Will There Be a Backlash Against China?

Those who are concerned by the level of political rhetoric going on amid a global pandemic deserve credit for voicing their disillusion and hopes for all governments to work together amid the health crisis. The impact of the new coronavirus (COVID-19) has already had a devastating impact on the global economy, with entire nations and industries being shutdown. Such a pandemic calls for global coordination, and the U.S. and China, which respectively have figured prominently both currently and at the initial outbreak of the virus in terms of number of infections and deaths, are being looked to for leadership and cooperation.

In a recent article, strategic consulting firm, Basilinna addresses an important dilemma regarding effort by some to force China to take responsibility for the outbreak via reparations. Such an attempt will be problematic as reparations have a mixed track record of accurately assigning guilt, resolving problems and ensuring that the peace be kept. Moreover, if anything the past few years has shown us, international arbitration – particularly where money is concerned, such as with trade disputes and at the World Trade Organization – have seldom been simultaneously accepted by opposing sides.

However, depicting this effort to assign blame as being simply a backlash against "China" misses some major points and creates a dangerous perception.  

Misperceptions on Where the Tensions Exist, and What is “China”

Perhaps the biggest misperception made – and one committed often by organizations that rely on China for part or all of their business – is that the animosity in the US government is simply aimed at pitting the U.S. against China. Certainly, there are some hawks in Washington who may see it that way, but there is an underlying problem that goes beyond “China,” namely the problems of a one-party, authoritarian state that allows no dissent at home and increasingly has little tolerance for criticism from abroad. No culture should be considered superior to another, and whether the battle between two nations is one that opposes fascism, dictatorship, totalitarian communism, or terrorism, trying to portray the disagreements the U.S. has with China as being a war "China," its people or its culture is a dangerous assumption to make. I will explain a bit later why such a distinction has to be made, particularly in the case of China.

The tensions between the U.S. and China have turned into a “Cold War” because the current regime in China under Xi Jinping has sought to return the Chinese governmental system back to a more communist and authoritarian one, with even greater centralized control as its focus. Xi and the party have expressed their reservations on the role that private enterprises play in China’s economy, and the party’s renewed reliance on state-owned enterprises as well as harsher stance on dissent are not the kinds of policies the world witnessed during much of the Deng, Jiang or Hu eras. More critically, the ending of life-time rule is what arguably encouraged the world to intensify its cooperation with China and pour in escalating levels of foreign direct investment (FDI), believing that the Chinese Communist Party (CCP) was liberalizing.

However, Xi in 2018 persuaded the party to grant him power for life. With that fateful policy change, it became difficult for any liberal democratic government to characterize its relationship with the China government as being “business as usual.” Few political scientists are willing to seriously support the idea that such lifetime rule is providing China with all upsides and no serious downsides. Instead, a return to lifetime leadership by one leader has likely put the party in an even more precarious position, as Pei Minxin has discussed. Instead, it has strengthened the resolve of the peoples in both Taiwan and Hong Kong to favor greater democracy rather than greater one-party control by a single leader, with their vocal opposition to Beijing’s “one country, two systems” now at levels seldom seen in the past 23 years since Beijing began to govern China’s relationship with Hong Kong.

The problem, therefore, is not "China." Indeed, the people and institutions which have spent their careers learning about China, its culture and business practices, its language, and building connections - even important ones with CCP officials - did so for decades because they believed China was liberalizing. Myself included. I have just been fortunate enough to have remained focused on “China” while working and living in the “other China;” the free, democratic version known as the Republic of China, or Taiwan. Since Beijing argues Taiwan is China, I have always been able to argue I am have been in some ways residing in China most of the past 32 years, although the past 23 have been here in Taiwan.

It is also here where I make that distinction between “China” as opposed to “Beijing” - meaning the one-party, authoritarian government - or the “Chinese Communist Party.” Failing to make a distinction between the former and the latter two can result in faulty arguments being made. Those who see all three as interchangeable will often policies that support liberal democratic governments actually conflict with those of the CCP and thus are aimed at hurting the people of China. However, unlike what the party may argue through the frequent Chinese Foreign Ministry statements these days, one can be supportive of the Chinese people and even Chinese culture and yet not agree with policies by the Chinese government or the CCP.

