We have already elucidated that the New World Order would be built around the Sphere Of Influence by major global powers by projecting their economic & military power across the influenced states. The Sphere of Influences are primarily determined by the relative economic strength of Established & the rising powers like US & China. US is truly the Lone Global Super Power not only in terms of Economy of 17 Trillion $ but also commanding world’s largest military force. China on the other hand has an economy of 10 trillion $ with one of the largest armies in the world after US. It’s an irony that while China has 10 trillion $ economy it does not have the military might to stand upto US & its allies in Asia-Pacific; Russia on the contrary has the military might to take on US & its allies but does not have the economic might which China has. It would be fair to state that in the New World Order the sphere of influence would be oriented from 2 opposite poles i.e. Washington Consensus & Beijing Consensus. World’s Geo Economics & Geo Politics will revolve around Washington & Beijing trying to exert its sphere of influence by soft economic power & muscle flexing through overt, covert means.
The Washington Consensus:
The Washington Consensus refers to a set of reform policies that the US government and financial institutions based in the American capital advocate believe should be implemented by nations to ensure economic growth. It was first coined in 1990 about Latin American economies. The Washington Consensus is the Economic Policies & Reforms imposed by the financial institution controlled or based out of US like IMF, World Bank or to some extent even the ADB. Financial institutions like IMF, World Bank are the prime lenders of aid & loans most of the world including the Developing Countries who require big investment in infrastructure, other projects. These banks/institutions in turn ask for hefty interests on Loans from already debt-ridden countries & prescribe them reforms like Privatization of Resources, Austerity measures in garb of fiscal prudence. This financial model is not only followed by Global Financial institutions but also by Private Corporations & banks. Hence in later half of the last century this financial model better came to be known as Washington Consensus. Washington Consensus not only includes Financial Aid & Loans but also bailouts, corporate lending’s, tax structures & free trade agreements that embody the principles of Western Economic Model. Washington Consensus mainly encompasses US extending its sphere of influence through various treaties & agreements like NAFTA or proposed trade treaties like TPP (Trans Pacific Partnership) or TTIP (Trade Agreement between US & EU states) in addition to the military bloc of NATO.
The opposite pole to the Washington Consensus that has emerged is Beijing Consensus, where China is trying to exert is sphere of influence through projecting its economic might across the influenced states like Central Asia, Pakistan, Iran, Maldives, Africa & even trying extending it to some Latin American countries. China has recently inaugurated the AIIB (Asian Infrastructure & Investment Bank), initiated the projects like OBOR (One Belt One Road) to revive the Old Silk Route of trade connecting Shanghai with Central Asian countries. To understand the Beijing Consensus one need to decipher the Economic Model that china aims to projects across the region & the world.
China is projecting its economic influence across the region like Pakistan where it has developed the strategic port of Gwadar in gas rich province of Balochistan & is planning to construct an economic corridor from Gwadar Port on the Gulf Coast to Karakoram Highway syncing it with its Silk Route Project of OBOR, similarly china is aiming to acquire strategic ports & listening posts across the Indian Ocean from Myanmar to Sri Lanka to Maldives. In addition to this, there is the great game in central Asia where China is trying to impose its shanghai based order through projects in Infrastructure, Oil, gas & financial assistance to the central Asian states like Kazakhstan, Kyrgyzstan in the name of SCO (Shanghai Cooperation Organization).
China’s sphere of influence is expanding beyond Asia-Pacific into Africa as well where its being called the Colonial Conquest of 21st century. “China’s Export-Import Bank extended $62.7 billion in loans to African countries between 2001-2010, or $12.5 billion more than the World Bank.” Other figures go even higher. What is clear that Chinese people and money have flooded into Africa in the past decade, chiefly to buy raw materials to fuel China’s roaring economy. Once a largely neglected region of the world, sub-Saharan Africa has quietly become the center of a struggle for influence between what are arguably the world’s chief powers: China and the United States. U.S. companies had committed to invest $14 billion in Africa. But that is a mere pittance when compared to an estimated $75 billion in investments China has made in Africa from 2000 to 2011. China’s top five African trading partners are Angola, South Africa, Sudan, Nigeria, and Egypt. In 2014, Premier Li unveiled an extra funding package totaling at least $12 billion for Africa, extending credit lines by $10 billion and boosting the China-Africa Development Fund by $2 billion
In Latin America, it is difficult for a pledge of $250 billion in direct investment to go unperceived, especially when the money is coming from China. At the China–Community of Latin American and Caribbean States (CELAC) forum in Beijing in January, Chinese President Xi Jinping signaled that his country will continue to literally build its way into the region with its investments in Latin American infrastructure projects. Chinese dragon has been flying high in Latin America, especially in the Venezuelan, Argentinean, Brazilian, and Ecuadorian skies.
