China: The Re-Emergence of the Middle Kingdom

China: The Re-Emergence of the Middle Kingdom

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DAVID BEGG

Almost 50 years ago, on February 23, 1972, to be precise, President Richard Nixon made a visit to China. The trip was the culmination of a period of intense diplomatic activity led on the American side by Henry Kissenger and on the Chinese side by Zhou Enlai. The objective from Nixon’s viewpoint was to establish a détente that would enable a US withdrawal from Vietnam and achieve, at least, a tacit alliance that might compel the Soviet Union to engage in arms control talks. Up to that point, China was second only to the Soviet Union on the American ‘bad guys’ list. China became a nuclear power and a serious threat to the West when it detonated an atom bomb on October 16, 1964.

The Chinese leaders, Mao Zedong and Zhou Enlai, were motivated to talk because they needed US help to deal with a number of serious problems. First, the economy was in bad shape and there was even the very real prospect of famine. The country needed fertiliser, farm machinery and technology and was not getting any help from Russia. Second, security was actually at risk from an enormous build-up of Soviet forces on the Manchurian border while China was being continually harassed by the Taiwanese from the South. Finally, Mao desperately needed to erase the ‘humiliation’ China suffered in the nineteenth and twentieth centuries at the hands of Europe and Japan by bringing Taiwan back under Beijing’s control. It could not achieve these objectives without American agreement and support.

The veteran trade negotiator and sometime presidential advisor, Clyde Prestowitz, maintains that Nixon and Kissinger were out-played by Mao and Zhou. He blames Kissinger, in particular, for conceding that American support for Taiwan had been a historical mistake and for promising to withdraw from the Western Pacific.^[1] Of the negotiations, Nixon stated, ‘This was the week that changed the world’.^[2] It was a claim not borne out in the passage of time since. The intention in this article is to explore the basis of Chinese exceptionalism and to explain why, despite its embrace of market capitalism, China has not joined the liberal international order as Presidents from Nixon to Obama had hoped it would.

BANS

Relations between the West and China are today arguably worse than they have ever been. The first high-level meeting between China and the new Biden administration held in Alaska in March 2021 produced an extraordinary public spat. The US Secretary of State, Anthony Blinken, and his opposite number, Yang Jiechi, are reported to have disagreed strongly over China’s policy towards Hong Kong, the treatment of Uyghur Muslims in Xinjiang and the status of Taiwan.^[3]

This was quickly followed by a co-ordinated EU, US, UK and Canadian imposition of sanctions, including travel bans and asset freezes, on key Chinese officials because of the persecution of the Uyghur population. China responded by imposing bans on ten EU individuals, including some MEPs, British MPs and academics.^[4] The government also incited a boycott of foreign retail brands such as H & M and Nike.

The Economist is not generally a publication given to hyperbole but in a feature on China it opines that we are facing into an epoch-defining contest between autocracy and liberal values. This presents the free world with a challenge: how should it best secure prosperity, lower the risk of war and protect freedom as China rises? The immediate manifestation of this challenge is Hong Kong. In March 2021 China slapped down democracy there effectively repudiating the ‘one country, two system’ agreement reached with Britain in 1997. This is not just a tragedy for the 7.5 million people who live there; it is also a measure of China’s determination not to compromise over how it asserts its will. ^[5]

Chinese leaders are increasingly confident that their model of techno-authoritarian state capitalism is superior to the partisan squabbling, short-termism and selfish individualism they see in the democratic West. There is not much evidence in the reaction of big business to gainsay that conclusion. One might think that the death of liberalism in Asia’s financial centre, which hosts $10 trillion of cross-border investments, would trigger panic, capital flight and a business exodus. Instead, Hong Kong, according to the Economist, is enjoying a financial boom. Banks like Morgan Stanley and Goldman Sachs are deeply invested in a hub for the world’s reserve currency which last year hit a record $11 trillion cleared in Hong Kong. Hong Kong issues its own hard currency, the Hong Kong dollar, which is freely convertible against the American dollar, and offers Chinese firms access to some of the deepest pools of capital on earth.^[6]

Nevertheless, Clyde Prestowitz believes that China’s efforts to control Hong Kong will ultimately undermine its status and value as a major international financial centre. His conclusion is based on the fact that its status was predicated on the rule of law left behind when the UK turned the territory over to Beijing. Now that Beijing has made its disregard for the agreement clear, he believes the money will move to safer territory.^[7] Time will tell.

In their first conversation in 1972 President Nixon is reported to have asked Zhou Enlai what he thought of the French Revolution. The answer was revealing. ‘It’s too early to tell’, replied Zhou. It was an indication that China frames its polity taking account of the long sweep of history.