Understanding how such a distinction can be made may well be easier by those living in Taiwan. However, those in mainland China - including foreigners working, studying or living there - the distinction may not always be so visible, as information and viewpoints expressed are always at the mercy of the CCP’s efforts to control the media and thus the narrative. This willingness to accept the party's views on the inseparability of the party from the people and China has also increasingly been the case since the 1990s. By the middle of that decade, the Chinese government began more earnestly important efforts to liberalize the economy, following several years of near-pariah status after the 1989 Tienanmen Square Massacre. As one former U.S. government official mentioned during a lecture in Taipei not long ago, for the past two decades, Asia – and I would add, much of the world – has looked to the U.S. for security and China for economic growth. As the threats of terrorism began to subside, a global financial crisis began to impact many nations and a period of globalization-fueled growth followed, China has grabbed the spotlight to a world in search of long-term growth, claims of economic stability and higher returns. 

Such willingness to only recognize at times the bright future Beijing promotes China as having while downplaying some of the realities, including the crowding out of the private sector, the greater reliance on state-owned enterprises and the lack of transparency in terms of corporate shareholding structures and accounting systems, as well as threats against intellectual property protection and other security concerns, may be even putting international investors at risk. Such concerns have prompted MSCI to have to deny politics played a role in its decision to raise the weight of Chinese equities in its indices from 1 percent at the end of 2018 to 3.3 percent by 2019-end.

Two Sides to Every Coin: One China or Two?

China's long, over-5,000 years of history raises the importance of understanding history as it plays an important role in allowing such distinctions on what exactly is China to be made. This is particularly true for its more recent history, as the CCP that took control of China in 1949 after defeating the Chinese Nationalist Party (“Kuomintang” or “KMT”), have allowed neither no free elections nor, for the most part, dissent or challenges to power. This reality at times has raised questions about the amount of political legitimacy the CCP can claim as government legitimacy is the right and acceptance of an authority, and certainly the existence of Taiwan raises such questions. This is perhaps one of the core reasons that the Beijing views Taiwan’s unwillingness to reunify as so dangerous to the CCP’s power. Until that “rebellion” is destroyed, the CCP’s ability to say it legitimately rules over all of China will face challenges.

At the same time, while the KMT from its vantage point in Taipei may argue that it is the legitimate ruler of China – or at least one of the rulers – it would be incorrect to suggest that the CCP cannot be considered a legitimate government of China. How close the party and the people have been over the years, though, is up for argument. Several times throughout the CCP’s rule, it is likely the gap between the party and the people has been wide; the Anti-Rightest Campaign, the Great Leap Forward, the Great Proletarian Cultural Revolution and the Tienanmen Square Massacre were hardly times when the party could claim its policies or rule were supportive by the population. Moreover, it is unlikely that the CCP would have remained in power after any of those tragedies in which tens of millions of Chinese died, had another political party existed in China and a free and open election been held.

Moreover, while the CCP may want the world to believe the thoughts of Xi Jinping and the policies of the party are being patriotically followed by the 1.4 billion people in China, it would of course be hard to assume that such conformity actually exists. We hear such claims nearly every time China's Foreign Ministry Spokesman Geng Shuang attempts to justify the party's policies, such as when he argued each and every person in China agreed with the country's policy on Hong Kong during the height of the protests there in 2019.

Nonetheless, and despite some China experts who may argue no one really believes such rhetoric in China and thus it does not pose a problem, China’s increasing economic power and corresponding political influence globally indicates playing along with such monolithic claims can produce long-term threats to the ability of other nations to challenge Chinese government policy. Beijing has been increasingly active in mobilizing armies of supporters, Netizens and Internet trolls to depict its policies of enjoying mass support, a continuation of the party's mass campaigns it has initiated over the years, particularly during times of crisis.

Reading the Tea Leaves and Understanding Intentions are a Problem

Besides the problem of figuring out what China is and where to make the distinction between the party and the people, related problems exist. Those outside of China and even within China are not always certain how policies are being created and by whom, and what the purposes of those policies are. The party may have many characteristics, but transparency is certainly not one of them. Indeed, party decision making is not confined simply to its 90 million members – which comprises only about 6.5 percent of the total population – but often is conducted by a few leaders at the very top. Under Xi, this concentration of power has accelerated. 

And yet, the author of the Basilinna indicates, "In good faith, no doubt, China has offered its experience in fighting the virus along with the necessary equipment to some of those countries hardest hit by the virus." The author does, however, also acknowledge that there is likely an intention of "soft diplomacy" as well by the party.

