Over the course of the next few weeks, we will be discussing the changes we are undergoing on a global scale as well as the forthcoming changes that are affecting all markets and portfolios. Those changes are marked by solid foundations laid below ground level which, in turn, are underwriting disruptions that may be violent but which are also becoming the fundamental sources displacing current norms.
We anticipate three parts to this commentary. In the first one (which could be perceived as an extension of the commentary which we published almost three years ago, titled Balance of Power, Thucydides, Useful Idiots, & Covid-19: Part III, China and the Statecraft Dimension), we will be discussing the emerging balance of power and China’s vision of displacing the US from its leadership role. China’s vision of replacing a liberal world order with an illiberal autocratic balance of power is envisioned to be such where the rest of the players are nothing but useful idiots in the grand design of its plans. The West (as explained below) was the first useful idiot in that Chinese play. The current useful idiot in that play is none other than Vladimir Putin.
In the second part, we will be discussing the anatomy of a grand energy transition where unwise moves of actors who overplay their hands could create an environment of energy instability and upheaval. Finally, in the third part, we will be discussing the anatomy of markets where actors have lost respect for fundamental anchors such as truth, foresight, modesty, nemesis, decency, and honor: a market where Aldus Huxley’s vision prevails along with elements of a sentimental celestial hierarchy, reminiscent of the Pseudo-Dionysius’s writings.
To begin presenting our thoughts about China and the threat that it poses to the liberal balance of power, we start with the premise that the epicenter of the moral fabric of the market is made up of individual liberty. Any oppressive measures exercised against that moral fabric represent nothing less than the dehumanizing efforts of players and actors who seek to reshape the world order into an amorphous mixture of autocracy and illiberalism that serves the selected few at the expense of the people, despite the autocrats claims that they are looking after the people’s interests. The people and the autocrats’ partners in that game are nothing but useful idiots who advance their cause. What China is doing at this stage is nothing but trying to undermine and destroy the moral fabric of the global market.
The Chinese fooled the West by singing from the songbook of free trade. The West was naïve enough to believe the Chinese and accepted them into the World Trade Organization (WTO) by adopting an illusionary belief that political freedom will follow. What actually happened was that the Chinese flooded the West with their products, factories closed, jobs were lost, and a sense of Chinese asphyxiation started encircling the consumer market. At the same time, that asphyxiation was extended into American or European firms that wanted to expand into the Chinese market.
High barriers to trade along with illiberal terms and conditions that the Chinse imposed (from demanding access to high tech, to local subsidies that made the West’s products uncompetitive, and from restrictions to doing business, to practices of violating intellectual property rights, just to name of few) created obstacles where the West was playing with unfair rules while opening up its markets. The whole WTO debacle seems to be nothing else but a useful idiot’s play where the West was fooled and still pays the price. It might be time to change the rules of the game. Does China still belong in the WTO, especially when its domestic standards diverge from global norms?
Foreign capital and foreign technology empowered Chinese exports and made the Chinese economy the #2 largest economy around the world, at the expense of local economies and the shrinking of the middle class in developed countries. Can democracy survive without a vital and healthy middle class? Magnanimity (another Aristotelian principle) has limits in the face of foul play.
China’s statecraft agenda is nothing but a straw man’s agenda. In the words of Xi Jinping, the time has come for China to lead the “reform of global governance”. Of course, at the center of such governance – where the aim is to serve the vested interests of the few – is an agenda of repression, human rights violations, and “re-education” (like the camps for the Uyghurs in the Xinjiang region). Why can’t China agree not to use its vetoes at the UN Security Council when mass atrocities are involved?
The moral fabric of the market is also destroyed when China, along with Russia, shielded Syria and its oppressive regime at a time when that regime was gassing Syrian children with chlorine while also committing other atrocities. Welcome to the new World Order “made in China”!
The Chinese play in the Ukrainian war is “heads I win, tails you lose”. By backing Putin (directly and indirectly) China bets in breaking the West’s unity and determination. If that bet fails, the useful idiot has played China’s card in weakening the West’s economies (supply constraints, energy issues, inflation, higher rates, etc.), also reducing the West’s military supplies which, in turn, will force deficits in the West (higher spending) and also weaken its military response time, especially if a conflict erupts in Asia.
Moreover, if the useful idiot (Putin) loses the war, the West will still be facing the economic consequences of that fool who miscalculated and was played by China. If on the other hand the useful idiot prevails in his madness, then China’s objective of creating a new world order could be achieved without firing a shot and at a minimum cost (if any) to China. Who is the real villain behind the Ukrainian war who is moving the useful idiot/puppet? Who is getting cheap oil from Russia’s useful idiot to finance spending and development? Cui bono in either scenario, whether the West wins or loses?