LEADING THE WORLD

It is China’s interpretation of history that conditions how it relates to the modern world. Samuel Huntington, writing in the 1990s, felt able to assert even then that the diffusion of technology and the economic development of China was producing a return to an historical pattern in which, for most of its history, China had the world’s largest economy.^[8] Certainly it is the view of China’s leader, Mr Xi Jinping, that ‘the East is rising and the West is in decline’.^[9]

As articulated by Mr Xi, the Chinese dream is not to become a ‘responsible stakeholder’ in a global rules-based system created by the United States after World War II and the Cold War. It is, instead, to return to the grandeur of a 5,000-year-old civilisation that was the supreme world leader – militarily, culturally, technologically, administratively and artistically – until the mid-nineteenth century, when the opium wars initiated ‘a hundred and fifty years of humiliation’ by the West. In Mandarin, the characters for ‘China’ literally mean Middle Kingdom. The dream evokes the notion of restoring a globally dominant country surrounded by vassal states and barbarians from whom tribute may be exacted. This is what is behind China’s aggressive international relations posture towards the West and especially in its near region of the South China Sea, Taiwan and Hong Kong.^[10]

While China’s sense of historical grievance against the West is not without justification, it tends to obscure some enormous unforced errors by the Communist Party since it came to power in 1949. Between 1958 and 1960, China embarked on the Great Leap Forward. By requiring people to melt their household utensils, factory tools and farm machinery to make steel in backyard furnaces, it rendered itself unable to plant and harvest enough food for its population. As a result it suffered a famine which killed more than 40 million people.

It also experienced the Cultural Revolution, in which Mao tried to erase Chinese civilisation, with terrible consequences in terms of social upheaval. It was only with the death of Mao in 1976 and the subsequent rise to power of Deng Xiaoping that the country adopted the doctrine of ‘socialism with Chinese characteristics’ which allowed the country to begin to modernise and prosper. Even so, the Communist Party still ruled with an iron fist, epitomised by the massacre of protesting students in Tiananmen Square in 1989.

Deng was succeeded by Jiang Zemin for 10 years and by Hu Jintao, also for 10 years. During this period, China experienced very rapid economic growth, hugely boosted by inward foreign direct investment and by China’s accession as a member of the World Trade Organisation (WTO). In permitting China to join the WTO in 2001, Western leaders believed that free trade and globalisation would inevitably liberalise and democratise China. They were wrong.^[11]

The Communist Party has total control of the economy and society in China. It is no longer a Marxist party in that it has embraced capitalism and inequality, but it is a Leninist party in that it follows Lenin’s concepts of how to obtain and maintain absolute power. Power is its highest priority. The Party is not subject to the rule of any laws, and it brooks no opposition. It monitors people constantly and comprehensively. It does not confine itself to the political sphere but enforces its will in art, religion, philosophy and all other aspects of life. For instance, China is the only country in the world where the government (that is the Party) names the priests in the Catholic Church.^[12]

CREATING DEPENDENCY

China’s international relations outlook does not formally admit of any allies except North Korea but in recent times it has repaired relations with Russia, which were broken in the split with the Soviet Union in 1960. In September 2019 their respective air forces engaged in joint operations over the Takeshima Islands near South Korea. Moreover, China has substantial economic influence in a large number of states and regions.

For example, Cambodia, Laos, Mongolia and Myanmar are almost extensions of China, and the recent military coup in Myanmar would not have happened without its approval. China practically owns sub-Saharan Africa and has been strengthening many dictators there. It also has a strong security partnership with Pakistan. Even in Europe its investments in Southern and Eastern countries have created a dependency. As a result the EU, which requires unanimity on foreign policy matters, has found itself somewhat disempowered in criticising China.

As Clyde Prestowitz argues, the long and the short of it is that, any country, company or person with any dependence on China may find itself compromised. This is a great problem with the global supply chain much of which runs through China, because many corporations and countries are vulnerable to coercion by Beijing.

China’s global strategy for challenging US global hegemony has two main components. One is the Belt and Road Initiative (BRI) facilitated by global investment by state-owned enterprises (SOEs) in infrastructure like pipelines, roads, ports and telecommunications. The other is a massive military build-up that includes naval vessels, missiles and copies of the most advanced US military aircraft. As of 2018 the Chinese navy has 300 ships as against 290 for the United States.^[13]

However, a recent article in Foreign Affairs argues that, while the Belt and Road Initiative is likely to enhance Beijing’s global influence, it will not necessarily damage the United States and its allies directly.^[14] It also makes the case that, according to the 2016 China Statistical Yearbook, the United States and seven of its allies made up eight of China’s top ten trading partners. Given that the Communist Party’s legitimacy at home is predicated on maintaining strong economic development, it would seem foolhardy to jeopardise these trade relationships. On that basis the article concludes that calls for a cold-war style decoupling from the Chinese economy is not only unrealistic but unwise.

