Chinese Current Geopolitics:
Chinese history is a rich one. Many Chinese empires have ruled over territory much larger than that within their own present-day borders.
2100BC – 1600BC: Xia Dynasty. – First dynasty in traditional Chinese history. Brought the Bronze Age to Asia.
1600 BC – 1046 BC: Shang Dynasty.
1046 BC – 221 BC: Zhou Dynasty. – Split into Western Zhou (1045 – 771), the Spring and Autumn Period (770 – 476), and the Warring States Period (475 – 221). Western Zhou was relatively peaceful and prosperous. But like most periods of peace, they come to an end and we experience grabs for power. The periods after included division and wars. The Qin Dynasty emerged as the final winner. This period led to the establishment of Confucianism and Daoism which are the basis for Chinese beliefs in the dynasties of the future.
221BC – 206BC: Qin Dynasty. – United what we know as present-day China under one emperor. The Great Wall and the Terracotta Army were established in this short 15-year period. Qing Shi Huang, who was the first to adopt the emperor title, also standardised units of weight and measurement. He also created the writing system.
206BC – 220AD: Han Dynasty. – The Han dynasty ruled China at the same time as the Roman Empire ruled Europe and surrounding areas. This period was the beginning of the Silk Road, that established trade between China, Central Asia, to Europe. Confucianism continued to thrive, and Buddhism from India was introduced, as well as the rise of Taoism. A Chinese doctor was the first to give general aesthetics in this period, and the technique for paper making was improved. Even a seismograph to measure the activity of earthquakes was invented during this time.
220 – 581: Wei, Jin, Northern and Southern Dynasties. – Another period of intense change and fracturing of the previous ruling order.
581 – 618: Sui Dynasty. – Included the Great Canal and the rebuilding of the Great Wall. Japan sent emissaries to study Chinese culture, economics, and politics during this time. This greatly influenced Japanese culture.
618 – 907: Tang Dynasty. – The Tang Dynasty is known as one of the most powerful periods in Chinese history. It arose thanks to the stability and advancement brought by the Sui Dynasty beforehand. This period featured the only female emperor in Chinese history, Wu Zetian. Saw the Golden Age for many arts, such as poetry, painting, and pottery. Korea and Japan sent further students to study the culture of China. The status of women was improved and they were free to marry and divorce. The power of the Tang Dynasty didn’t last, like all empires before it, and for all empires in the future. Economic, values, and wealth gaps emerged, disdain towards the government system arose, and internal conflict damaged the dynasty. This coupled with deteriorating finances contributed to the decline of the Tang Dynasty.
960 – 1279: Song Dynasty. – The periods of transition between ruling powers were decided by wars in the past. Long wars. The period of war after the Tang Dynasty led to the Song Dynasty, which arose as the leading Chinese power in 960. After periods of war, we often see periods of great innovation. Technological innovation during the war advanced military technology. The period of peace after allows education to flourish. This further contributes to rising innovation and technological growth. This period saw overseas trade through shipbuilding grow, to the South Pacific, Middle East, Africa, and Europe. Paper money was invented in a Chinese province during the Song Dynasty, and the inventions of paper, printing, the compass, and gunpowder were further developed. The advancement of military technology occurred because back then, countries fought in human-to-human combat for power. So military technology was the most important area of innovation to maintain any power. The main cities in China in this period began a clear shift towards the coast, where we see the highest population density in present-day China.
1279 – 1368: Yuan Dynasty. – Saw the first foreign-controlled dynasty in China as Kublai Khan conquered the previous Song Dynasty. Free trade and connectivity to surrounding countries continued in this period, allowing innovation to continue to rapidly grow. The Travels of Marco Polo described China’s culture during this dynasty, as he travelled all the way from Venice for trade. The fall of the Yuan Dynasty was caused by expensive wars as they sought to claim further territory in Japan, Vietnam, and Burma.
