The policies unveiled in a speech by China's president didn’t get much press, but they will dramatically affect investments, the markets and economies, a leading political scientist told advisors.
Ian Bremmer, founder of the global political risk research and consulting firm Eurasia Group, covered political and economic risks around the world in a keynote speech Thursday before thousands of advisors attending TD Ameritrade’s national conference, LINC 2018, in Orlando.
The policies Bremmer discussed that will change the world order were those outlined by the leader of China, Xi Jinping, in a speech last October before the country’s 19th National Congress in which he declared China was prepared to become a global superpower. Bremmer said the last time he heard such a monumental speech that changed the world order was when Mikhail Gorbachev announced the end of the Soviet Union in 1991.
“In 10 years’ time, we’re going to look back on [Jinping's] speech and we’re going to say that was the beginning of a transformation in the world order,” Bremmer told the audience. “Geopolitically, it’s by far the most important thing that’s happening in the world today. Nothing else is close.”
For decades, observers have expected China to reassert itself, but the country’s leaders held back from making any sort of public announcement, Bremmer said.
“Over the last few years, they have said that they would rather wait to show their hand. Wait to actually say, ‘We want to create a new order that reflects our sensibilities, our standards, our values.’ But they still did it now and the reason they did it now, is that the Chinese believe that they never will have an opportunity to really assert their power globally without pushback from other countries like they do now, given the state of the U.S.-led order,” Bremmer said. “That’s a response to Brexit, that’s a response to weak European leaders, but it’s mostly a response to America First and President Trump, and a feeling among [U.S.] allies that they don’t know how much they can count on the U.S. That’s why the Chinese are doing this now as opposed to in five or in 10 years’ time.”
Another reason that China is reasserting itself as a world superpower is the country keeps getting bigger -- its economy today is about 64 percent of the size of U.S. GDP, so it has a lot more world influence. Also, the country, in Jinping, has the strongest leader since Mao Zedong, Bremmer said. Jinping has implemented an “anti-corruption” campaign in which 1.4 million Chinese party officials were removed from power and are under investigation. “That’s the size of San Antonio. They were taken out by Xi Jinping. He has consolidated power. ... He is now the strongest leader that China has had in decades, at a time when you look around the world and say who are the really strong leaders?”
Among advanced industrial democracies, Bremmer said, the strong leaders are not Trump, Britain’s Theresa May or Germany’s Angela Merkel, but Japan’s Shinzo Abe and France’s Emmanuel Macron.
Bremmer said he wanted to impress upon advisors that of all the things that are in the headlines, it is this move by China that is by far the most important. “It is this that will affect your investments. It will affect the marketplace, because we don’t live in a global free-market economy anymore. We live in a hybrid economy, where the Chinese economically have more influence as a government than the United States. That’s new.”
China isn’t a global military or diplomatic superpower, but it is an economic superpower. “Their One Belt, One Road plan, which is to write big checks and build infrastructure all over the world, forcing an enormous amount of debt on all sorts of other countries … the spend on that plan is seven times the American Marshall plan, inflation adjusted,” Bremmer said.