China’s role in the world

JUNE 2020

2

• Economic ties surged• China joined WTO in 2001• Co-operation on Global Financial Crisis

• Increased tensions on:o South China Seao New Chinese institutions (e.g. AIIB)

• Strengthen ties with other Asian countries (e.g. Japan, Vietnam) to contain Beijing

• Trade/tech war• Increased military competition in Asia• Pushback against BRI

4766

2017 2020

Public opinion

Bi-partisan consensus

Econ. challenges

Xi position

• First time China’s growth turned negative in 40 years

• CCP could increase nationalism to shore up legitimacy (particularly as feeling isolated globally)

% of Americans who hold unfavourable view of China

• Stoking nationalism also in Xi’s interest• Leadership changes/anti-corruption

campaign alienated powerful interests• Vulnerable to criticism for Covid

handling/BRI setbacks

Recent US-China relations Domestic pressure on bilateral ties

StrongWeak

US-China relations have sharply deteriorated in the past decade, with little prospect of rebounding

“Previous administrations ignored or abetted China’s actions. Those days are over.”

Vice President Pence

Pivot to Asia2011-2016

New Cold War?

2017 –present

Responsible Stakeholder 2001-2010

“We need to confront China’s abusive behaviours and human rights violations.”

Joe BidenFormer Vice President

Polling: Public opinion towards China in Britain, the US, France and

Germany will also make it harder for politicians to not act

4

Nationally representative surveys conducted for YouGov on behalf of the Tony Blair Institute

Great Britain

2,033 adults(4 – 15 June 2020)

United States

2,418 adults(8 – 11 June 2020)

Germany

2,020 adults(9 – 12 June 2020)

France

2,023 adults(9 – 11 June 2020)

China is generally seen as a “force for bad” in the world in Britain, the US and France

55

28

6

46

38

6

54

27

8

60

30

2

0 20 40 60 80

Worsened

No difference

Improved

%

Attitudes towards the Chinese government have hardened during the pandemic

Great Britain US Germany France

5Question: Please say whether you think each of the following is generally a force for good or a force for bad in the world, or neither?

Question: Has your opinion of each of the following improved or worsened since the beginning of the coronavirus pandemic, or has it made no difference?

A majority of people in Britain, the US and France and a plurality in Germany actively see the Chinese government as a force for bad in the world and their opinion has worsened through the pandemic

19 1729

13

3 54

5

6056 47 60

19 22 19 22

Force for good

Neither

Force for bad

Don't know

40

32

13

36

25 3 4

49 48

4044

12

22

1419

3 3 48

4

10 8

17

4 4 5 4

14

8

27

13

0

10

20

30

40

50

Great Britain US Germany France

%

In Britain, the US, Germany and France, people hold their own governments less responsible than

the Chinese government

My government

My local/regional government

The Chinese government

The World Health Organisation

Scientists in my country

The healthcare system in my country

Other

No one is really to blame

There are some differences in opinion by age

• Younger people in Britain are more likely to blame the

British government than they are the Chinese

government for the severity of the pandemic. (52% of

UK 18-24s think Britain’s government is most to blame,

compared to 31% of 55-64s.)

• In the US, older people are more definitive about

blame resting with the Chinese government with 63%

of those aged 65 and above saying it is most

responsible. US 25-34s are the only generation to place

more responsibility with their own national

government than with the Chinese government.

• In Germany, the Chinese government is blamed the

most across generations. Older people are more likely

to say no one is to blame (21% for 18-24s compared to

35% of 65+).

• In France, 18-24s place almost equal responsibility with

the Chinese government and their own national

government (32% and 34%) whereas older people are

more likely to blame the Chinese government.

6Question: Which one or two, if any, of the following would you say is MOST responsible for the severity of the

coronavirus pandemic?