Instruments of Beijing Consensus:
China’s response to this changing global dynamic is that it launched expensive new initiatives, such as the Asian Infrastructure Investment Bank (AIIB), the BRICS Bank, and the ‘One Belt, One Road’ initiative in order to strengthen infrastructure both on the westward land route from China through Central Asia and on the southerly maritime routes from China through Southeast Asia and on to South Asia, Africa, and Europe. China’s frustration to the lack of Reforms at IMF by increasing the voting share & inducting Yuan (the Chinese currency) as part of SDR has been one of the sticking points it has with International financial Institutions part of the Washington Consensus. More than 60 countries have signed with AIIB, which includes many EU nations like UK, France, Germany etc, & even America’s closest allies like Israel. The Top Contributors of Corpus of 100 Bn $ of AIIB are China with 29.78 Billion $ (26.06% Vote Share), India with 8.37 Bn $ (7.51% Vote Share), Russia with 6.54 Bn $ (5.93% VS), Germany 4.48 Bn $ (4.15% VS), South Korea 3.74 Bn $ (3.5% VS) & Australia with 3.69 Bn $ (3.46% VS). Despite China claiming to establish AIIB on the moot issue of a non-western monopolistic financial institution giving fair & equal representation to countries outside Washington Consensus; the fact remains that China retains the VETO in AIIB with the largest voting share of 26.06% compared to any other member state.
The ‘One Belt, One Road’ (OBOR) initiative is larger than the AIIB. It started with the idea that nearby countries in Central Asia—spread along the traditional Silk Road-could benefit from more transport infrastructure, some of which China could finance bilaterally. China has even added maritime road or strategy to its Silk Route Project by integrating it with its String of Pearls in South China Sea, Indian Ocean Region all the way extending its influence to Europe. China though faces resistance from neighbors like India, Vietnam, Indonesia & Japan to OBOR.
In Addition to AIIB, Even the BRICS Bank is HQed in Shanghai. BRICS offers a truly large economic landscape on which the experiment to internationalize the Renminbi could begin. Chinese President Xi Jingping made a call to BRICS Nations to push for governance reforms in IMF at BRICS Summit in UFA, Russia in July 2015. The NDB, the trade cooperation agreement and the economic cooperation pact among BRICS could facilitate this. The second key advantage has to be diversification of the Chinese product market by moving towards an eventual BRICS Free Trade Zone, seeds for which were planted in Ufa.
Washington Consensus V/S Beijing Consensus:
The Washington Consensus dominated World Order in most part of the last century that oriented from Wall Street but now we see an emergence of Beijing Consensus or a Geo-economic order oriented from Shanghai. In Beijing Consensus it is China that is trying to spread its influence through Geo-strategic/economic means like AIIB, OROB, String Of Pearls, SCO or BRICS while it is Russia that is complementing China in the Beijing Consensus viz-a-viz the Washington Consensus. Russia, which is hamstrung with Ukraine Conflict at the European Cross roads & sanctioned by the west faces a financial crisis with Falling Ruble & Crude is being pushed into China’s sphere of influence & backing the “Beijing Consensus”.
It is prudent to note that such counter-force against Washington Consensus by China and Russia is not meant to be a revolutionary measure. On the one hand, both China and Russia benefited from the post-Cold War expansion of neoliberalism, partially endorsing the policy packages advocated by the Washington Consensus. Their economic achievement to a large extent is the result of gradual integration in the liberal world order. Externally, both countries have taken an active role in overseas investment and trade, becoming major investors in many countries and industries around the world, with resources that can rival those of the traditional capitalist core countries.
Beijing Consensus is not about rocking the Washington Consensus but an attempt to create an alternate Geo-Strategic & Economic Vision where the rising powers like China demand for a more ‘equitable’ international order and global governance reform. IMF is already in talk with China with respect to its currency Yuan being in SDR, which in most likelihood, will be acceded to in near future. World bank President & AIIB Secretary General agreed on co-financing of projects & a meet is scheduled in fall in Washington to discuss the possible tie-ups.
Bank of China in the meanwhile has become the First Asian Bank to join the Auction Setting of Gold Prices in London’s Bullion market. The Other members are Goldman Sachs, HSBC, JP Morgan Chase London, Bank of Nova Scotia, Societe Generale & UBS. London is world largest gold trading exchange & China is believed to be looking to establish its own benchmark system to rival London in Gold Trading. For this purpose the China is stockpiling gold as a part of plan to diversify its massive foreign exchange.
China faces several roadblocks in its vision from the recent turmoil in Chinese Stock Markets or the expected slowdown in China Growth estimates or the Massive Credit Bubble & Ghost Cities. Despite all these hurdles China’s Economic capacity as Low Cost manufacturing hub & being the largest trade partner of US puts it into a unique position that while US & China compete with each other in sphere of influence yet both are equally interdependent. Hence it would be fair to conclude that the Beijing Consensus just like the Washington Consensus is just projection of Regional & Global order the way the respective powers view it which will define the New World Order in this Century.