Dr Shahar Hameiri is a professor in the School of Political Science and International Studies at the University of Queensland. His research focuses on the field of political economy in Asia and the Pacific region, with an emphasis on China and other rising economic powers. Dr Hameiri is also the recipient of the Australian Research Council Future Fellowship and is a Research Associate of the Second Cold War Observatory. His latest book, The Locked Up Country, co-authored with Dr Tom Chodor, reflects on the impact of Australia’s COVID-19 response. His 2021 book, Fractured China, co-authored with Dr Lee Jones, has offered a significant contribution to conceptualisations of China’s political economy and governance and how these shape its international engagements in the present day. In this interview we discussed Dr Hameiri’s work on China’s political economy and its implications for the global economy and wider power dynamics.
Do you see the convergence of development finance practices in China and the West as a retrenchment of global capitalism or the shifting of capitalism to new norms?
It’s definitely a retrenchment of traditional development financing, but I wouldn’t stretch that out to include capitalism. We have seen Chinese development finance taking a lot of different forms in recent years. Previously China would provide these sovereign loans to recipient countries for use in large infrastructure projects, and we’re seeing a lot less of that today. We’re also not seeing much from the West in terms of development investment, but China is still investing a lot in areas like green manufacturing in regions such as Southeast Asia as a way to protect the Chinese economy from tariffs.
Your use of the term ‘Second Cold War’ is interesting. Are we living in a second cold war?
There has been a lot of pushback about the term because of how different the current climate is from the first Cold War. The argument that those at the Second Cold War Observatory would make would be that the first cold war was a competition between two mostly isolated, largely ideologically cohesive blocs, and that the current cold war is less coherent, meaning the competition mostly takes place through cross-border networks established in the globalisation era, which is very different. I think that some of criticisms are fair, and the main use of the term is to draw attention towards the increasing conflict between the US and China and how this rivalry is increasingly structuring the global political economy in new ways. Obviously the current situation is nothing like the first Cold War, as there have been forty years of economic integration and globalisation. We need to use this term with a grain of salt, but we need to be cognisant of the implications of this rivalry for the global political economy. Some people claim that by calling it a ‘cold war’ we are reifying it, but we are not trying to make a normative claim; we are only seeking to reflect and make sense of the emerging reality.
Some of your recent publications seem to disagree with some of your previous publications on China’s challenging of global governance. Have you changed your point of view on China’s ability to challenge the West?
That’s a difficult question. I would still argue that the AIIB, on which Lee Jones and I wrote back in 2018, still doesn’t pose a threat to traditional established development institutions. However, I would say that global governance as a whole is increasingly in crisis and perhaps collapsing, and the form it will take in the future is hard to say. One possibility is the emergence of an alternative system led by China, but I’m not sure that’s likely. Another thing we may see is increasing conflict within institutions, which don’t disappear but become platforms for competition. We can see this happening a lot already; for example, looking at the US and its relationship with the WTO, which has been completely neutered by the US’s decision to not appoint judges to the appellate body, effectively making it dysfunctional. Of course the US would argue it had to do that because China has always been operating in non-market ways. Other organisations like the WHO have also been impacted by this competition and the US’s efforts to control world health. So this is a mutual development of competition and rivalry, which rarely benefits the rest of the world. I have some friends researching just this question: the specific historical conditions leading to the period of multilateralism that we saw and why it is now coming to an end. I still think the argument of our paper on the AIIB is valid, but there are other ways that China is putting pressure on global governance, contributing to the current crisis.
Can you reflect on the relationship between political competition and economic models in the current world?
I see these things as almost always connected in some way. The way that the Chinese political economy has developed in the last forty years is deeply linked to wider global changes. Like the crisis in the seventies in the West, which led to the internationalisation of production, which China benefited from more than others, ultimately allowing it to move up the value chain. This internationalisation has led consumers in the West to increasingly rely on debt to support their consumerism, which China has supported by buying the financial assets of Western states, especially the US.