The Chinese government is consistently seen as the most responsible for the severity of the pandemic

6

13

47

40

54

11

11

61

52

66

10

45

44

46

51

6

11

53

59

70

0 10 20 30 40 50 60 70 80

The Chinese government

The US Government

The European Union

The United Nations

The World Health Organisation

%

The WHO is the most trusted out of the international institutions and the

superpowers

Great Britain US Germany France

7

There is extremely low trust in the Chinese and US governments to tell the truth about the coronavirus pandemic

While opinions on geopolitical questions are highly

polarised on political lines, there is widespread

non-partisan distrust of China

• In all demographics and regions in the four countries

we polled there was majority, and often

overwhelming, distrust in the Chinese government.

• For example, 95% of Conservative voters in Britain do

not trust the Chinese government.

• In the US, 2016 Clinton and Trump voters have very

different views on all of the international institutions

and superpowers we asked about. But there is little

difference in positive sentiment towards China, with

only around 4% of 2016 Trump or Clinton voters

polled believing that China is a force for good in the

world.

Question: How much, if at all, do you trust each of the following to tell the truth about the coronavirus pandemic?

6

32

50

37

3741

4

9

17

60

66

30 31

19

0

10

20

30

40

50

60

70

Generallyfriendly

Generallyhostile

Mix of both Neither

%

People in the US are more likely to view China as hostile

Great Britain US Germany France

8Question: Generally speaking, do you think China is friendly or hostile to the West, or a mix of both, or neither?

Many have mixed feelings about whether China is friendly or hostile to the West, but few think it is generally friendly

13 13

42

31

1511

3934

12

21

39

28

18

12

36 34

0

10

20

30

40

50

60

Working tooclose together

The current levelof cooperationbetween the

West and China isabout right

Should beworking more

closely together

Don’t know

Great Britain US Germany France

Questions: Generally speaking, do you think the West and China are working too closely together or should be working more closely together on [scientific research/economic policy] to tackle the

coronavirus pandemic, or is the current level of cooperation between the West and China about right on this issue?

There is support for greater cooperation on scientific research and, to a lesser degree, on economic policy around the pandemic, but also a high degree of uncertainty

Cooperating on ECONOMIC POLICY to tackle the coronavirus pandemic

Cooperating on SCIENTIFIC RESEARCH to tackle the coronavirus pandemic

912

50

29

14 13

43

30

11

20

46

24

13 14

43

30

0

10

20

30

40

50

60

1 2 3 4

Series1 Series2 Series3 Series4

17

21

33

45

49

61

52

63

14

20

26

39

44

54

46

53

14

22

25

34

56

62

63

9

16

20

30

39

59

66

65

0 10 20 30 40 50 60 70

Canada

Italy

Japan

India

US

Saudi Arabia

Russia

China

% oppose

Co

unt

ries

wit

h p

ote

nti

al r

ole

s in

ma

jor

infr

ast

ruct

ure

A majority of people in all countries surveyed opposed China having a major role in national

infrastructure projects

Great Britain US Germany France

• Younger people in the countries we surveyed are

likely to be more supportive of companies from

foreign nations having a major role in national

infrastructure projects.

• People we surveyed are more certain about whether

they support Chinese companies having a major role,

than they are about whether the Chinese government

is a force for good or bad in the world (10% of people

in the UK didn’t know what they thought about China’s

role in infrastructure, compared to 19% who didn’t

know whether they thought China was a force for good

or bad).

• Politics is a likely driver for opposition to Chinese and

other countries’ investment in the US, but is less of a

driver for other countries.

10Question: Generally speaking, to what extent would you support or oppose allowing international companies from each of the following countries to have a major role in infrastructure projects in

Britain?

