China’s communists are riding the tiger
The West isn’t certain how to handle China. Some say what’s good for Beijing is good for everyone: its pro-market reforms have lifted millions of Chinese out of dire poverty and reduced prices across the globe. Donald Trump’s trade war is based upon a fundamental misunderstanding. Yes, Western jobs have gone to China; yes, China has flooded our markets with cheap imports. But China also provides a massive market for our services and industries – and, precisely because they are so cheap, Chinese imports lower costs for Western manufacturers. American car makers, for instance, rely heavily on steel and thus oppose tariffs. Mr Trump – the supreme deal maker – sees the world in clear-cut terms of winners and losers, but when it comes to trade, that’s not always how things work.
Some industries, however, are strategic, which is where a serious problem emerges. China’s products are increasingly high quality and sophisticated, hence Huawei’s reported interest in helping Britain build its 5G network. It has the technology; it can probably underbid anyone else. But even if China is now an innovative capitalist economy, it remains a communist dictatorship in which the political and business elite are aligned. This is why some of our Five Eyes security partners have banned Huawei from parts of their communication networks: America, which is just as worried about security as jobs, doesn’t want its allies exposed to theft, espionage or even extortion by its Pacific rival.
One could argue that everything China is accused of doing to the West, the West once did to China and that this is payback. It could also be said that China is simply returning to its historical position as the largest market in the world; some urge the West to swallow its pride and encourage, not challenge, this resurgent power. But how much longer can China’s authoritarian experiment really continue? It relies on growth, which has been fast, but at the cost of enormous disparities in wealth and the continued suppression of free speech. To quell dissatisfaction, the state has fallen back on Maoist rhetoric twinned with nationalism, along with locking up minority groups, all of which alienates the very Western partners necessary for economic progress.
The Communist Party looks all-powerful, but it is riding a tiger and it knows it.