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Over 10 years, Xi Jinping has methodically amassed power. Beginning with an unprecedented consolidation of military support, Xi then launched his ‘Tigers and Flies’ campaign, sidelining his political rivals along with officials accused of corruption. Over many years he patiently laid the groundwork to elevate Xi Jinping Thought to match the official stature of Mao Zedong Thought, and edge out Deng Xiaoping Thought, in the CCP’s ideological pantheon. He then overturned international commitments regarding Hong Kong, and brought that free-wheeling and Westernized city to heel with the introduction of a new security law. At the last 19th Party Congress in 2017, Xi tossed aside Deng’s “hide-and-abide” (韜光養晦、有所作為) approach to international relations and gave a triumphalist speech, announcing that China had not only arrived on the world stage but that it deserved central position on that stage. With the outbreak of the Covid-19 epidemic, Xi used sharp-elbow tactics to block scientific investigation into its origins in China and ordered sweeping zero-Covid lockdowns to highlight his government’s ability to take more effective action than was possible for democratic governments in the US and the West.  The Winter Olympics were meant to be Xi’s star-turn to demonstrate — more to the Chinese people than to international audiences (many of whom undertook diplomatic boycotts of the Games because of oppression of Uyghurs in Xinjiang and other issues) — that he was a flawless and unrivalled champion.  He even went so far as to claim that the authoritarian system he presided over represented a superior form of democracy to Western liberal democracy.

Chinese President Xi Jinping during a show commemorating the 100th anniversary of the founding of the Communist Party of China

Along this path to unrivalled power in China, Xi first jettisoned the system of collective rule by the Standing Committee of the Politburo which Deng had put in place to guard against recurrence of unbridled rule by any one individual, epitomized by the last years of Mao’s rule.  Longer term, Xi’s aim in amassing power has been to discard the limit of a president to two five-year terms, another safeguard Deng put in place and which he himself observed.

The announcement of leadership for the next five-year term will happen at the CCP’s 20th Party Congress in Beijing this autumn. At that meeting, Xi is widely expected to be named for a precedent-shattering third term. This will mark a historic high-point for Xi. His systematic consolidation of power has been designed, in part, to create an air of inevitability about this outcome. While his selection is still overwhelmingly likely, a number of significant fissures have appeared in recent weeks which crack this façade of total control.

ZERO-COVID

While undoubtedly successful in limiting the number of infections, hospitalizations, and deaths in the first two years of the pandemic, Xi’s Zero-Covid policy has created a raft of problems for China more recently, most notably during the highly-transmissible omicron phase. While incidences of infection, hospitalization and death have been dropping worldwide, they have been surging in China, with the number of confirmed cases more than quadrupling from mid-February to mid-March of this year. Elderly citizens are especially at risk due to their low rates of vaccination and hospitals have already become overwhelmed, due in part to the low number of hospital beds on a per capita basis in China. While it can be argued that the Zero-Covid policy ‘bought time’ for the development of vaccines, Xi’s championing of the locally developed Sinovac vaccine and his refusal to permit the use of more clinically-effective vaccines developed in the West, has blunted that advantage somewhat since the Sinovac vaccine is notably less effective against the omicron variant. The Zero-Covid policy has also meant that there is practically zero immunity in the Chinese population as a result of exposure to the virus as it becomes endemic worldwide. If SARS-COV-2 can be compared to a flame, China’s population is like a vast field of tinder. Finally, the economic and social costs have become glaringly apparent with the lockdown of an entire province, Jilin, in the northeast and the of Shenzhen and Dongguan – China’s two largest manufacturing hubs for information and communications technology (ICT) — in the south.

While Xi will, with considerable justification, continue to claim credit for his “triumph” over the coronavirus, China is by no means out of the pandemic woods and the setbacks of the last month make his strident claims ring more hollow, both internationally and domestically.

REAL ESTATE

In September last year, Chinese real-estate development firms began to feel the severe discomfort of a massive hang-over following years of real-estate speculation partying.  The problems were most evident in real-estate giant Evergrande but soon spread to a host of other significant players in the field such as Fantasia, Modern Land, China Property Group and Xinyuan Real Estate Group.  At the institutional level, the problems hitting the $5 trillion sector were the result of a unique PRC nexus of aggressive real estate development, lax banking, and local government incentive structures.  More simply, the problems resulted from “unrestrained borrowing, expansion as an end-in-itself, and corruption.”  

While the PRC Government claimed this week that the real-estate free-fall has been “stabilized,” pricing data from real estate developers across the country continue to show sharp deterioration. Also this week, Evergrande announced a further delay in sharing its plan for restructuring and for paying back bonds and other financial obligations.  The government has strong reason to put on a brave face while throwing up a curtain of opacity around the problem.  Property-related industries account for more than 30% of China’s economic output.  Continued problems in the sector could drag China’s growth below the optimistic, post-pandemic official target of 5% growth, a minimum level which must be maintained in the years ahead for China to escape the ‘middle income trap.’ More immediately, it risks alienating an important swath of the urban public, 80% of whose household wealth is tied up in real estate and who see their property values plummeting. (A particularly aggrieved segment of this population are buyers who have paid up front to the developers, as is common in China, for a property not yet built and for which construction has halted indefinitely while values continue to slide).

While Xi has voiced loud promises to not let the bottom fall out of this sector and to support homeowners currently caught in the fallout, there is little evidence on the ground of these promises translating into reality.  Meanwhile, the situation risks alienating the public and sowing dissent among officials.

‘COMMON PROSPERITY’

As measured by the Gini coefficient, China ranked fourth in the world in 2022 for greatest wealth disparity and inequality (after South Africa, Namibia and Sri Lanka). While Deng Xiaoping had announced famously in the late 1980s that “to get rich is glorious” and to “let some get rich first,” the extreme degree of inequality persisting in China four decades later is a source of growing social and political concern. The heady days of 10% growth have long ago disappeared and Chinese who thought they would be boarding on a later rail-car in the national train of prosperity now worry that the train may have departed, stranding them on the platform.