1368 – 1644: Ming Dynasty. – The Hongwu Emperor founded the Ming Dynasty and ousted the Mongol Empire seen ruling during the Yuan Dynasty. He consolidated this power by removing any enemies to his rule. The Northern border with where present-day Mongolia is experienced constant tension, so the Great Wall was built and repaired into what we see in the present day. Ocean trade and shipping expanded further. The country pivoted from agriculture to an industry-centric country through this expanded trade. But the Ming Dynasty was a key demonstration of the elements of China that usually lead to its downfall. Agriculture and energy. Famine and a lack of support for China’s international trade routes led to dwindling power.
1644 – 1912: Qing Dynasty. – The rapid decline of the Ming Dynasty was challenged by the Qing Dynasty. This was China’s largest ruling when considering land space, which contained over one-third of the global population. China’s history is one of strong rule and dominance over its regional geography. But during the Qing Dynasty, the increase in technology led to a smaller world with greater connectivity. And so, the European powers arrived in China. This led to China’s Century of Humiliation in the 1800s. The Europeans were stronger militarily and wanted Chinese resources which were abundant. China didn’t want anything the Europeans had to offer, so they introduced opium into China. A series of physical wars occurred during the Opium Wars. With the introduction of opium, China then wanted something the Europeans had. During 1839-1842, the British Navy defeated the Chinese and took Hong Kong and other Chinese ports were opened to trade with the British. As a consequence of this war, Russia and Japan challenged China from the North and China lost further territory to both countries. This led to the Chinese decline of the Qing Dynasty over a long period. Internal conflict came to a head and the final collapse of the Qing Dynasty occurred in 1912.
1912 – 1949: Republic of China (ROC). – In a period covering both World Wars, China saw a period of conflict and pain, as most big cycles of empires occur. During World War One, China had been neutral since 1914 but ended this in 1917 when they declared war on the German and Austro-Hungarian Empires. China sent no combat troops during the war but sent labourers who were vital in serving the British and French forces at the end of the war. Following the war in the Paris Peace Conference, China was given two seats. They wanted the Shandong Peninsula returned to China, which belonged to Germany in 1914 before Japan occupied it in 1914. While neutral in 1914, China agreed to Japan’s Twenty-One Demands, in order to avoid a war with Japan. One of these demands was that Japan would control any former German territory, rather than them being returned to China. The territory was finally returned to China in 1922, but heavy Japanese influence remained in the region. The Twenty-One Demands agreement by China delayed a war, but the war with Japan eventually came.
In 1931, the Japanese Army invaded Manchuria, a northeast region of China that was known for its resources. The Japanese installed a puppet government.
In 1937, the Second Sino-Japanese War broke out. The first occurred between 1894-1895. The second was caused after a Japanese soldier failed to return to base after training exercises by the Japanese troops. The Chinese didn’t let the Japanese troops search a town for the missing guard and the standoff became violent.
The Japanese very quickly claimed Beijing and Shanghai before November 1937. In December 1937, the Japanese massacred between 200,000 and 300,000 people in Nanking in one of the most brutal events of war ever seen.
The war hit a stalemate, and foreign aid arrived for China. Most countries saw Japan growing in power and if they defeated China, Russia and the United States would be under threat. The US took it further and halted the trade of aircraft, oil, and scrap metal to Japan. The embargo was deemed as one of the reasons Japan attacked Pearl Harbour, the event that dragged Japan and the US into World War Two.
China’s importance in World War Two is clear. If China didn’t defend against Japan, Japan would have seized further Chinese territory. With these resources, they could have grown in power to challenge the leading global powers in the future.
As it occurred, the global attitude towards Japan as they were at war with China soured. The trade embargo, among other reasons, led to Japanese involvement in World War Two.
But the period of war after the Japanese surrender wasn’t over in China, as civil war arose in a broken country where power was up for grabs.
1949 – Present: People’s Republic of China (PRC). – The PRC arose when the ROC fled to Taiwan after a period of civil war between the communists and the capitalistic systems after World War Two concluded. The post-world war environment had a communist system under the Soviets and a capitalist system under the United States. China was communist-Soviet aligned and signed the Treaty of Friendship, Alliance, and Mutual Assistance with the Soviet Union in 1950. The communists, led by Mao, won power in the mainland.
