By Ryo Sahashi

Power shifts are inevitable. In the late 2020s, the Chinese economy is expected to surpass that of the United States in terms of nominal gross domestic product. If the current trend of a shrinking U.S. defense budget and steadily growing People’s Liberation Army continues, it is possible that China will catch up to the United States in military spending as well in the 2030s. It is also predicted that the level of trade dependence on China among countries in the region will increase. For example, it is predicted that Japan’s trade with China will increase from the current level of 20 percent of Japan’s total trade to more than 40 percent by 2030, according to the gravity model.

Today, in an era of power shifts, the liberal order underpinned by the United States as hegemonic power should be restructured. It is high time for China and India to be given higher roles and status in global institutions, including financial ones. To transform the structure of the international order would be very difficult without major war.  Perception cannot easily be changed for a new reality. However, the power diffusion we are witnessing is more fundamental than those following the wars of the French revolution or the world wars of the 20th century. A globalized world will not sustain itself without proper reform of global governance.

We should not give up our belief in rule-based liberal order. Peaceful resolution of conflicts, international norms on human rights, the role of international law, and other liberal projects should continuously be pursued. For such goals, firstly we should design a united complex of both advanced and rising economies, including China and India. We should not replace the U.S. hegemonic role with the leadership of two superpowers in the United States and China. A contest between them for global hegemony would create vicious circles of superpower competition and compromise, in which the interests of smaller states are sacrificed and the liberal order would not be applied to all players equally.

In other words, a G-2 world would lessen the unity of liberal international order and American partnerships — and encourage neighbors and trading partners to bandwagon with China, rendering it the regional hegemon in continental Asia. Rather, we have to create a flatter, not a more hierarchical, consortium — such as the G-20 — where major powers deem it in their interests to gather, discuss, and share the burden.

Secondly, it is clear that China has the potential to behave aggressively, breaking rules and norms due to its unique values and political regime. We should not be deterministic. China and other autocracies could be transformed if proper guidance and pressure are given. For that purpose, it would be useful to create second united complex of advanced democratic economies — especially the United States, Europe, Japan, Australia, Canada and South Korea. Since their political values and life standards are shared, they ultimately can commit to sustain liberal international order.

Without this complex functioning well and setting standards for others to follow, China and other rising economies could be let off the hook to keep refusing responsibility in global governance on issues like climate change, economic liberalization and human rights. Soft power, including diplomatic skills and the power of visionary imagination, would be their big assets to create soft pressure on China to meet basic international norms. This is the reason why a study group in which I participated named our recent report Japan as the Rule-Promoting Power (http://www.horizonproject.jp/?lang=en). It is still uncertain which bodies of governance would take central roles under such an arrangement, but this second united complex of advanced democratic economies should be more important than regional groupings in any forum.

In addition, it should be underlined that the future of liberal international order is a function of the future of democracy. The United States, Europe and Japan confront the difficulty to stimulate seasoned domestic markets and sustain social welfare simultaneously. Democracy works better when it distributes the positive returns from  growth rather than dividing a non-expanding pie. Democratic politics today function too often as a cacophony of dissenting voices, failing to forge progress through consensus or reasonable actions. Autocracy historically works better to force people to sacrifice their interests and lives. It is ironic that autocratic states today experience economic success, but without a fair distribution of prosperity and safety nets to their citizens.

The task ahead for democracy is, firstly, to reform established political systems to create responsible, not populist, governance. Japan would be the best test case: its advanced democracy with the most rapidly aging society now suffers from a lack of social consensus and a defective parliamentary system. Without successful reform and growth of advanced democracies, the value of democracy would be called into question in the eyes of transitional economies where democratic process is still under development.

The rise of the rest is welcome — as long as it leads to better living standards and human dignity for the people residing in these countries. However, without a clear vision of the new world order, all humanity might be brought back to the classical era of great-power competition. We need to be wisely united. We should be confident in the values of liberalism and democracy – and be willing to defend them.

Ryo Sahashi is an Associate Professor of International Politics at Kanagawa University and research fellow of Japan Center for International Exchange