To counter this source of social unease, Xi unveiled with great fanfare in 2021 a policy of ‘Common Prosperity.” Writ large, this policy was meant to cement Xi’s place — side-by-side with Mao and with Deng slightly in the background – in China’s pantheon of modern heroes.  In this telling, Mao was the one who roused China to throw off its ‘Sick Man of Asia’ bondage to foreign imperialists and to stand up. Deng contrived a transitional stage of capitalist-style wealth-creation for enough Chinese that China could attain wealth and power (富权). It was left to Xi to complete this project of national rejuvenation, by reinstituting a Marxist “Common Prosperity’ for all Chinese and returning China to the center of the world stage.

Without getting into either the ideological weeds (such as Xi’s ‘Dual Circulation’ strategy) or deep into the tangle of economic measures (e.g., restrictions on overseas listings by Chinese companies, user-data and other controls put on Chinese Big Tech firms, clampdown on student test-prep and video game commercial sectors, etc) which Xi embraced in 2021 to advance his Common Prosperity agenda, the general effect was felt quickly and keenly in the form of abrupt economic slowdown. In the first quarter of this year, the Common Prosperity program has been ‘walked back’ by numerous party officials who have emphasized that it represents a historic project more than an immediate project. Premier Li Keqiang, in his lengthy speech to 3,000 deputies at the opening of the National People’s Congress earlier in the month, mentioned Common Prosperity only one time. For educated Chinese — who have been skillfully parsing official pronouncements closely ever since the Cultural Revolution for clues about where the country is headed — this lack of visibility and endorsement for Xi Jinping’s signature program represents a remarkable degree of push-back for Xi by top-level leaders.

UKRAINE

Chris Buckley’s report in last Friday’s New York Times traces the contours of what is potentially the most damaging crack to appear in Xi’s carefully-crafted, monolithic façade of power and control.  The article details the war of words that has erupted on the Chinese internet following the warning delivered by a respected scholar and politically-connected insider, Hu Wei, to the effect that China “risked becoming a pariah if it didn’t denounce Russia’s invasion of Ukraine.” As was covered in last week’s post and as continues to play out this week, Chinese officials have contorted themselves by claiming to be neutral and wanting peace while following Putin’s lead in not calling the ‘special military operation’ either a war or an invasion, in not objecting to Russia’s violation of Ukraine’s sovereignty and territorial integrity, and in amplifying Kremlin disinformation about U.S. bio-military labs in Ukraine. 

As argued last week, this has the potential to grow into a strategic blunder for China with significant geopolitical fall-out. It may affect not only Xi’s ambitions to retake Taiwan – the last territorial piece in his China Rejuvenation plan – but to bear long term costs for China as a rising power in the Indo-Pacific region and for its standing in the world at large.

None of this is to suggest that Xi will not get his third term as President this fall. It is only to say that the carefully-cultivated blooms of infallibility and inevitability are now off the XJP rose.

Xi has been in power for less than half of Putin’s tenure (18 years as President and 4 years as the power behind the throne for Medvedev) but there are doubtless people in Zhongnanhai wondering to themselves, post-Putin’s invasion, whether Deng didn’t get it right with his moves to limit the untrammeled exercise of power by an individual leader.

The Shanghai Communiqué was signed on the evening of February 27, 1972 at the Jinjiang Hotel in Shanghai, home to a restaurant my wife and I frequented weekly during my posting to the U.S. Consulate in Shanghai from 1988 to 1990. The Communiqué, as distilled by Wikipedia, “pledged that it was in the interest of all nations for the United States and China to work towards the normalization of their relations, and affirmed a mutual interest in détente.”

Earlier this week, a China-hand friend of long-standing texted me to ask my thoughts about the South China Morning Post’s report on the ceremony conducted a few days ago by the Chinese Government to commemorate this event. Specifically, she asked my thoughts on the comment by PRC Foreign Minister Wang Yi to the effect that China was “willing to work with the US on the Build Back Better World, a G7-led global infrastructure plan, and would welcome Washington joining its Belt and Road Initiative (BRI).” (This comment was contextually painted by Wang into a broader picture of how Nixon was far wiser than the current administration in engaging cooperatively with China and that the US should immediately cease and desist from its current posture seeking “hegemony” in Asia.)

Here’s my reply:

“Wishful thinking on Wang Yi’s part. 77 years of U.S. international development assistance have been based on principles of democracy promotion, free market strengthening, transparency and anti-corruption. BRI projects tend to work best where none of those values flourish and instead where those projects serve the personal interests of autocratic (and near-autocratic) leaders. The Rajapaksa family in Sri Lanka and Lukashenko in Belarus are prime examples (with Ukraine being the oddball exception which proves the general rule). Right-thinking US Govt officials have ZERO interest, I believe, in joining BRI projects or in allowing PRC entities to participate in Build Back Better World initiatives until PRC intl-econ-dev standards rise to the level of US/European/Japanese standards. Until that happens, the focus is on out-competing China in the less autocratic BRI countries and with working particularly closely with Japan and Australia in the Asian arena of development assistance competition.”

“So summing up: Wang Yi’s statement is a non-serious and unrealistic throw-away line but one that sounds warm and fuzzy to say on the occasion of the 50th anniversary of signing the Shanghai Communiqué. It has the added advantage of having no prospect of actually going anywhere.”

In July 1989, I was at my desk at the U.S. Consulate General Shanghai when I received a call notifying me that a small group of senior officials from the Shanghai Municipal Government would be coming for a meeting that afternoon.  I was asked to make sure that the newly-arrived Consul General — Pat Wardlaw who had just replaced my first Consul General Charlie Sylvester earlier in the month — join the meeting.