That would still be fairly large leap of faith on the author's part to assume these efforts are primarily out of good faith. There are likely many reasons Beijing is helping other nations during this coronavirus (COVID-19) pandemic, including its efforts being part of a propaganda campaign to portray the CCP in a better light after the party's reputation took some hits on how it handled the virus. As an authoritarian nation that has to be out in front of criticism, Beijing needs to control the narrative. Otherwise, the open discussion of its mistakes within the society creates possible calls or arguments for the party's removal from power. In democratic systems, the desire to put a spin on a story also exists; however, power is a two-way street: the path out of power is the path that can lead the defeated back into it. In fact, allowing for dissent to exist can be used by parties voted out of power to challenge those who now hold the reins of power. This greatly reduces the need to stifle dissent. In Beijing, however, there is no path back into power for the party once overthrown. At least, Beijing fears there is not.

Again, Taiwan can offer an alternative not just to the people of China but the CCP as well. Having lived through the first time power changed hands from the KMT to the Democratic Progressive Party (DPP) - when DPP candidate Chen Shui-bian won Taiwan's presidential election in 2000 - the upset provided at least one good example of what occurs when an authoritarian government eventually gives up power. Then, speculation was rife that the KMT would likely collapse for good, as many argued it had been in power so long and thus would be unable to make the adjustment from leader to led. However, by the end of Chen's second four-year term, in 2008, the KMT had been re-energized under Taipei City Mayor Ma Ying-jeou. The criticism that the KMT was out of touch with the times in 2000 were now able to used against the DPP by 2008. China had continued to open up, business opportunities were plentiful there, and yet the DPP continued to take a hard-line approach towards thawing relations with China. The path out of the Presidential Palace was the road back for the KMT.

Meanwhile, it should be pointed out also that this “good faith” mentioned earlier has not extended to China’s attitude toward Taiwan. Beijing has continued to intimidate Taiwan with People’s Liberation Army (PLA) exercises by both air and sea – right at the height of the suffering in China. The CCP has also shown little good faith as it has continued to refuse letting up on its pressure on the World Health Organization (WHO) to ignore Taiwan. Clearly, claims by CCP officials that it has solely focused its efforts on defeating the coronavirus are untrue. The party’s decision to keep the pressure on Taiwan indicates it can walk and chew gum at the same time, in the forms of fighting the virus and keeping pressure on Taiwan, as core party political interests are at stake.

Still, Beijing will face hardships to its desire to paint a picture that its efforts are producing long-term, lasting results. As Basilinna suggests, Beijing’s hopes of creating a “Health Belt and Road” face obstacles. These obstacles will not only impact this new initiative; the pandemic will undoubtedly make Xi's hopes for the success of his “Belt and Road Initiative" (BRI) more problematic, both financially and practically. China’s economy is expected to face a major slowdown in 2020, with the party being concerned before the virus's outbreak that it was already on a slowing path. How the government continues to fund the trillions needed for the BRI and take care of the local economy can be expected to further create tensions between the party and the people as Beijing must decide whether to spend money at home or use it to try to buy influence abroad.

Moreover, while some “unnamed” Chinese officials as Basilinna mentions may be confiding that Beijing may be considering relief for countries that are indebted financially to China, it is uncertain how such debt relief will be carried out in any meaningful way. From the plan's inception, there have been many practical commercial and diplomatic hopes embedded in the BRI. When reports first started to come out about a "New Silk Road" being created, it made sense. China's economy was growing and it hoped the goods, services and financial flows could be expanded and extended, to the benefit of both China and those nations along the route.

However, debt was also served two other purposes: first, it was to become one kind of pressure the CCP could rely upon to to project its power. Second, debt could also be employed to help China gain strategic assets around the world by nations who had used Chinese loans to fund needed infrastructure but came up short repayment time. Relieving such debt not only reduces the effectiveness of those aims but also increases pressure on Beijing’s financial ability to carry the entire plan out. Similar to other governments’ debt forgiveness, the question then becomes how to decide who will be forgiven in the future, and how by much. Here, centralized authority does not necessarily create easier decision-making. Beijing is already having problems making decisions at home in terms of dealing with local enterprises that face economic problems via heavy debt burdens. So far, it is not clear which entities Beijing will rescue and which will have to fend for themselves. Such decision-making will be even more difficult in an international context, where foreign governments will react aggressively attempts by China to either grab assets or foreclose on assets in which it has a stake.