NAIVETY

Given that the growing military and economic strength of China is now seen as an existential threat to the West, it is an irony of history that American presidents from Nixon on have facilitated that growth. In particular, Bill Clinton persuaded the advanced liberal market economies to allow China to join the World Trade Organisation (WTO) in 2001. This was done on the naïve expectation that China would play by the rules and liberalise its economy, including by privatising its state owned enterprises (SOEs). It was also believed that economic liberalisation would lead to democracy but the Communist Party (CCP) never had any intention of playing by WTO rules or of democratising the country. Why would they when the arrangements entered into gave them the best of both worlds – economic growth that legitimised the Party’s political dominance?

Thomas Orlik, former Chief Asia Economist for Bloomberg, writes that WTO entry was a more or less unalloyed positive for China. For the multinational corporations that gained access to the country, the price was being compelled to participate in joint ventures with Chinese partners, with forced technology transfers and export quotas of goods made in China.^[15] Nevertheless, these multinationals were willing to accept any number of impositions in order to benefit from cheap labour and freedom from regulation.

They had no qualms either about outsourcing jobs to China. Prestowitz points out that more than five million US jobs were lost between 2001 and 2006, while wages stagnated in the European Union, the United States and Japan. Median US household income, which had grown at a rate of 5.3 per cent in the last 30 years of the twentieth century, fell 10 per cent in the decade after China’s entry to the WTO. Over the same period, US corporate profits doubled. Obviously, the creation of a China-centric supply chain was a great boon to big business, but not for ordinary citizens of the West.

It was initially cheap, unorganised, quasi-indentured labour, and later other inducements like free land, reduced utility prices, capital grants and the growth of Chinese markets, that led to the great wave of offshoring of US, European, and, to some extent, Japanese manufacturing to China between 1991 and 2018, and the great expansion of what is now known as the global supply chain. It is this global supply chain which now makes decoupling of the West from China so difficult. A shortage of containers from ships has seen a huge increase in rail freight between China and Europe. In the first two months of this year, more than 2,000 freight trains ran from China to Europe. In 2020, China overtook the US to become the EU’s largest trading partner in terms of goods, with total imports from China rising 6 per cent.^[16]

CHALLENGING DILEMMAS

This presents a huge dilemma for the West. The vulnerability of a global supply chain so dependent on China was exposed by the -Covid-19 pandemic. More importantly, the current structure of coupling feeds capital and technology to a China that is actively opposed to Western values and concepts of human rights. Multinational corporations and their customers are directly complicit in a system that suppresses Tibetans in Tibet, Uyghurs in Xinjiang and demonstrators in Hong Kong. Moreover, it is now abundantly clear that Nixon’s hubristic declaration following his 1972 visit to China – ‘This was the week that changed the world’ – and all the wishful thinking of his successors, was wrong. It is critical to understand that the West cannot change China, neither can we easily decouple from her. We may have to wrestle with this dilemma for some time.

There can be little doubt that for the next 30 years or so, China will pose a challenge to the West greater even than the old Soviet Union ever did. The Communist Party is not likely to be displaced as it was in the Soviet Union and it will continue to pursue an aggressive mercantilist high-tech import-substitution industrial policy. The It’s Made in China in 2025 policy statement issued by Prime Minister Li Keqiang in 2015 is intended to make the country a self-sufficient autarky in key technological and industrial areas.

In the longer run, though, China faces some serious problems. The most challenging is that of an aging population. China’s labour force is already shrinking and its total population will begin falling after 2029. This is likely to act as a drag on economic growth and the optimistic projections which sees the economy surpassing the United States may not be realised. The country may also be affected by water-supply problems. By 2050, Tibet’s glacial water supply will have fallen by two-thirds. Global warming and attendant rising sea levels could compound this problem and cause difficulties for a number of coastal cities.

