CHINAwatch

How is Hong Kong impacted by changed US-China relations and problems with Covid-19 vaccines

Backchat with RTHK (Radio Television Hong Kong) on 16 February, 2021 (My contribution are imbedded in the top bar, starting from time counter 04:00, 18:16, 21:46, 24:06, and 25:40) 

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION 2020 Annual Report to Congress

With US bipartisan "China Scare" reaching a crescendo, it is no surprise that the above 2020 Annual Report to Congress tries to back Beijing into a corner.

I use the word "Beijing" advisedly. The whole thrust of the Report seems directed at the Communist Party of China (CPC) - that Beijing harbors the ambition to displace the United States as the global leader; that it is trying to change the Western-led world order to suit its own rhetoric; that it has been doing this for years through advances in economic, military, trade, technology, academic exchanges and international organizations; and that its perceived transgressions in human rights, democracy, trade, investments, as well as its alleged machinations in the United Nations must be thwarted across the board with all the United States has at its disposal. 

Without belittling a host of legitimate American concerns about China's Rise, and granted that China needs to do a lot better in many areas domestic and international, a reading of the Report's findings on China's rising economic, military and technological gravitas begs the following questions - 

(a) whether as the world's second largest economy, China has the right to advance itself in all dimensions;

(b) whether China wants or is able to usurp the global leadership of the United States; America maintains military presence in 70 countries worldwide, its military expenditure exceeds the sum of the next 10 countries combined, its military technology and overall combat readiness remain unparalleled; even if China is likely to surpass the United States in aggregate GDP by 2035, its GDP per capita remains miles behind; 

(c) whether the Communist Party has legitimacy if, according to July 2020 Report of the Ash Center for Democratic Governance and Innovation, Harvard Kennedy School, it has been earning extremely high level of people's support across many matrices; 

(d) whether China needs to copy the Western model of capitalism: its own model has bee remarkably successful in lifting 800 million people out of poverty and growing China to what it is today in so short a time; 

(e) whether some of China's assertiveness or authoritarianism is largely defensive e.g. against perceived foreign security threats (e.g.US military deployment in the first and second "island chains in the South China Sea), violent separatist movements in Xinjiang, and subversive separatism in Hong Kong; 

(f) in cajoling China into mending some of its ways, whether in addition to a one-trick pony act - that of confrontation and containment, it may be more productive in working with China on defined areas of common interests e.g. Climate Change and North Korea, as well as on needed reform of multilateral institutions like the World Trade Organization, and the setting of international technological and other standards; and 

(g) unlike the old Cold War, Beijing is not exporting Communism around the world while few countries want to or can copy its model. This begs the question whether the United States Can Negotiate With a China Driven More by Power Than Ideology , as Robert Manning of the Atlantic Council suggests in his article of 4 December, 2020 in Foreign Policy. 

The following think-pieces may also offer some fresh perspectives -

The New China Scare - Why America Shouldn’t Panic About Its Latest Challenger

With Biden, China gets four years to remake itself as a likeable, trusted power. It must seize the moment  

Why the world needs China

Keynote presentation by Cyrus Janssen, an American digital entrepreneur living in China, at Thompson River University, Canada, on 21 November, 2020. For those who think that (a) "There is no freedom in China" (b) "There is no safety in China" (3) "China is the biggest threat to democracy" (4) "China is trying to take over the world", the video clip may be an eye-opener. 

The above also resonates with my earlier piece on World Strategic Insights - The New China Scare - Why America Shouldn’t Panic About Its Latest Challenger

How Asia would fare with a Biden Presidency and RCEP?

A PowerPoint presentation on 24 November 2020 to a meeting of the Pioneers Group of EGN, Hong Kong, a business network. 

Download How Asia would fare with a Biden Presidency and RCEP

 

The New China Scare - Why America Shouldn’t Panic About Its Latest Challenger

At a time of paranoiac anti-China confrontations, it is instructive to re-visit Fareed Zakaria's insightful analysis in Foreign Affairs dated January/February, 2020. In sum, we need to ask whether China is really such an existential threat to the United States and the global liberal order. 

First, is China trying to take over the world as portrayed by Michael Pillsbury's The Hundred-Year Marathon: China's Secret Strategy to Replace America as the Global Superpower (New York, 2015)? 

Yes, China has become the world's second largest economy and is growing to become first within a decade or so. But regardless of anxieties about relative decline, the United States remains dominant in many matrices of world power, including global military presence, leadership in cutting-edge science and technology, alliance systems with leading advanced countries, and the mighty dollar.