It is correct to assume that the global backlash against China once economies around the world recover from the pandemic will become increasingly fierce, and that the U.S. will likely lead that fight. However, portraying the US.’s disagreements with Beijing as being irrational or borne out of fear of a rising power misses the valid disagreements that many policy makers in the U.S. as well as other liberal democracies have with an illiberal government in Beijing that under a new regime has wanted to increase its influence around the world while making little progress in the form of political reforms. The possible covering up of the coronavirus outbreak only adds to those disagreements. 

Complexity Need Not Cause Confusion

Addressing possible retaliation by the U.S. on China over the coronavirus pandemic is indeed complex issue. Expressing possible efforts by some U.S. policy makers to demand such compensation will indeed further heighten tensions between the two nations, at a time when cooperation is needed. The pandemic is creating severe economic problems around the world, and the world needs both the U.S. and China to cooperate to help contain the virus’s spread and damage on nations’ economies. However, the critical responsibility by scholars, analysts, advisors and those in the business community who do have experience with China is to make distinctions where the public and government officials may not have yet made them. Portraying this as the U.S. seeking revenge on China and simply a way to fuel a possible new "Cold War" – or even going along with that portrayal – only creates future problems for the US, China and the world.

Claiming some institutions or actors’ efforts in these tensions are based on self-serving intentions rather than rational and legitimate ones also do not help make such distinctions clear. For example, politicians in the U.S. Congress – Republican or Democrat – are accountable (hopefully) to their constituents. Fortunately, on some very important cases – such as supporting democracy in Hong Kong late in 2019 – the two parties were unanimous in both the purpose and message. The bipartisan support was not simply a way to weaken China as a rival to the U.S. by siding with the protesters. China may want the world to believe such interference in China's "internal, domestic affairs" is an effort to destabilize China. However, that ignores the important role that upholding democratic values around the world has in the U.S. and other liberal democracies. The U.S. for its part often misunderstood or underestimated during much of the 20th century the communist movement's efforts to spread its economic and political ideas internationally in order to challenge a capitalist system that Marx and his supporters believed corrupt and exploiting unfairly an impoverished working class. The CCP as the most powerful communist party in the world could remember that the other side's commitment to its own principles is often genuine.

In terms of the tensions between the U.S. and the China government, supporting democracy is a primary issue here. However, supporting democratic movements is never an easy task. We may eventually find out that whether stifled in an authoritarian China or mishandled by a politically divided U.S., failing to rely on democracy’s core components, including free speech and respect for the rule of law, has serious consequences when crises erupt. Indeed, a lack of transparency and desire to quell dissent did not help Beijing in the first few weeks of the virus’s outbreak, nor has a lack of bipartisanship and continued disagreement on the role of the federal government helped Washington prevent the U.S. from halting the spread of the virus. The two sides indeed should be working toward helping one another overcome their shortcomings, not overlooking their more serious, toxic behaviors: China is suffering from a political system that is overly focused on maintaining the authority of a one-party state. The U.S. is often suffering from a political system that is often in the hands of wealthy, political donors who dictate policy to politicians who appear no longer beholden to all their constituents.

In that way, Beijing’s criticism of how the U.S. is handling the coronavirus pandemic should be taken into consideration by U.S. officials. Listening to the other side does not mean you agree with the other side. While it is dangerous to place full faith in numbers coming out of China given Beijing’s decades of providing unreliable economic figures that are the result of a dysfunctional relationship between the central and provincial or local governments, policies such as city-wide lockdowns and widespread virus testing will likely have proven crucial in helping China reduce the spread of the virus. Also, while Taiwan has not had to rely on such comprehensive lockdowns or widespread virus testing, its alternative measures are only some of several alternative approaches that at least for now have worked for Taiwan. The process of tackling this virus should not be straight-jacketed by “either-or” prescriptions. Different societies and systems may need different solutions. However, there should be an effort to come to an agreement on the more crucial needs for societies to follow in stopping the spread of the virus: practicing social distancing, widespread usage of face masks, following correct hygiene such as hand-washing, and avoiding unnecessary travel or activities away from home. China has been doing this, too, in addition to its lockdowns and testing. The U.S. could follow the methods used by both China and Taiwan, for the good of the American people’s safety and without admitting it is simply listening to China. Such a recognition that China does have some lessons to be shared could help provide Beijing the "face" it often demands, which in turn could help it ease its hard-line attitude toward Taiwan.

