Which brings us to the GSI. Many of our leaders in Asia do business with China and strive to maintain decent diplomatic relations with Beijing for pragmatic reasons. Yet while we can make money together, that doesn’t mean we have to like Xi’s aggressive and authoritian ways. Can we trust Xi to use the GSI for peaceful purposes, or will he try to exploit it to edge America out of the Indo-Pacific? Asians are not naive, and just casually observing Xi’s actions since coming to power one can only conclude the latter.
At this point it is impossible to predict how the new cold war evolves and for how long it will persist. One key determinant will be America›s mid-term elections and the next presidential election. As one European intellectual quipped, «because American politics are so divided, every time there is an election and the opposition wins it seems like a regime change.»
This question of whether the Republicans will win big in the midterms and regain control of the White House is critical. While the overwhelming majority of Europeans view the war in Ukraine as their war since they now view Russia as a potential threat to the entire European subcontinent, the American public is less so supportive, a point that is not lost on Republicans running for office. Hence a Republican comeback has the potential of resulting in less American military being funneled to the Ukranians, therefore shaping the final outcome of the war.
Another factor is economics. The US and EU are continuing to tighten the noose around the Russian economy. This week the EU agreed to cut 90 percent of its oil imports from Russia by the end of this year. This will have a major impact on Russia›s currency reserves and its ability to wage war.
Yet at the same time these sanctions also hurt other economies all around the world. In a sense, the real question is, who will suffer the most and willing to endure the pain before changing course?
Read: The U.S. doesn’t want to protect Ukraine; it wants to defeat Russia
When it comes to China and its hegemonic ambitions, economics is also a critical driver when you think about where things will be headed in the future. For the first time in 40 years China›s economy is slowing down. In part this is due to the the state of the global economy and US sanctions. In larger part it could be a result of what economists call the middle income trap, meaning that when economies reach a certain size then growth rates invariably become lower than before.
If in fact China is now caught in a middle income trap, it is hard to imagine Xi would ignore the need for an economic policy that is more focused on job and wealth creation rather than expanding China›s influence abroad. In other words, Xi might be compelled to scale back his ambitions, something that would bode well for a less contentious cold war in the future. (James Van Zorge)