The Chinese leaders played the West again in 2021 when President Xi unveiled the GDI (Global Development Initiative) “aligning” China with the UN’s sustainability goals. China’s effort in changing the world order became evident following the financial crisis of 2007-’09 and became even more obvious when they created in 2015 the AIIB (Asian Infrastructure Development Bank) where useful idiots can sign up and, in connection with the BRI (Belt & Road Initiative), the Chinese leadership can fool nations in giving up their infrastructure projects in exchange for awful terms and conditions. Here, the Chinese grasp the grand majority of the gains while the useful idiots – who give China their rich natural resources – wait for the crumbs to fall from the Chinese leadership’s banquet table. Through these and other institutional structures, the Chinese are changing the rules of the game one region at a time, while Putin as the ultimate useful idiot is playing their game against the West.
As for India and all those other countries that have abstained from crucial UN votes, the question is simple: Really? Are you serving your people’s interests by being played by China and getting the crumbs from their banquet table?
The Chinese’s actions are weakening multilateral institutions that have served as foundations for the liberal order established in 1945. The UN and the tool of sanctions will become rarer and least effective given the coalition that China has built in resisting the sanctions against Russia. Chinese efforts were so successful that they forced out Michelle Bachelet, the UN High Commissioner for Human Rights. However, her report is a testament to the atrocities committed in Xinjiang. Furthermore, the reputation of the WHO (World Health Organization) has been irrevocably damaged after its failures related to C-19. Speaking of C-19, the recent reports that the virus was made in the Chinese labs demand answers and the world should demand reparations. And what can we say about Mr. Qu Dongyu (Chinese head of the UN Food & Agriculture Organization) who downplayed the food crisis following the useful idiot’s invasion into Ukraine?
The Chinese are applying many different levers of statecraft while executing their plan. There are economic plays along with financial cards. There are political plays along with blackmailing cards. And there are military plays along with threatening cards to smaller players like Taiwan, African countries (where Chinese technology is used by similar-minded regimes to harass opponents), and the Solomon Islands. This is consistent with Xi’s vision which, in turn, is guided by “tianxia guan” (an ancient worldview where Chinese and Sinocentric interests, principles, and elements of its civilization are at the center of a world order) while on the surface, and in order to recruit useful idiots, Xi proclaims that it is guided by the principle of harmonious co-existence known as “he er bu tong”, all the while practicing its debt-trap diplomacy for its victims/clients/useful idiots.
The sale of cheap Russian oil to China is no longer transacted in dollars but in Chinese yuan. The graph below is telling of China’s play. The useful idiot is energizing not just China’s economy and its zealousness to overturn the world order, but it is also serving China’s goal of having the yuan as a global reserve currency.
The apotheosis of the West’s foolishness was when the yuan became part of the global payments system. China’s grand game is to replace the dollar with the illiberal and unconvertible yuan. Does the repressive yuan belong in the global payment system, especially when we know that China is developing the CIPS (Cross-Border Interbank Payment System) to replace the SWIFT?
China’s play whether in the economic, political, or military field is asymmetric decoupling as it builds up its military, seeks to dominate in emerging key technologies (such as quantum computing, electric cars, semiconductors, etc.), while it also lures like-minded autocrats into its grand design of creating a new balance of power.
When Li Hongzhang was drafting a plan – during a time of historical upheaval for the Qing dynasty – to revive and reform a dying dynasty, China was experiencing changes not seen in thousands of years. Li failed to revive China, lost the war with Japan, signed an embarrassing Treaty with Tokyo, and a century of humiliation followed. The Qing dynasty failed to see the storm of geopolitical and technological changes that were taking place around the world. President Xi aims to reverse all of that and re-establish China at the epicenter of global developments. The problem is that President Xi cannot live with the moral fabric of a free world. The wonderful Chinese people with such rich history, culture, and capabilities deserve much better than being played by a few masters with vested interests whose efforts to overturn the world order and undermine the moral fabric of societies is nothing but a straw man’s play. Co-existence with China is feasible (like the West’s co-existence with the Soviet Union) and the West’s principles (including magnanimity) can be on full display, but we humbly suggest that the time has passed when nations and peoples can be used as useful idiots by the Chinese leadership.
