Chaos and the Closure of Colonialism

New geopolitical and economic dynamics are emerging, signaling a shift toward more equitable global cooperation

The following is an editorial by Warwick Powell, Senior Fellow of Taihe Institute

Thirty-five years ago, the Berlin Wall came down. Two years later, the Soviet Union disbanded. Geopolitical unipolarity was ushered in on a wave of universal liberal ideological hubris.

How time flies.

What was once solid now melts into the air. The integument of America's unipolar moment cracks under the weight of its own domestic contradictions and a reality that resisted the West's simulacra. The ideological ambitions of a totalizing project crumble. For the past thirty years, as the collective West pursued the geopolitical economy of the Washington Consensus, suppressing global development and pursuing extractive relationships with the undeveloped world, countries and peoples refused to accept the inevitability of History's End.

The de jure independence wrought by previously colonized nations in the 1950s and 1960s across Asia, Africa, and South America did not herald an era of even global development. The promises of equality amongst nations, enshrined in the United Nations Charter, were compromised by the institutions of finance that were put in place at Bretton Woods. These institutions - the World Bank and the International Monetary Fund (IMF) - were created by the victors of WWII, for the victors, and were reinforced by a network of military projection that sees over 800 American military bases dotted across the globe today.

The EU and its predecessors were formed in part to act as a geopolitical bulwark against American dominance, while at the same time preserving the economic privileges of the pre-WWII empire. The European project was as much geopolitical as it was a racialized vision, pitching the civilizational virtues of the Western European cultures against those of, first Africa, then eventually those of Eastern Europe. Colonialism was to be preserved by other means, even as previously subjugated colonies fought successfully for recognition as independent nations. The Eurafrican project kept Western Europe's African colonies on a leash. Fourteen African nations continue to be shackled to a French-issued currency. The dominance of European financial institutions in Africa ensured the flow of wealth from the historical colonies to the centers of European power.

Development finance by way of the mechanisms of the World Bank/IMF created US dollar-denominated debt crises across much of the developing world, but little sustained economic development. Conditional IMF financing has undermined economic development and poverty alleviation. The flow of economic wealth today is more unequal than it was even a few decades ago.

Set against the longue durée of history, the unipolar period marked the last three decades of five centuries of transatlantic colonialism. That era is coming to an end, if it hasn't already ended. Some scholars have argued that unipolarity ended sometime between 2014-2018. Whatever the precise date, if indeed there can be such precision at all on these kinds of questions, what is clear is that the economic privileges of colonialism and the post-WWII global settlement will not be ceded gracefully.

This is no "translatio imperii" moment where power is smoothly passed from one European power to the next, or from the British to the Americans.

Rather, a quarter of the way through the 21^st century, we are witnessing the unfolding of the violent reaction of the transatlantic colonial powers to the waning of the five long centuries of colonial domination and the large dose of displacement anxiety that is now being felt across the centers of elite power in Washington, London, and elsewhere amongst the collective West.

Hybrid Warfare

In the face of the changing contours of the global political economy, to which I return below, the collective West has responded with waves of hybrid offensives. Consider the following dimensions.

1. We have had major hot conflicts in Europe and West Asia, not to mention dozens of military interventions which the United States continues to be a party to across the world. These conflicts were, in part, aimed at weakening adversaries (Russia in particular) and depleting their resources. At the time of writing (December 2024), the situation in Ukraine has not gone to plan, while that of West Asia is highly fluid and unstable in the aftermath of the collapse of the Assad regime in Syria. Indeed, the military failure of the US and NATO in Ukraine has demonstrated the limitations of Western military power.

2. Accompanying hot conflicts, political destabilization work has intensified in various theaters. Regime change or domestic destabilization campaigns have been mounted from Romania through to Georgia in Europe, and further afield to Bangladesh when Western influence was under threat. Regional tensions have been aggravated in Southeast and East Asia. Various mini-lateral arrangements have been put into place in the Asia-Pacific, the aim of which is to contain China and support American ambitions to reclaim Asian primacy.

3. We have seen an intensification of economic and financial conflicts. The weaponization of the US dollar-based system of global payments has intensified, as has the use of sanctions; and that's despite the growing recognition that such measures are increasingly ineffective. The US has also pursued assorted measures to stymie China's access to technologies, and has embarked on an ever-expanding regime of trade protectionism. While tariffs have become synonymous with the US (under both Trump and Biden), they are now part of the Western European armory.

