Globalist Analysis

Twenty Years After the Demise of the Soviet Union: A Chinese Perspective (Part I)

How did the fall of the USSR give rise to a global order characterized by peace and economic development?

Read Part II here.

Takeaways


  • The demise of the Soviet Union marked not just the end of the Cold War, but also of the epoch of war and revolution.
  • Emerging powers have taken advantage of this era of peace by modernizing their countries.
  • Most emerging powers are in Asia — and the rise of Asia is tipping the center of gravity of international relations from the Atlantic to the Pacific.
  • The end of the bipolar world and the formation of a global market set the stage for the IT revolution.
  • Today, the relationship between major powers is now a positive-sum game.

On December 25th, 1991, at 7:25pm, Mikhail Gorbachev made a televised speech announcing his resignation as President of the Soviet Union. Three minutes later, the red flag of the Soviet Union on top of the Kremlin was lowered, and a tricolor flag of the Russian Federation went up. Henceforth, the Soviet Union disappeared from the world map.

In China, this news was received with mixed feelings. Some people were nostalgic for the Soviet Union and profoundly regretted its disintegration. Others believed that, with the demise of the Soviet Union, the threat to China from the north was gone.

The disintegration of the Soviet Union was the most important global event toward the end of the 20th century. It changed the world. Twenty years later, it is time to look back and reflect on the evolution of the world since then.

An end to the epoch of war and revolution

In 1916, Vladimir Lenin, talking about the trend of the time, stated that the world was in the epoch of imperialist war and proletarian revolution. That was a far-sighted statement. What happened throughout most of the 20th century proved Lenin’s prediction true.

Mankind went through two world wars and witnessed the October Revolution in Russia in 1917 and China’s New Democratic Revolution (from 1919-1949). There were also widespread armed struggles for national independence and liberation in Asia, Africa and Latin America.

After World War II, the world was divided into two camps, the socialist camp headed by the Soviet Union, and the capitalist camp headed by the United States. For more than 40 years, the Cold War between the United States and the Soviet Union prevailed throughout the world.

During that time, though there was no new world war, a host of regional wars broke out, such as those in Korea, Vietnam, Cambodia, Angola and Afghanistan. Against the backdrop of the U.S.-Soviet rivalry, those were labeled proxy wars.

For much of the second half of the 20th century, the U.S.-Soviet confrontation was the predominant feature in international relations and the most important factor shaping the world. The two superpowers engaged in an arms race on an unprecedented scale.

The United States and the Soviet Union, according to some estimates, spent at least $20 trillion on building their nuclear arsenals and improving their military hardware. Each of their nuclear arsenals were so powerful that they could have destroyed our planet many times over. That led the world to a dangerous situation, what people called a “balance of terror” and “MAD” (mutual assured destruction). The world lived under permanent threat of nuclear war.

The last century was also the bloodiest century in the history of mankind. Two hundred million people lost their lives in various wars. At the end of that century, humanity was more vigilant against the danger of a world war than ever before.

Toward the end of the century, the epoch of war and revolution drew to a close. It was by no means accidental that the disintegration of the Soviet Union and the reunification of Germany were realized peacefully. That was unthinkable at the height of the epoch of war and revolution. At that time, they could have easily triggered war and large-scale armed conflicts.

Deng Xiaoping said in the 1980s, “Only two countries in the world are qualified to fight a world war. They are the United States and the Soviet Union.” He was right. With the Soviet Union gone, a world war looks impossible in the foreseeable future. Among the major powers, no country has the means or political will to fight a world war with the United States. World peace is more secure than ever.

The demise of the Soviet Union marked not just the end of the Cold War, but also the end of the epoch of war and revolution.

The beginning of the epoch of peace and development

Every epoch has its theme. The theme gradually changes with the evolution of the international landscape. In the 1980s, Deng Xiaoping noticed the ongoing change. “The world is confronted with two major issues: peace and development,” he said.

With the end of the Soviet Union, the theme of our epoch has switched from war and revolution to peace and development. This is the most important change in international relations. We now live in a world totally different from the past century. It has these five main features:

1. A truly global market has formed, and the world has witnessed the fastest creation of wealth and the strongest growth of international trade and economic cooperation in history.

In the market economy, the market is the key factor. During the Cold War, the world market was divided into two blocs. There was little in the way of interaction and exchange between them.

The division of the world market was a stumbling block to global economic development and cooperation. The collapse of the Soviet Union has cleared the way — a truly global market has come into being.

Capital, goods, technology and people can now move freely around the world. That gives a tremendous push to the growth of global GDP, world trade and international economic cooperation.

In 1991, global GDP amounted to $23.3 trillion. In 2010, it jumped to $63.15 trillion, an almost three-fold increase.

In 1991, global foreign direct investment amounted to $385.6 billion. In 2010, it rose to $1.2 trillion.