This is what causes the tensions between Taiwan and China, the ROC is still in power in Taiwan. Hong Kong was returned to China in 1997, and Macao returned to China from Portugal in 1999. But they lost Taiwan to the Japanese, who ruled it until 1945 and then to the ROC. The geopolitical memory for some countries is longer than for others. Especially when the period in which they lost so much was one of the sharpest declines in a world power ever seen. And now that China is on the rise towards some of its historic dynasties, they want back what they believe is rightfully theirs from history.
1949 – 1976: Mao Ruling
Mao was a keen follower of Marxism-Leninism. One of Marx’s most popular theories is called Dialectical Materialism. It refers to the idea that opposites interact to produce change. So at the end periods of empires, internal conflict is high due to gaps in values and wealth. In short, opposites are in conflict. The weak and poor rise up to challenge the strong and rich. This period of intense conflict eventually contributes to a new leading power and the start of the cycle of empires within a country. If the conditions are suitable, an empire within a country grows big enough. From this, they can rule over more than their own country and can become the ruling global power.
During Mao’s rule, China experienced a period of isolation but grew the economy at an average rate of 6% per annum. At first, with the support of the Soviets. After the Great Leap Forward, economic growth came from close support from the United States, as Mao determined the Soviets were the biggest threat to China and distanced from them. Mao’s principle here was to identify a country’s main enemy, neutralize the enemy’s allies and draw them away from this main enemy. Hence this drew China towards the United States.
The Great Leap Forward was an event between 1958 and 1962. It was an attempt to copy the Soviet model of industrialisation, away from agriculture. But the Chinese didn't have an agriculture surplus. This led to widespread famine and the loss of around 20 million people, but other estimates provide a number much larger than this.
In 1971, the PRC of China was given a seat on the United Nations Security Council that had been held by the ROC. The ROC was expelled from the UN altogether. This shows the strength of picking the right friends. Of course, nothing is permanent in geopolitical alliances. But the friendship with the United States set the course for China to one day rival the US as a global superpower.
This change of the PRC joining the American-led world order led to the Shanghai Communique. This detailed that the US acknowledged that there is one China, and Taiwan is a part of China. This event is what causes so much tension between the US and China in present-day discussions in Taiwan.
China is a clear potential global superpower. They are the rising power against the United States which is the ruling power. After the Century of Humiliation and existing under a period of Japan as the Asian regional power, the Chinese are gaining back what they lost. Taiwan is one such thing.
We have seen many Taiwan Strait crises, and they usually pan out the same way. China demonstrates its military power in the Taiwan Strait with military exercises close to Taiwan. They fly into Taiwanese airspace, an event which occurs countless times per year even outside periods of crisis. And then the US responds by sailing an aircraft carrier and warship group right down the Taiwan Strait. And then the tension dies down.
In recent communist party conferences, Chinese terminology changed. It has pivoted away from growth and economy, and towards strategy, security, and safety. As China works to develop its People’s Liberation Army, will we reach a point when this usual timeline of a Taiwan Strait Crisis doesn’t unfold as previously? I’ve discussed how wars are no longer really fought with human-to-human combat. They are trending towards other forms of war such as space in the new space race to establish bases on the moon, mars, or to partake in asteroid mining. All of which are aspirations China has in space. Other types of war include cyber, technology, and trade wars. There are exceptions, but as major global superpowers, any escalation between China and Taiwan would drag the United States into the playing field. And that would have to be a carefully navigated period for both sides.
1976 – 2012: Deng, Jiang, and Hu Rulings
Under Deng, Jiang and Hu, China developed from 90% of the population in poverty to a fall by more than half. In the present day, less than 1% of the Chinese population lives in poverty. The period of Mao set the scene for rapid economic growth, and China joined in with trade. In turn, becoming one of the biggest players in globalization aided the transfer of knowledge, innovation, and trade.
