Rules based international order, who is violating it?

Of late, the West is bellowing from the roof top at China accusing her of violating rule based international order (RBIO). But evidence indicates that these are in fact, hollow claims as the real blame is squarely placed on the part of America and her allies. Here is the proof:

Since 1940s the western democracies introduced and adopted rule based international order based (RBIO) on the twin anchors of political and economic liberalism. These were set of norms that are to be applied in terms of trade, finance and investment from one country to another across the globe. Significantly, liberalism means promotion of equitable rights and free enterprise, so to speak. After China miracle, the West has taken up cudgel against Chinese trade & investment. The following are samples of measures executed by the West that betray its own liberalism and destroy the level playing field in geoeconomics:

In a briefing paper titled “Recognising Geoeconomics Risk”, published by the Finnish Institute of International Affairs (FIIA) authors Christian Fjader et al, summarise these measures that includes:

•      Increased public scrutiny over direct investment and foreign state subsidies in order to prevent the foreign control of critical infrastructures or technologies, and to ensure fair competition.

•      Controls regulating the export of certain technologies with a dual-use potential, and thus deemed to pose a risk to national and international security.

•      State incentives aimed at the redesign of global supply chains, with the purpose of ensuring supply of sensitive technologies.

•      Actions to discourage universities and research centres from hosting students from certain countries so as to prevent the dissemination of knowledge considered strategic.

•      Measures to limit access to fresh capital, such as the US delisting of Chinese companies from stock markets, or redirecting government pension funds. (Here)

Ironically, these measures have boomeranged on the USA business enterprises who have hitherto had privileged position by capitalizing on the same RBIO had to be on back foot now when competing with China in her domestic market. That is because countervailing business policy adopted against USA on reciprocal geoeconomics manner by the Chinese authorities made the price & product advantages of USA exporters to China vanishing into thin air. As a double whammy USA manufacturers at present, could not compete with cheap Chinese products in the home turf even after imposition of Donald Trump’s tariff rates. 

Plainly put, USA is caught in a cleft wood in geoeconomics power play. Any disturbance of China supply line into America could result in the hiking of inflation that is trending around 1.8 percent now to shoot over 2.6% by end 2021. But the punchline is, America now receives more than 42% of imports sourced from China. If this exceeds half-way mark that could be a massive blow to the continuation of rule based international order!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist