CHINAwatch

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 focused 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. 

 

United States Strategic Approach to the People’s Republic of China

It's now commonly thought that the "Thucydides Trap" confronting rivalling Great Powers has now well and truly sprung.  A "New Cold War" is happening in all but name between the United States as world hegemon and China its existential challenger. To understand America's perspective, the above White House report released on 20 May, 2020 is as timely as it is instructive. 

The Report outlines a robust, realist, results-based pushback on all fronts against China as the greatest threat to American national interests including the free, open, and rule-based world order led by the United States.

Its apparently-benign Conclusion reads as follows -

"The Administration’s approach to the PRC reflects a fundamental reevaluation of how the United States understands and responds to the leaders of the world’s most populous country and second largest national economy. The United States recognizes the long-term strategic competition between our two systems. Through a whole-of-government approach and guided by a return to principled realism, as articulated by the NSS, the United States Government will continue to protect American interests and advance American influence. At the same time, we remain open to constructive, results-oriented engagement and cooperation from China where our interests align. We continue to engage with PRC leaders in a respectful yet clear-eyed manner, challenging Beijing to uphold its commitments."

Concrete pushback against China across the board is already in full swing. This includes a massive tariff war, tightening chokehold on Huawei (the lodestar of China's 5-G advance), restricted academic access to US technological research, measures to decouple from China's supply chains, increase in "Freedom of Navigation Operations" in the South China Sea, stepped-up development of hypersonic weaponry, ratcheted-up criticisms of China's perceived human rights violations (Xinjiang), questioning China's Belt and Road Initiative, its green energy credentials, its rhetoric in building a global "Community of Common Destiny", and most recently, refusing to recognize Hong Kong's "One Country Two Systems"

The Report denies any sinister motive of regime change or China containment - 

"Our approach is not premised on determining a particular end state for China. Rather, our goal is to protect United States vital national interests, as articulated in the four pillars of the 2017 National Security Strategy of the United States of America (NSS). We aim to: (1) protect the American people, homeland, and way of life; (2) promote American prosperity; (3) preserve peace through strength; and (4) advance American influence."

"Even as we compete with the PRC, we welcome cooperation where our interests align. Competition need not lead to confrontation or conflict. The United States has a deep and abiding respect for the Chinese people and enjoys longstanding ties to the country. We do not seek to contain China’s development, nor do we wish to disengage from the Chinese people. The United States expects to engage in fair competition with the PRC, whereby both of our nations, businesses, and individuals can enjoy security and prosperity."

To Beijing, however, the Report's rhetoric masks a blatant attempt to interfere with and discredit China's chosen development path. Warts and all, China's own model has proved remarkably successful for the Chinese nation and its people. Fear of China's increasing economic clout and influence sustains the rhetoric of a global "China Scare". It ignores China's lack of willingness and capacity to take over America's global leadership. It is tone-deaf to China's repeated warnings that its model doesn't suit every nation. It flips China's national defensive strategy to an offensive military posture.  It underplays China's leading contribution to solar, wind and hydroelectric energies under the Paris Agreement (which the United States has torn up). As for the Belt and Road Initiative, it is meeting a glaring global deficit in infrastructural connectivity. It is being embraced by a host of countries including Western nations such as Italy and Greece, while China has acknowledged important room for improvement such as debt-sustainability, transparency and corporate governance.

Beijing is now widely condemned for trying to enact for Hong Kong's national security bypassing Hong Kong's legislature. This ignores a gaping national security loophole in Hong Kong's mini-constitution (Basic Law). This loophole has been created by decades of fierce opposition to enacting Hong Kong's national security safeguards (Article 23) under the Basic Law. The same anti-Beijing legislators now stand on the high horse that such law should be enacted locally.

