Author: Alan McCormack | AIIA’s Australian Outlook | Published 22 October 2020
Strident anti-China political and media exchanges limit reasoned public debate on Sino-American relationship issues. It is important to remember that many of the institutions that characterise China’s rise can trace their origins to the Asian Financial Crisis.
Fortunately, Michael Clarke’s recent Outlook articles on revisionism add depth to the usually simplistic binary that America is good and China is bad. By examining the issues of institutional order and military power separately, Clarke shows how both great powers can be regarded as revisionist in aspects of the global institutional order. In fact, identification of America as a “revisionist hegemon” challenges comprehension. Yet, on reflection it captures America’s about-face on commitments to cornerstone principles of global institutional order in trade, health, climate, migration, human rights, and so on.
This article builds on Clarke’s revisionist-status quo analysis. First, it questions the rationale on which International Relations’ current analysis is based. Does a theory that preferences “civilised Western order” and disregards the capacity of rising states to enhance the global order have intellectual rigour? Second, it positions major Asian institutional initiatives, such as the Belt and Road Initiative (BRI), the Asian Infrastructure and Investment Bank (AIIB), and the New Development Bank (NDB), as Asia’s response to the International Monetary Fund’s (IMF) bungled Asian Financial Crisis interventions, not malign Chinese revisionist intrigues.
The challenge for International Relations theorists and policymakers is to demonstrate that Western-framed status quo/revisionist analysis provides a disinterested assessment of “non-Western” institutional initiatives. Are all rising state institutional initiatives adverse to the global common good? Are we being detached when current readings indulge the global hegemon to the point where ex-post any initiative becomes the “status quo”? If so, rising powers are deemed “guilty” until proven innocent.
Whether it is the West’s relative decline or the “rise of the rest,” the Eastward shift of geostrategic gravity is a reality. That reality presents major ideational and institutional challenges to the West’s domination of the international order. Now, three of the five largest economies are Asian – China, Japan, and India. In nominal terms, these three Asian states alone represent 31 percent of global GDP, equal to the US and all 27 EU states combined. In purchasing power parity terms, China’s economy is almost 30 percent larger than America’s. These realities challenge scholars and policymakers to reason with competing conceptions of revisionism and accommodate wider norms and foreign-policy priorities of non-Western states.
Behravesh’s construct of “thick” versus “thin” revisionism provides one opportunity. Here, offensive state initiatives motivated by threat reduction or status enhancement are deemed thick. Examples include Russia’s military actions in Crimea and intervention in Syria. However, it is thin revisionism that offers a pathway to more reasoned assessments of a rising state’s geopolitical initiatives.
Thin initiatives are characterised as a rising state’s actions that unsettle established institutional norms. But, unlike thick initiatives they do not impinge on the sovereignty or territorial boundaries of other states. In sum, thin revisionism represents defiance of the institutional status quo without impacting territorial integrity. This is the context in which non-Western geopolitical initiatives challenge International Relations theory’s prevailing rationale.
Asia’s rising states provide many examples of thin revisionist initiatives motivated primarily by a desire to redress their alienation from benefits available to Western status quo states. Examples are China’s BRI, the multinational AIIB, and the Shanghai-based NDB, a venture equally owned by the BRICS countries (Brazil, Russia, India, China, and South Africa).
Encouragingly, the World Economic Forum describes the NDB as:
… rooted in the real and continuing power shift in the international system, from the developed industrialized world towards emerging market economies. In this sense, the bank is a physical expression of the desire of emerging markets to play a bigger role in global governance.
In emerging Asian markets, that desire is powerfully motivated by the IMF’s calamitous interventions in the 1997-98 Asian Financial Crisis. This author lived and worked in Asia following the crisis and first heard local executives and monetary authority officials use the now common refrain, “never again.” The interventions produced dire personal wealth destruction and “fire sale” acquisitions by US and EU corporations that are deeply etched in the region’s commercial psyche. The resultant desire to limit US and international financial institutional influence in the region still rings true. Joseph Stiglitz’s assessment explains why: “The IMF helped create the crisis and proceeded to make it worse. The Fund’s bungling intensified needless human suffering.” Likewise, former Australian Reserve Bank deputy governor Stephen Grenville observed: “After the Asian crisis, the countries of east Asia decided that they would never go to the IMF again. The IMF is taboo in east Asia.”
As a result, many of Asia’s thin institutional initiatives that culminated in the BRI, AIIB, and NDB ensue from the IMF’s bungling of the 1997-98 crisis. Asia’s first alternative to the disdained Washington Consensus was Japan’s 1998 Asian Monetary Fund – a proposed regional monetary fund, absent the US. The initiative was roundly rejected by the West. Next was the Bo’ao Forum, an annual Davos-like Asian regional trade, investment, and technology cooperation program that began in 2000. In 2001, the Chiang Mai Initiative launched an ASEAN+3 (China, Japan, and Korea) regional financial cooperation system capable of providing members with local currency support if required.
However, East Asia’s most explicit “never again” initiative is aggressive accumulation of foreign exchange reserves by all states except Indonesia. Within 20 years of the Asian Financial Crisis, Asian states’ aggregate foreign exchange reserves exceeded 65 percent of total global reserves. These reserves underwrote the “rising state’s” three major thin revisionist initiatives: the BRI launched in 2013, the NDB in2014, and the AIIB in 2016.
Recurrent criticism of these post-crisis initiatives as evidence of China’s or Asia’s revisionist ambitions are at best hypocritical. Had Asia’s early 2000s pursuit of equitable representation in global financial governance institutions been successful, these projects and wider common goods could now be embraced within global institutional regimes. But the West’s status quo preemption denied that outcome. The history of prevarication, veto of voting right parity, and inequitable executive appointments at the World Bank, IMF, and World Trade Organization is conveniently forgotten.
Details of the developing world’s systematic exclusion are beyond the scope of this article, though one example is illustrative. In 2010, after extended negotiations, IMF members agreed to a slightly more equitable voting rights structure. Yet, consistent with the West’s disdain for “the rest,” the US Senate delayed ratification of the reforms for five years. One opportunity to salve Asia’s “never again” antagonism and incorporate its burgeoning contribution into the global collective was lost. East Asia’s collective frustration with such intransigence better explains the regions’ BRI, NDB, AIIB, and other initiatives than any supposed ideological revisionism.
In summary, current power transition orthodoxy that precludes incorporation of Asia’s economic and ideational initiatives and preferences the West’s status quo, is at best ingenuous. Opportunities to expand, enhance, and enrich the global financial regime have been lost. Can scholars and policymakers develop actionable theories that overcome current preferencing of International Relations’ Western ideational origins? Success would enhance the pursuit of global common goods, help counter mutually hostile military posturing, and temper offensive political and media bravado.
Alan McCormack BEc, MIR, MRes, PhD is an Honorary Postdoctoral Associate at Macquarie University. This article was published here in the Australian Institute of International Affairs’ Australian Outlook. This article is published under a Creative Commons License and can be republished with attribution.
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