The economic growth of a nation, under certain conditions, can lead to a simultaneously expansionist foreign policy designed to ensure the establishment of its commercial and military influence in strategic regions of the globe. The astonishing economic growth that has characterized the Chinese economy over the last two decades will likely continue to have political implications for the economic and geostrategic ambitions of the West, a region carrying huge loads of debt with no long-term resolution of this problem yet in sight.
In the last two decades China has signed a series of trade agreements with several African states—in large part belonging to the group of French-speaking African states—with the aim to gain access to the raw materials found in abundance in these countries on the most favorable terms.
The Chinese strategy, defined by the Chinese themselves as a “win-win” approach, has in many instances proved quite efficient. In exchange for building infrastructure, such as roads, dams, and hospitals, Chinese companies, often supported by the Chinese state, have gained important trade concessions from African governments, such as the right to exploit local resources and even, in some cases, the right to send Chinese settlers to their country, which reduces China’s population pressure and serves geopolitical objectives.
In its relations with African dictators, China turns a blind eye to human rights abuses and democratic progress. This reassures Africa’s national governments, like those in Sudan or Zambia, which are often put under pressure by the West for these very reasons. In return, African regimes turn a blind eye to the dismal and unsafe working conditions the workers hired by Chinese companies often endure. The latter do not hesitate to use contemporary forms of labor exploitation, akin to new forms of slavery, imported directly from the motherland.
These ongoing developments are frightening the former colonial powers, particularly France, as they are seeing before their eyes the disappearance of their supremacy over African regions they have always considered, even after decolonization, their own “backyard”. Not surprisingly therefore, despite years of decreasing strategic, but not economic, commitment to the region, in April 2011 France decided to intervene militarily to resolve the political crisis between President Alassane Ouattara and Laurent Gbagbo in the Ivory Coast.
While the French government, along with the United States (through AFRICOM) and European states attempt to thwart, or at least slow down, China’s expansion efforts, Beijing continues to forge closer links along the trade routes that connect Africa, Europe, and Asia. China is also building ‘bridgeheads’ in the form of “commercial ports”, in what is called by Indian analysts the “String of Pearls” strategy, which will surround India with friendly Indian Ocean ports such as Hambantota in Sri Lanka, Gwadar in Pakistan, and other locations in Bangladesh, Myanmar, and the Maldives. Like India, most of China’s others neighbors are fretting over the Middle Kingdom’s growing intrusions into their affairs. The number of diplomatic confrontations between China and its neighbors has steadily increased over the last five years, especially in the South China and Yellow Seas over the exploitation of precious natural resources and a few archipelagos deemed strategic to regional states.
Emblematic of this modern day tug-of-war is the continued dispute between Japan and China over the Senkaku Islands. This case has made international media headlines on an almost daily basis since September 2010. In response to the rapid alteration of the balance of power in East and South East Asia in favor China, Washington has signed a series of agreements with Pacific countries, namely South Korea, Japan, the Philippines, Taiwan, Singapore, Malaysia, Cambodia, and Australia. These are amongst the regional countries most interested in forging a mutual defense agreement with the U.S. and gaining protection from China’s growing economic and territorial claims. China has even managed to alarm little Vietnam, a situation which has created an almost unimaginable economic rapprochement between Washington and Hanoi and the participation of the two countries in joint naval maneuvers.
In this climate of latent Cold War, Russia’s position remains ambiguous. The Russian Federation, after the trauma of the dissolution of the Soviet Union, has for years been trying to restore its lost glory through political and military actions. However, the inadequacy of its military apparatus to cope with the geostrategic changes of the last 20 years has been blatantly obvious on many occasions. Therefore Moscow has seen good reason to engage with China, a communist country allied to the USSR until the mid-1960s.
Despite the sometimes nearly irreconcilable differences between China and Russia they began to cooperate again at the beginning of the 21th century and became once again ‘bedfellows’, a situation perceived as disturbing by many American analysts. This cooperation is mostly manifest in areas such as trade in energy resources, sales of weapons, and technology transfer. Both countries are clearly trying to use their recent multi-faceted cooperation to challenge the U.S.’s global hegemony, which it has maintained without serious threat for the last twenty years.
