This has come as something of a surprise, as has the speed of China’s emergence—forcing a series of second thoughts, reversals of opinion and attempts to correct imbalances. After many years of negotiation, China joined the World Trade Organization (WTO) in 2001, giving it the ability to better ensure commercial exchange through its trade agreements, as well as providing a forum for resolving disputes. China’s refusal to open up its own markets to outsiders was “contrary to the fundamental principles of the WTO,” reported the US Trade Representative, Robert Lighthizer, to Congress at the start of 2018. In retrospect, he said, “the United States erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-oriented trade regime.”195
These concerns are magnified by the large-scale theft of intellectual property (IP) by China and others, which one influential report claimed came at a cost of some $225–$600bn per year to the US economy.196 According to a different study, Chinese cyberattacks have focused on “massive theft of information and intellectual property to increase China’s economic competitiveness and accelerate its efforts to dominate world markets in key advanced technologies.”197
The question of how best to understand and respond to China’s rise is becoming an important (if not the dominant) challenge for US policy-makers. This was set out clearly in a speech delivered by then US secretary of defense James Mattis at the US Naval War College in the summer of 2018. China, he told graduating students, harbours “long-term designs to rewrite the existing global order.” Their attempts to do so, he said, were based on a return to the past. “The Ming dynasty seems to be their model, albeit in a more muscular manner, demanding other nations become tribute states, kowtowing to Beijing; espousing One Belt, One Road, when this diverse world has many belts and roads…and attempting to replicate on the international stage their authoritarian domestic model.”
There were three ways to deal this, said Mattis. By “building a more lethal force”; by “strengthening our military alliances and building new partnerships”; and by “reforming and modernising the Department of Defense for greater performance, accountability and affordability.” The past taught a valuable lesson, he said: “Nations with allies thrive.” He did not explain why that did not apply to China’s careful efforts to win friends around the world. Nor did he say why he was willing to learn from history at all, given he started his speech by enthusiastically quoting a recent statement by Donald Trump that “the past does not have to define the future.”198
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The escalating rivalry between the US and China and the implications this will have for global security were thrown into sharp relief by comments made by Lieutenant General Kenneth F. McKenzie Jr., joint staff director and one of the most senior officers in the American forces, when asked about the creation of artificial islands in the South China Sea. “I would just tell you that the United States military has had a lot of experience in the western Pacific taking down small islands.” This, he said, was nothing more than “a simple statement of historical fact.”199
General McKenzie’s words were meant as a warning—and are best interpreted as a sign of the seriousness with which discussions are being held at the highest levels in the US military about how to deal with China. This is hardly surprising, given that US military assessments conclude that the Chinese military forces have “rapidly expanded its overwater bomber operating areas” and have acquired the “capability to strike US and allied forces and military bases in the western Pacific Ocean, including Guam.”200 Perhaps not surprisingly, therefore, General McKenzie’s bullish comments do not find echoes in the views given by Admiral Philip D. Davidson during recent nomination hearings for his appointment as commander, US Pacific Command, in April 2018. Admiral Davidson gave a series of written responses to the Senate Armed Services Committee that described the difficulties of adapting to a changing world—which included candid views of how things stand not in the future but in the present.
Admiral Davidson gave a frank assessment of China’s capabilities, and the limitations of the options available to the US Navy. China was in the process of constructing a series of military bases in the South China Sea and beyond, he noted. “Once occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania.” Its forces, furthermore, would “easily overwhelm the military forces of any other South China Sea claimants.” His conclusion was as stark as it was clear: “In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States.” Even in that event, he added, “there is no guarantee that the US would win a future conflict with China.”201
This is despite major investment in naval technology that includes the construction of vessels like the USS Zumwalt, so sophisticated that one of the US Navy’s most senior officers, Admiral Harry B. Harris, said that it would be Batman’s choice of ship—if he had one. Built at a cost of $4.4bn, Zumwalt has the radar signature of a fishing vessel a twelfth of its actual size.202 Nevertheless, China still raised concerns that a warship of this kind might be deployed close to the Korean peninsula—and therefore close to China.203 Such worries are ill-placed, at least for now. For one thing, Zumwalt has suffered from a string of technical mishaps, including breaking down as it made its way through the Panama Canal.204 But while it (and others in its class) may in due course become “warships of unprecedented lethality,” it does not look like that will happen soon. According to recent reports, the weapons systems either do not work well enough or not at all; and the cost of firing rocket-propelled shells is four times more than expected, at a cool $915,000 per round.205
Such reports do little to still growing fears within the US about the tide turning in China’s favour, and help underpin a change in policy regarding the navy in particular. In 2017 an invitation was extended to China to take part in the Rim of the Pacific (RIMPAC) exercise, the largest multinational naval exercise in the world, which takes place every two years and which in 2016 involved forty-five surface ships, five submarines, more than 200 aircraft and 25,000 personnel.206 Just weeks before this was due to start, James Mattis announced that “as an initial response to China’s continued militarisation of the South China Sea [the US has] disinvited the PLA Navy from the 2018 Rim of the Pacific (RIMPAC) Exercise.”207
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Predicting how intense rivalry and geopolitical competition plays out or resolves is not easy. What is striking, however, is that mirroring the concern in the US about the rise of China is a very different perspective on the other side of the world. “Western civilisation is built on a philosophical-theological tradition of binary antagonisms,” wrote Jiang Shigong, a prominent Chinese intellectual, in an essay that has been described as the “authoritative statement of the new political orthodoxy under Xi Jinping.”208
For centuries, notes Jiang, “Chinese culture was the envy of the west.” Since the time of the Opium Wars, however, “China has experienced humiliation and misery.” The Chinese people, he states, “who have long suffered in the modern age, have now made a great leap.” Dividing history into the eras of Mao Zedong, Deng Xiaoping and Xi Jinping, Jiang states that these correspond respectively to China “standing up,” “becoming rich” and “becoming strong.”
