25 July 2020 (Chania, Crete) – Over the last two days I watched several of the speeches of U.S. Secretary of State Mike Pompeo who has called on “free nations” to triumph over the threat of what he said was a “new tyranny” from China, in a provocative speech likely to worsen fraught U.S.-China relations. I’m in the middle of a clutch of books on China so his speech was rather timely. And even though I hate to agree with anything coming out of this Administration, I think he has it right.
What Eric Hobsbawm cynically called the “short 20th century” was supposed to have ended in 1989 with the United States winning the Cold War. Yet today America faces a powerful and assertive China, a one-party state with an official ideology it calls 21st-century Marxism, which is busy building a powerful military on the back of an economy set to become the world’s biggest in the foreseeable future. This development has shaken the assumptions that have underpinned economic and national security decision-making in Washington for the last thirty years.
The Covid-19 crisis has pushed into the background the smouldering trade war between the U.S. and China, but it has not prevented their economic rivalry morphing into a dramatic grand strategic stand-off. The financial hub of Hong Kong has become a political battleground; the U.S. has launched an all-out campaign against Huawei, China’s leading tech firm; and both sides have announced sanctions against senior politicians. What’s more, the conflict is spreading to America’s allies, including Australia, Canada, France and the UK.
It is hard to escape the impression that we have reached a point of historic rupture, and that is the feeling conveyed by this recent crop of books on Sino-American tensions. Not only do they offer a chronicle of mounting tension but, though some of them were completed just a few months ago, they seem to speak from a world we have lost. The questions they ask are still urgent, but in our current situation they are being reframed with each passing day.
That crop is as follows:
• Schism: China, America and the Fracturing of the Global Trading System by Paul Blustein
• Superpower Showdown: How the Battle between Trump and Xi Threatens a New Cold War by Bob Davis and Lingling Wei
• Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace by Matthew C. Klein and Michael Pettis
• The New Class War: Saving Democracy from the Metropolitan Elite by Michael Lind
I’ve only finished two of them – Blustein and Lind – and I am half way through Klein/Pettis. But my brain is dripping thoughts so herein a few reflections. In fact, just three:
One
This first point does not relate to the books but is just a general observation on the past week.
A hostile week of US-China relations was punctuated by forced consulate closures in Houston and Chengdu, but the dueling superpowers’ cold conflict has been heating up on the digital landscape for months, if not years. China began censoring online speech and interfering with access almost as soon as the internet took off. By 2014, the country was hosting an annual internet conference to promote – the position that a state’s sovereignty extends beyond its physical territory into cyberspace, and that countries, in turn, shouldn’t interfere with how others regulate the internet.
Russia and Iran have also pushed forward with “domestic” internets, but these moves had been seen as largely the purview of authoritarian regimes – until last month, when India banned 59 Chinese apps, including TikTok, citing privacy and national security concerns. The Trump administration has signaled that the US may also block TikTok—it would be the country’s first ban of a foreign online platform – in “weeks not months.”
In a recent piece in Axiom, Samm Sacks (a cybersecurity and China expert at the Washington, DC-based New America think tank) argues this would have an enormous impact: “If the US does it, it opens the floodgate for advanced liberal democracies to begin doing this, too”. While some China tech watchers argue that tougher measures by the U.S. are necessary to address an imbalanced cyberspace relationship with China, experts say there are better ways to deal with an inevitably recurring concern in the internet economy.
One alternative is the European model. The 2018 privacy rules known as GDPR fragmented the internet in their own way, with the aim of protecting user data from the prying eyes of US tech giants and government surveillance. But playing whack-a-mole with companies that are deemed to have ‘good’ or ‘bad’ data, privacy or foreign data reporting conduct is not very productive in the absence of setting clearer data standards and issuing regulations that govern data usage by companies both domestic and foreign. Removing TikTok is a band-aid on a much larger underlying problem.