China and The Asian Financial Crisis: During the Asian Financial Crisis, China was underrepresented in MSCI Asia indices. And investment in the Asian values other countries exhibited wasn’t transferred at high levels to China. So, the impact on China wasn’t major, and they emerged relatively unscathed. They successfully restructured debt and corporations and sold unprofitable Chinese state-owned companies. They built up reserves of the world’s reserve currency, the US Dollar. But unlike other Asian countries, they didn’t need to devalue the Yuan when increasing US interest rates made debt payments higher.
China continued to thrive in the period of global peace, learning and advancing due to its relationships with other nations that had greater geopolitical power than their own. In this period, China’s self-interest was to become a part of this globalised, capitalist system to maintain its rapid economic growth. They offered the rest of the world the cheapest labour throughout this period also. All this was exacerbated when China joined the World Trade Organisation in 2001.
The rapid growth of other countries happens in the cycle of empires until a country that grows as fast as China is seen as a threat, and then relations sour with the global ruling power. There are no friends in geopolitics, only interests. And every nation acts in its own self-interest, always.
Xi Jinping Ruling
Xi Jinping was elected in 2012 and a new Politburo was established. The Chinese system is constructed as follows:
Tier 1: General Secretary – Xi Jinping since 2012.
Tier 2: 7 Politburo Standing Committee.
Tier 3: 24 Politburo.
Tier 4: Central Committee.
Tier 5: National Party Congress.
Tier 6: Chinese Communist Party
Note: Tier 1 represents the most power with the leader of the country.
Since 2012, Xi has been consolidating power over the entire CCP. In the most recent Communist Party Conference, he removed any challenges to his rule as he became the leader for a third term. This makes him the most powerful leader since Mao. But with Xi tinkering with the leadership structure so much, is he surrounded by people who won’t challenge him? One key element of being a leader is communication with those around you. If Xi has created an untouchable bubble around himself through the Politburo, is he running the show solo?
Outside the leadership structure, what have been the main policies of Xi's leadership since 2012? A key element is balancing state and capitalism. Many Chinese capitalist companies, which aren’t owned by the state, have been limited as they grew too powerful. Regulations were placed on these companies to give the state more control and access to these companies. Examples are Alibaba, Baidu, and JD. When considering the Chinese financial markets, be aware of the trade war and the impact of bans or embargos, the tech war, and extra accounting audits for Chinese companies. China also has a difficult relationship with non-state-owned companies, where they want to maintain an element of control. This can lead to slower growth for these publicly listed Chinese companies.
A more active balancing act of the Chinese currency has also occurred. A currency that is cheap in comparison to others can help a country’s exports look more attractive as goods are cheaper. For China as an export-driven commodities player, the control of the currency helped them incentivize exports. It is debated whether this was a clever exchange rate policy or currency manipulation. Regardless, it allowed China to remain the biggest player in the global commodities market for many commodities.
As China grew and continues to grow as an empire under Xi’s rule, the US felt challenged. China plans for long periods. They release a 5-year plan every year. Since Xi’s rule, the Chinese have plans to become the leader in certain industries that the US is leading currently. They detailed this in their Made in China 2025 plan, released in 2015.
Under the Donald Trump administration in the US, the Chinese-US trade wars began. The US is attempting to limit the trade of materials important to China in these industries because it wants to limit the growth of China's market share. One of these industries is semiconductors.
A key technological aspect of modern life, semiconductors are the chips that go into everything from washing machines to computers. They will be vital in the future of technology. The United States under Biden is limiting exports of this technology and related materials to Chinese companies.
China makes lower quality chips than the US, who makes the highest quality chips in the world. But China is known for reverse-engineering technology made of a higher quality. They will have access to US technology using semiconductors, and with time, replicate the US chips. Also, China has a lot more friends now.
Chinese Connectivity
After China isolated itself in the last century, they are now experiencing rapid connectivity growth. They are building islands in the Pacific that hold Chinese military bases. The Chinese sphere of influence in the surrounding oceans includes the South Asia Islands and stretches as far as Australia, with who China faces a complicated trade relationship. Australia is a member of AUKUS, with the UK and the US, who are helping Australia to construct its own nuclear submarine. There is a massive 4000km between China and Australia, which shows how much influence China has over the region. Australia also benefits, with nearly a third of its total exports going to China. This is a relationship that should be carefully balanced.