Moreover, should Beijing refrain from continuing pressure on the WHO and allow greater participation by Taiwan in the organization, not just during this pandemic but after it is contained, this could show the U.S. that Beijing is willing to participate in multilateral endeavors with others to which it may not always agree.

Such conciliatory behavior by the U.S. and China, however, will not come easily. Democracies are viewed as being more moderate forms of government as they often recognize an array of views and beliefs. The corruption mentioned earlier that exists in Washington in the form of political influence being bought by political donors creates extremes, too. However, one-party, authoritarian governments can be much more extreme politically as they often allow no dissent, no organized opposition and seek to dominate the political system, indefinitely. The U.S. founded its entire system upon the goals to limit concentrations of both power and wealth. China has increased its concentration of power as its wealth has grown. While Beijing likes to remind the world it has brought hundreds of millions of people out of poverty within China - while ignoring the reasons that impoverished so many earlier, during party rule, as well as the role that foreign investment and trade has played in enriching China - the economic egalitarianism at home has not translated into a more moderate political policy abroad. China is now openly using its economic might to influence other nations to support its policies, or else face being shut out of the world's deepest consumer market.

Still, there is a very real chance that the world will be willing to overlook Beijing’s mistakes and trust its traditionally unreliable data while at the same time assume that the U.S.’s mistakes are due to an inherently inferior democratic system rather than other factors, such as the fact the U.S. is being led by its first-ever businessman as president, who had no prior political or public office experience but does have a strong desire to not want to work with others. The world will likely have come through this crisis frightened, in dire economic condition and looking for new models to lead their political systems, economies and societies. Undoubtedly, Beijing will try to take the lead via its desire to fund the continuance of globalization and promises that it can fund the reconstruction efforts.

Meanwhile, it may not be so clear how the U.S. will respond once the pandemic subsides. It is a bit more certain that there will be a continued desire to decouple the U.S. economy away from China’s. This may depend on when an exit from this pandemic takes place, too. Should it end well before November, then the path forward may be dictated by President Donald Trump. Should it occur after the presidential election, it is also still unclear if Mr.Trump will win a second term in office. How a possible future Democratic administration carries out its China policy is also unclear. National security issues will still be a concern, and Democrats are traditionally cautious of looking weak on such issues. A Democratic president may tone down the harsher rhetoric of the Trump administration against China, but it is unlikely to completely change the U.S.’s general policy. The pandemic has nearly guaranteed decoupling will be carried out, at least within some sectors.

A willingness by such authorities on China and U.S.-China policy to point out the problems both governments need to address would, of course, would be the wisest policy. Those who urge the two sides put their differences aside to fight the virus are right to do make such pleas, but they must also be willing to remind both sides that their respective policies at times have created serious problems, domestically and globally. Unfortunately, most of the criticism and policy second-guessing often has been directed at the U.S. in the past few years. Those who criticize Washington seldom are deemed as dissidents or enemies of the state, so vociferous criticism of America is the norm in the U.S. and even around the world. Conversely, we are seeing those who criticize Beijing’s policies regarding its handling of the virus, such as Ren Zhiqiang, suddenly turn up missing. For all its claims of leadership, Beijing still offers a system with little respect for the rule of law and no place for dissent. Those arguing for the world to allow China a greater place on the world stage politically would do well to remember that.

However, those shortcomings in both the U.S. create a serious imbalance when determining whether liberal democracy or authoritarianism will be the preferred system to lead the world once the crisis ends. With the pandemic increasingly expected to last at least through the summer of 2020 and possible beyond, it would be dangerous to underestimate the deep and potentially long-term impact the coronavirus will have on the world's economy, political systems around the world and humanity in general. Urging the U.S. and China to put aside some of their differences to help lessen the impact of the virus is definitely a wise effort. However, expecting that both sides - particularly the U.S. - put aside all their differences in order to return the economic and global trade back to normal only ensure that serious political, economic and even societal problems go unaddressed.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of TriOrient Investments, or any of the institutions with which the author is affiliated.

References:

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Finews.Asia (2019, March 18) MSCI Denies Politics Behind China Conclusion. Link: https://www.finews.asia/finance/28469-msci-politics-china-inclusion-henry-fernandez.

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