What is happening in China under Xi Jinping, both domestically and internationally, is the natural and logical culmination, in other words, of deep trends and a long process that Jiang ultimately traces back to 1921 and the foundation of the Communist Party. “The great revival of the Chinese nation,” he concludes, “is not only an economic and political revival. It is also the revival of political education…that will result in the great revival of Chinese civilisation.” The implications are clear: “Chinese civilisation is spreading and extending itself into even more parts of the world.”209 As far as visions go, it is hard
to think of one that is more expansive and ambitious. The new Silk Roads are an integral part not only of China’s economic and foreign policy; they are an integral part of how China sees the world—and how it is preparing for the future.
| THE ROADS TO RIVALRY |
Nostalgia can have an intoxicating and powerful effect. Looking back through rose-tinted spectacles can create false pasts that cherry-pick only the very best, while ignoring the worst and the mundane. While harking back to a previous golden age often triggers warm memories of supposedly better times, the process can be deceptive, misleading and wrong. In fact, today’s world is better in almost every single way than the world of the past.
A child born today is not just statistically likely to live longer than their parents but longer than every single one of their ancestors. More children born today will grow up being able to read and write than at any time in history—both in sheer numbers (because global population is at its highest ever point), but also in percentage terms. Access to clean water and to medical care, to affordable and fast transportation, to energy and communication networks is not just high, but rising. There is much to celebrate and look forward to in the future.
That does not make coming to terms with change easier. It is not always easy to remain sanguine if one seems to be standing in the wrong place at the wrong time. That is the case in the United States, where the rise of China seems not only to pose systemic questions about America’s future but also to cast a shadow that makes yearning for the supposed golden years of the twentieth century understandable. The sale of one major business after another, from hotels to aircraft-leasing companies, from biotech to General Electric’s Appliance Business—once the jewel in the crown of GE, itself the totemic institution of corporate America—can be difficult to adjust to.1
Seeing big names fall to outside buyers armed with cash is a shock to the system—not least when expectations have rarely entertained the thought of buyers from parts of the world about which little is known and to which limited attention is paid. This runs true not only in the US but in Europe, where some of the most iconic names and brands—from Volvo to London taxis, from Warner Music to construction giant Strabag, have owners from abroad, mainly from the countries of the Silk Roads. A perfect example of this new and often strange world comes with the sale of the largest stake in the firm that quarries the Carrara marble in Italy that was used for the Pantheon in Rome, the Duomo in Siena, the Marble Arch in London and the Peace Monument that stands in the grounds of the Capitol in Washington, DC. The principal shareholder is the bin Laden family—which in turn means that the marble that was used in the Freedom Tower in New York City comes from quarries now owned by the family of the man who masterminded the destruction of the Twin Towers that previously stood on the same site.2
Acquisitions like these have prompted considerable soul-searching and calls for government intervention to block sales. One typical example comes from an article written in the influential Industry Week, one of the oldest trade publications in the US. An article titled “Should We Allow the Chinese to Buy Any Company They Want?” begins: “We Americans blithely ignore the long-term effects of allowing foreign corporations to purchase the assets of our country in the form of companies, land, and resources. We are selling off our ability to produce wealth by allowing many American corporations to be purchased by foreign corporations.”3
Some go even further. “A lot of Americans don’t understand what’s happening in China and how good their tech companies have become,” said Senator Mark Warner, who sits on the Senate Intelligence Committee. That Chinese high-tech firms are globally competitive is bad enough. But for Warner, what was truly unforgivable was the fact that American companies “have bastardised themselves so much to get into the Chinese market”; in fact, he said, US businesses were guilty of nothing less than “prostituting themselves.”4 As it subsequently turned out, these include Facebook, which has data-sharing partnerships with at least four major Chinese electronics businesses—all of which have close ties to the government in Beijing.5
The fact that this was not disclosed during high-profile hearings in Washington tells its own story about the steps corporations are willing to take in pursuit of opportunities—as a strongly worded statement from the bipartisan House of Representatives Energy and Commerce Committee explained.6 That was issued before it emerged that Facebook had been sharing user data with four firms—Huawei, Lenovo, Oppo and TCL—that have been flagged as national security threats by US intelligence.7