The theory of connectivity argues that we are no longer in a world where political borders are as important, and functional borders are being established based on connectivity between states. As China grows its connections, it expands its borders. Countries connect through infrastructure, and no infrastructure project is as big as the Belt and Road Initiative. China has recognised that countries are no longer fighting for territory (excluding countries like Russia whose main aim is to establish distance from its borders to its capital). They aren’t fighting because they can buy territory. Countries with no ocean access can buy ports in other countries. China is buying islands in the Pacific to spread its influence. And Belt and Road are China buying access to expand its trade from its own country towards Western Europe.
China wants to return trade to the land. Mackinder’s Heartland Theory describes that whoever controls the Eurasian landmass controls the world. Mahan’s Sea Power theory details that whoever controls the world’s oceans controls the world. China wants to challenge Mahan’s Sea Power that the United States currently benefit from with the world’s strongest navy by a considerable distance. If they return some maritime trade to the land, China has more influence over the area through Belt and Road. China’s land-based trading gains are the United States' ocean-based trading losses.
If countries are no longer fighting for territory, then militaries will be used to protect supply chains. China will have quite a job on its hands defending the supply routes that it aims to stretch over the entire Eurasian landmass. But it doesn’t stop here. China also aspires to influence other regions.
As the US isolates itself from global geopolitics, China has expanded into new areas. Specifically, Africa and the Arctic.
In Djibouti, China has a military base. It is China’s first overseas military base, and it demonstrates China’s geopolitical aspirations in Africa. 46 countries from Africa have signed up for China’s Belt and Road Initiative (BRI). And Africa is modernising. During the Industrial Revolution in the developed world, massive technological innovation and economic growth occurred. China wants a part of this African economic growth when it experiences its own industrial revolution. The progress of society is determined by the amount of cheap energy available. With China building infrastructure through BRI, they are aiding this economic growth in Africa. If Africa can deal with the conflict and instability, China’s hard work will pay off.
China also is present in the Arctic. Joint with Russia, they are using icebreakers to forge new trade routes through the Arctic as the sea levels warm up. This will provide further options for the BRI.
China finds itself in the position to establish a new trade system due to being the biggest commodities player in the world. All this economic growth has to come from somewhere. And infrastructure advancement allows for economic growth to boom. To expand infrastructure, commodities are needed.
This brings to question if China has enough commodities to be self-sufficient, regardless of limits thrown their way such as the US semiconductor export limits. Or if they can get everything they need from friendly countries, especially those part of BRICS.
BRICS stands for Brazil, Russia, India, China, and South Africa. It was first coined in 2001 by Jim O’Neill who worked for Goldman Sachs to describe the five leading emerging market economies. They now form a tightly knit organisation in which trade between the members has rapidly expanded in recent years, especially after Russia isolated from the West and pivoted to the East after its Ukraine invasion. There are many nations who want to join BRICS including Algeria, Argentina, Saudi Arabia, and Turkey.
China has a lot going for it when it comes to global trade. Establishing the infrastructure and routes for trade through BRI and having the partners to trade with through BRICS. The biggest commodity player in the world could itself be self-sufficient in some commodities. But if they aren’t, the chances are that another country will benefit from trading with China and giving them what they need.
The Pandemic: COVID-19
China had the strictest COVID policies of any country in the world. They have attempted to fully open up their economy at the start of 2023. They have the advantage that they have seen every other nation reopen and can use this experience. The disadvantage is that China is very densely populated around its coastal cities, and other countries achieved herd immunity with the vaccine rollouts.
Chinese herd immunity will be painful, with high levels of transmission in these coastal cities. Whether they reverse this policy remains to be seen. But if they achieve herd immunity, China could see a spending boom as the western countries. Consumers have found themselves locked down for nearly 3 years in China, and savings will have accumulated.
We’re seeing greater activity in flight and metro numbers, so the economy is improving. One key question is how China’s reopening will impact the rest of the global economy.
Even if China does experience difficulty reopening, we may not find out. They are known for releasing misleading economic data that has to be corrected in the future. We don’t have access to the underlying processes used to formulate this data, so we take any data out of China with a pinch of salt.