The absence of sufficient national security safeguards became all too evident in Hong Kong's recent violent protests. Symbols of Beijing's sovereignty have been ransacked, police stations fire-bombed, and ordinary citizens with opposite views publicly lynched. Flags, slogans, and demands calling for Hong Kong's "independence" became a common sight. Prominent activists were lauded and given high-level meetings with very senior officials of hostile foreign powers. A generation of Hong Kong people have been brainwashed into total loss of a sense of nationhood. Many have been turned into radical subversives, aided and abetted behind the scenes by opportunist hostile foreign forces. 

In the eyes of many Chinese people, China's many failings notwithstanding, America's double-standards about democracy and human rights are glaring. Apart from friendly relations with Arabian autocracies, the White House's attitude towards current "George Floyd" protests against deep-seated American racism and social inequalities stands in ironic contrast to America's support and encouragement given to Hong Kong's remarkably similar fiery unrests. 

While the Report rightly flags up legitimate alarm and fears of a rising "authoritarian" China, it begs the question if China's real intentions are misread.  Taken to conclusions, such misreading may turn out to be the fuse igniting a catastrophic powder keg that may engulf the whole world. 

The Decline of the West: What is it and Why might it matter?

Published on 11 April 2020 by the Asia Global Institute, the above Paper by Mark Beeson, Professor of International Politics at the University of Western Australia, traces the Rise of the West, including its ideas and values and the creation of a liberal, albeit hegemonic world order underpinned by US dominance and the Bretton Woods Institutions of the World Bank, the International Monetary Fund and the World Trade Organization. This liberal world order has been embraced by and beneficial to most nations, including China. 

The Paper also synthesizes the Rise of the Rest, especially an increasingly powerful and assertive China which seems to question and undermine American hegemony. At the same time, rampant America First exceptionalism is scattering to the winds much of the ideas and values that uphold the global commons.  This poses the question whether the world will converge into a one-size-fits-all, Fujiyama's "End of History" model, and if not, what would become of the world order. 

While the West largely understands what the world's current hegemonic superpower wants, not many outside China really understand what China wants. While "international collective-action problems" like terrorism and climate change may offer some grounds for cooperation between rival great powers, misreading and misjudgement, especially after the occurrence of the Coronavirus pandemic, are likely to translate into fear and a security spiral that may spin out of control.

If sad chapters of history are not to repeat themselves, it is timely and instructive to deconstruct The China Mirage.  

"The China Mirage" - Timely revisit of America's tragic misreading of China

Author James Bradley's 2015 eloquent introduction to his seminal book The China Mirage is a timely reminder of the critical need for Americans to really understand what China, a fifth of humanity, is all about as a nation, and what its people and leaders want, if only to avoid misjudging China again to the detriment of all, America included. 

As a follow-up, award-winning journalist John Pilger's documentary The Coming War on China is a dark revelation of the dangerous paranoia and inhumanity into which the world's most powerful democracy can sink with a twisted narrative of China inflamed by American pride and prejudice. 

New Money: The Greatest Wealth Creation Event in History (2019) - Full Documentary

While many would disregard it as one-sided sales pitch overtaken by the Coronavirus crisis, Stanberry Research's 30 July, 2019 documentary on exciting opportunities in China remains neverthless an educative peep into what China may become in coming decades. 

China in a New Era of Global Disruptions (including Covid-19 pandemic)

PowerPoint presentation to a Joint Meeting of the EGN Founding Chairmen’ Group and the CEO Pioneers Group on 20 March, 2020. 

Download China in a New Era of Global Disruptions

For additional perspective on China's development model, click here.

China has created tech ‘new world order’ in Big data and AI

The Future Today Institute, a US think tank, released its 2020 Tech Trend Report on 16 March, 2020, highlighting China's "prolific dominance" in multiple areas, despite unprecedented headwinds. In particular, it calls attention to China's creation of a "new world order" in cutting-edge technologies like Big Data and AI.

Download 9-Key-Takeaways

Download 2020-Trend-Highlights

Download FTI_Trends_2020 (Full Report)