While China may be able to challenge some of these matrices, at least regionally, there is no indication that China will be able to take over the world anytime soon.

Moreover, according to the latest survey of 6 October, 2020 of Washington D.C.-based PEW Research Center, Unfavorable Views of China Reach Historic Highs in Many Countries. At the end of the day, few countries want to embrace China's political system. Nor does China want to rival American's military presence in more than 70 countries around the world.

Second, consider China's perceived assertiveness in the South China Sea.

As these waters are vital sea lanes of communication for China's economic and strategic lifeblood (energy and trade), is it surprising that a growing China will want to guard against encirclement by US military assets in the so-called First and Second Island Chains and the Malacca choke point ? 

As China's economy remains heavily dependent on these waters, of necessity they will remain free and open for international shipping. In any case, China is unlikely to be able to impose a "Monroe Doctrine" on the United States as a long-established Pacific Power, unlike the relative power position of the United States in 1823 vis-a-vis its European rivals, both geographically and militarily. This reality seems unlikely to change substantially in the foreseeable future. At least, geography is immutable. 

Third, since accession to the World Trade Organization, China has been the biggest beneficiary of the liberal world order founded by the United States. Despite perceived malpractices, China remains a staunch supporter of free trade and a multilateral system underpinned by global institutions including the United Nations.

Instead of pushing for needed reforms of the existing liberal order, should the United States throw the baby out with the bathwater? Would unilateralism and rule of the jungle serve America's best interests when the whole world's supply and value chains are intricately intertwined, and power becomes more diffused? Even America's allies don't really want to be forced to choose sides sacrificing their own key economic interests. 

Fourth, regarding human rights and democracy, despite perceived transgressions, there is little evidence that the vast majority of the peoples in Xinjiang, Tibet, Hong Kong, let alone the rest of China, are demanding regime change.

As regards ethnic cultural heritage, it is instructive that the PRC has taken care, right from the start, to show the native languages of its four largest minority ethnic groups - Uyghur, Tibetan, Mongolian and Zhuang - on all of China's banknotes - the Renminbi.  

Not forgetting that the United States has its fair share of human rights infringements (systemic racism, and extrajudicial detention camp at Guantanamo Bay come to mind), compared to the West, the Chinese Communist Party has been enjoying increasing support by the people, according to a July 2020 Harvard Kenney School Ash Center survey Understanding CCP Resilience: Surveying Chinese Public Opinion Through Time. All seem to support the nation's trajectory towards the China Dream of historic renaissance as a Great Power, bringing better and more dignified lives for its people.

Fifth, with 56 different ethnic groups, and great divergence of development between provinces, Western democratic models based on multi-party adversarial electoral systems can only lead to fragmentation, if not disintegration. Unlike former Communists, China is not imposing its ideology on other countries, or gunning for regime change.

Sixth, as for alleged belligerence, since the end of World War II, the United States has waged wars 57 times in 75 years. By comparison, China has waged few wars to speak of in recent decades, always pleading for peaceful coexistence, despite differences. 

Last but certainly not least, the world is big enough for diversity of political models, including China's and those of Arabic kingdoms. While substantial corrections are in order and differences or conflicts with Western political values remain, there is no reason to cancel cooperation or partnership in defined areas, such as regional peace, denuclearization, anti-terrorism, and Climate Change.

Indeed, measured cooperation will at least serve to calm down nerves, build trust for negotiations, and avoid a self-fulfilling security dilemma spawning unintended consequences that may spiral out of control.   

To put US-China power competition in a structural context, John Mearsheimer's webinar on 15 October 2020 with the University of Chicago - The Clash of Great Powers: China’s Rise and the Challenge to U.S. Primacy is opportune. The above run-down may help to answer, some, of not all, of the vital issues he raised. 

Click here for an alternative view in Foreign Affairs (November/December, 2020) on how the United States should respond to China's perception of America's "hastening decline". And here to listen to an American YouTuber living in China why an American patriot can love both America and China. 

China Is Done Biding Its Time? But what is America's end-game?

The End of Beijing’s Foreign Policy Restraint? poses the above question in Foreign Policy on 15 July, 2020. The piece is penned by Kurt Campbell, Chair and CEO of The Asia Group and former Assistant Secretary of State for East Asia and Pacific Affairs, with Mira Rapp-Hooper, Senior Fellow for Asia Studies at the Council on Foreign Relations.