A couple of things about this. First, you’ll note that a meeting wasn’t actually requested and that none of us were asked about our availability in the afternoon.  We were instead informed that the group of government officials would be coming and we were simply expected to be available when they arrived.  Second, anyone who has worked in China will notice something quite extraordinary about this phone call.  We were not summoned, as is typically the case with Chinese government officials, to go meet with them at their offices. They were coming to us. This would be the only time in my working career in China when Chinese government officials came to us rather than vice versa.

At my desk, U.S. Consulate General Shanghai, 1989

A word of context. This phone call took place in the latter half of July, a month and a half after the June 4th Tiananmen incident. Roughly a week before June 4th, my wife Grace and I had left Shanghai on a one-month Home Leave, traveling first for one week vacation with my sister’s family on Kauai and then expecting to spend the remainder of our time in Philadelphia with family and with me traveling to Washington DC on consultations. As we transited San Francisco International Airport on June 4th to catch our onward flight to Philadelphia, there was a palpable tension in the air and we soon saw the near-identical banner headlines about Tiananmen in a row of vending machines along the terminal wall as we made our way to Passport Control.

I never got my homeleave or consultations in Washington. Secretary of State Jim Baker was determined to have his thumb on the pulse of decision-making by McDonnell-Douglas, 3M, Johnson & Johnson, Coca-cola and the other top U.S. investments in Shanghai. He knew it wouldn’t be reliable to just count on what he heard from the CEOs at U.S. headquarters. He wanted to know the calculus of decision-making that was taking place on the ground by the Shanghai-based executives in charge of the major U.S. investments in Shanghai. Having just landed in Philadelphia, I was given one-day to help Grace (early in her pregnancy with our older son Todd) get settled in and was instructed to then turn around and fly back to Shanghai to start providing anything I could learn from my business contacts in Shanghai in a series of classified cables.

So back to the July meeting. The Consulate guard (not a Marine because no U.S. military presence was allowed in China at that time) notified me that the government officials had arrived. I escorted the group of four or five officials into the ground-floor meeting room where a handful of my Consulate colleagues were waiting. One of the officials was just barely managing to carry a big armful of long paper rolls. They did not wait to be seated and didn’t begin with any pleasantries. The senior official simply took the first roll of paper handed to him, unrolled it on the conference room table and announced “This will be the new Pudong. We want you to report about Pudong to your government. We want Americans to invest and help develop it. They will make a lot of money.”

¤ ¤ ¤ ¤ ¤ ¤

Today’s post falls into the TEA Collaboratives’ A-Series of content dealing with PRC government planning Ambitions. Over the weeks and months ahead, I will have a chance to share insights developed through the Masters-level course (IMPA 608) which I taught at the University of Pennsylvania in the spring semester of 2019 and 2020. The focus of that course, based on Mandarin language research, is the forty-year trajectory of China’s macro-development planning vision and execution. Domestically, the trajectory of that storyline begins with Shenzhen in the early 1980s, continues smoothly through Pudong throughout the 1990s before encountering turbulence in Tianjin in the 2000s. Following 2012, the first stage of this macro-development model gets jettisoned and the second stage ignites with the twin megalopolis projects — the Consolidated Beijing-Tianjin-Hebei Project (‘Jing-Jin-Ji’ or 京津冀) in the northeast and the Guangdong-Hong-Kong-Macao Greater Bay Area Project in the southeast. Simultaneous with the unveiling and cranking up of this pair of Version 2 domestic macro-development projects over the last decade, China has also been systematically extending its macro-development model to its 139 international partners through the Belt & Road Initiative.

I look forward to sharing the insights gleaned from this multi-year, instructor-and-student knowledge co-creation effort in the TEA Collaborative’s A-series blogposts on Fridays over the remainder of the year. Understanding the vision and values driving the momentum of this forty-years macro-development effort helps chart where China is headed in the future. I hope this small, personal anecdote about Pudong’s emergence into China’s macro-development planning process serves as an apt way to kick off our Macro-Dev series.

ambitions

Bear with me. I’m going to kick off today’s post with a snapshot about how we organize the blog’s content week by week in order to set the stage for then revealing the slight wrinkle with today’s post. Boring. Hang in there, though … there’s a good reason.

 

The TEA Collaborative produces three blog-posts per week: on Mondays (aspirationally, at least) we put out a tech-related post which takes care of the T in our name; on Wednesdays (ditto) an energy/environment post which covers the letter E; and on Fridays (ditto) an A post for Ambitions (by which we mean the effort to chronicle the seventy-year undertaking by the government of the People’s Republic of China to leverage their huge population, along with other assets, to confront the world with a new, ambitious model of change at vast scale and speed).

So as not to get trapped into rigidity, we have also been planning all along to fold occasionally a so-called X-factor post into this T-E-A formula.  X-series posts will generally be the contribution of an invited guest blogger who is an acknowledged Xpert (sorry, couldn’t resist) in the broad field of U.S.-China relations.

Today’s post turns out to be a bit of a hybrid between A and X.  Originally, we were lining up an X-series post which I thought might appear today but, for various reasons, that expert will need to hold off her appearance until September.  Since I did not myself have anything particularly cogent prepped for Ambitions as a fall-back, I went through much of the day yesterday mentally open, in equal measure, to either inspiration or dumb luck. Dumb luck won the day.

As a result, I am able to present here both a fortuitous hybrid — content that actually does fit the A-Series perspective but happens to be delivered by a different X-series expert.  (The wrinkle is that the X-series expert is not yet aware that he is filling in this way.  I’ve written him today to explain and to get his blessing.  Having gotten to know him in a sense after listening to more than 100 hours of his podcast series, I’m pretty sure he’ll go for it.  If not, though, I’ll have to pull this from the blogsite.  So, you might want to read fast.)