The relentless search for profit is mirrored by Google’s decision to develop a search engine, code-named Dragonfly, to block websites and searches on topics to do with human rights, religion and other sensitive subjects, and that would be acceptable to the Chinese authorities—giving the company access to a huge market. Perhaps not surprisingly, this has led to considerable soul-searching within Google itself, a company that used to have the motto “Don’t be evil” enshrined within its code of conduct.8 The dropping of the slogan in the early summer of 2018 is not just a sign of the times; it is a sign of the realities that go with putting the priorities of shareholders above those of others.9
Google itself was concerned that plans would meet with internal opposition from the company’s own staff that would slow down the development of the browser, so it began work on the project in conditions of strictest secrecy.10 News of the proposals brought about vociferous criticism when it became public knowledge in 2018, with Google employees threatening strike action unless the project was dropped.11 US Vice President Mike Pence made his own views clear: “Google should immediately end development of the Dragonfly app that will strengthen Communist Party censorship and compromise the privacy of Chinese customers.”12
The demonisation of China in various forms played an important role in the presidential election campaign. The Chinese “want to take your throat out, they want to cut you apart,” Donald Trump said in one interview.13 The Chinese “have waged economic war against us,” he said in a speech in Staten Island in April 2016. “They’re ripping us left and right. [The Chinese] abuse us beyond belief,” he said, finishing by claiming that “in the history of the world, this is the greatest theft ever perpetrated by anyone or any country, what China has done to us.”14
This was an escalation of claims six months earlier, which called “the money [that China] took out of the United States [is] the greatest theft in the history of our country.”15 But such statements play well with a core part of the electorate: the economist Branko Milanović observed that “the great winners” of the redistribution of global wealth “have been the Asian poor and middle classes; the great losers, the lower middle classes of the rich world.”16 Explaining the shift of the world’s centre of gravity—and promising to do something about it—wins votes.
Given Trump’s rhetoric—and key appointments in his administration, such as Peter Navarro (whose views are hinted at by the titles of his recent books Death by China and The Coming China Wars)—the only thing that came as a surprise was how long it took for a sweeping range of proposed tariffs to be announced on Chinese goods, including steel and aluminium. The explanation for the delay lay partly in the concern about the North Korean missile and nuclear programme, and the need to work carefully around antagonising Beijing as pressure was applied to try to bring Kim Jong-un to the negotiating table.
This was one reason why President Trump insisted on removing references to China in a speech announcing a year-long investigation into intellectual property violations—despite his senior advisors making clear that China was the main target of the inquiry. “We’re going to need their help for North Korea,” he told them.17 As it was, over a year had passed after becoming president when Trump announced tariffs on more than 1,000 products, which would affect some $50–60bn of imports. The action, said Trump, would be the “first of many.” Targeting China should have been done “many, many years” ago. Besides, he add
ed, doing so was “probably one of the reasons I was elected. Probably the main reason.”18
A few days later, the president ordered a further slab of tariffs.19 He did so despite being warned by powerful retailers that consumer prices in the US would rise as a result. Rather than helping American families, advised the CEOs of businesses like Costco, Gap and IKEA, tariffs “would worsen and punish” them by resulting in “higher prices on household basics like clothing, shoes, electronics and home goods.”20 Too bad, said Peter Navarro. “This is a historic event and President Trump should be applauded for his courage and vision on this.”21
Some commentators believe that Trump’s actions are negotiating techniques whose ultimate aims are not to collapse global trade agreements but, rather, to bring a better deal for the United States. “We view US trade actions targeting China more as an opening gambit for negotiations than the start of a trade war,” said Richard Turnill, chief strategist at the investment manager BlackRock.22 After all, the president has openly mused about rejoining the Trans-Pacific Partnership trade agreement signed in 2016, which would have reduced trade barriers between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.23
Gambits and gambles have consequences, however, especially when trumpeted with loud fanfare. Days after the president’s announcement of a second wave of tariffs, Peter Navarro declared China’s response to “Mr. Trump’s legitimate defence of the American homeland has been a Great Wall of denial.”24 This was not quite true, since the Chinese government had not responded with denial or silence at all, but instead had promptly issued a retaliatory list of tariffs that targeted American exports, many of which are produced in states won by Trump during the 2016 election, and which also happen to be areas represented by leading Republican politicians.25
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