China's Rise as a Global Power Reaches Its Riskiest Point Yet

China is an empire in the modern sense — a nation strengthened (but also held hostage) by its long supply chains, compelled to ever greater economic and political intercourse to preserve its interests, and increasingly drawn into the security sphere as well. It uses its economic, political and military leverage to expand its own direct sphere of operations, from the South China Sea to India and across Central Asia into Europe. The more engaged it is internationally, the more dependent it is on maintaining and strengthening those connections, which are critical for Chinese economic growth and, by extension, domestic management of its massive, diverse and economically unequal population.

Japan's imperial rise from the late 1800s through World War II is a prime example. An advancing industrial power in an era of empires, Japan was emboldened by its successes in the Sino-Japanese War in the last decade of the 19th century and the Russo-Japanese War in the first decade of the 20th century. Japan's expectation of being accepted as an equal among the leading empires and nations of the time was dashed by post-World War I settlements, and a begrudged and insecure Tokyo that ultimately launched a major military vitalization to press outward and claim leadership within the Asia-Pacific region. 

China, however, is not Imperial Japan. And today's world is not a world of empires, where conquering neighbors was a common practice of international relations. But China does sit at a moment in history that is loosely analogous to that of a rising Japan. Over the last half-century, China has moved rapidly from a developing nation to a country with increasing technological competence and competitiveness that hosts the world's second-largest economy, as well as one of the world's largest modern militaries. Under the guidance of President Xi Jinping, who took office in 2013, Chinese society has also pulled closer together around a new nationalism that lays claim to the country's 5000-year history and the righteous indignation of its so-called "century of humiliation" at the hands of Western and Japanese imperialism.

The challenge for China, however, is that international fears of "China's rise" are no longer being ignored or subsumed in debates over globalization versus nationalism. The relative power balance with the United States is no longer one Washington can simply hope away. And even the European Union, the vanguard of globalism, is increasingly concerned by China's economic and regulatory reach, and is taking steps to curtail Chinese investments in critical sectors. 

China has reached a risky point in its international development where its economic and strategic power is perceived as great enough to require a reply, but are not yet strong enough to withstand a concerted counter-challenge.

Following the end of the Cold War, the United States policy toward China could be summed up in a single word: cajoling. While there were moments of extreme tension, the overall intent was to try to draw China into a North Atlantic-centered world system, based on democratic liberalism and free-market capitalism. Avoiding overt confrontation was a key part of this policy — and something China rapidly learned to exploit. Beijing's steady expansion in the South China Sea, for example, always moved in increments small enough that Washington would weigh the cost of response as too high.

During this time, China adapted to ideas and systems that fit its needs, but Beijing also reinforced its own system centered on state capitalism. The stronger China grew, the more confident it was in its system, and the more China has sought to alter the Western-centric international norms. If China was a major player in the global economy, and its economic development was largely on par with countries in the global south, why should it or other emerging countries still play by the rules set more than half a century ago by a small number of North Atlantic nations with a common heritage and an anti-Soviet agenda? China's economic success, and the apparent political, economic and social chaos in the United States and even Europe, appeared to bolster China's case with much of the world. 

By boldly asserting its global role, China has moved beyond its former walk softly and bide time approach. Beijing, however, also knows it's not actually ready to support the role of a global leader, and any easing now may expose that weakness. China still needs time to complete its program of national rejuvenation and strengthening. But it is already facing constraints and restrictions on access to markets and technology, and is seeing a rise of military activity within its own near abroad. 

The United States, in particular, has recognized that there is no longer a value in cajoling China. The other options are simply accepting that China will play a major role in rewriting the international order, or taking action to constrain the Chinese advance — and Washington has chosen the latter by returning to a coercive strategy. 

U.S. moves to cut China off from international semiconductor supply chains to limit investment and intellectual flows are clearly attempts to stifle Chinese development, and Beijing sees these as little less threatening than Japan saw U.S. restrictions of scrap steel and tropical resources. But if Beijing does not yet have the confidence or strength to use its military in a way comparable to the other big powers — namely, the United States, Russia and Europe — it still has a useful tool in its kit to counter rising international pressure.

China can, and actively does, work to exploit fissures in the international system, divisions among the North Atlantic nations, stresses in the U.S. alliance and partnership structure, and the perception of inequality between advanced and developing nations in international institutions. Should the West coordinate in their attempts to constrain and shape Chinese development, it would come at a time when China remains vulnerable. Beijing is moving faster to strengthen its position around its periphery, from Xinjiang and Hong Kong to the south and east China Seas and the Tibetan Plateau. It needs to accelerate its domestic technology drive, turbocharge domestic consumption, and lock in economic dependencies and political connections across Eurasia. 

China is also cautiously eyeing the U.S. presidential election in November, concerned that a change in U.S. policy could lead to greater trans-Atlantic economic and political coordination, as well as increased trans-Pacific economic and security coordination against China. With the U.S. election only months away, China has a small window to simultaneously accelerate its own national security position and increase its efforts to exploit differing priorities before a potential change in U.S. leadership heals the current perception of a go-it-alone United States.

Over the next year, we thus can expect Beijing to be more aggressive in its near abroad when it comes to territory and military movement, and more conciliatory and cooperative in Europe, Africa and Asia when it comes to economics, investment and calls for globalization. These seemingly contradictory paths are, in fact, complementary — one secures the buffer space around China, the other keeps the world divided about how to manage China's emergence. 

It is a difficult balance to maintain, and the pressure on Beijing, from domestic economic and demographic challenges to external military activity and economic levers, make this a risky moment in China's assertion of its global status. But while we are no longer in the era of traditional empires, and active warfare against one another is the anomaly rather than the norm for the largest powers, history shows us that such transitions are filled with uncertainty, urgency and higher risk tolerance — and Beijing's moment will prove no different. 

Rodger Baker leads Stratfor's strategic thinking on global issues and future trends. As the firm's senior analyst, Mr. Baker guides the company's analytical process, to include the development of international analyst teams to refine their understanding and application of Stratfor's proprietary methodology grounded in the study of applied geopolitics and intelligence analysis. 

Mr. Baker is one of the world's leading experts on North Korea and has dedicated extended periods of time living and working in and around the Korean peninsula. He also spearheaded the firm's early forecasts on China, making Stratfor one of the first organizations to identify growing challenges to the Chinese economy contrary to widely accepted views at the time. His core emphasis is the multidisciplinary approach to geopolitics and the evolution of international relations to develop mid- and long-term forecasts to assist companies, governments and other globally engaged organizations make informed decisions.