The tour d'horizon summarizes a dramatic about-face of China's foreign policy, in rhetoric and action, from Deng Xiaoping's earlier "hide-and-bide" admonition. China's assertiveness on all fronts is thought to be exploiting the Trump Administration's AWOL on global leadership. The worldwide chaos resulting from the Coronavirus pandemic has created opportunities for a much more powerful China to overreach, thinking that its time has come as a Great Power. 

The authors conclude with the following observation: 

"Fortunately for the next U.S. president, the contours of a better American approach to China have been evident for some time. The United States must reject the punitive unilateralism that has become the norm in recent years and that has produced no trade or national security gains whatsoever. It must rejigger its relationship with allies in Europe and Asia, who provide its only remaining chance at balancing China in the decades ahead. It must reinvest in international institutions, such as the UN, the G-7, and the WHO, which are indispensable for crisis management and which China is all too happy to lead in the United States’ absence. And it must restore its own domestic health and prosperity to remain a viable competitor on the global stage."

Aside from the chances of a second-term Trump presidency, there is a robust bipartisan consensus in the United States that China has become an existential threat (or an "evil empire") with a totally different ideology. This is perceived to be eroding the America-led liberal global order, including American interests in trade, technology, the South China Sea, and ideology. There is widespread support for a robust all-of-government push-back on all fronts, with unilateral sanctions and decoupling where necessary, to exert maximum pressure in the hope of behavioral, if not regime change. It's no wonder that amid the Coronavirus outbreak, American negative views of China have jumped significantly, according to an April 21st PEW survey. 

As for traditional US allies, while wanting to resist China's assertiveness, neither Europe nor Asia wishes to be forced to take sides. This also applies to the rest of the world, with a few exceptions. This is because China has become the largest trading partner of 124 countries, compared to US's 76. China is deeply imbedded in the global complex supply-and-value chains, strategic decoupling notwithstanding. The seven-year period needed for the UK to decouple from Huawei is a case in point. So is the fact that some 90% of India's pharmaceutical industry depends on inputs of China's ingredients.

Another example showing how integrated China remains is the proposed launch in a year or so of the world's largest trading bloc, the Regional Comprehensive Economic Partnership (RCEP), where China, as the world's second largest economy, is set to be a leading partner. This encompasses all ASEAN countries and each member's regional trading partners. With India, it would account for 50% of the world's population and 40% of world GDP. Without India, which has recently withdrawn from engagement, the percentages would be 30% in both cases. 

As for global institutions, the Trump administration has been flouting the UN, lording it over the G-7, and dishing the WHO. It would take time and concrete examples to rebuild America's leadership. 

At the end of the day, there is a growing risk of misreading China's real intentions. China would be foolish to displace the United States as global leader as it remains unable and unwilling to shoulder the responsibilities. Nor would the world be prepared to accept this in view of China's ideology.

However, the Chinese Communist Party has been enjoying increasing support by the people across the board, according to a July 2020 Harvard Kenney School Ash Center survey Understanding CCP Resilience: Surveying Chinese Public Opinion Through Time. It's only rightful for China to realize its China Dream of historic renaissance as a Great Power, bringing better and more dignified lives for its people, provided its trajectory is not seen to be at other countries' expense.

What is more, absent a pragmatic and constructive end-game, a plethora of paranoiac, no-holds-barred, get-tough actions on China could well end up with the very opposite of what these maximum-pressure tactics are meant to achieve, warns Jude Blanchette, Freeman Chair in China Studies at the Center for Strategic and International Studies in Washington, D.C., in his July 17 commentary The United States Has Gotten Tough on China. When Will It Get Strategic? 

A World Politics Review of May 2020, US-China Rivalry in the Trump Era offers a panoply of analyses of multiple responses to the perceived China challenge. As one of the Review's leading authors Howard French wily observes, "Nonetheless, beyond vague calls for the U.S. to get its own house in order and reinvigorate its partnerships, which few sensible people can argue with, it is far from obvious what else Americans should do about the across-the-board challenge that China presents." The absence of a clear-eyed endgame is conspicuous. 

A Rand Corporation 2020 study China’s Grand Strategy: Trends, Trajectories and Long-Term Competition examines how successful China would be in realizing its China Dream of becoming a fully-developed nation by 2049. It outlines four scenarios: "triumphant", "ascendant", "stagnant" and "imploding", concluding that the middle scenarios are much more likely.

While generally balanced, the study quotes statistics no later than 2015. It somewhat under-estimates China's explosive consumption growth (38.8% of GDP in 2019, contributing 60% to economic growth), overplaying the importance of exports (only 17.4% of GDP (5% for net-exports) in 2019). It doesn't seem to do justice to China's rapid advances in e-commerce, 5G, big data, quantum computing, internet-of-things (IoT), its recently-completed global BaiDou Navigation Satellite System, and Tianwen-1, China's first Mars Probe Mission. It also seems oblivious to the above-mentioned Harvard Kennedy School's study on CCP resilience. In any case, its overarching response is America's military.

