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Saturday, June 12, 2021

Does the Chinese consumer have a role in East / West issues?

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

A leading representative of China threw a new factor into the current exchanges about “decoupling” from China when commenting on problems facing UK-China trade – the Chinese consumer.

Let’s recap – Under the influence of Trump who tried, unsuccessfully, to make relations with China a political issue in the Presidential Election, the US has applied pressure to its allies to take a hard line with China following disputes re Hong Kong, the S China Sea, Taiwan, the Uyghurs and the China-Indian border dispute. The Five Eyes – US, UK, New Zealand, Australia and Canada – share military intelligence and have focused their activities on China. The policy of “de-coupling” has been cobbled together in an effort to persuade people in the world that China can be brought to heel by applying economic pressure – Huawei was the focus and efforts made to remove the company from the next generation of communication technology. Pompeo travelled the world’s capitals trying to construct an anti-China alliance in the belief that China – hurt and wounded – would sue for peace, become more compliant and the world would be safer for the West.

China has considerable experience. It is rarely taken by surprise. It knows how to handle itself and how to keep the initiative and stay focused and alert. China did not begin when Xi became President or Deng was in charge in 1979. China began in 1949 when it was the Sick Man of Asia. Today – seventy one years on – China has contributed significantly to world stability and offers more of the same in the years up to 2049 and the celebration of its 100th anniversary.

So when Trump and Johnson turned against China – it was no more than China expected. They had read the signals, seen the developments and anticipated the pain that would be applied. Even with the pandemic – and with the Trump imposition of tariffs and duties – China has sprung back with a firm economy, rebounding growth, and the re-injection of confidence that comes from the growing prosperity of its people.

China knows how to look after itself. It knows how to protect its interests without inviting hostilities. It knows how to handle attempts to undermine Chinese growth and the surge to increasing prosperity. It knows that there is a Big Divide between politicians and businessmen. They have separate agendas. Politicians are motivated by Elections and political achievement. Businessmen are motivated by profit and growth. Quite different.

Just as Trump and Johnson seek to “decouple from China” so businessmen seek to do more  trade and investment in China. HSBC, AstroZenica, JP Morgan and many others are deepening, strengthening, expanding in China. The China market matters.

500 m Chinese removed from poverty and a policy of growth based on the growing influence of the rapidly emerging Chinese middle class. And it is with this group that the focus has come to bear. China consumes but the consumers also have political preferences. They are not instructed what to buy or from which origin to consume. That is the decision of the individual Chinese consumer but the US/UK are becoming aware that Chinese consumers vote with their feet and they will turn their backs on the UK if the UK continues to discriminate against China in international trade issues. The word “boycott” comes into play and the awareness that the UK will slip down the ladder if they continue to try to isolate or de-couple from China.

Hitherto the Chinese consumer has not been a factor. But now as Feng Wenjian, chairman of the China Chamber of Commerce in the UK has said “If the UK continues to be hostile to China, to Chinese companies and goods what will the public reaction in China be? The public will say ‘OK, if you don’t buy from us, why should we buy from you?’ Mr Feng concludes “We have seen such things happen before.”

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