OK, here we go …

In our T(ech) post from last week, Fiddling Around with U.S.-China Tech, I asserted: “there was undoubtedly a measure of optimistic naïveté in the West in assuming China’s willingness to dutifully assume the role of a ‘responsible stakeholder’ in the post-WWII world order.  If the Chinese had conceived of their nation as only having been born in 1949, assuming the mantle of responsible Pax Americana stakeholder might have fit more comfortably. As it was, Chinese conceived the People’s Republic of China as the heir to a Chinese polity which had been the dominant economy in the world for sixteen of the previous eighteen centuries.  They weren’t predisposed to simply adopting some newcomer’s rules and norms as to how China should conduct itself on the world stage.”

Today’s post is going to put meat on the bones of that assertion.  In order to do so, I will turn to Mike Duncan — creator, author and narrator of the magisterial History of Rome podcast series.  On the occasion of the 100th episode of his series, Mike took listeners’ questions.  For the remainder of this post, I am going to take his answers to two questions from that podcast, reverse the order in which he answered them, and share his erudition here to shine a bright light on the two component parts of my assertion:  first, why would the Chinese not naturally think of themselves as heirs to something very special which pre-dated 1949 by quite a few years; and, second, why would the Chinese not naturally have some skepticism about falling in line with a new-fangled U.S.-led world order dating back to 1949.

Except for the headings, the following two points of text are entirely drawn from the 100th episode of Mike Duncan’s History of Rome podcast.

  1. China Has More Historical Continuity Than The Roman Empire (And That’s Saying Something)

Question:
What, if any, relationship existed between ancient Rome and China?

Answer:
The majority of the contact between Rome and China was indirect, but the two great bookends of the world certainly knew that the other existed. The Han Dynasty, which persists in one form or another from about 200 BC to 220 AD was rising at the same time as the Romans, and as Rome headed East, the Han headed West. And it was during this period that the links became more overt. With the stabilizing hand of the Han in place the famous Silk Road was able to knit itself together, carrying silk and other Oriental treasures from China all the way to Antioch, and from there to Rome, while, among other things, Roman glasswork made their way back to the Chinese.

In 97 AD a Chinese embassy was sent West to try to make contact with the kingdom of the Da Qin, which is what the Han called Rome. But apparently they were stopped short in Mesopotamia after the Parthians explained that the difficult crossing to Rome would take another two years at least. This bald faced lie was meant to keep the two poles of the lucrative trade routes, which Parthia controlled, from ever meeting and working out a way to bypass the Parthian middlemen.

In 166, though, a Roman embassy was sent east and was able to make contact with the Chinese emperor. Debate still swirls about how the Romans got there, whether by sea or overland, but a meeting definitely occurred and the Romans offered up all kinds of gifts from the West, including a book of Greco-Roman astronomy. Nothing concrete seems to have followed the meeting though, and thereafter the two sides continued to simply trade with one another indirectly via the Silk Road or by the sea routes around India.

For the remainder of the Empire, Chinese silk remained a highly sought after luxury item in Rome, and was a major point of contention, both for old school conservatives who found how revealing the fabric was disturbing, and proto economists who worried about how much gold was disappearing east for nothing but a few scraps of cloth.

2.   What’s the Enculturated Chinese Attitude Towards a ‘Pax Americana’ Dating Back to 1949?

Question:
“One of the earliest topics that was brought up is the purported similarities between ancient Rome and the US. What are the main similarities and differences between ancient Rome and the present and historical US?”

Answer:

Well, let’s go through the obvious list. The United States kicked out a monarch, founded a republic wildly skewed in favor of a rich aristocracy (that was self-consciously modeled on Roman institutions), dealt with violent upheavals as the lower social classes attempted to capture some power for themselves, expanded aggressively on their own continent before accidentally capturing overseas territories, and is now utterly dominant militarily, politically and economically. What else do you need to know?

Throw in the fact that if you believe the Soviet Union was Carthage and that the Cold War is our equivalent of the Punic Wars, then you can even locate us within the larger timeline right around the rise of the Gracchi brothers and, hey, look, Tea Parties.

Except that one thing that’s really been driven home to me lately is that while you can find these superficial similarities, there are much deeper differences. Every powerful nation follows its own trajectory, for its own particular reasons, towards own particular end, though usually at the height of each one’s power, they claim that they are the rebirth of the Roman empire.

For me, the biggest difference between America and Rome is that compared to Rome, the United States is a baby and could be very well proved to be merely a flash in the pan. The Roman Empire became the dominant state in the Mediterranean around 200 BC and remained as such in one form or another until the fall of Constantinople in the 1450s. I mean, we are talking about a nearly 2000 year period where you simply cannot talk about anything that occurred in North Africa, Europe, or the Middle East without talking about Rome. America, by contrast, was a pretty decent regional power for about a century, a pretty major world power for about 75 years after that, and has been living with the kind of unipolar prestige Rome enjoyed for centuries for about the last 20 years.

If the United States of America is still around in 3010, I think maybe then we can start talking about comparisons to Rome. Until then, things happen, nations rise and fall, and borders shift. I’m not saying America can’t dominate the world for a millennia. I’m just saying that it’s an awful lot to ask of anyone.

Rome was all about longevity and stability, and that is a test that no one in the West has been able to pass since.