A Brookings Institution April 2020 study Preparing the United States for the Superpower Marathon with China underscores the imperative of geo-economic competition, defined by 21st century game-changing technologies like 5G and quantum computing. Apparently borrowing the competitive terminology from Michael Pillsbury's much-admired 2016 tome The Hundred-Year Marathon: China's Secret Strategy to Replace America as the Global Superpower , it argues that " If we are to prevail, we must  compete rather than contain China." It concludes that "The outcome of this geo-economic competition is by no means certain. .... If the U.S. fails to prepare for this superpower marathon, we will resign ourselves to becoming a second-rate power while the world looks up to a new global leader with strikingly different values and views." This gives some credence to the possibility of the China "triumphant" scenario in the above-mentioned Rand Corporation study.

With American hawks in the ascendant, a new US-China Cold War seems inevitable. Nevertheless, de-risking  it would be in everyone's interests. What is more, President Trump will never win his New Cold War with China , according to columnist Robin Wright of The New Yorker on 29 July, 2020, suggesting that principled engagement on areas of concern coupled with partnership on global issues like Climate Change is likely to be more productive.

Thanks to Covid-19, are we facing a turning point in history?

No, says Richard Haass, President of US Council on Foreign Relations. The Pandemic Will Accelerate History Rather Than Reshape It , he writes in Foreign Policy on 7 April, 2020, reminding us that "not every crisis is a turning point", harking back to his earlier tome A World in Disarray (Penguin Press, New York, 2017).

Outlined in The Global Analyst of June 2020 are Ten Reasons Why the Coronavirus Crisis Will Spawn a Brave New World of Discord.

An epochal rivalry for global dominance between the US and China will intensify whoever is in the White House. While the US retreats from obligations as global leader, China remains ill-fitted and unwilling to usurp America's role.

In face of mounting headwinds, China is emerging from Covid-19 with a more sober view of its geo-economic and geopolitical trajectory. Nevertheless, as China is the first to recover from the pandemic while the US tops the world with total Covid-19 cases approaching 3 million, China may well be able to overtake the US economy sooner than expected, before 2030. Click here 

What is more, obscured by demonization, the legitimacy of China's development model is gaining global ascendancy. This is supported by Washington D.C.-based research institutions like the 2020 Edelman Trust Barometer (page 7) and PEW Center people's satisfaction ratings . These consistently show that China's people trust their government much more compared with Western democracies.

With Covid-19, China's draconian city lockdown measures are now copied by many countries, Western democracies included. With long-established systemic racism in the United States highlighted by the George Floyd tragedy, the universality of capitalistic democracy is beginning to be questioned. Huntington's Clash of Civilizations is coming home to roost. 

Nevertheless, nationalism in on the rise across the globe. With a pervasive "China Scare", national security in personal protective equipment (PPE) and high-tech services such as 5G is likely to drive a global wave of decoupling from China, causing trade flow disruptions.

However, as China has already been intricately embedded in the global multi-faceted supply and value chain, meaningful decoupling is easier said than done. Challenges as described in Strategic US-China decoupling in the tech sector (Hinrich Foundation) and China dominates medical supplies, in this outbreak and the next (New York Times) are instructive. 

Meanwhile, as contagion risks remain, more and more business interactions are being conducted using Zoom or equivalents. With the advent of 5G, big data, and the Internet of Things, how businesses are transacted and how people live and work are migrating to a new normal. Robots and virtual experiences are becoming commonplace. A lot more will work from home. The quantity and features of offices and housing are likely to be transformed. There will be a paradigm shift in urban and global connectivity.

As Henry Kissinger opined in the Walls Street Journal on 3 April, 2020, The Coronavirus Pandemic Will Forever Alter the World Order.

The world will never be the same!  

New Cold War: De-risking US-China conflict

A June 2020 Hinrich Foundation report authored by research fellow Dr. Alan Dupont offers seven insightful recommendations (Chapter 4):

(1) Protect democratic values and interests;
(2) Maintain a military edge;
(3) Manage decoupling to minimize disruptions; 
(4) Reform the WTO; 
(5) Strengthen international cooperation, middle-power diplomacy and "back channels"
(6) Develop new cyber and tech rules, protocols and agreements 
(7) Integrate economic and security policy.