When asked about international companies having a major role in national infrastructure projects, there is high suspicion of China

15

3338

14

25 27 2621

24

52

12 12

43

32

8

18

0

10

20

30

40

50

60

My country shouldbe doing more to acton its own and less

to coordinate itsresponse with othercountries in tackling

the pandemic

The current balanceis about right for mycountry acting on its

own andcoordinating its

response with othercountries

My country shouldbe doing less to act

on its own and moreto coordinate its

response with othercountries in tackling

the pandemic

Don’t know

Britain and the US are more keen on greater coordination with other countries

Great Britain US Germany France

11Question: People have different views on whether your country should be doing more to act on its own or more to coordinate its response with other countries in tackling the coronavirus pandemic, or whether the current balance is about right. Which of the following

statements best describes your view?

In response to the coronavirus pandemic, people have different views on whether your country should become more independent from the global economy or more integrated with the global economy, or should generally keep the balance it has now between economic

independence and integration with the global economy. Which of the following statements best describes your view? In response to the coronavirus pandemic…

There is no consistent view when it comes to coordination between countries on the pandemic, and less than a quarter of people surveyed want more integration with the global economy

17

40

22 20

28 30

21 22

35

42

915

52

30

612

0

10

20

30

40

50

60

1 2 3 4

France has more isolationist views when it comes to the global economy

Series1 Series2 Series3 Series4

14 18 18 17

6044 43 40

19

1827

22

720

1221

0%

20%

40%

60%

80%

100%

Great Britain US Germany France

Out of the countries we surveyed, only in Britain did a majority of people

perceive the UN as a force for good

Don’t know Generally a force for good

Neither a force for good nor bad Generally a force for bad

11

13

13

13

1

6

2

2

6

11

11

7

69

48

56

47

7

9

11

18

5

13

8

14

0 10 20 30 40 50 60 70 80

Great Britain

US

Germany

France

Views on how opinion of the UN has changed since the beginning of the

pandemic

Significantly worsened Slightly worsened

No difference Slightly improved

Significantly improved Don’t know

12Question: Please say whether you think each of the following is generally a force for good or a force for bad in the world, or neither?

Has your opinion of each of the following improved or worsened since the beginning of the coronavirus pandemic, or has it made no difference?

There is majority support in Britain for the UN as a force for good in the world, but the pandemic has changed few opinions

China’s role in the world is changing

14Sources: TBI analysis; IMF Direction of Trade Statistics; The Diplomat; Washington Post; The Globe and Mail; East Asia Forum

China’s economic rise over the past two decades is translating into greater strategic influence

US-China global presence by exports

2019

Larger source of exports

USChinaNo data

2000

Larger source of exports

USChinaNo data

60138

2017 2019

1.3X

Belt and Road InitiativeBRI presence, by # of countries

“China’s geoeconomic offensive across the Eurasian continent through BRI could threaten the very foundations of the United States’ post-WWII hegemony”

New institutions

2016

2014

“… the global governance system has not embraced these new changes and is inadequate in terms of representation”

Pres. Xi Jinping, 2017

Military bases

• China opened 1st overseas base in Djibouti in 2017

• Currently hosts 2K PLA personnel, but reportedly could deploy up to 10K troops (vs 4.5K troops at US Djibouti base)

15

Although China is forecast to become the world’s largest economy, the balance of global power will likely continue favouring the US

Note: SCO military spending also does not include India due to its non-aligned posture, Tajikistan and Uzbekistan due to lack of data. Source: TBI Analysis; PwC, The World in 2050; SIPRI

GDP (MER) in USD TN, 2020 and 2050 (Projected)

16

50

20

34

4

28

20

37

2020 2050

OthersUS

China India ‘Others’ includes Japan, Germany, France, UK, Russia, Australia, Canada, South Korea

30

NATO

8

SCO

Key alliances with current number of Members States

Military spending comparison in USD BN, 2019

261

732

USChina

77

261

SCO (exc. China)*

NATO (exc. US)*

16

China has also significantly deepened and strengthened its economic relationship with Africa