4. Information has been weaponized as well. The US and its collective Western allies have pursued a vigorous campaign to demonize China. Think tanks across Western capitals mobilized to build an anti-China narrative, buttressing the 2017 US National Security Strategy that declared China a revisionist force that aimed to "displace the United States in the Indo-Pacific region." The 2018 National Defense Strategy highlighted China as a strategic competitor with a rapidly modernizing armed force, and attitudes have only hardened since. The US Congress recently (September 2024) committed a further 1.6 billion USD toward anti-China information, building on the 500 million USD previously committed to propaganda work.

5. And, lastly, we have ideological disputes, in which the present dynamics are framed in apocalyptic millenarian terms. Attempts have been made to inveigle countries into a new "civilizational" contest, in which the stakes have been described in eschatological terms as a battle ultimately between that which can be considered to be virtuous and that which is evil. The political doctrine of liberal democracy has been pitched against authoritarianism, while others in the West view the contest as one of "spiritual conflict" between Godly civilization and the ungodly work of the devil.

New Contours

Much of the world - despite, or perhaps because of, persistent hardships - refused to yield to the geopolitical economy of the Washington Consensus.

The economic contours of a new multinodal international political order began to germinate, then take shape, in part on the back of China's 40-plus years of stupendous development, in part as a result of the revitalization of Russia, and in part because the broader developing world refused to yield to Washington's version of History. New institutions slowly emerged, in parallel to longstanding existing institutions, as a response to the refusal of the dominant transatlantic powers to open the doors to the citadels of global financial and other powers.

China today is the world's largest economy, in purchasing power parity terms. It is the largest trading partner for over 140 nations globally. Its development bucked the constraints of the Bretton Woods system and the institutions of the Washington Consensus. It is expected to contribute around 23% of global growth over the next five years. China's economic development has fueled a deep sense of displacement anxiety amongst the policy and political elite in Washington in particular. Their response has been three-pronged.

Firstly, the US has mounted a vigorous and expanding campaign of economic coercion. Directly, a regime of sanctions and prohibitions has been the centerpiece of Washington's attempts to stymie Chinese economic development. Trump's first term saw the introduction of a vast swathe of tariffs on Chinese-made goods, which were continued under the Biden administration. The incoming Trump administration is expected to pursue an expanded tariff regime with gusto. Technology access prohibitions - under the "small yards, high fence" rubric - have been pursued to contain China's access to the latest in microprocessor technologies and manufacturing capabilities. Tariffs and chip wars have largely failed to achieve their aims.

China's export capacity, particularly in manufacturing, has not been diminished. Some supply chain re-routing was occasioned, with Chinese firms investing in new manufacturing and assembling facilities in other locations around the world. Domestically, the tariffs failed to return the lost jobs to the American heartland. The chip wars may have delayed China's ability to make the most of the latest in microprocessor technology, but that is all. The offset to these delays has been an invigorated domestic Chinese microprocessor sector, which would otherwise not have developed as quickly or advanced as significantly. Few analysts now believe the chip wars will deliver long-term sustained containment of China on this front. Indeed, there is a quiet confidence inside China that Chinese firms have weathered the storm and will achieve parity within the next few years at the latest.

Additionally, Chinese technology and its embrace of open source protocols are enabling the emergence of what I have previously called Digital Westphalia. That is, we are seeing the embryonic signs of a new generation of global technologies, including protocols, standards, and operating systems, which enable data sovereignty and transnational interoperability. This contrasts with the global technology landscape of the past three decades, in which US technology has been the de facto technology for much of the world.

More broadly, the weaponization of the US dollar-denominated payments system by way of sanctions, asset freezes, and confiscations (thefts), has shown the world how Washington is able and willing to turn economic networks into "tools of domination." Undaunted by this weaponization of the existing information and financial system, the BRICS network of countries has forged ahead with the development of its own complementary architecture. Building on the back of the Cross-Border Interbank Payment System (CIPS) and the Financial Messaging System of the Bank of Russia (SPFS), China's and Russia's bank-to-bank alternatives to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the BRICS is moving forward to implement a national currency-enabled payments system, BRICS Clear. The evolution of currency multipolarity has picked up pace, in part as a reaction to Washington's weaponization of the pipes of global financial flow.

Secondly, Washington has pursued an information offensive aimed at talking down the Chinese economy in the hopes of damaging China's global reputation and dampening China's own economic momentum. The "China collapse" thesis gained much amplification during 2023 and 2024. The thesis has repeated a range of tropes, which purportedly presage the imminent collapse of China's economy.