My Personal Postscript

We live in a polarized time.  Many people who I encounter in the blogosphere will be inclined to take this post as evidence that I am somehow an apologist for the PRC.  Let me set the record straight on that possible perception:

  • My entire professional life has been dedicated to supporting U.S. Government institutions (e.g., the U.S. Foreign Service), U.S. Government programs (e.g,. the U.S.-China EcoPartnership program) and U.S.-led People-to-People cooperative programs such as The Philadelphia Orchestra’s engagement with China
  • Above and beyond my professional involvements, I personally believe that America’s multi-cultural, future-oriented perspective is the world’s best path forward, at least as far as I have so far encountered
  • I do not believe in historical determinism.  There is nothing about either Rome’s or China’s longevity which I find instructive for understanding their futures, except for the single fact that the people who grow up in that cultural tradition feel it in their bones
  • But, as I took pains to lay out in my Where I Stand post, I will never shy from seeking to understand, take into account, and respect my counterpart’s reality when grappling with a shared problem so that solutions which work for “my side” will also work for theirs.  Those are the solutions that stick.

Volume 2, Number 3 in Global TECHtonics: U.S./China Fault-line series

A U.S.-led initiative to reach out to China and to welcome it into the community of Western nations began with President Nixon trip to Beijing in February 1972.  Orchestrated by Henry Kissinger, Nixon’s National Security Advisor at the time, the trip was a brilliant Cold War gambit to exploit the growing rift between Moscow and Beijing. The trip kicked off a seven-year process of “normalizing” relations between the West and “the sleeping dragon” of Asia and, in so doing, divided the Soviet bloc. Through almost half-a-century and a bipartisan succession of Presidents, the effort to engage with China continued as that country woke from its Cultural Revolution nightmare and began to rise up, shaking the world as it did so.

February 1972 was the Year of the Rat (Water Element) in the Chinese zodiac.  Forty-eight years later we are again in the Year of the Rat under the Metal Element.  In Chinese traditional thinking, we have gone from a time of suppleness and fluidity to a time of hardness and intransigence.  In the minds of most Western observers, we have passed from a strategic engagement with China to, under President Trump, a time of open competition on the world stage and strategic disengagement (“de-coupling”) in the technology arena.

This post will save for another time the broader discussion about how and why this shift came about other than to make three general, even obvious, points.  First, there was undoubtedly a measure of optimistic naïveté in the West in assuming China’s willingness to dutifully assume the role of a ‘responsible stakeholder’ in the post-WWII world order.  If the Chinese had conceived of their nation as only having been born in 1949, assuming the mantle of responsible Pax Americana stakeholder might have fit more comfortably. As it was, Chinese conceived the People’s Republic of China as the heir to a Chinese polity which had been the dominant economy in the world for sixteen of the previous eighteen centuries.  They weren’t predisposed to simply adopting some newcomer’s rules and norms as to how China should conduct itself on the world stage. Second, there has undoubtedly been tactical overreach and ill-advised swaggering by President Xi Jinping since his triumphalist speech at the 19th Party Congress in September 2017.  U.S.-China relations would undoubtedly be on a more stable track today had Xi Jinping played his cards differently, following suit more with Deng Xiaoping’s opening bid of “keeping a low profile (hiding one’s capacity) and biding one’s time” (韜光養晦、有所作為) rather than flashing his Made in China 2025 card so conspicuously. It can be argued that it’s better from the U.S. standpoint for this “world order competition” to be out in the open. Third, the horse is definitely out of the barn.  No U.S. Administration is going to try to get that horse back on the 1972-2017 normalization track. The world has changed and what is needed is a U.S. Administration which recognizes real challenges from China but does not exaggerate them and which marshals the resources to address those challenges in an efficient and effective way, rather than wastefully and non-productively.

The remainder of this post uses last week’s The Four Levels of Risk post as a backdrop to a quick sketch outlining just how wasteful and ineffective the Trump Administration’s policy of technology de-coupling from China is becoming.  I’ll do this sketch with three brushstrokes – the view from U.S. boardrooms, the view from the cultural sidelines and the view from history.

 

The View from U.S. Boardrooms

A CNBC.com article by Arjun Kharpal published on June 4, 2019 made no reference to the Tiananmen anniversary but did point out that the Trump Administration’s Huawei policy was quickly hoisted on its own petard  – failing to get allies to broaden the campaign but leading to a marked acceleration of China’s efforts to develop its own semiconductor industry to supplant U.S. semiconductor supply in the Chinese market and, eventually, in world markets.  “The Huawei incident has indeed stimulated the development of China’s domestic chip industry,” Gu Wenjun, analyst at China-based semiconductor research firm ICWise, told CNBC by email” wrote Kharpal at the time. Now, one year later, Trump Administration policy is digging this hole deeper and at a faster pace:

  • Qualcomm is reported to have lost current orders worth as much as $8 billion as a result of the Trump Administration’s May 2020 tightening of trade restrictions imposed against Huawei. The new regulations block all chipmakers that use U.S.-made equipment or software from producing chips for Huawei (though companies can apply for a license to continue supply)
  • Following the Trump Administration’s August 6th signing of an Executive Order banning transactions by U.S. companies with Tencent, the owner of the WeChat app, market research firms scrambled to assess the impact on Apple and its installed base of iPhones in the strategically vital Chinese market. The surveys all pointed to the same result – as many as 90% of iPhone users in China would drop the Apple product and switch to Android devices if the WeChat app were no longer available on their iPhones.
  • The same August 6th Executive Order targeted Bytedance, parent company to the massively popular TikTok app. Seasoned observers who are able to gauge the U.S.-side push-back against this action and know the sloppiness with which the Executive Order was drafted, expect an eventual climbdown by the Administration – if not before the November 3rd election, then shortly after it.

 

The View from the Cultural Sidelines

There are two culture wars raging – a partisan one in U.S. domestic politics and an international one between a suddenly tarnished U.S. model and a much-hyped “bright and shiny” new Chinese model.  The same dynamics at play with the COVID-19 pandemic are at play in the technology sphere.  Domestically, Trump works to energize his base with claims that China is the enemy and that his Administration’s COVID response and China de-coupling response are “the best” that any President could possibly do.  Front-line health workers and tech experts know that, in both cases, the claim lies far afield from the truth.