In 1991, the global trade volume was $4 trillion. In 2010, it grew to $15 trillion, a nearly four-fold increase. Such growth in less than 20 years is beyond anybody’s wildest dreams.

2. The rise of emerging powers

In the past 20 years, what has affected international relations most is the rise of emerging powers. Be they in Asia, Africa or Latin America, these emerging powers share one core belief: Peace is the sine qua non for development.

These emerging powers have taken advantage of this era of peace by modernizing their countries. To benefit from and adapt to globalization, they have all conducted market-oriented economic reforms and opened their countries to the outside world.

The rise of emerging powers over the past 20 years is staggering.

From 1991 to 2011, China’s average annual GDP growth was about 10%. These two decades of continuous growth have brought about tremendous changes in China. In 1991, China’s GDP amounted to $424.1 billion. In 2011, it may exceed $6.6 trillion.

From 1991 to 2011, India’s average annual GDP growth was about 7%. In 1991, India’s GDP amounted to $308.3 billion. In 2010, it rose to $1.43 trillion.

In 1991, ASEAN countries’ GDP totaled $385.5 billion. In 2010, it amounted to $1.4 trillion.

In 1991, Brazil’s GDP amounted to $406.2 billion. In 2010, it totaled $2.1 trillion.

In 1991, South Africa’s GDP amounted to $112.2 billion. In 2010, it reached $361.2 billion.

Russia is a special case. In the first eight years after the demise of the Soviet Union, Russia was in disarray. Its GDP declined continuously. However, from 1998 to 2008, Russia’s annual GDP growth reached 7%. That was impressive enough to secure Russia’s position in the BRICS.

Most emerging powers are in Asia — and the rise of Asia is tipping the center of gravity of international relations from the Atlantic to the Pacific. This is the most important change in international relations in the past four centuries.

3. Globalization has made unprecedented headway.

Globalization started more than a century ago. In the course of its development, it was hindered, from time to time, by conflicts among the major powers — in particular, by two world wars and the Cold War. Since the collapse of the Soviet Union, globalization has gathered tremendous momentum and made unprecedented headway.

Globalization is carried by the multinational corporations (MNCs). In 1991, the MNCs in the world totaled more than 30,000; in 2010, there were about 90,000. What is worth noting is that in the last 20 years, not only has their number increased three-fold, but their quality has greatly improved.

Many important MNCs have been transformed into global corporations, defined as a corporation with more than half of its assets, sales and employees overseas. It is in a position to operate globally. Its market is global. It has access to global resources. It can hire the best people in the world and enjoys the biggest comparative advantages. Therefore, it is very competitive. This is a remarkable transformation.

4. The success of the IT revolution

The end of the bipolar world and the formation of a global market set the stage for the IT revolution.

In the past 20 years, the information technology revolution has remade the world. It was characterized by the use of the personal computer (PC) in the 1990s, and of the Internet in the first decade of the new century.

In the second decade of this century, cloud computing will lead the way. Thanks to the IT revolution, the whole world is now connected. Whatever happens in one part of the world, the rest of the world knows it instantly. Access to information is much quicker and much easier. The world is flat. The consequence of the IT revolution we are seeing now is only the beginning. Its far-reaching impact is yet to come.

5. The name of the game has changed in the relationship between major powers.

During the Cold War, the United States and the Soviet Union were locked in rivalry and confrontation. They confronted each other everywhere. It was a zero-sum game — when the Soviet Union won, the United States lost, and vice-versa.

But today, the relationship between major powers has changed dramatically. It is true that competition and cooperation both exist in their relationships. However, cooperation outweighs competition. It is now a positive-sum game.

The evolution of the China-U.S. relationship serves as a good example of this trend. In 1991, the trade volume between China and the United States was $25.2 billion. Last year, it reached almost $400 billion. In 1991, American direct investment in China amounted to $511 million, while last year it reached $105.7 billion.

In 1991, China did not hold any U.S. Treasury bonds. But today, China has become its largest holder. In 1991, 200,000 people traveled between China and the United States. Last year, three million Chinese or Americans crossed the Pacific Ocean to visit each other’s country.

One can clearly see that China and the United States are deeply interdependent today. It is true that, in the past 20 years, China-U.S. relations have endured some crises, such as the EP-3 incident in April 2001. But the two countries managed to deal with the crises properly and put their relationship back on track.

If we look at Soviet-U.S. relations during the Cold War period, it is quite different from the current China-U.S. relationship. Although there was détente from time to time, it was based on MAD (mutual assured destruction). No one dared trigger a nuclear war. Trade between the Soviet Union and the United States was negligible and could not be compared with China-U.S. trade today.

When cooperation gains the upper hand in a major-power relationship, it is good for world peace and stability.

Editor’s Note: Read Part II here.

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