In partnership with Eurasia Group, the Office of Applied Innovation at Goldman Sachs published an article entitled “The global credibility gap: Assessing underperformance and overreach in today’s geopolitics.”
The argument presented is that there exists a crisis of credibility causing global geopolitical instability. Neither the US nor China appear willing or able to singlehandedly support one international order. The rising tensions between the world’s foremost powers create an international environment of uncertainty unconducive to amiable relations and business performance. But tech companies can help change this.
‘Credibility’ is the amalgamation of several variables: “hard military and economic power; the soft power of political and cultural attraction; and more intangible qualities related to trustworthiness, history, and context”. In short, faith in the ability of a guarantor to act maintains international order. Crucially, credibility is also context-specific, meaning that actors can draw different conclusions from the same policies.
Solutions to the highlighted credibility crisis are numerous and difficult to achieve. Reframing the conversation surrounding US-China relations and involving tech companies in the future of global governance will be essential.
The credibility premise
Goldman Sachs’ article presents China’s difficulties with credibility levels as being the result of a middle-income trap and economic slowdown, prioritizing political control over economic growth, and military buildup raising concerns. Crucially, China is characterized as “an aspiring global leader”, which causes problems in our understanding of its aspirations.
This claim, though common, frames the conversation about US-China relations in an unhelpful and inaccurate manner. Organizations of all types should be wary of asserting that China is an aspiring global power. The evidence is shaky at best, and it encourages unhealthy rhetoric.
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By GlobalDataAlongside the political rhetoric, there exists a wealth of academic literature on the matter of Chinese ambitions. A full review of this literature is beyond the scope of this article, but the existence of a healthy academic debate is indicative of a wider point. It is not the case that China absolutely is an aspiring global leader. There are even those who argue that “…attaining major power status… does not make China a hegemon or guarantee that China will continue to ascend until it dominates the region” (Roy, 2020).
For the sake of political stability, prosperity, and business performance, it is essential that the conversation about US-China relations acknowledges the present uncertainty concerning the agendas of both countries and prioritizes open dialogue.
US-China relations as a problem
Chinese behaviour is consistently framed by US-aligned actors as a problem to solve, as something that has gone wrong. This is the base assumption of the ‘credibility’ paradigm; great powers are defined by their ability to solve problems. However, consistently framing relations between actors as problematic makes them—organizations ultimately made up of people—feel threatened.
From the American perspective, their ability to dominate the world and ensure security through power is under threat; for the Chinese, the projection of American force makes them feel physically unsafe and threatens their own freedom of action. This encourages both to react as if they are insecure—in an erratic and unreliable manner—which former US Secretary of Defence, Robert Gates, identifies as a significant cause of geopolitical instability (Foreign Affairs, September 2023).
American and Chinese actions in the South China Sea provide the perfect example of the damage that this framing can do. It is widely believed that Chinese President Xi reneged on his promises in 2015 to not militarize the South China Sea, the Spratly Islands in particular. The Wall Street Journal, the Washington Post, and the Economist all reported as such. However, Xi had initially offered a more reasonable diplomatic approach, stating that he had no intention of militarizing the Spratlys (Mahbubani, 2020). As former US ambassador to China, Stapleton Roy, noted, the Obama administration chose to ignore this, with the US Navy increasing its patrols in the area. China’s subsequent militarization of its own was thus simply a response.
It is of the utmost importance that the biased language of competition and threat that has caused such significant tensions be sidelined in favor of a more collaborative approach to ensure the levels of stability necessary for strong business performance and global security.
Cooperation and the role of tech
Goldman Sachs’ article notes US-Soviet cooperation to eradicate smallpox. Though arguing that this level of cooperation is far off for the US and China, the same could be said for US-Soviet relations in the 1970s. And yet here we are. Cooperation was impossible until it wasn’t. US-Soviet cooperation saved lives; thinking in business terms, imagine what Sino-American cooperation could do for global prosperity.
The rapidly evolving tech landscape provides an opportunity for the US and China to pool resources and make important advancements. Combining efforts and resources for regulation and innovation presents an immensely profitable opportunity that would also enhance global stability and security. Optimistic this may be, but aspiring for such a reality is in the interest of all in the long term.
Goldman Sachs notes that “the world’s biggest private technology companies are also stepping into the breach to play larger, more autonomous roles in global politics” in an increasingly ‘technopolar’ world. The power and influence of tech companies will continue to grow at the expense of states as the world increasingly digitalizes. How tech companies and geopolitical actors choose to wield this power will define the future international order.
Tech companies have an opportunity to engage in international affairs and, for the price of some regulation, help to ensure a consistent market and sustainable society. Aside from simple financial concerns, it is important that tech companies engage with geopolitics with honesty and conviction going forward.
Geopolitics is a major theme, being mentioned over 77,600 times in company filings in the last four quarters according to GlobalData. For a company or industry to thrive it must involve itself in geopolitics in a regulated, sustainable manner in conjunction with state apparatuses rather than simply reacting to geopolitical developments in perpetuity.
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