On The Road to a Post-G20 World
December 4, 2018
The ascendence of China and multilateral trading blocks could eventually
spell the doom of the G20 and U.S. global dominance, as Pepe Escobar
explains.
By Pepe Escobar
in Moscow
Special to Consortium News
The trade war launched by the Trump administration against China may not
have been solved by a 2½-hour dinner between Chinese President Xi Jinping
and Donald Trump at the G20 in Buenos Aires on Saturday. But it may have
opened a path towards a drastic realignment.
Way beyond the histrionics surrounding the family pic and whose nods and
winks signaled surefire geopolitical capital the G20 walked and talked
like a last gasp to save the current turbo-capitalist world (dis)order.
The sherpas at the G20 lost sleep for two consecutive nights trying to come
up with a final declaration capable of appeasing Trump. As virtually every
nation at the G20 supports multilateralism on trade, nobody wanted to upset
even more the real Big Boss in Buenos Aires: Xi Jinping.
The climax in any case was the U.S.-China bilateral which carried the
potential, if things went downhill, to derail the global economy.
The White House spin was on immediate negotiations lasting 90 days over
forced transfers of U.S. technology to China; intellectual property
protection; an array of non-tariff barriers; and alleged Chinese cyber
intrusions. If theres no deal, Washington will raise tariffs on Chinese
imports to 25 percent.
Xi and Trump at G20. (Official White House Photo by Andrea Hanks)
Now compare that with the key take away from Beijing, with Wang Yi, the
vastly experienced Chinese Foreign Minister, describing the dinner
conversation as friendly and candid. There were also no specifics on how
substantial the allegedly immediate Chinese buying of American
agricultural, energy and industrial products will be.
Wang, defiant, outspoken, and an expert on Japan, was promoted to state
councillor last year, which means the Ministry of Foreign Affairs now has
much more clout over other key Chinese institutions. Last summer, Wang
coined a priceless take on Trumps trade war: The U.S. often says that it
is taken advantage of, but this is perplexing. Its like someone who buys a
hundred-dollar product in a supermarket, has the product in hand, and then
complains that he is a hundred dollars short. Does that logic stand up?
Applying Sun Tzu
The Chinese negotiation camp though is led by a thoughtful intellectual;
Harvard-trained vice-premier Liu He, 66, who directs the all-powerful
General Office for the Central Financial and Economic Affairs Commission. Xi
heads the commission but its Liu, his top adviser on economic policy, who
actually runs the daily operations. Hes also the top interlocutor of U.S.
Treasury Secretary Steven Mnuchin.
In the end, Beijing actually applied some modified Sun Tzu tactics to buy
time. It has, in parallel, stalled almost to a whisper the Made in China
2025 agenda, a plan to boost Chinese domestic industry which the Council on
Foreign Relations calls a real existential threat to U.S. technological
leadership.
The imminent Chinese leadership in robotics and artificial intelligence does
proceed, of course, but now in dissimulation mode.
Its not that Beijing has never thought about so-called reforms. Steps
were already delineated by the China 2030 report, agreed five years ago
between premier Li Keqiang and the World Bank, pointing to a progressive
privatization of major state corporations and the banking system.
But this will happen on Chinese, not American, timing. Few, if any, analysts
have noted that in the new NAFTA negotiated by the Trump administration with
Canada and Mexico, and signed in Buenos Aires, that section 32.10 forbids
members to negotiate with non-market economies. Thats code for China.
Whatever happens next, Beijing will keep being demonized for predatory
practices the terminology of choice within the Beltway and enshrined in
the U.S. National Security Strategy.
Submission Down South
On the Global South front, just as the G20 was hosted by South America, the
two key regional powers, Brazil and Argentinaone a BRICS member and the
other a potential BRICS Plus memberinstead of shining, presented a sorry
picture. Argentina, with its economy in tatters thanks to a neoliberal
puppet, and Brazil, totally humiliated on the brink of being run by a
cartoonish neo-fascist, were both prostrated in total submission to the
indispensable nation.
There are some fascinating nuances, however. Argentinas neoliberal
President Mauricio Macri is really a hyper-multilateralist, pro-free trade,
and cooperation proponent in every international forum but his friend,
Trump, was instrumental in getting the IMF to take Argentina to the cleaners
once again.
Macri has excellent relations with the notorious multilateralists, China and
the EU. When the White House claimed that Buenos Aires agrees that Chinas
trade policies are predatory, Argentine diplomats immediately denied it.
No wonder, as Argentinas fourth nuclear power plant will be financed by
China, at $8 billion. China will become Argentinas biggest
non-institutional lender after a currency swap doubles the nations credit
line to $18.7 billion.
The Militarized Evangelical Banana Republic, formerly known as Brazil, once
again, did not fail to deceive. French President Emmanuel Macron already
embattled by the Yellow Vest insurrection across France reiterated that a
free trade deal between the EU and Mercosur, under negotiation for nearly
twenty years now, can only be clinched if the Brazilian government, under
Jair Bolsonaro, does not ditch the Paris climate change Accord.
Prior to the G20, Bolsonaro abdicated from hosting the UN summit on climate
change in 2019 as Brazil may leave the Paris Accord to the benefit of the
powerful agro-business lobby ravaging the Amazon rainforest. For Macron,
self-styled leader not only of the EU but global environment, thats a major
red line. And that will translate into a French veto on a deal with
Mercosur. No wonder Macri has got to be furious.
Enter the R20
The Trumps head home after G20. (White House photo)
Crucially, Xi Jinping once again stressed in Buenos Aires that Beijing
supports necessary reforms to the World Trade Organization (WTO). But
these should protect the interests of developing countries and China
still defines itself as a developing country.
That brings us to a road map that should please the Global South.
Yaroslav Lissovolik, former Duetsche Bank and IMF official, at the essential
Valdai Discussion Club, which he directs, proposed a horizontal format to
coordinate trade and infrastructure integration: namely, an R20 as in
Regional 20 that would bring together the largest regional heavyweights
in the world economy represented by 10 regional blocks.
This connectivity track within the R20 format, as Lissovolik describes it,
might become the essential platform interlocking many current infrastructure
projects, from the vastly ambitious and well funded Chinese-led New Silk
Roads, or Belt and Road Initiative (BRI) to the still quite vague
Asia-Africa Growth Corridor (AAGC), driven by Japan and India.
Its not about nations; its about regional trade blocks. They might well
become the uber-building blocks of a post-G20 world after a definitive,
world system-shattering moment is brought upon us: when the petroyuan
eclipses the dollar.
Pepe Escobar, a veteran Brazilian journalist, is the correspondent-at-large
for Hong Kong-based Asia Times. His latest book is 2030. Follow him on
Facebook.
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