In China, the popular view cuts to the bone of Trump Administration posturing.  His new nickname is 建国 (Jiànguó), a popular name given by parents to their infants especially during the nationalistic years of the Cultural Revolution.  It means “Build the Country.”  In other words, Trump Administration policies are widely seen as accelerating the same nationalistically-driven Sputnik-type race to advanced semiconductors, artificial intelligence, robotics and the tech future which the policies ostensibly are meant to forestall.  Trump’s impulsive “Only I Can Fix It” approach playing to a grandstand of partisan supporters has made the challenge which Xi Jinping’s China presents the U.S. more acute.   An approach which takes measured and deliberate stock of that challenge and which aligns interests and works closely with the U.S. business community and international partners would be far more effective.  Pumping up nationalist sentiment in both the U.S. and China serves only to narrow options and increase risks of conflict spiraling.

 

The View from History

A pithy take on Trump’s approach to the U.S.-China technology challenge comes from a widely-respected former colleague who has decades of high-level experience with China from political, national security, economic and think-tank perspectives.  He writes “(Trump is like) King Canute trying to fight, instead of the ocean tides, the tides of technology.”

I’ll conclude with another, somewhat longer historical reference which illuminates Trump’s campaign of China-bashing as a central element of his re-election strategy.  It is drawn (almost) verbatim from Episode 66 of The History of Rome podcast series by Mike Duncan:

“Conscious that his standing with the people was taking a hit, the Emperor decided he needed to find someone to take the fall for the fire.  Someone he could point to and say it was them, not me, I didn’t have anything to do with it.  But he couldn’t just grab someone off the street because, with his popularity sinking like a stone, that would just engender the further charge that he was setting up some innocent to take all the blame.  What Nero needed was someone, some group that the people disliked even more than him, someone that the people were ready, willing and able to believe had done this horrible thing if for no other reason than that the people were looking for an excuse to round up and punish them. Enter the Christians. In the thirty odd years since the death of Christ, nascent Christian communities had begun cropping up throughout the Empire.  At first, they were primarily Jewish in character but through the missionary work of St Paul, known later as the Apostle to the Gentiles, this new religion began to spread into the Greco-Roman world.  By the Emperor’s reign, a tiny community of believers, led according to tradition by St. Peter, had established a religious beachhead in Rome itself. The problem the early Christians faced in Rome, though, was not just that their religion, in comparison to the wider pagan world, struck the average Roman as downright weird, but also that at this point most Christian adherents were non-citizen resident aliens in the city who spoke primarily Greek or Hebrew. So the Christians in Rome looked different, spoke a different language, usually came from the lower rungs of the social ladder, and belonged to a strange monotheistic cult that seemed to have cannibalistic overtones. All in all, they were capital O Other in every sense of the word. And as has been proven over and over again by history, whenever terrible things happen to a community – economic problems, floods, plagues, fires – it is the capital O Others who usually get blamed. So desperate to shift responsibility for the great fire away from himself, the Emperor looked at these Others and decided to lay it all on them.”

The only change I have made to this podcast text, recorded in August 2009, was my substitution of the central character’s title instead of his name.  Even with that switch, there’s little surprise who that Emperor was.

Nero.

 

 

Everything that I have ever done professionally has been approached and viewed through the lens of one of two disciplines.  Eventually, I learned to combine the two.

The first was the discipline of cultural anthropology. A twelfth-grade class in 20th c. religious thought led me to major in Asian Comparative Religion at Princeton which led me (after a year of traveling overland from Europe to Taiwan via Turkey, Iran, Afghanistan, Pakistan, India and Nepal) to a joint MA/PhD program at the University of California at Berkeley.  Two and a half years living at 10,500’ in the village of Tengyi in the Manang Valley north of Annapurna (pictured below), taught me how to see the world through the eyes of people with different circumstances and values.

 

The other was the discipline of diplomacy.  I joined the U.S. Foreign Service in the spring of 1988, a little more than two years after getting my degree.  (I should mention at this point that I made very good use of the intervening time by moving to New York to court Grace, by marrying Grace, and by renovating our first house in Brooklyn.) Having cleared the various assessment hurdles of the Foreign Service test and having been given an offer to join, it wasn’t a hard decision.  My clearest career idea upon receiving my doctorate was that I did not want to stay in academics.  And my only interview in the corporate world – with SmithKline (now Glaxo) – could have made for an amusing episode of The Office.  So I took the offer. Having come in initially through the State Department, I asked for a lateral transfer into the U.S. Department of Commerce branch of the Foreign Service, because my sense was that — for the two places I really wanted to be posted, China and Japan – a lot of the Embassy action was on the business side.  I wasn’t wrong. Anyway, the point I want to make here is that the anthropological viewpoint worked well with the diplomatic viewpoint to help me see issues in three dimensions and, with that better field of vision, helped me resolve some the issues at the heart of the U.S.-Japan Auto Talks and other knotty diplomatic challenges.  I don’t think I ever told business clients, and rarely told Embassy colleagues, that I was trained as a cultural anthropologist.  I definitely never contemplated for a moment putting PhD on my business cards. But I used the anthropological perspective every day during my time in the Foreign Service.

 

With this as personal introduction, I’ll share here the three roadmaps – ‘pathmaps,’ more accurately – which have been most helpful in guiding me through both the magnificent panoramas and the minefields of modern U.S.-China relations.  In coming weeks, I will give each of these works its own dedicated post.  Today will simply list the three with brief thumbnail intros and identify the common thread I have found most useful.