Sources: China-Africa Research Initiative; UN Comtrade

China’s FDI stock in African countries in BN, 2003-2018

46

43

40

35

32

26

22

16

13

9

8

5

3

2

1

0

2011

2007

2018

2013

2016

2017

2015

2014

2009

2012

2010

2008

2006

2005

2004

2003

+35%

US-Africa and China-Africa Trade in USD BN, 2002-2018

0

50

100

150

200

2002 2004 2006 2008 2010 2012 2014 2016 2018

US

China

Breakdown of China’s trade with Africa in USD BN, 2002-2018

0

50

100

150

200

20

07

20

03

20

02

20

04

20

09

20

05

20

06

20

08

20

10

20

15

20

11

20

12

20

13

20

14

20

16

20

17

20

18

Imports

Exports

17

China is integral to global supply chains and manufacturing, and accounts for an increasingly significant share of global output

Sources: World Integrated Trade Solutions Database; McKinsey Global Institute

Select countries’ share of global exports in %, 2000-2017

4

11

7

4

8

4

12

8

43

7

2

0

5

10

15

UKChina Japan GermanyUS France

2000

2017

Select countries’ share of global imports in %, 2000-2017

3

17

54

75

9

12

3 3

6

3

0

5

10

15

20

China FranceUS Japan Germany UK

2000

2017

Industries with high exposure to Chinese exports

Industries with high exposure to Chinese imports in %, 2013-2017

28 2717

4026 22 19 13

FurnitureElectronics MachineryElectrical

equipment

Textiles and

apparel

Rubber and

plastics

Nonmetallic

minerals

Basic metals

China Rest

16 9 921

12 12 19

ChemicalsMachineryElectronics Electrical

equipment

Mining and

quarrying

Paper and

paper products

Agriculture and

allied sectors

China Rest

China’s share of global exports by industry between 2013 and 2017 (in %)

China’s share of global imports by industry between 2013 and 2017 (in %)

18

China is rising as a leading source of digital innovation, most notably in emerging technologies

Sources: World Intellectual Property Organization; Nikkei Asian Review

Top sources for patent applications, 2012-2019 (in 000’s)

2012 2013 2014 2015 2016 2017 2018 2019

30

0

60

10

20

40

50

35

5

15

25

45

55

65

US

China

Japan

Germany

South Korea

Top 5 countries for patent applications in select technologies, 2017

AI

Quantum computing

Regenerative medicine

Autonomous driving

Blockchain

Cybersecurity

Drones

Lithium-ion batteries

Virtual reality

Conductive polymers

1st 2nd 3rd 4th 5thChina accounted for 49% of total applications while the US

accounted for 20%

19

China seeks to become a global leader in advanced and emerging technologies such as artificial intelligence

Sources: Paulson Institute; Stanford Human-Centred Artificial Intelligence Institute; World Intellectual Property Organization

China’s AI goals under its AI Development Plan Investment in AI

2017

2020

2025

2030

• China’s State Council issues the New Generation Artificial Intelligence Development Plan

• Seeks to make China “the world’s primary AI innovation centre” by 2030

• China among most advanced countries in AI tech• RMB 1.15 TN (~USD 162 BN) in total output from

core AI and AI-related industries• AI market with several globally competitive firms• Pushing breakthroughs in key areas (e.g. intelligent

big data, swarm intelligence)

• China is a leader in some AI tech and achieving key breakthroughs in fundamental AI theories

• RMB 5.4 TN (~USD 762 BN) in total output from core AI and AI-related industries

• AI marketplace for smart cities, manufacturing, health care, agriculture and national defence

• China leads in all AI theories, tech & applications• RMB 11 TN (~USD 1.5 TN) in total output from core

AI and AI-related industries• Domestic marketplace with integrated application

in production segments, social governance and national security and defence

2030

0

5

10

15

20

2015 2016 2017 2018 2019

US China IsraelUK Canada

Private investment in AI, (USD BN) “The US and China obviously have stolen a lead. They’re out in-front in Artificial Intelligence, in terms of numbers of applications, and in scientific publications.”