The Anatomy of Underpinning Upheavals: Part I, China and the Balance of Power
Author : John E. Charalambakis
Date : March 1, 2023
Over the course of the next few weeks, we will be discussing the changes we are undergoing on a global scale as well as the forthcoming changes that are affecting all markets and portfolios. Those changes are marked by solid foundations laid below ground level which, in turn, are underwriting disruptions that may be violent but which are also becoming the fundamental sources displacing current norms.
We anticipate three parts to this commentary. In the first one (which could be perceived as an extension of the commentary which we published almost three years ago, titled Balance of Power, Thucydides, Useful Idiots, & Covid-19: Part III, China and the Statecraft Dimension), we will be discussing the emerging balance of power and China’s vision of displacing the US from its leadership role. China’s vision of replacing a liberal world order with an illiberal autocratic balance of power is envisioned to be such where the rest of the players are nothing but useful idiots in the grand design of its plans. The West (as explained below) was the first useful idiot in that Chinese play. The current useful idiot in that play is none other than Vladimir Putin.
In the second part, we will be discussing the anatomy of a grand energy transition where unwise moves of actors who overplay their hands could create an environment of energy instability and upheaval. Finally, in the third part, we will be discussing the anatomy of markets where actors have lost respect for fundamental anchors such as truth, foresight, modesty, nemesis, decency, and honor: a market where Aldus Huxley’s vision prevails along with elements of a sentimental celestial hierarchy, reminiscent of the Pseudo-Dionysius’s writings.
To begin presenting our thoughts about China and the threat that it poses to the liberal balance of power, we start with the premise that the epicenter of the moral fabric of the market is made up of individual liberty. Any oppressive measures exercised against that moral fabric represent nothing less than the dehumanizing efforts of players and actors who seek to reshape the world order into an amorphous mixture of autocracy and illiberalism that serves the selected few at the expense of the people, despite the autocrats claims that they are looking after the people’s interests. The people and the autocrats’ partners in that game are nothing but useful idiots who advance their cause. What China is doing at this stage is nothing but trying to undermine and destroy the moral fabric of the global market.
The Chinese fooled the West by singing from the songbook of free trade. The West was naïve enough to believe the Chinese and accepted them into the World Trade Organization (WTO) by adopting an illusionary belief that political freedom will follow. What actually happened was that the Chinese flooded the West with their products, factories closed, jobs were lost, and a sense of Chinese asphyxiation started encircling the consumer market. At the same time, that asphyxiation was extended into American or European firms that wanted to expand into the Chinese market.
High barriers to trade along with illiberal terms and conditions that the Chinse imposed (from demanding access to high tech, to local subsidies that made the West’s products uncompetitive, and from restrictions to doing business, to practices of violating intellectual property rights, just to name of few) created obstacles where the West was playing with unfair rules while opening up its markets. The whole WTO debacle seems to be nothing else but a useful idiot’s play where the West was fooled and still pays the price. It might be time to change the rules of the game. Does China still belong in the WTO, especially when its domestic standards diverge from global norms?
Foreign capital and foreign technology empowered Chinese exports and made the Chinese economy the #2 largest economy around the world, at the expense of local economies and the shrinking of the middle class in developed countries. Can democracy survive without a vital and healthy middle class? Magnanimity (another Aristotelian principle) has limits in the face of foul play.
China’s statecraft agenda is nothing but a straw man’s agenda. In the words of Xi Jinping, the time has come for China to lead the “reform of global governance”. Of course, at the center of such governance – where the aim is to serve the vested interests of the few – is an agenda of repression, human rights violations, and “re-education” (like the camps for the Uyghurs in the Xinjiang region). Why can’t China agree not to use its vetoes at the UN Security Council when mass atrocities are involved?
The moral fabric of the market is also destroyed when China, along with Russia, shielded Syria and its oppressive regime at a time when that regime was gassing Syrian children with chlorine while also committing other atrocities. Welcome to the new World Order “made in China”!
The Chinese play in the Ukrainian war is “heads I win, tails you lose”. By backing Putin (directly and indirectly) China bets in breaking the West’s unity and determination. If that bet fails, the useful idiot has played China’s card in weakening the West’s economies (supply constraints, energy issues, inflation, higher rates, etc.), also reducing the West’s military supplies which, in turn, will force deficits in the West (higher spending) and also weaken its military response time, especially if a conflict erupts in Asia.
