Author discusses how to work with China
In Shaun Rein’s The War for China’s Wallet, the author offers a roadmap for navigating relationships with China, both for foreign countries and international companies. He recently spoke with The Post’s Hor Kimsay to discuss the potential benefits and pitfalls of Cambodia’s increasingly friendly relationship with the regional giant.
What is the main message in
As China supplants America as the world’s economic growth engine, countries and companies can benefit if they understand how to navigate China’s political system and understand the wants of Chinese consumers. Companies that get it right can make billions of dollars – China, for example, has already eclipsed America as the largest market for fried chicken chain KFC. It has become the largest market outside of the US for Starbucks and Nike and is the main driver for those companies’ growth.
However, the ability to generate profits has some downside. Countries and companies alike cannot cross China politically and must do the Communist Party’s bidding or else run into trouble. For example, the Chinese government punished the hotel chain Marriott by blocking its Chinese-language website and apps in China for a week, costing them millions of dollars, because Marriott TheWarforChina'sWallet, had promulgated a survey that listed Taiwan as a separate country, enraging Chinese consumers and government mandarins alike.
In the book, you define three categories for a country’s relationship with China: Hot Partner, Warm Partner and Cold Partner. What is the difference between these groupings?
Many American foreign policy analysts criticise China for not having true allies in the American-Canadian sense. One day China is taking photoops with leaders from neighbouring countries, the next day lashing out at them for crossing them politically and
thus say that China is failing in its foreign policy aims.
I view it differently – I don’t think China is trying to forge alliances; instead, it is looking to use economic carrots and sticks to convince countries to either do its political bidding (a Hot Partner country like Hungary, Ethiopia or Cambodia) or to punish countries that cross it politically (a Cold Partner country like India or the Philippines and the Aquino administration). It knows it can never be truly close with any country in the long-term, so instead it tries to dole out low-interest loans and infrastructure investments to countries to make them open to China’s political aims in the short term. Meanwhile, countries that cross China politically, as South Korea did by installing Thaad missiles, get punished. China blocked Chinese tour groups from visiting South Korea last April, causing a 40 percent drop in annual tourist visits and crippling the South Korean economy.
If Cambodia is a ‘hot partner’ with China, what does this mean for Cambodia’s economy and development? And what does China gain from the relationship?
Cambodia’s [Prime Minister] Hun Sen has been quite savvy in his deal- ings with China over the past decade. He has supported China’s views on the South China Sea during summits of Asean. Having a supportive country in Asean like Cambodia is to counter criticism of China’s policies by countries like Vietnam or the Philippines, and causes China to look to invest more in infrastructure development in Cambodia and to give it low-interest loans.
Moreover, the Chinese government uses its control of the state-owned media to tout the historical landmarks in Cambodia like Angkor Wat. Right now, Cambodia is one of the top destinations Chinese tourists want to visit. I am very bullish on Cambodia’s ability to attract Chinese tourists to its landmarks and high rollers to its casinos. This is all gained by being a friend of China in the “hot partner” category.
One of the problems of becoming a “hot partner” country is that these countries often become too dependent on China economically and start to lose political independence. China’s economy is so large that if a country gets punished for crossing China politically, then it will have a real impact, as in the South Korean case.
On the one hand, it is good to get close to China politically, as nations will reap economic benefits, but it comes at a cost of losing political independence so countries should try to be close to China but also distance itself at times, as the United Kingdom or France has done, so that they are not viewed as lackeys of the Chinese government.
This interview has been edited for length and clarity.