 

1

Wealth and Power: China’s Long March to the Twenty-First Century

By Orville Schell and John Delury

Random House (2013)

Given to me for Christmas in 2013 by James Gibney — former Foreign Service colleague in Tokyo, editor extraordinaire, and godfather to my younger son – Wealth and Power brings to life a simple but profound insight.  Through the life stories of eleven completely different individuals — in some cases, mortal enemies – Schell and Delury show how all eleven hew to a single goal, China’s rejuvenation through the acquisition of wealth and power.  The early 19th c. scholar Wei Yuan and the activist Feng Guifen proposed completely different courses of action; the Empress Dowager Cixi, the “new citizen” Liang Qichao and the reformer Sun Yaat-sen all saw radically different pathways to modernization, Chiang Kai-shek and Mao Zedong led opposing sides of a decades-long civil war, and Zhu Rongji (whom I met as Mayor of Shanghia on several occasions during my first posting there) and Nobel Prize winner Liu Xiabo had entirely different conceptions of the moral duty of a citizen in modern China.  Nonetheless, despite differing in their ideas of the best means to reach the goal, they all shared an absolutely identical understanding of the most urgent goal in their lives – helping China acquire enough wealth and power to regain its traditional standing as a world colossus.  (This goal, incidentally, continues to be inculcated in the education of every school child in China today).

 

2

Belt and Road: A Chinese World Order

By Bruno Maçães

Hurst Publishers (2019)

 

This book is included not because it is one of the best books about China.  Far from it.  John Pomfret’s The Beautiful Country and the Middle Kingdom and countless other books would make that cut in front of Maçães.  The reason for Belt and Road’s inclusion here is that Maçães does something few too scholars and commentators on China bother to do.  He puts himself into the minds and mindset  of the Chinese government planners who are charting China’s future.  This is what an anthropologist does and the insight it provides helps minimize misunderstanding and creates more space for successful diplomatic outcomes.

Maçães is himself a former Portuguese diplomat with extensive experience in Hong Kong and China.  To give just a sense of his approach, Maçães argues that Western theories of international relations entirely miss the basic conception at the heart of the Belt and Road Initiative (BRI).  In Maçães’ view, that conception “follows Taoist logic: the single concept first divides in two — land and sea — then in several — the corridors and coutnries — then in many — the specific projects and privileged locations” in the BRI enterprise.

 

3

The U.S. and China in the 21st Century: Sub-National Sino-American Relations

Course Number IMPA 608 in the School of Liberal & Professional Studies (FY 2019 & 20)

International Masters of Public Administration, Fox Leadership International

Instructor: Terry Cooke   Co-Instructor: Liyiran (Shelly) Xia

 

This is the course I taught at Penn for two years before COVID-19 hit and the course was furloughed.  I hasten to point out that I am adding it here because of the input from students, rather than because of my syllabus.  The course is designed in two parts: the first seven weeks involves readings, lectures and classroom discussion structured on the basis of my syllabus; the second seven weeks, the most valuable part of the course, is a knowledge co-creation exercise based on original research, much of it in Chinese, which the students conduct and present.  It is through this knowledge co-creation exercise and through insights provided by the students and Co-Instructor Shelly Xia that I have been able to articulate the framework which informs the Ambitions portion of the TEA Collaborative project (T = Technology, E = Energy/Environment, A = Ambitions).  The Ambitions portion seeks to understand and systematically present the MacroDevelopment vision which Chinese government planners have been elaborating and adjusting since the birth of the People’s Republic of China in 1949 (and have been communicating clearly in their Five Year Plans).  It is an effort to apply the joint lens of anthropology and diplomacy to better understand the motivation and to better delineate the opportunities and challenges associated with China’s MacroDev trajectory.  We use three time periods (and, in the last time, period two different geographies) to organize this undertaking:

1949 – 1978:               Version 1.0 of the PRC MacroDev Model

1982 – 2009:               Version 2.0 of the PRC MacroDev Model

2012 – Current:           Version 3.0 of the PRC MacroDev Model
A) Domestic Release
B) International Release (Belt & Road Initiative

Note: the years not covered above were years of opaque, internal deliberation
within the Chinese Communist Party leadership

 

The Common Thread

 

 

I hope the point is obvious.  The common thread here is being able to understand the world as seen through the eyes of your counterpart.  As in business, you don’t always know whether your counterpart will prove to be protagonist or antagonist, friend or foe.  In order to negotiate the best possible deal, however, it is always vital to understand as well as possible that counterpart’s motivations, core values and thought processes.  Whether the climate of U.S.-China relations is chilly or warm, I choose to stand firmly on that ground.

 

As the U.S. and China continue to face off daily over technology and other issues, I have been listening, as my dog Max and I walk each day, to the brilliant History of Rome podcast series by Mike Duncan (2007-12).  One thing is clear from the endless wars which Rome undertook over the course of a millennium against the Latins, the Etruscans, the Samnians and the Carthaginians during the Republic; against each other during the Civil Wars; and against the Greeks, the Syrians, the Parthians and others during the early Empire (which is as far as I’ve gotten so far) – wars were started as often as a result of misreading – or cynically exploiting– an opponents’ real intentions as they were from any meeting of minds over the actual need for conflict. (Mind you – we’re talking here about the miscalculations that get conflicts started, not the logic which takes over once military actions have been initiated).

With that in mind, I am reminded of a March 2019 article by Katherine Epstein, a member of the Princeton Institute for Advanced Study.  This article gives a clear overview of the attitudinal and behavioral parallels marking America’s 18th c. rise in a British-led world order and China’s emergence in the U.S.-led post-WWII global system.  A common structural dynamic is at play in both instances.

To Understand China, Look to America’s History

In challenging Britain’s hegemony a century ago, U.S. tactics look similar to Beijing’s today.