● In August 2023, the claim was that China's exports had collapsed, spelling the end to the Chinese economic model. This claim was premised on one month's data - the July-July comparisons. The claim didn't last long when trade rebounded in subsequent months, so much so that more recently the argument is that China is now dumping on the world market due to domestic consumption weaknesses.

● The persistent theme of the China collapse trope is that China's economic structure is unbalanced, with weak domestic demand and excess capacity. This forces exporters to dump on global markets unfairly, and also results in deflation domestically. This line of rhetoric is undermined by the reality that: (i) Chinese domestic household consumption has and continues to grow sustainably, with year-to-date data showing consumption growth of close to 4% in real terms; (ii) China continues to run a modest aggregate trade surplus, of around 2% of GDP. This means that overall, China's economic growth is driven mainly by domestic investment and consumption demand rather than net exports; (iii) China is experiencing modest inflation, and where there has been downward pressure on prices, that has been a function of supply-side growth being faster than demand growth, but importantly not because there is a collapse in aggregate demand; (iv) Chinese manufacturing is focused mainly on meeting the growing demands of the domestic economy. Almost 80% of manufactured output in the year to October (2024) has been consumed domestically, which incidentally means China's manufacturing sector is less export-dependent than its American counterpart (23%+). There is no general problem of so-called excess capacity; and (v) exports have continued to grow, but China has not "dumped" into global markets. The pricing premium achieved by Chinese exporters during the pandemic (2021-22) has subsided, but the pricing levels achieved today simply reflect a loss of the COVID-19 premium.

China's economy continues to work through what I have previously described as three great rotations: (i) the contraction of the relative importance of capital formation in property to be replaced by investment in advanced technologies and related manufacturing; (ii) extending growth to regions outside of tier 1 and tier 2 cities; and (iii) driving income growth amongst lower-income households. Wrapped around these rotations is a green energy transition, which is redefining the economics of energy.

Thirdly, the US has sought to drive wedges between China and other countries, effectively aiming to force countries to "make a choice." Attempts to isolate China economically have so far not delivered. A refusal to expand market access via trade agreements during Biden's term is likely to continue under a new Trump administration. Without the carrot of access to the US market, and where China offers comparable technology, infrastructure development capacity, and support market access, few countries are willing to cut their nose off to spite their faces.

Contradictions and Centrifugal Forces Unleashed

As the new contours of the post-colonial global political economy unfold, the collective West is confronting the limits of their own domestic contradictions, and the centrifugal forces that have been unleashed.

The Western European project, embodied by the EU and the Eurozone, is facing a reality of economic stagnation. The energy shock occasioned by the imposition of sanctions on Russian oil and gas in the wake of Russia's special military operation of February 2022, has served to accelerate industrial decline. Deindustrialization is now a reality, particularly in Germany and France, the Eurozone's historical centers of industry.

The European Commission's own Draghi Report, commissioned to investigate the drivers of the Eurozone's crisis of competitiveness, recognized the centrality of energy costs but could say little about it without addressing the problems of conflict and peace in Europe. Instead, resolving the Ukraine conflict post haste cannot be countenanced by the prevailing powers in Brussels and other European capitals - Berlin, London, and Paris in particular - all of whom are fully invested in the "strategic defeat of Russia" and the incorporation of Ukraine into NATO. Neither is likely.

At the same time, citizens across Western Europe continue to show growing disdain for this refusal to find a workable solution. New political forces of both the right and left have emerged, arguing for a cessation of funding and military support to Ukraine and a peace accord with Russia, together with an economic program that prioritizes national economic development. A revived nationalism is evident in the politics of European nation-states, at times with racialized dimensions. Putting a stop to migration is advocated by various parties with growing support, in a direct challenge to the erstwhile cosmopolitan ethos of the post-WWII European project. The racialized dimensions shouldn't surprise, however; they actually draw from the historical pedigree of the EU's own emergence.

Can a unitary European project survive the economic fallout?

On the other side of the Atlantic, the limitations of American military preponderance are increasingly evident. Despite having the single largest defense budget across the world - larger in fact than the next nine countries combined - US military capability has been exposed as well short of its vaunted reputation.

