Let’s be Real, the G20 is, in Fact, a G2: America & China

That isn’t to say other countries don’t matter Germany and Japan are still big advanced economies, India is growing strongly. A middle power like Australia carries influence particularly in the Asia Pacific region as it straddles the divide between the superpowers.

But it is the Washington-Beijing relationship that will define our times and right now it is a deep inflection point. Some would suggest a crisis point.

The two biggest economies in the world are locked in an escalating trade war: a game to see who blinks first. Critical are the two leaders: Donald Trump and Xi Jinping. They have boasted of their close relationship before, yet it isn’t enough yet to get a deal on trade.

The Financial Times this week described the mood as “toxic” and says “trust has all but collapsed”. Perhaps the two leaders share too much in common. They both put their countries first and speak of a return to greatness.

Both countries ignore the World Trade Organisation when it suits.

President Trump has shown he wants to shake up the American led global order, from questioning the future of NATO, to imposing trade tariffs on allies and economic partners on his way to the G20 summit, and criticising the host nation Japan for not pulling its weight in the US defence alliance.

If America went to war, he said, the Japanese would “watch it on Sony television” rather than join the fight.

China is building its own network of influence, the Belt & Road initiative $US1 trillion of infrastructure and investment covering more than 60 countries and 40 per cent of global GDP and its Asia Infrastructure and Investment Bank. It has claimed and militarised disputed islands in the South China Sea, ignoring a ruling of the Maritime Court in The Hague.

As the two giants battle over trade, there are rising fears of a more deadly conflict.

Analysts warn of the “Thucydides Trap” a supposed iron law of geopolitics dating back to the ancient wars of Sparta and Athens that a rising power and a waning power inevitably meet on the battlefield.

Unlikely? Well, as International Affairs expert, Christopher Coker, points out on his book The Improbable War, logic tells powerful nations “if you want peace, prepare for war”.

Coker says war can be avoided but warns if it does break out it will likely be within the next decade. It depends, he says, on how the two powers play out this rivalry.

US Secretary of State, Mike Pompeo, this month told European leaders “China wants to be the dominant economic and military power of the world, spreading its authoritarian vision for society and its corrupt practices worldwide.”

The most recent US National Security Strategy makes it clear that the world is again in an era of great power rivalry. Russia and China are named as the greatest threats more than international terrorism nations that “want to shape a world antithetical to US values and interests.”

This a Clash of Values

Observers now talk about a clash of civilisation and ideology. There is little doubt that’s how President Xi sees the world. He is hailed as the most powerful Chinese leader since the revolutionary figure, Mao Zedong. He has changed the constitutional presidential term limits, meaning he is potentially the leader for life.

President Xi is a Maoist, whose China Dream is to return his nation to global power. For President Xi, the Communist Party is central to everything in China. He talks of a “harmonious society”, yet he seeks to impose it by force, silencing dissent, cracking down on freedom of expression and jailing rivals.

He has targeted the Muslim Uighur majority, holding a million of them in “re-education camps”, where human rights activists say they are brainwashed to declare allegiance to the state.

President Xi speaks of fighting the “long game”. He uses phrases like “sacrifice” and “blood”. He warns of outside threats and of outsmarting capitalism. He rejects liberal democracy and has told his party leadership to prepare for a long period of conflict.

For all that, he is vulnerable. The marching of millions in Hong Kong has unnerved Beijing. President Xi rules over what China-watcher Susan Shirk has called a “fragile superpower”. The Communist Party fears its own people: it spends more on internal security than defence.

As President Xi sees himself as a self-styled champion of a new global order with his brand of authoritarian capitalism on the march against retreating democracy, he also knows there are many stumbling blocks to the return of China.

The United States still dwarfs China in purely economic and military terms. It has global alliances where China has only transactions.

Every few years there is another book predicting China’s collapse mostly overblown and certainly premature yet the latest is one of the more persuasive. George Magnus from Oxford University, in his book Red Flags: Why Xi’s China is in Jeopardy, warns of the “Four Traps: the debt trap, the currency trap, the ageing trap and the middle-income trap”.

They are self-explanatory: China has rapidly taken on debt; its currency cannot forever be pegged to the US dollar and a floating renminbi could be perilous for the economy; it is the fastest ageing country in the world, losing workforce and putting strain on government resources; and no authoritarian regime has ever made the transition to a fully fledged middle-income country.

Magnus says the Chinese President knows what he is up against.

President Xi, addressing the Party Congress in 2017, warned the economy was “unbalanced and inadequate”. It is a warning Chinese leaders have been issuing for more than a decade. President Xi believes he can defy history by doubling down on the power of the party and making good on the deal with the Chinese people: we will make you rich, not free.

This is a high stakes game, the trade war with the US is just one albeit large factor.

President Trump and President Xi may yet strike a grand bargain, but a full reckoning of this critical relationship lies in the future.

Scott Morrison says the global power tussle means the world needs “urgent repair” of the rules-based system, and Trade Minister, Simon Birmingham channelling Spider-Man says great power comes with great responsibilities.

For President Xi and President Trump, responsibility begins at home, and both seem determined to write the rules to suit themselves.