By Katherine C. Epstein
March 19, 2019 7:15 p.m. ET
Wall Street Journal

There’s been a good deal of hand-wringing in the U.S. over efforts by the Chinese telecommunications giant Huawei to replace U.S. suppliers of advanced equipment and wire the world with its 5G network. Most analysis of China’s strategy turns on the conviction that the Chinese are trying to challenge U.S. commercial and geopolitical hegemony—they steal U.S. technology and then sell their plagiarized equipment at a lower price. Worse, they seek to build an alternative, China-led global telecom infrastructure, positioning Beijing to spy on the users and capture yet more U.S. commerce.

As a historian, I’m struck by the incompleteness of this analysis. Two crucial pieces are missing.

The first is any sense that the threat posed by Chinese control of a global telecom infrastructure might not be limited to espionage or (that other favorite metaphor) a “cyber Pearl Harbor.” The potential danger may be wider and deeper—and the World War I era shows why.

Before that war, like today, the global economy was highly integrated. This was the first era of globalization. Advanced industrial, urbanized societies depended on international trade, requiring uninterrupted access to the infrastructure that girded the global economic commons. Interruptions to that access had the potential to cause economic derangement, rapidly leading to social and political instability. In other words, control of the infrastructure conferred commercial advantage and it could also be weaponized.

A century ago, Britain acted on this insight. In addition to eavesdropping on enemy and neutral communications, the government acted to regulate the British firms that dominated the services necessary to conduct global trade: the global communications network, the financial-services industry (including commercial credit and marine insurance) and oceanic transportation. Britain used its control over the infrastructure of global trade not simply to spy on its enemy, nor to strike enemy military assets, but to mount a systematic assault on the whole of an enemy’s economy—in 21st-century parlance, a massive denial-of-service attack against enemy society.

Returning to the present, both the espionage model, which refers to targeted state spying, and the cyber-Pearl Harbor analogy, which refers to an essentially conventional military attack, fail to capture the systemic and social qualities of a certain type of attack. In this context, reflect on Russia’s efforts to interfere with U.S. elections. Partisanship aside, Moscow has managed, at relatively low cost, to reduce the confidence that Americans have in each other and the electoral process. It waged a successful psy-op, compromising not material resources but social confidence. Its campaign showed that foreign countries can manipulate information within global networks to sow distrust within American society.

What would a scaled-up version of this attack look like? What if it were carried out over a China-dominated information network?

The second missing piece is awareness that if China is trying to challenge (or escape) U.S. hegemony by stealing American technology and building an alternative global telecommunications infrastructure, this would be analogous to what the U.S. tried to do vis-à-vis Britain, then the global hegemon, and the other great powers in the World War I era. Americans tend to forget how powerful Britain was and how weak the U.S. remained before World War I.

In its drive for world status, America routinely pilfered foreign technology well into the 20th century, and it gained considerable strategic advantage from its theft. The 1912 Supreme Court case Crozier v. Krupp, which formally extended the power of eminent domain to intellectual property, concerned a German gun-carriage design the U.S. Army had plagiarized. That same year, a U.S. naval officer walked off with the plan for the British navy’s super-secret long-range torpedo. During World War I, Washington expropriated German chemical intellectual property held in the U.S., providing an enormous boon to America’s chemical industry.

In World War II, the U.S. received huge inflows of scientific and technological knowledge from Britain, then slapped secrecy restrictions on subsequent developments to prevent any flow back to Britain. Many more examples could be adduced. Historically, it might be said, Americans are an imitative people.

The U.S. came to appreciate the significance of controlling global economic infrastructure when Britain’s campaign of economic warfare against Germany in World War I caused huge collateral damage to the American economy. Companies like RCA worked hand-in-hand with the U.S. Navy to build a global telecommunications grid—perhaps similar to the way Huawei, run by a former Chinese army officer, may be working hand-in-hand with the Chinese army.

Wall Street cooperated with the U.S. government to develop a modern financial-services industry deliberately intended to help New York displace London as the world’s financial capital—perhaps similar to the way China has developed its own Swift payment-clearing system. Woodrow Wilson’s administration attempted to build an oceangoing merchant marine so the U.S. wouldn’t have to rely on Britain’s—perhaps similar to the way China is attempting to increase its control over the global oceangoing merchant marine.

In short, a century ago, the U.S. was the China of the age: an up-and-coming revisionist nation chafing against the established powers, importing and pirating what it could, free-riding on the security provided by the existing hegemon, and legitimizing its behavior with the pious conviction that it was on the right side of history. Could it be that the Chinese understand U.S. history better than Americans do?

It’s easy to be moralistic about China, but in the quest to find a sound U.S. strategy, we need less pearl-clutching and more imagination. Rising powers have compelling strategic incentives to control the sinews of global economic activity as well as to acquire foreign technology. Americans and their allies should ask themselves whether they would rather live in a world under U.S. or Chinese hegemony—and what they can do about it.

Ms. Epstein is a member of the Institute for Advanced Study in Princeton, N.J., an associate professor of history at Rutgers University-Camden, and a director of the Naval Historical Foundation.

So, what’s the point? As  Yuval Noah Harari, author of Sapiens, would be quick to point out, the British themselves had established their naval-led Empire by upending Spain’s Armada, which had earlier navigated its way to world power status by stealing from the Portuguese the same “rudders” (mariner’s handbook of written sailing directions) which the Portuguese had stolen from the then-ascendant Arab empire.

Well, the point is that, as the U.S. and China edge ever-closer to an actual or pretextual spark of open conflict, we need to stay sharp-eyed.  Given the incalculable costs which outright conflict between the U.S. and China would exact from both countries and the world, it is a political necessity and a moral imperative to keep an accurate picture of the structural situation in our field of vision.  This is where Katherine Epstein’s article is useful.  A picture with gray-tones is always more accurate and revealing than a simple black-and-white picture.  Harder to argue in a sound-bite perhaps, but more consistent with the leadership we need.

 

 

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