Bruno’s Newsletter #7

In a speech at the Brookings Institution in April 2023, National Security Advisor Jake Sullivan expanded on the geopolitical basis of world building, while simultaneously illustrating why this term or concept, world building, might be more exact than any other alternative. For Sullivan, the need to replace the previous economic consensus of free markets, trade liberalisation and deregulation has a certain history. “After the Second World War, the United States led a fragmented world to build a new international economic order.” For a while, it seemed to work, but in time deep trade liberalisation and what Sullivan calls “oversimplified market efficiency” had the unexpected result that “entire supply chains of strategic goods, along with the industries and jobs that made them moved overseas.” At that point, a contradiction seemed to emerge. The United States had built the existing world order, but in the process the very powers that once granted it the role of demiurge started to erode. This might not be so tragic had other actors remained firmly under the jurisdiction of the global order. That did not happen. The problem was that a large economy “had been integrated into the international economic order in a way that posed considerable challenges.” Integrating China into the world economy had not incentivised it to adhere to its rules. Rather, China grew stronger and soon began to plan how to build its own rules and its own order, forcing the United States to return to its original role and the world to divide between rival building projects or plans.

That the global system is a construct and that global power accrues to those who built it is the intuition behind the “dual circulation” strategy introduced by Xi Jinping in the May 2020 Politburo meeting. The strategy is a major theoretical innovation deserving much closer study in the West than it has received so far. It is also acutely attuned to the new external conditions introduced by the pandemic, even if it was developed in advance. Formally, it introduces a clear break between a domestic and a global economic system: the two circulations. Something of the concept had been present in Chinese practice, but after the trade wars and after the pandemic, that intuition was transformed into a new general concept meant to guide Chinese economic policy as a whole.

Subscribe to Premium to read the rest.