When it comes to the geopolitics of this, I believe it started in the US, where the domestic situation which allowed these economic structures to be maintained started to collapse following the global financial crisis. The crisis led to increasing anger from many Americans about the results of this economic model: deindustrialisation, increasing inequality, and a disconnect between the people and their political leaders. These people struggled to find a place to express their frustration, which led to the rise of figures like Donald Trump, who would previously have had no chance of getting to office. This has then led to an increasing geopolitical rivalry with China, which was continued by the Biden administration. This basic story shows how political economy has shaped geopolitics throughout recent decades.
This is true in China as well, which is an ‘overcapacity machine’ and has its own concerns regarding politics and the economy. For example, Chinese policy elites have apparently been aiming to increase China’s domestic consumption for decades, but have been unable to do so because of the power of ‘cadre-capitalist’ interests within the party-state and concerns about lack of control should income be redistributed too much to households. In the context of intense competition between different localities, everyone is producing too much, and there is no domestic market, which has led to this overcapacity being pushed externally to other markets. This internationalisation has caused a backlash, as many countries see the hollowing out of their most important industries now becoming a realistic prospect.
Does the mobilisation of models of political economy for geopolitical ends implied in the concept of ‘state capitalism’ suggest a ‘crisis of capitalism’ or not?
There are several different perspectives that you see on this question. Most Marxists would argue that there is no capitalism without state capitalism, as the state has always supported and legitimised capitalism. The idea of state capitalism that Ilias Alami and Adam Dixon have developed, while accepting this basic point, suggests a qualitative difference in the particular expression of the state’s role in capitalism in the current day that goes beyond the basic fact that the state is always involved in capitalism. And as they argue, the increasingly visible role of the state in capitalism does suggest a wider crisis of global capitalism.
In China, what we’re seeing is party-state capitalism. The argument that we made in Fractured China is that you have this cadre-capitalist class that has come to dominate the Chinese economy and polity since the late 1970s. We also argue that this class is not unified or coherent, but it is fragmented across the party state, and that despite attempts at unity there are continual struggles between different fractions of this class, which have different interests. Obviously, the leadership is aware of this and has tried to find ways to constrain these actors or unify them, but they cannot do so fully. Maybe the turn towards authoritarianism under Xi Jinping has been an expression of that, but even under him they have not been able to solve many issues. An example of this is the issue of ‘involution’ China is grappling with now, where the drive for ‘new quality productive forces’ has led to an excess of things like EV factories, many of which aren’t viable without extensive support from local party-state elites. These issues have been there from the beginning, and I can’t see how that is going to change in the near future.
I recently interviewed Shaun Breslin, who has done work on what he calls China’s enhanced capability for ‘para-diplomacy’ in the economic sphere compared to other states. Does the ‘fractured China’ thesis incorporate that perspective?
The Chinese party-state has a tremendous capacity to squeeze its workers and mobilise that surplus value in the desired direction of the state. That state capacity is arguably much stronger than in many other states, and it gives state managers an advantage because they can deploy that value internationally for political ends more easily than their peers elsewhere. However, the Fractured China thesis is still valuable, because a lot of that process happens in a way that is fractured across different institutions and interest groups, which pursue their own interests or paths within that system. If we want to understand how the Chinese party-state operates, then Fractured China is useful, because we don’t say that the party-state’s centre doesn’t have enormous capacity, but we say that its capacity is fractured, which can result in undesired outcomes, including from the senior leadership’s point of view.
What has been the impact of Trump’s second presidency on the dynamics of global economic governance?
It’s too early to tell what the impact is, but his rise to power is definitely intensifying the decay of global governance structures. It’s also intensifying the decay of trust that governments have for US leadership and the pressure on the US dollar as the global reserve currency. I also think that the rise of Trump needs to be seen in the wider context of that process we talked about previously: how he came to power and how he is able to enact these kinds of policies with very little resistance, including from supposedly very powerful capitalist interests, at least for now.
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