By: Riccardo Bosticco

World order dynamics and world order itself have changed substantially in the last thirty years. The evolution of it derives from those dynamics that determine the way it works. This article will discuss the specific case of China. 

Nowadays, military conflicts are mostly concentrated in least-developed areas, whilst western and eastern major countries exited the logic of the Cold War - when balance and peace were possible mainly thanks to military deterrence. From those times, conflicts have been substituted by other means of states’ competition. From the ‘90s onwards, commerce has displaced war - as pioneer Edward N. Luttwak states -, with economic and financial capital in place of firepower, civilian innovation instead of military technological progress, and economic incursion rather than military bases building. These are the new tools employed by states to grow their power and spread their influence, and of course, the elements that can explain the relationships among international actors. The logic of war has to be read through the grammar of commerce, but do these new means serve the same interests as artillery pieces used to before? 

Especially among the theorists of interdependence, many believe that the growing importance of industrial and financial entities and economics as the lens through which to understand international relations would imply a shift from “world politics” to “world business”, thus reducing warlike escalations. However, they are still the states that can extract and regulate economic resources; and they are still territorial authorities. In these terms, we can understand geoeconomics: an evolution, and not a revolution, of geopolitics. 

To better conceive this evolution, definitions are of some help. Geoeconomics can be considered applied research, and it can be understood as both an analysis and practice by states and businesses. It is an interdisciplinary subject including geopolitical features, strategic analysis and foresight, and economic intelligence. Saying geoeconomics is an evolution of geopolitics does not mean that the latter disappeared. The relationship between economics and power ever existed throughout history indeed. As an example, starting from the XI century, Venice became a powerful geoeconomics actor. It built its considerable power not flexing muscles, but presenting itself as a strong diplomatic and trading power, mastering advanced naval technologies and using economic espionage. 

More precisely, Soilen defines geoeconomics as “the study of spatial, cultural, and strategic aspects of resources, with the aim of gaining a sustainable competitive advantage”. It is different from geopolitics under two aspects: for the topic, since it focuses on economic means and not military or political; and for the actors, because it does not look only to individuals representing the state, its institutions, or the state as a whole, but to individuals who conduct relevant economic activities, corporations and other national and non-national institutions operating in the economic field. Despite this, they remain very similar to each other. Indeed, they both study how certain instruments can serve national purposes. Strategy is “where we define an optimal plan for our organizational or institutional objectives” SOILEN -1). In a world where war is banned, civilian technology is more strategic than a bomb. 

This means that those actors with hands over new technologies are more inclined to gain additional power and influence. China figured it out during its economic global ascendance and engaged to “master core technologies” in any imaginable area. If from the 80s to the mid-2000s, China’s economic policy was to encourage foreign direct investments in the country through often unfair incentives and advantages to investors; from 2006, China turned to “China Inc” and began promoting “indigenous innovation”, freezing the pursuit of international investments.

Published in 2006, the “MLP”, standing for “The Guidelines for the Implementation of the National Medium- and Long-term Program for Science and Technology Development (2006-2020)” stressed the need to “create an environment for encouraging innovation independently, promote enterprises to become the main body of making technological innovation and strive to build an innovative-type country.” Thus, today’s Chinese economic policy can be considered a long-term oriented pattern focused on the welfare of internal producers. In other words, what China has adopted is a mercantilist set of policies aimed at defeating non-Chinese competitors.

Why is geoeconomics important? Because the means are financial and industrial, and the strategy is mainly territorial. The main example of Chinese current economic policy? The Belt and Road Initiative. For this to be realized, the geographical dimension is vital. In particular, infrastructures in South and Southeast Asia are crucial since they are key to the connectivity envisioned by BRI. These countries are the most likely to allow Chinese naval bases or to serve as strategic pivots for commercial and military needs. This would let China build strong regional power at the first stage, and expand its activities then. Therefore, one might argue that geoeconomics is the evolution of geopolitics and that geoeconomics could serve geopolitical interests. Indeed, the BRI aims to build linkages with other countries and regions through investments, infrastructures, opening corridors, and connecting with them “physically, financially, digitally, and socially”.  

In conclusion, the growing importance of economic connections and tools in this technological era makes it the new paradigm to intend power in the XXI century. Wars have been marginalized, and thereby governments ought to find a new way to propagate their power. Notwithstanding, territorial dynamics still play significant roles, even in times of faster communications and digital transactions. This is the case of China, a growing “territorial ruler” with global ambitions that offers advantageous economic opportunities to bring other countries in its orbit while expanding its own economic, diplomatic, and military projections of power.