In the short term, the big concern would be an attempted invasion by China of Taiwan or some other incident in the South China Sea that could provoke a hot war with the United States. American military leaders have warned that this could happen within six years and are increasing their military build-up in the region against this possibility. Notwithstanding that Chinese nominal naval strength overall slightly exceeds that of the US, the latter has many allies and mutual defence treaties. It also has 11 major aircraft carriers to China’s two, and one each possessed by the United Kingdom, France and India. Overall, the US has the superior military capability and it accounts for about half of all defence spending in the world. China may calculate that America would not respond militarily to an invasion of Taiwan so far away but it is hard to see how it could credibly abandon a long-standing ally and still preserve its mutual defence treaties. The consequences for us all of a misjudgement could be catastrophic. Beware the Thucydides Trap.^[17]

The case of China would appear to disprove the utility of Liberal Internationalism as a theory of international relations. It looks as if the future will see relations between China and the West conducted on the basis of balance of power realism. It is a bleak prospect.

The renowned French Jesuit theologian, mystic and scientist, Teilhard de Chardin, lived, on and off, in China from 1923 to 1946. While working there on his scientific tasks in geology and palaeontology, his mind was asking profound questions about the nature and direction of cosmic and human evolution, the meaning and goal of life in the universe. He produced in his work one of the strongest affirmations of the Christian faith in the incarnation – the presence of God in all things through Christ. Sadly, he was treated with suspicion by the Church for most of his life. During a scientific expedition to Xinjiang in 1931 he wrote:

The more scientifically I regard the world, the less can I see any possible biological future for it except the active consciousness of its unity. Life cannot henceforth advance on our planet …. except by breaking down the partitions which still divide human activity and entrusting itself unhesitatingly to faith in the future.^[18]

It is, I think, a more hopeful note on which to conclude.

In my next international relations article, I will discuss what the terms of engagement with China might look like in a balance of power paradigm.

David Begg served as secretary general of the Irish Congress of Trade Unions from 2001 to 2015.

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 ^[1].   Clyde Prestowitz, The World Turned Upside Down: America, China, and the Struggle for Global Leadership (New Haven and London: Yale University Press, 2021), Chapter 6

^[2].   Alfred E. Eckes Jr. and Thomas W. Zeiler, Globalisation and the American Century (New York: Cambridge University Press, 2003), p. 169

^[3].   Demetri Sevastopulo and Tom Mitchell, ‘Alaska meeting ends without breakthrough in US-China relations’, The Financial Times, March 20, 2021

^[4].   Michael Peel, Christian Shepherd and Demetri Sevastopulo, ‘China retaliates after sanctions move by US, EU and UK’, The Financial Times, March 22, 2021

^[5].   ‘The way it’s going to be: China is not just shackling Hong Kong, it is set on remaking it’, The Economist, March 20, 2021, pp. 14-16

^[6].   ibid

^[7].   Prestowitz, p. 222

^[8].   Samuel P. Huntington, The Clash of Civilisations and the Remaking of World Order (London: Simon & Schuster, 1997) p. 88

^[9].   The Economist, March 20, 2021

^[10].  Prestowitz, p. 5. The Opium War was caused principally by British merchants trading opium for Chinese goods during the period of the Qing Dynasty. This opium trade created millions of drug addicts and many of China’s largest coastal cities were devastated. In an effort to rescue the situation, the Emperor Daguang ordered the seizure of all the opium in Canton, including that held by foreign governments. Britain responded by sending in the Royal Navy which quickly defeated the Qing army. The war ended in 1842 with the signing of the Treaty of Nanking, which forced China to cede Hong Kong Island in perpetuity to Britain.

^[11].  Prestowitz, p. 42

^[12].  Ibid, p. 224

^[13].  Centre for Strategic and International Studies. csi.org/china-naval-modernization/.

^[14].  Thomas J. Christensen, ‘There will not be a new Cold War: The Limits of US-Chinese competition’, Foreign Affairs, March 24, 2021. Christensen suggests that the BRI may hamper Western diplomacy against China. As an example he cites the case of Greece, a NATO member, which blocked an EU human rights complaint against China after the Chinese shipping giant COSCO invested heavily in the Greek port of Piraeus as part of the BRI. Yet he concludes that this is more about defending the Chinese system at home than turning Greece into an offensive platform against NATO’s security interests.

^[15].  Thomas Orlik, China The Bubble That Never Pops (Oxford: Oxford University Press, 2020) Chapter 9

^[16].  Thomas Hale, ‘China embraces rail to transport good to Europe’, The Financial Times, March 28, 2021

^[17].  The Thucydides Trap is a term popularised by the political scientist Graham Allison to describe an apparent tendency towards war when an emerging power threatens to displace an existing great power as the international hegemon. Thucydides was an ancient Greek historian and general who wrote a history of the Peloponnesian War between Sparta and Athens in 411 BC

^[18].  Cited in Ursula Kind, Spirit of Fire: The Life and Vision of Pierre Teilhard de Chardin (New York: Orbis Books, 1996), p.141