Under the twenty-year Treaty of Good-Neighborliness and Friendly Cooperation Between the People’s Republic of China and the Russian Federation (FCT), signed by their leaders, Jiang Zemin and Vladimir Putin, on July 16, 2001, Russia and China agreed to hold joint military exercises along their still-disputed international borders. Moreover, the Chinese People’s Liberation Army, Navy, and Air Force have been supplied with billions of dollars’ worth of Russian military hardware. This Sino-Russian relationship has the potential to directly threaten America’s strategic interests in Eurasia and East Asia, as each nation strives to achieve a great power status which rivals that of the United States and its allies.
Several Latin American states, under the influence of the “neo-Bolivarian revolution”, have taken note of the obvious economic difficulties the United States is facing, especially in the light of its ever-increasing balance of trade deficit, and are turning towards developing economic ties with China. Beijing sees in Latin American countries, such as Brazil and Venezuela, both major export markets and important suppliers of raw materials and agricultural commodities.
China continues to expand its economic presence in other regions of the world traditionally under Western influence. In North Africa and the Middle East, China’s commercial penetration is a phenomenon which grows by the day. The signing of a strategic and commercial agreement by Beijing and Cairo on September 21, 2012 is a significant example of this. This accord provides for the construction of a six-square kilometer industrial area near the Suez Canal and a commercial port linking Asia, Africa, and Europe. This will be built by the Tianjin Economic-Technological Development Area (TEDA) in the next 10 years at a cost of approximately $1.3 billion.
Saudi Arabia is the largest supplier of oil to China (54.2 million tons in 2013), while bilateral trade between the two countries amounted to $74 million in 2012, according to the International Monetary Fund. Qatar, for its part, is China’s largest supplier of natural gas (1.8 million tons in 2011). The United Arab Emirates is China’s second largest trading partner and a major hub for the distribution of Chinese products in the Gulf region and beyond. Approximately 70 percent of Chinese exports to the UAE are re-exported to other Gulf countries, Africa, and Europe. China’s need to ensure energy supply, combined with the necessity to export its products as smoothly as possible, makes the Gulf region an essential piece in its “String of Pearls” strategy.
China’s rising interest in the Middle East is also determined by the need to contain Islamic terrorism in Central Asia, especially in the north-western provinces of China where there are many Muslim communities and national security is a constant preoccupation for Beijing. Consequently, China is pursuing a similar strategy in Central Asia. The establishment in 2001 of the Shanghai Cooperation Organization (SCO)—which now includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, plus four observer countries (India, Pakistan, Iran, and Mongolia)—aims to facilitate trade, energy cooperation and to contain regional threats, including Islamic terrorism.
Richard Rousseau is Associate Professor and Chair of the Department of Humanities and Social Sciences at the American University of Ras Al Khaimah, United Arab Emirates. His research, teaching and consulting interests include Russian politics, Eurasian geopolitics, international political economy, and globalization.
This article was originally published in the Diplomatic Courier's May/June 2014 print edition. Subscribe here.
But it’s difficult to think about value when we have no buoy for understanding it outside our traditional lenses: for example, our time, our job, and what others tell us they are worth in cash. This, largely, is the world’s paradigm for value so far. But understanding what value really means changes everything—and will be at the center of the decentralized revolution in global coordination that will unfold over the next decade. So, where do we begin?
Let’s start with gold.
Gold is an inherent value. When backing a market, gold allows us to grow a balanced economy well into the trillions. But why does it allow for massive stable markets to form around it? It is gold's permanence that creates stability. We understand that gold will always have value, because it is inherent in all of us, not just in one part of the world, but everywhere, not just today, but tomorrow and for the long haul.
In the 1930s when the gold standard was removed, we learned that the U.S. dollar didn’t need gold to back its economy to flourish. We learned that it was just a symbol for U.S. citizens to decentralize their coordination around the United States economy.
It turns out, common agreement is a philosophy for building shared economy.
And so it seems inherent value is a marker for us to begin exploring what the future could look like—a future beyond gold and the existing realm of credit. And so what else has inherent value? Is education as valuable as gold? What about healthcare? What about a vote that can’t be tampered with? What about an ID that can’t be stolen or erased? What about access to nutrition or clean water? You will find value everywhere you look.
It turns out, we’ve already done the legwork necessary to uncover the most elemental inherent values: The Sustainable Development Goals are commitments grown out of the drive to bring to life basic tenets of the Universal Declaration of Human Rights—the closest possible social contract we have to a global, common agreement.
We’ve already agreed.
