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Wednesday, December 8, 2021

China and the USA

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Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

Today’s article focuses on China and the US, and the speculation about the future direction of the relationship between the two countries. There is a context, and it is not Trump’s flamboyance or Pompeo’s provocations – they are just the tactical day-to-day. Trump was hoping to make China an election issue by contrasting his “Stand Up To China” with Biden’s “Softly As You Go”. But Biden was clever. He frustrated Trump by following a policy that was little different and thereby denied Trump any voter reward on election day. The Election has passed. Trump has gone – for the time being – and Biden can now pursue his own policy on China. But let’s remember, the context for US/China relations is of much greater significance than Presidential politics. It is the macro view that matters.

In a global sense, it is about the rise of China and the decline of the US. China has surprised her opponents by its increasing economic and political power. The US has also surprised the world – not its opponents – by its economic decline. But this is the mark of history. Today we see the day-to-day but we also need to see the decade-to-decade. The long-term view is the context to understand the dynamic of China-US relations. And there are two separate aspects – first, China, and second, the US – for things are happening to both countries that impact on an assessment of the state of play today.

China is on the rise. It has lifted 500m people out of poverty. It is a significant achievement for what it portends – it is not just about the better life style for such a large number of people, important though that is, but also about the credibility of its governance and the leadership of the Party in Beijing and the work of the Party in the regions. Young married couples today have a quality of life that was never in the expectation of their grandparents in 1949 when China was labelled the Sick Man of Asia. China had lost 14m people in World War II – in the Patriotic War against the Japanese. Successful in repulsing the Japanese, China was nevertheless, devastated, diminished, and war ravaged. And yet the new power of the Communist Party knew there was no respite as there still had to be a reckoning with the Kuomintang – its opponent in the continuing Civil War that had commenced in 1927. Four more years of conflict concluded with the fleeing to Taiwan of Chiang Kaishek – a province of China – and, on 1 October 1949, Chairman Mao Tsetung announced the coming into existence of the new People’s Republic of China. China had stood up.

And China has grown in world significance ever since. It has seen a turnaround that still astounds its critics. The economy has been rebuilt; the people have prospered; and a level of material well being continues to advance. It has not been a straight-line linear progression. There have been setbacks and failings – the Great Leap Forward, the Cultural Revolution and the Tiananmin Deaths of 1989. No question, China has made serious mistakes with consequent considerable loss of life but at each juncture it has pulled back from the brink. The Party has learned lessons. It does not always announce its reviews of erroneous policies but behind closed doors, and within the Party of 89m members, we know enough to understand that there is a full discussion and understanding of what has gone wrong, and it is this which has given China the confidence to re-set policies and priorities and move forward.

What is often overlooked in the West is the extent to which progress has been assisted and prosperity achieved as a result of the most searching examination of the failings of the USSR that led to its disintegration in 1991. “What Went Wrong?” was the question asked by China’s many hundreds of think tanks as they investigated every level of Soviet history and, as with the review of its own failings, China was thorough and persistent with its analysis. The purpose of this wide ranging, across-the-board review of the life and history of the USSR was to provide China with a way forward which avoided the USSR’s mistakes, mis-judgments and mis-readings.

As to the US, the President of the Massachusetts Institute of Technology, Dr Rafael Reif said in the New York Times of 8 August 2018 “Unless America responds urgently and deliberately to the scale and intensity of this [China] challenge, we should expect that, in fields from personal communication, to business, health and security, China is likely to become the world’s most advanced technological nation and the source of the most cutting-edge technological products in not much more than a decade”. According to figures produced by the Chinese People’s Political Consultative Conference in 2019, the US research and development budget has peaked and will decline just as China’s research and development budget will continue to climb. Further, in 1950 in PPP terms – Purchasing Power Parity terms – the US had 27.3% of the world’s GDP (Gross Domestic Product) and China had just 4.5%. As of 2018 the US has 15% and China 18.6%. Finally, the average income of the bottom 50% of the US population has fallen over the last thirty years. Cold figures which tell a revealing story – the US is declining and China is rising.

This is the issue that lies at the heart of the US/China conflict. The leading superpower is on the skids. It is falling behind. Its power is being eclipsed by “the new boy on the block”. It does not necessarily herald a “Decline and Fall” of the US Empire – a disintegration and collapse -and the US will fight back, for sure, but the initiative is very much with China and its own ambition of relations with the world governed – not by naked Imperialism and military bases in each of the five continents of the world –  but by a win-win policy of mutual benefit and prosperity.

As stated previously in articles in this column, the US, its historians and intellectuals as well as its military and political leaders, read China very wrong. Their studies assumed that the growing prosperity of China would lead to the emergence of a burgeoning middle class with economic rights of ownership of private property and wealth that would translate inevitably and seamlessly into political rights, political parties, regular elections and the marginalisation of the Communist Party of China. Whilst the first part of the analysis is correct, the growing middle class do have more economic rights and property ownership and wealth, the second  part of the analysis is wrong because the Party remains firmly in control and there is no evidence that the Chinese people are unhappy with the governance of the Party. If they were, they would take advantage of the freedom to travel overseas and stay overseas but – that figure again – in 2019, 140m Chinese tourists travelled abroad without one report of any claim for asylum or non-return. There will be no Western style elections or the adoption of the Westminster model of government. The West’s hopes that China would “mature into a Western democracy” have been dashed.

This is the background and the context to today’s tensions between the US and China – and a change of administration in Washington will not lead to any great change in the US assessment of China’s growing prosperity and influence in the world. China is on a path going forward. It is planning for 2049 and, further, to 2100. That is China’s perspective. The US perspective works in much shorter time frames due to the rotating terms in power of Presidents, Senators and Representatives. China has a unified view and the USA has a differentiated view. This has much to do with politics and governance in the two countries but more on that in a future post.

One example of a significant mis-read by China’s critics – and there are many – comes with the announcement of a China-Philippines $940m freight railway project that will link two former US military bases in the Philippines. Previously the two countries were meant to be in a state of war-readiness as Manila feared so called “Chinese expansionism” in the South China Sea. The construction of the 71 kilometre single-track freight railway will take three and one half years to construct. China will also donate 500,000 doses of coronavirus vaccine which follows the Philippine purchase of 25m doses of China’s Sinovac vaccine.

Aside from genocide allegations against China for its alleged treatment of the Uyghurs and the US attempts to portray China as “an outsider” that “frightens and intimidates its neighbours”, the reality is quite different. Mis-portraying China, as well as mis-reporting China, is at the heart of US efforts to restrain China’s advance.

Also a note to let you know that my article on the Uyghurs is well underway. It is taking longer because the article is longer and covering much ground but bear with me – it will be published.

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