Eurasia and Asia
№96 China’s Geoeconomics and the ‘New Cold War’
New Cold War
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Chinese geoeconomics is making a great leap forward to adjust to rapid technological developments and a changing international distribution of power. The world is entering a new industrial revolution that further decouples the relationship between capital and labour, which incentivises Beijing to abandon its reliance on low-wage competitiveness and instead take the lead in developing high-tech strategic industries with its digital Silk Road. 

Technological leadership in the new industrial revolution is funded by the scale of demand, which China is filling by monopolizing on the growing Chinese domestic market and strengthening economic connectivity with the world. The Belt and Road Initiative (BRI) restructures global value chains as new transportation and energy corridors lead to China, which are financed by Chinese-led international financial instruments. Russia and China are becoming natural allies due to the shared objective of restructuring global value chains and developing a multipolar world. China offers a model for developing national technological platforms as an imperative asset in modern geoeconomics. Furthermore, China’s BRI is harmonized with Russia’s own ambitions for increased economic connectivity in Greater Eurasia.

Western sanctions that would in the past have marginalized Russia from international market are now merely pushing Russia towards China-centric global value chains. To the detriment of both Russia and the West, sanctions are making Russia excessively reliant on China by undermining Moscow’s ability to diversify its economic connectivity and technological autonomy. The ‘new Cold War’ is relegating Russia to an asymmetrical partnership with China aimed to construct a multipolar world order. Concurrently, the West is developing increasingly unfavourable asymmetry with China as an adversary challenging Western-centric value chains.