Thirty years after the Cold War ended, a new one of sorts is emerging between China and the West, a leading economic scholar asserts. As a muscular China seeks to refashion trade and geopolitical organizations in its own image, the US and many of its allies face a key challenge: keeping Beijing on board with trade pacts and efforts to slow global warming without ceding ground on democratic freedoms.
In this special episode of the Stephanomics podcast, host Stephanie Flanders talks economics and geopolitics with Paul Tucker, a former deputy governor of the Bank of England and author of the new book, Global Discord: Values and Power in a Fractured World Order. Years ago, world leaders could set their monetary, national security and human rights policies independently, but nowadays all of those things are interconnected and everything is more complicated. This new reality was evident when the Group of Seven leading economies, responding to the Kremlin’s war on Ukraine, froze Russian currency reserves held in Western banks, Tucker says.
Tucker predicts that developing nations will eventually topple the existing world order, shaping one in which the US, Europe and Japan no longer call all the shots. In this new iteration, international trade and diplomatic entities will have to be completely remade. But Tucker says that’s still a few decades away, because while China is already a world power, India and a few other developing nations remain a ways off. For now, the US will enjoy a “lingering status quo” in global finance as issuer of the world’s premier reserve currency, but global trade, cross-border investment and everything else will see more jostling for power, something between a “superpower struggle” and a “new Cold War.”
Tucker sees China trying to influence global trade and politics much more in coming years, a real concern for the West since Beijing tends to prioritize Communist Party control over civil liberties. World leaders will need to walk a fine line when dealing with Beijing, he says, working with China on pressing global issues while distancing themselves on others. “I think the big thing is China is too powerful” for the US and its allies to tell it how to reorder its society, Tucker tells Flanders. Still, the West should “should find common cause” where it can.
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