The Global Financial Crisis, China’s Rise and the West’s Decline: Welcome to the New World Order!

1. The Global Financial Crisis, China’s Rise and the West’s Decline:Welcome to the New World Order! Dr. Andrew Cottey Department of Government University College Cork, Ireland Department of Government

2. Introduction • President George H. W. Bush, 1990-91 Gulf War: • A ‘new world order’. • Noam Chomsky: • ‘The 500 Year War’. Department of Government

3. The Global Financial Crisis • The end of capitalism? • Capitalism historically rather robust • Absence of viable alternatives. • What kind(s) of capitalism? • The end of the neo-liberal ‘Washington consensus’? • The ‘Brussels consensus’? • The ‘Beijing consensus’? Department of Government

4. The Global Financial Crisis • Medium and long-term impact? • To date, worst case scenarios have been avoided. • Instability in the financial sector and the liquidity crisis, however, continue. • … Department of Government

5. China’s Rise • 1978-2000s average annual economic growth rate approximately 9%. • 1990s global impact of China’s rise limited – primarily an exporter. • 2000s China ‘goes global’: • Multilateral institutions and political alliances; e.g., WTO, UN Security Council, UN Human Rights Council, Shanghai Cooperation Organization, East Asian Community. • Search for energy and raw materials (Sudan, Africa, Iran, etc). • Aid policy: emergence of China as an aid donor rather than recipient (esp in Africa). • Sovereign wealth funds: China Investment Corporation (CIC) established September 2007 (- US $200bn, est. US $30bn to invest overseas in 2008) • ‘Soft power’ strategy: e.g. Confucius Institutes, ‘Beijing consensus’. Department of Government

6. China’s Rise • China and the global financial crisis: • ‘Bucking the markets’? • Chinese capital as a solution to the global liquidity problem? Department of Government

7. The Rise of the Non-West • India, Brazil, Mexico, South Africa, etc high economic growth rates since mid-to-late 1990s: • BRIC (Brazil, Russia, India, China) group likely to become economically larger than G7 (Group of 7). • Economic power now being converted into political influence: • E.g., WTO negotiations; UN Human Rights Council; ‘Beijing consensus’; debates on military intervention (Darfur, Zimbabwe, Burma); UNFCCC – Kyoto II a potential ‘train wreck’? Department of Government

8. US Decline? • Symptoms of decline: • Budget deficit; 2008 financial crisis; defeat in Iraq and Afghanistan?; military overstretch; global public opinion and decline in ‘soft power’. • Relative or absolute decline? • Relative rise of other powers. • Economic assets. • Per centage of GDP devoted to defence sustainable. Department of Government

9. US Decline? • Foreign policy challenges for the next US President: • Recognising the limits of American power. • Building coalitions. • Restoring America’s soft power. Department of Government

10. Europe: Resurgence or Decline? • European economies show some signs of life. • Global financial crisis: • Re-inforces the value of the European model of regulated capitalism. • European states and the EU have responded at least as convincingly as the US to the crisis. • Europe continues to struggle with ‘hard power’… • …but in an era of multilateral coalition building the ‘European way’ is a significant force • Mark Leonard ‘Why Europe will run the future’. Department of Government

11. The New World Order • Central long-term trend = the rise of the non-West. • Global financial crisis likely to re-inforce this : • Non-Western economies have weathered the crisis reasonably well – likely to strengthen their relative economic and political power. • Weakened material power and ideological/ normative power of the West. • Multipolarity rather than non-polarity. Department of Government

12. The New World Order • Global challenges: climate change, managing global capitalism, poverty in Africa, proliferation, terrorism: • Requires building global political coalitions in a post-Western world: • Need to reform global political institutions (UN Security Council, the G7, the IMF, the World Bank). Department of Government