Inflation and supply and demand factors of key global commodities are coming to the limelight. One such example is oil.
China’s reopening will lead to the demand for oil rising. It is difficult to predict by how much and many analysts use the random number generator approach to figure it out. But we won't truly know until China is fully reopened. This is why China is working hard on its relationship with Saudi Arabia. Saudi Arabia is the second biggest oil producer in the world, behind the US. Because the US is a geopolitical rival, China can’t go to them for energy. So their relationship with Saudi is incredibly important to ensure China can continue to expand and develop its economy and trade systems. As I’ve mentioned earlier, access to cheap and abundant energy is the key driver of societal expansion.
Saudi Arabia receives security from the United States due to its power over the oil markets. This stops any countries acting against Saudi Arabia in the unstable middle east, particularly Iran. Saudi Arabia and Iran battle for leadership in the Middle East. But Saudi having the US as a security guarantor stops any Iranian action. If Saudi pivoted to China, BRI, and BRICS, would they lose the security the US provides? Will they lose that security anyway as the US trends towards isolation and protecting itself and only the closest of allies? This demonstrates the importance of Saudi Arabia as the world still heavily relies on oil. China will have reliable access to the energy that they so desperately need to continue to function.
The Future:
We saw a prime example of Chinese data misinformation recently. It was announced their population experienced a decline and was 850,000 people lower. The UN predicted that China’s population would peak in 2031 based on data released. If this is the start of their population decline already, China is nearly 10 years ahead.
Most countries are (or will be) experiencing population decline due to lower birth rates and women prioritising careers, among other reasons. Longer life expectancy then leads to a population where the older retirees are supported by a smaller young population.
China is in this situation but will experience it on a level more drastic than most other countries. The One Child Policy was implemented in 1980 and ended in 2016. The government deemed the population growth was too rapid and a strain on resources would have arisen if it continued. Families were offered incentives such as financial, to only have one child.
However, the secondary effects of the policy were unforeseen. Boys were preferred to girls to support their parents and to work. This led to abortions of baby girls, and a clear population skew with more men now existing in the Chinese population. This also contributed to the ageing population China now has to deal with. There is no strategy for a society with a small workforce and a large ageing retired population because no country has ever had to deal with it. Solving this problem, if possible at all, will require strategic thinking and creativity. Tactics such as raising the retirement age could be expected as the productivity of the Chinese economy drops. Can China maintain productivity outside its political borders, as it expands its functional borders through trade connections?
In history, the downfall of Chinese ruling empires has been caused by the usual events such as wealth and values gaps and high amounts of debt. But two elements of Chinese history that contribute to its downfall are its abilities to feed and provide enough energy for its population. China is attempting to secure its future in both food and energy. They are closely aligned with Russia, which has the Russian Wheat Belt and is a key player in the energy markets. And the relationship with Saudi Arabia will aid energy security. This is an element worth keeping an eye on however due to its occurrence in China’s historical cycles.
The final relationship to consider is between China and itself. A similar problem to Russia, could China’s demographics stop it from reaching the levels of global power it aspires to achieve? China’s population is declining. Also, a larger number of the Chinese population are leaving the country than people are immigrating to China. A contributing factor to this is the level of freedom. They are in the bottom 25% of all countries in the world on freedom of the general population. The COVID lockdowns, social credit system, societal repression of protests and complaints against the government are all examples of problems faced by the Chinese government. In challenging periods, strong leaders are elected to navigate the choppy waters. But China was exercising this level of authority during one of the most peaceful periods in the history of humanity. The power of China's digital communism system is difficult to balance. Its population demographics are a rather large hole that China needs to plug somehow.
China is a key global player. The number of relevant parties in China’s geopolitical story is more than that of any country. Taiwan, Japan, Saudi Arabia, India, The South Asia Islands, and Australia are important relationships China has to manage. As well as BRI and BRICS trade routes.
Regardless of all this, the most important to global geopolitics is how China manages its policy towards the United States, Russia, and most importantly, itself.