Francis GurryDirector GeneralWorld Intellectual Property Organization

US-China comparison of AI patents in key sectors

14,47213,407

Security

ChinaUS

1,820

1,221

Military

2,562

2,158

Computing in

Government

Number of patents, by AI application fields, 2018

20

Note: Domestic issues: Xinjiang and Uyghurs, Tibet, Hong Kong, and human rights issues; Territorial

disputes: South China Sea, Taiwan, Indo-China border disputes; Trade: China’s trade relationship with

the United States; Technology: Huawei and the competition for technological leadership between the

US and China; BRI: BRI-related expansion of commercial and industrial ties globally

The two most likely scenarios for US-China relations are a “light Cold War” or “great power rivalry” that falls just short of this

Scenario Prob. Description

Cooperation

• Close economic engagement• Some cooperation on global issues• Similar to ~15-20 years ago

Great power rivalry

• US tries to contain China’s rise• But does this on select issues (e.g.

South China Sea/technology)• Cooperation in some areas

Light Cold War

• Continuation/intensification of status quo

• Geo-political contest in Asia• Geo-economic contest worldwide

Full Cold War

• Similar to US-Soviet contest• World split into rival camps• Arms race/economic influence wars• Unlikely given more integrated

diplomatic/econ. structures

Military conflict

War breaks out (probably in East Asia)

Scenario-based assessment of key focus of tensionDomestic

issuesTerritorial disputes

Trade Technology BRI

Legend for Probability

(Prob.)Most likely

Limited impact on issue Greater impact

HighLow .

21

Despite the Cold War analogy’s appeal, China is significantly different from the Soviet Union and will have to be engaged thus

Sources: U.S. Library of Congress; Foreign Affairs; United Nations Statistics Division; US Census Bureau

Economically stronger and better integrated Implications of China’s rise as a global power

• China effectively converts its economic strength into strategic influence, usually at the cost of the United States

• China has deepened economic ties and become the top trading partner with more than two-thirds of world, most notably among emerging economies

• China is emerging as a global leader in several emerging and key sectors, such as advanced technology

A challenging geopolitical environment?

• China’s rise is central to the continued prosperity of the United States and its partners

• Chinese factories are the backbone of the global economy and deeply intertwined with global supply chains and manufacturing

• China’s role as a leading source of digital innovation could play an integral role in the global advancement of key technologies, such as AI

An indispensable partner?

1

16

Soviet Union (1979)

China (2018)

Trade as a share of US total trade, %

In GDP (PPP) terms, China overtook the

US in 201743

66

China (2018)Soviet Union (1973)

GDP (current US$) as a share of US GDP, %

A more stable country

China is one state with common history and civilisational values while the Soviet Union was a group of states held together by force and power

“Soviet power, like the capitalist world of its conception, bears within it the seeds of its own decay”

George Kennan

A distinct competition

• No emergence of an arms race• Lack of proxy conflict between the US and China• No ideological delineation of country blocs

(Peak year) (Peak year)

22

Going forward, the West should adopt a strategic framework to effectively engage with China

Sources: Foreign Affairs; Foreign Affairs

Cooperate Compete Confront

Reserve space to cooperate with China to benefit the global commons and ensure long-term stability• China is likely to be a major power

and a key decision-maker in global affairs

• Cooperating with China is critical to addressing key transnational challenges:

• Be willing and prepared to protect the international community’s norms, interests and values

• Speak out against China’s human rights violations as well as its undermining of civil liberties within China (e.g. Hong Kong, Uyghurs)

• Call out China’s aggressive actions against neighbouring states as well as against Western allies and partners

Preserving the West’s competitive edge in technology and innovation must be prioritised• Ambitious and focused public

investments in R&D• Greater government support to

incentivise innovation • Attract the best and the brightest

minds from around the world• Collaborate with like-minded

partners:• Synergise R&D efforts• Agree global standards and

norms on sensitive use of tech• Reduce dependencies on China

Illustrative examples• Framework to combat future

pandemics• Sharing data on diseases for faster

cures• Coordinating economic policy