Vacuum in the world, and Xi’s China stands ready to fill it

Secondly, there is the global battle for technological dominance. In particular, the United States and China are now leading the charge on investment in artificial intelligence. For the US, leadership in this area comes from the private sector. In China, it comes from the state, which directs the country’s most powerful companies and institutions in ways that serve state interests. As with its trade and investment strategies, other governments, especially those most fearful of social unrest within their borders, will find this development model attractive. China’s economic clout will align tech sectors within smaller nations with Chinese firms and the technical standards they would like to set.

Finally, there is the question of values. China’s appeal is not ideological. The only political value Beijing exports is the principle of noninterference in other countries’ affairs.

Yet, that’s attractive for governments that are used to Western demands for political and economic reform in exchange for financial help.

With the advent of Donald Trump’s “America first” foreign policy and the many distractions for Europe’s leaders, there is no counter to China’s non-values-driven approach to commerce and diplomacy.

There are obvious limits to China’s international appeal. It will be decades before China can exert the sort of global military power that the US can. China remains a regional power, and the military spending gap continues to widen in the US favour. Nor are China’s neighbours comfortable with Beijing’s ability to project force near their borders.

But conventional military power is less important for international influence today than it has ever been, given the threats to national security posed in a globalised world by the potential weaponisation of economic influence and the unclear balance of power in cyberspace.

In 2018 and beyond, the global business environment will have to adapt to new rules, standards, and practices advanced by China, not just within that country’s borders but in other countries where Chinese firms are increasing their presence and China’s Government is expanding its influence.

We should also expect Japan, India, Australia, and South Korea to work together more often to limit China’s regional power, creating risks of friction and even conflict.

Depending on the state of USChina relations, the Trump Administration might become more active in the region, as well.

Finally, it’s possible that Xi’s grand ambitions will leave him vulnerable to rivals within the party, particularly if China suffers embarrassing setbacks at home or abroad.

But the world will be watching over the coming year and comparing the Chinese and Western models.

For Americans and Europeans, China’s system holds little appeal. For most everyone else, the China model offers a plausible alternative.

With Xi ready and willing to offer that alternative, this is the world’s biggest geopolitical risk in 2018.