In doctrine terms, American military strategy has been premised on aerial superiority. The unfolding conflict in Ukraine over the past three years has exposed the limitations of a Western military doctrine when ambition isn't matched by reality. The US and NATO have failed to adapt strategic doctrine in the face of a failure or inability to assert and sustain aerial dominance. In terms of manpower, it is now clear that the West confronts serious limitations in both qualitative and quantitative terms. Western militaries are facing a recruitment and retention crisis. As for equipment and armaments, it too is clear that Western dominance was more a figment of propaganda than a reality. Various waves of supposed Wunderwaffe made no material difference in the conflict in Ukraine. Lastly, the Western systems of replenishment, repair, and replacement have been exposed as chronic under-performers. The collective West simply cannot match the productive output of Russia.

While many in the US continue to advocate a kinetic first approach, the limitations of the American military system and supply chains are ruefully being recognized by many others. The inability to bring the Houthis to heel in the Red Sea has been an unedifying experience for some observers. The reality of maintenance backlogs that have trapped a large amount of US naval hardware in drydocks is also unavoidable, as is the production backlog in the American submarine program. On top of this is the fact that it is the Russians and Chinese that have now succeeded with the development and deployment of hypersonic delivery systems, which has led analysts like Andrei Martyanov and David P. Goldman to conclude that the US has already lost the current "arms race."

Economically, the US political economy is showing all the signs of mature financialization. This means an imbalance domestically, with wealth and power tilted strongly to finance capital. When the West complains about Chinese "overcapacity," the real issue is Western "undercapacity." Evidence in the US confirms a progressive concentration of wealth and control over capital resources. American manufacturing has become concentrated since the 1970s. US technology is also concentrated in the hands of a small number of dominant firms, 93% of financial wealth by way of stocks is owned by 10% of Americans.

As the finance sector grew in absolute and relative importance, so too did manufacturing employment decline. These two phenomena are causally linked, as financialization drove labor replacement with technology and reduced commitments to expanded productive plant and equipment investment.

The US social settlement now delivers a structure in which:

● Over 65% of households report living paycheck to paycheck;

● Over 20% of households forgo meals to pay rent or mortgages; and

● Over 13% of households experience food insecurity.

Household indebtedness has risen in recent years, as credit card delinquencies have grown. Inflation has reduced real living standards for many, while rising interest rates have effected a net transfer of wealth to the already-wealthy. As Wall Street soars, Main Street crawls. The political reaction has been a rejection of "politics as usual."

The nostalgic turn of "Making America Great Again" effectively mobilized the affective energies of a disenfranchised polity, but the promises of tariffs aren't likely to address the deep structural reasons for America's political and social maladies.

Against Colonialism

The collective West no longer controls the technologies, let alone the other resources, necessary to determine the shape of future global development. The mobilization of resources in developing nations can be accomplished without reliance on the US dollar. Institutions like the BRICS' New Development Bank lay the groundwork for national currency-based development finance. Trade settlements can take place without the intermediation of the USD, and this trend is continuous. Currency multipolarity is with us for the foreseeable future.

As the transatlantic West contemplates building barriers to trade, the rest of the world looks to open trade flows even more. If the US isn't interested in reforming the WTO, or indeed is committed to stymieing it, then parallel multilateral agreements will become more prominent as the "rules of the game." Whether we are talking about the BRICS, the Regional Comprehensive Economic Partnership (RCEP), or other multinational arrangements, the willingness of countries to continue to grow trade and investment relations with each other remains strong.

Growing physical transport, logistics, and digital infrastructure that are independent of Western control enable diversification and risk mitigation. Whether it's new ports in Peru, multinodal connectivity through Iran into Central Asia and Russia; terrestrial fast train networks linking Southeast Asia; submarine cables that don't run data through the data centers in Virginia; digital operating systems that can't be censored; payments networks that are beyond the ability of a minority of powers to sanction; or whether it's renewable power systems enabling national energy sovereignty; all of these point to a multinodal global setup that enhances national sovereignty.

New institutions and infrastructure such as these portend another step toward the closure of the 500 years-plus era of transatlantic colonialism. The European and American powers that have stood astride the world are resisting these changes, at times with increasing violence. The prevalence of the belligerence reflex is why scholars Monica Duffy Toft and Sidita Kushi, in their 2023 book Dying by the Sword: The Militarization of US Foreign Policy, describe the US as a nation "addicted to military intervention."

Yet, not only are these changes grounded in fundamental economic forces reshaping the contours of global value flows, but with each and every effort to resist these changes, the Western powers only remind the rest of the world of why such changes are necessary if fair and equitable development is to be a reality.