These recommendations have a great deal to commend themselves. They may, however, benefit from the following additional perspectives -

(a) Does China really want to dominate the world, with all the obligations, costs and pushback implied? Would achievement of its China Dream be better realized by upholding multilateralism and a global "community of common destiny"? If so, instead of baiting an awoken lion by stroking fears of a global "China Scare", would there be room to encourage greater mutual understanding and learning between the West and China as regards governance and norms, without necessarily negating one or the other? 

(b) As for decoupling, it's true that the idea has gained much further traction thanks to the Coronavirus pandemic. So essentials like certain medical supplies and equipment plus products and components directly affecting national security are likely to see changes in their supply and value chains. But totally "cutting the Gordian knot" seems impossible, as Dr. Dupont quotes from John Lee of the Lowry Institute (page 28). This will become even more apparent with the coming Regional Comprehensive Economic Partnership (RCEP), the world's largest trading bloc, of which China will be a key Member. China has also indicated it may well join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Click here At many more countries already have China as the largest trading partner by far, the vast majority of nations do not want to be forced to choose between the United States and China. 

(c) As the world's Superpower, the United States already possesses overarching global military dominance on multiple fronts. It has 11 nuclear-powered aircraft carrier battle groups compared with China's nascent and miniscule version. It has some 800 military bases in 70 countries and territories, compared with China's only spot in Djibouti. It's nuclear stockpile is some tenfold over China's. Would stroking fears about US global military edge risk a "security spiral" with China and Russia, feeding into the American "military-industrial-complex" vested interests at the expense of much-needed improvements of homeland infrastructure, healthcare and education? 

(d) A looming new Cold War with the United States and the global  Coronavirus backlash have taught China a huge lesson. Its coming Five Year Plan (2021-2025) is likely to focus on improving its own people's livelihood and environment. Click here  Would cooperation with China on global issues of common interests such as Climate Change, denuclearization, anti-terrorism, water scarcity, poverty relief, UN Sustainable Development Goals, and reform of China's Belt and Road Initiative, be more productive in de-risking US-China conflict?         

Strategic US-China decoupling in the tech sector

This informative and insightful Hinrich Foundation report published on 4 June 2020 dissects the intricate web of mutual dependencies and rivalries in cutting-edge technologies between the two Great Powers, how conflicts may intensify and how multinationals could navigate through choppy waters. 

The following exerts give a glimpse of what the report is about -

"The China-US geopolitical competition has reached a tipping point and morphed into a new “cold war”, even as extensive trade and commercial ties continue on uncertain terms. In this report we look at why US-China decoupling in the tech sector is inevitable and implications for multinational companies."

"This is techno-nationalism on an unprecedented scale. Thus, as policymakers and business leaders outside of China contemplate this new reality, a new set of outcomes will emerge:

• Certain strategic value chains will decouple, restructure and diversify out of China.
• The US, EU and other state-actors will focus increasingly on countering Beijing’s economic nationalism with techno-nationalism initiatives of their own.
• Re-shoring and ring-fencing of some critical manufacturing will be unavoidable.
• New public-private partnerships, alliances and programs will need to emerge to compete with Chinese state and non-state actors.
• Multinationals will need to adjust to a world of increasingly fragmented and localized value chains.
• Businesses will have to adopt “in-China-for-China” business models if they wish to access the Chinese market."

Of particular note are the following titbits -

• Huawei claims 85,000 international tech patents. It is the world's biggest ICT patent holders in Europe, the top 50 patent holder in the United States, and the first in the world for patents related to 5G; 
• America's top tech firms are highly dependent on revenue from the China market: Qualcomm - 65%; Broadcom, Micron, and Marvell Technologies - more than 50% and the rest - 20-40%. 
• "Today, most innovations coming out of Silicon Valley cannot be manufactured unless they are made in China" (pages 10-11) 

Download Hinrich Foundation-Strategic Technology Decoupling from China-Alex-Capri-08 June2020

 

The Struggle for Power: U.S.-China Relations in the 21st Century

Leading up to the more robust, realist, and all-of-government pushback against China in the latest White House report United States Strategic Approach to the People’s Republic of China is the above 14-chapter book, The Struggle for Power: U.S.-China Relations in the 21st Century

The relatively concise, 14-chapter book was compiled earlier in 2019 by a team of distinguished American experts and scholars including Joseph Nye, Condoleezza Rice, Michael Pillsbury, Graham Allison, Elizabeth Economy, and David Shambaugh. The tome is a good read to understand the intensifying dynamics in US-China rivalry for economic, military, technological, and ideological dominance.