Two
The crude Trumpian take, which is perhaps also the kindest, is that the U.S. negotiators of the 1990s and early 2000s were chumps, suckered by the Chinese. The more sophisticated version is that Bill Clinton’s team were too committed to the kind of modernization theory Frances Fukuyama spun in his “end of history” essay in 1989. They believed the liberal story that as China’s economy matured it would inevitably develop a need for the rule of law and representative democracy. If the Communist regime refused this logic and clung to its old ways, the laws of social science would condemn it to economic stagnation. Either way America had nothing to fear.
In his cool-headed history, Paul Blustein takes issue with both these interpretations. So too does Lind. With hindsight it is clear that the policymakers of the 1990s and early 2000s did get some things wrong. They didn’t anticipate Xi’s restorationist, personality-driven model of CCP leadership. But neither did plenty of Xi’s rivals in Beijing. Xi is a transformative leader of a conservative kind. What cannot reasonably be said is that the Clinton or Bush administrations were naive about the ease of convergence with China. The terms of its accession to the WTO were demanding; thousands of Chinese laws had to be brought into compliance. As Blustein recounts, Zhu Rongji, the Chinese premier who negotiated the deal, faced widespread denunciation at home for selling out to America. The terms of China’s WTO accession were, one senior Communist Party official blurted out, no better than the infamous ‘21 points’ which imperial Japan had tried to foist on the Chinese republic in 1915.
But the key thing, as both authors point out, is that the boom in China’s exports in the new century wasn’t the result of a sweetheart deal, but of the extraordinary mobilization of labor and capital that began in the 1990s. And in that process Western capital played a key role. The question asked by the American left, as well as more hard-nosed right-wingers, is not whether the U.S. negotiators were naive or incompetent, but whose interests they were representing. Were they negotiating on behalf of the average American, or American business? U.S. economic policymakers were committed to advancing the interests of American business more or less as business articulated those interests to them. U.S. manufacturers such as Boeing, GE and Pepsi, banks like Goldman Sachs, Morgan Stanley and JP Morgan, and the insurance giant AIG all wanted the new market, and they wanted the cheap labor. From 1994, when the Clinton administration abandoned its hard line on the legacies of Tiananmen, the thrust of policy was to open up new markets and opportunities for investment, even in the face of strong objections from American trade unions. To get approval for the deal in Congress American business mounted the most expensive lobbying effort ever. So eager were American firms to be seen as the chief advocate for China, they had to form a committee to make sure they didn’t fall over each other.
The sound and fury of trade war has been one of the few consistent motifs of Trump’s administration. But he is torn schizophrenically between his desire to pose as the champion of blue-collar workers and his obsessive interest in the Dow Jones index, which doesn’t react well to his economic nationalism. While Trumpian rhetoric emphasises the dignity of labor, even economists inclined to favor protectionism have struggled to find any substantial group of American workers that has benefited from Trump’s tariffs. No major business coalition has backed his trade policy.
And I know that somehow the resurgence of Putin’s Russia factors into all of this logic but I need to think it through. Although its GDP isn’t much larger than Spain’s, Russia has managed to leverage its military assets to upend the geopolitical balance in Western Asia and the Middle East. The scale of China’s growth, combined with the determination of its political leadership, has undone the notional separation of economics and security policy entirely, and that also addresses another piece I am writing on structural corruption and how China has become a master at that tool/weapon. So I see that the sheer weight of state power conferred on Beijing by China’s spectacular economic growth is freaking out America’s hawks: they see every dollar added to China’s GDP, every piece of technology that China acquires, shifting the geopolitical balance in the wrong direction.
Three
The mistake in thinking that we are in a “new Cold War” is in thinking of it as new. In putting a full stop after 1989 we prematurely declared a Western victory. From Beijing’s point of view, there was no end of history, but a continuity – not unbroken, needless to say, and requiring constant reinterpretation, as any live political tradition does, but a continuity nevertheless.
American hawks have only a crude understanding of China’s ideology, but I think they “get it”. They have a serious sense of the CCP’s sense of mission. We should not comfort ourselves with the thought that because nationalism is the main mode of Chinese politics today, Xi’s administration is nothing more than a nationalist regime. China under the control of the CCP is, indeed, involved in a gigantic and novel social and political experiment enrolling one-sixth of humanity, a historic project that dwarfs that of democratic capitalism in the North Atlantic.