China’s bullying and the role of the chip
Ever since Deng Xiaoping opened China to the world in the late 1970s, many in the West wanted to see the country succeed, because we thought China – despite its brutal authoritarian political structure – was on a path to a more open economy and society. Alas, President Xi Jinping has reversed steps in that direction in ways that could pose a real danger to China’s future development and a real danger to the rest of the world.
Everything Xi is doing today is eroding trust among Chinese and foreign entrepreneurs about what the rules of business are now inside China, while at the same time eroding trust abroad that China – having swallowed Hong Kong – won’t soon move on Taiwan, which could trigger a direct conflict with the US.
While I don’t want Xi’s hard-line strategy to succeed – that would pose a danger to every free country and economy in the Pacific – I also don’t want China to fail or fracture. We’re talking about a country of 1.4 billion people whose destabilization would affect everything from the air you breathe to the cost of your shoes to the interest rate for the mortgage on your house. It’s a real dilemma. Alas, though, I don’t think Xi realizes just how much uncertainty his recent behavior has injected – inside and outside China.
For those of you who have not been keeping score at home, let me explain by starting with a question: What would you have thought if you’d looked at this newspaper in 2008, a year after the Apple iPhone was released, and the front-page headline said that Steve Jobs had disappeared? There would be millions of searches on Google: “Where is Steve Jobs?”
Well, if China has a Steve Jobs equivalent it’s Jack Ma, the co-founder of the e-retail giant Alibaba. Has anyone seen Ma lately? I guarantee you that more than a few people have asked Google this year, “Where is Jack Ma?”
Although news reports said that Ma had surfaced briefly in Hong Kong, there has also been talk that he may have been under some kind of house confinement during the last year. Ever since Ma gave a speech in October 2020 that criticized China’s financial regulators, Xi has cracked down on Alibaba’s global empire and blocked what would have been a record initial public offering of an affiliate company set to have taken place last November.
It was as if Xi said: “You know, if I have to choose either having Alibaba, Tencent, Baidu and all the other Chinese tech giants be global champions – with their own massive financial and data resources but growing beyond the grasp of the Chinese Communist Party – or having them be second-tier companies under my control, I’ll choose door No. 2.”
Xi has clearly watched how Western tech companies have exacerbated social tensions in their societies, widened income gaps and established monopolies that can dominate governments – and he wants none of that unfettered capitalism for China. I get that. But making their founders vanish? More than a few young Chinese innovators have to be asking themselves: “What’s my future here? What are the new rules?”
A second story: After the Australian foreign minister, Marise Payne, expressed support last April for an independent investigation into the origins of the coronavirus pandemic, China reacted by slashing its imports of Australian barley, beef, wine and coal. Really? It was an absurd, bullying overreaction that every one of China’s Pacific neighbors noted.
Then, two weeks ago, China sent 150 People’s Liberation Army aircraft to probe the airspace near Taiwan, just the latest reminder that China is seriously laying the groundwork to seize Taiwan by force. You should be afraid.