Moreover, if the useful idiot (Putin) loses the war, the West will still be facing the economic consequences of that fool who miscalculated and was played by China. If on the other hand the useful idiot prevails in his madness, then China’s objective of creating a new world order could be achieved without firing a shot and at a minimum cost (if any) to China. Who is the real villain behind the Ukrainian war who is moving the useful idiot/puppet? Who is getting cheap oil from Russia’s useful idiot to finance spending and development? Cui bono in either scenario, whether the West wins or loses?
The Chinese leaders played the West again in 2021 when President Xi unveiled the GDI (Global Development Initiative) “aligning” China with the UN’s sustainability goals. China’s effort in changing the world order became evident following the financial crisis of 2007-’09 and became even more obvious when they created in 2015 the AIIB (Asian Infrastructure Development Bank) where useful idiots can sign up and, in connection with the BRI (Belt & Road Initiative), the Chinese leadership can fool nations in giving up their infrastructure projects in exchange for awful terms and conditions. Here, the Chinese grasp the grand majority of the gains while the useful idiots – who give China their rich natural resources – wait for the crumbs to fall from the Chinese leadership’s banquet table. Through these and other institutional structures, the Chinese are changing the rules of the game one region at a time, while Putin as the ultimate useful idiot is playing their game against the West.
As for India and all those other countries that have abstained from crucial UN votes, the question is simple: Really? Are you serving your people’s interests by being played by China and getting the crumbs from their banquet table?
The Chinese’s actions are weakening multilateral institutions that have served as foundations for the liberal order established in 1945. The UN and the tool of sanctions will become rarer and least effective given the coalition that China has built in resisting the sanctions against Russia. Chinese efforts were so successful that they forced out Michelle Bachelet, the UN High Commissioner for Human Rights. However, her report is a testament to the atrocities committed in Xinjiang. Furthermore, the reputation of the WHO (World Health Organization) has been irrevocably damaged after its failures related to C-19. Speaking of C-19, the recent reports that the virus was made in the Chinese labs demand answers and the world should demand reparations. And what can we say about Mr. Qu Dongyu (Chinese head of the UN Food & Agriculture Organization) who downplayed the food crisis following the useful idiot’s invasion into Ukraine?
The Chinese are applying many different levers of statecraft while executing their plan. There are economic plays along with financial cards. There are political plays along with blackmailing cards. And there are military plays along with threatening cards to smaller players like Taiwan, African countries (where Chinese technology is used by similar-minded regimes to harass opponents), and the Solomon Islands. This is consistent with Xi’s vision which, in turn, is guided by “tianxia guan” (an ancient worldview where Chinese and Sinocentric interests, principles, and elements of its civilization are at the center of a world order) while on the surface, and in order to recruit useful idiots, Xi proclaims that it is guided by the principle of harmonious co-existence known as “he er bu tong”, all the while practicing its debt-trap diplomacy for its victims/clients/useful idiots.
The sale of cheap Russian oil to China is no longer transacted in dollars but in Chinese yuan. The graph below is telling of China’s play. The useful idiot is energizing not just China’s economy and its zealousness to overturn the world order, but it is also serving China’s goal of having the yuan as a global reserve currency.
The apotheosis of the West’s foolishness was when the yuan became part of the global payments system. China’s grand game is to replace the dollar with the illiberal and unconvertible yuan. Does the repressive yuan belong in the global payment system, especially when we know that China is developing the CIPS (Cross-Border Interbank Payment System) to replace the SWIFT?
China’s play whether in the economic, political, or military field is asymmetric decoupling as it builds up its military, seeks to dominate in emerging key technologies (such as quantum computing, electric cars, semiconductors, etc.), while it also lures like-minded autocrats into its grand design of creating a new balance of power.
When Li Hongzhang was drafting a plan – during a time of historical upheaval for the Qing dynasty – to revive and reform a dying dynasty, China was experiencing changes not seen in thousands of years. Li failed to revive China, lost the war with Japan, signed an embarrassing Treaty with Tokyo, and a century of humiliation followed. The Qing dynasty failed to see the storm of geopolitical and technological changes that were taking place around the world. President Xi aims to reverse all of that and re-establish China at the epicenter of global developments. The problem is that President Xi cannot live with the moral fabric of a free world. The wonderful Chinese people with such rich history, culture, and capabilities deserve much better than being played by a few masters with vested interests whose efforts to overturn the world order and undermine the moral fabric of societies is nothing but a straw man’s play. Co-existence with China is feasible (like the West’s co-existence with the Soviet Union) and the West’s principles (including magnanimity) can be on full display, but we humbly suggest that the time has passed when nations and peoples can be used as useful idiots by the Chinese leadership.