Our agreements are grounded in deep value centers that are globally shared, but undervalued and unfulfilled. The reason for this is our inability to quantify intangible value. All of these rich, inherent values are still nebulous and fragmented in implementation—largely existing as ideals and blueprints for deep, globally shared common agreement. That is, we all agree education, health, and equality have value, but we lack common units for understanding who and who is not contributing value—leaving us to fumble in our own, uncoordinated siloes as we chase the phantoms of impact. In essence, we lack common currencies for our common agreements.
Now we find ourselves at the nexus of the real paradigm of Blockchain, allowing us to fuse economics with inherent value by proving the participation of some great human effort, then quantifying the impact of that effort in unforgeable and decentralized ledgers. It allows us to build economic models for tomorrow, that create wholly new markets and economies for and around each of the richest of human endeavors.
In late 2017 at the height of the Bitcoin bubble, without individual coordination, planning, or the help of institutions, almost $1 trillion was infused into blockchain markets. This is remarkable, and the revolution has only just begun. When you realize that Blockchain is in a similar stage of development as the internet pre-AOL, you will see a glimpse of the global transformation to come.
Only twice in the information age have we had such a paradigm shift in global infrastructure reform—the computer and the internet. While the computer taught us how to store and process data, the Internet built off that ability and furthered the conversation by teaching us how to transfer that information. Blockchain takes another massive step forward—it builds off the internet, adding to the story of information storage and transfer—but, it teaches us a new, priceless and not yet understood skill: how to transfer value.
This third wave kicked off with a rough start—as happens with the birth of new technologies and their corresponding liberties. Blockchain has, thus far, been totally unregulated. Many, doubtless, have taken advantage. A young child, stretching their arms for the first couple times might knock over a cookie jar or two. Eventually, however, they learn to use their faculties—for evil or for good. As such, while it’s wise to be skeptical at this phase in blockchain’s evolution, it’s important not to be blind to its remarkable implications in a post-regulated world, so that we may wield its faculties like a surgeon’s scalpel—not for evil or snake-oil sales, but for the creation of more good, for the flourishing of commonwealth.
But what of the volatility in blockchain markets? People agree Bitcoin has value, but they don’t understand why they are in agreement, and so cryptomarkets fluctuate violently. Stable blockchain economies will require new symbolic gold standards that clearly articulate why someone would agree to support each market, to anchor common agreement with stability. The more globally shared these new value standards, the better.
Is education more valuable than gold? What about healthcare or nutrition or clean water?
We set out in 2018 to prove a hypothesis—we believe that if you back a cryptocurrency economy with a globally agreed upon inherent value like education, you can solve for volatility and stabilize a mature long lasting cryptomarket that awards everyone who adds value to that market in a decentralized way without the friction of individual partnerships.
What if education was a new gold standard?
And what if this new Learning Economy had protocols to award everyone who is helping to steward the growth of global education?
Education is a mountain. Everyone takes a different path to the top. Blockchain allows us to measure all of those unique learning pathways, online and in classrooms, into immutable blockchain Learning Ledgers.
By quantifying the true value of education, a whole economy can be built around it to pay students to learn, educators to create substantive courses, and stewards to help the Learning Economy grow. It was designed to provide a decentralized way for everyone adding value to global education to coordinate around the commonwealth without the friction of individual partnerships. Imagine the same for healthcare, nutrition, and our environment?
Imagine a world where we can pay refugees to learn languages as they find themselves in foreign lands, a world where we can pay those laid off by the tide of automation to retrain themselves for the new economy, a world where we can pay the next generation to prepare themselves for the unsolved problems of tomorrow.
Imagine new commonwealth economies that alleviate the global burdens of poverty, disease, hunger, inequality, ignorance, toxic water, and joblessness. Commonwealths that orbit inherent values, upheld by immutable blockchain protocols that reward anyone in the ecosystem stewarding the economy—whether that means feeding the hungry, providing aid for the global poor, delivering mosquito nets in malaria-ridden areas, or developing transformative technologies that can provide a Harvard-class education to anyone in the world willing to learn.
These worlds are not out of reach—we are only now opening our eyes to the horizons of blockchain, decentralized coordination, and new gold standards. Even though coordination is the last of the seventeen sustainable development goals, when solved, its tide will lift for the rest—a much-needed rocket fuel for global prosperity.
“Let us raise a standard to which the wise and the honest can repair.” —George Washington