history began”.
He was speaking on Oct 31 at a joint event by investment platform ADDX and fund manager Aggregate Asset Management, of which he is the chairman and non-executive director.
Mahbubani says the US believes it has “around a decade” to prevent China from taking its position as the world’s No 1 superpower and is willing to do “whatever is necessary” to accomplish this. The question is, who will emerge victorious?
Different pieces
Mahbubani says that the sheer self-belief Americans have in the superiority of their ideology is one of the main reasons why it will come out tops in the competition. He continues: “The United States is confident it will win this contest with China. What explains this confidence? Firstly, the Americans believe with some conviction — and with some reason — that they have the best political system in the world. Presidents come and presidents go but the United States carries on.”
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“At the end of the day, the Americans are confident that their institutions and systems give them a competitive advantage. Certainly, they think they have a better political system than China does,” he adds.
This confidence extends to the nation’s domestic economic system, which Mahbubani describes as the “most Darwinian” in the world and one that is “absolutely vicious”, where different companies are in a constant churn of growth, competition, domination and failure.
“That explains the dynamism of the American system. In the last quarter, American companies did spectacularly well despite all the problems in the world,” he adds. In contrast, top companies in the European Union (EU) have “barely changed” decade after decade.
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America’s pride in its economic system is apparent and has split into its conduct of diplomacy. “If you look around the world, no other country has produced, decade after decade, world-beating corporations — Google, Facebook and more — which go on to become the largest corporations in the world. Whatever China does, it must not underestimate the United States of America because it is incredibly dynamic and competitive.”
Mahbubani also points to the global attraction of American soft power or Americana as a defining argument for the superpower’s certainty of its own winning trajectory. “It is a fact that the United States remains, in the eyes of many people around the world, the most attractive country to go to. Today, if you give people in Brazil, South Africa, India or South Korea a choice of where they would rather migrate to, China or the United States, you would find that most of them would want to go to the United States, and that is because of the overall appeal of the society. It's Hollywood; it's the universities; it’s the think tanks; it’s the vibrancy of life.”
However, on the opposite end is China, whose seniority and endurance as a nation of “around 4,000 years” to America’s establishment of “less than 250 years” is reason for Chinese self-confidence.
“China is the world’s oldest continuous civilisation. If there is one civilisation that has gone through stress-testing regularly, it is China. The Chinese suffered one of the worst centuries recently: humiliation from 1839 to 1949. This was a major stress test. They were trampled all over — the Western powers were seizing their territories, destroying the Summer Palace, and they were helpless,” he adds.
From those downtrodden years, Mahbubani credits China’s resilience and subsequent emergence from a trying century as the world’s “second greatest power” with the possibility of becoming the first as a “major civilisational advantage”.
The nation’s rapid development in recent decades has come about from its economic system, which is coverse to the American model. While the US has almost a free-for-all economy, China has created a system he describes as “the most regulated form of competition”.
“The Chinese also still believe in markets. They realised that their big mistake in Mao Zedong’s time was to suppress market forces, so they unleashed the market forces that functioned well inside China. They believe their system of having a more managed, regulated economy gives them a big advantage in this contest against the United States,” he continues.
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Mahbubani suggests that China's greatest advantage might be its perceived blueprint for eventually surpassing the US. He also believes that China had been “planning for this contest” since 2000 when the American economy was eight times the size of the Chinese’.
He acknowledges that despite China's relatively smaller economy at the time, Beijing had the foresight to expect containment from the US and thus opted to proactively open its economy to the world.
Notably, China negotiated to join the World Trade Organization. It also proposed a free trade agreement with Asean. “This was shocking because none of the Western partners of Asean had proposed anything similar. Communist China proposed a free trade agreement, and the results since have been spectacular. China has been, and still is, thinking long-term. That is why it started initiatives like the Belt and Road Initiative and joined free trade agreements like the Regional Comprehensive Economic Partnership to ensure that China is far more integrated with the rest of the world than the United States is. That will be China's competitive advantage.”
America’s fatal flaw
Despite its strengths, Mahbubani believes the US lacks a comprehensive long-term strategy in this geopolitical competition, which could be its fatal flaw. He takes the tariffs imposed on China by the US due to the ongoing trade war as a prime example of action without direction. He says: “The people who shoulder the costs of these tariffs are American consumers, not the Chinese. And even though every American economist knows this — as does Janet Yellen, the Secretary of Treasury — the United States cannot withdraw their tariffs on China. That is an example of a lack of strategy on their side.”
Speaking with The Edge Singapore, Mahbubani reasons that as long as the US-China trade war continues, the former looks to get the short end of the stick. “At the end of the day, the US government will make decisions based on his calculations on how it will help or harm the American people. And up to now, the United States has been very confident that the trade war will not hurt the American people but China much more. But that's not what has happened. It hasn't hurt China. China's economy is still growing. And, in some ways, it has hurt the American people.”
Although the US is bent on preventing China’s rise to the top, the Chinese have no desire to step into American shoes and assume global responsibilities as China’s hands are fully dealing with domestic issues. As a result, Mahbubani has “no doubt” that the lack of a common dialogue or “modus vivendi” between the two global giants will lead to worsening relations over the next decade.
When asked about the possibility of a further complication of relations between China and other countries due to situations such as the sudden passing of former premier Li Keqiang, Mahbubani was quick to dismiss any talk of a conspiracy theory that will affect China’s growth trajectory in some way. He sees the heart attack-induced passing as a natural and “unshocking” event for a man at 68 years of age.
How Singapore can thrive
Beyond addressing relations between the US and China, Mahbubani also advocates greater respect for Asia in the 21st century, questioning the lack of consideration for the Asian perspective by the West.
“The West believes in the principle of democracy. They believe societies should have one man, one vote, where every human has an equal vote. When a minority makes decisions, they call it a dictatorship or autocracy. Yet, the global system is autocratic. The West represents just 12% of the world's population, while the remaining nations have 88%. So why do they believe in democracy at home but autocracy in the global scene?”
As Asia continues to rise, Mahbubani cautions that Singapore and the Asean countries must carefully manage their relations with the US and China as favouring one side over the other could lead to severe consequences.
“I think it would be disastrous for Singapore to take sides in the US-China contest because we have good relations with the United States and we have good relations with China, and it's mutually beneficial for us. If we take sides, we will suffer, and we will not gain, so this is the optimal position — not just for Singapore but also for all the 10 Asean countries, and it's good news that our region is united in that,” he says.
While Mahbubani anticipates a deterioration in US-China relations over the next decade, he remains optimistic about Singapore's position, citing the city-state's strong trade ties with China and India and Asean's role as the world's largest middle-class market.
He adds: “The next 10 years will be a tremendous opportunity for growth. Although I can understand why people in the United States and Europe are pessimistic, there's no reason for us in Singapore to share this pessimism in the next decade; rather, the next 10 years may be among the best 10 years for Singapore.”
