News Comments, Reflections

Is China Playing Go?

The recent crackdown by Chinese authorities on their largely foreign-listed education and tech companies has caused much chaos among Western investors.

As I hinted last year, the CCP leadership’s vision for China’s future appears to be a sophisticated version of high-tech big-data authoritarianism that advances the interest of the party-state. While “authoritarianism” and “big data” are the inherent political and demographic characteristics of China, “high tech” is, to a great extent, an imported good. Given that foreign investment and know-how in technology are still relatively scarce, it is indeed puzzling to see the PRC killing the goose that lays the golden eggs at such an early stage of its “technology struggle,” to the point where it appeared to be helping its adversaries in achieving their goals.

Unless “we must have missed something”—as the “conventional wisdom” goes when it comes to the “mysterious ancient nation that reads Sun Tzu and plays Go”—

Unsurprisingly, the “usual suspects” in the U.S. quickly came to the PRC’s rescue, arguing that “investors have misconstrued China” and it “could ultimately be a good thing.”

So is China playing Go? I don’t know. What I do know is that an enormous bet is being placed: if successful, it could make George Orwell blush for his lack of imagination, but if it goes south, one can only hope that things would end up peacefully.

Standard
News Comments, Reflections

“Sovereignty and Territorial Integrity”

By a vote of 2,895 to 0 (with one abstention), China’s rubber-stamp legislature near-unanimously approved sweeping changes to Hong Kong’s electoral process, ensuring that candidates will be “patriots only” per Beijing’s requirement. Concurrently, 47 politicians and activists in Hong Kong were charged with “subversion,” kept in custody pending trial. The message that the PRC is sending to Taiwan could not be clearer: Do not expect your political system to be honored and/or allowed to co-exist should any deal be struck between the two sides of the Taiwan Strait.

On a related note, Admiral Philip S. Davidson, head of U.S. Indo-Pacific Command, recently said that China might be capable of forcing a “reunification” with Taiwan within the next six years, as part of Beijing’s ambition to supplant the U.S. in geopolitical matters in the Western Pacific area. Indeed, “rise of the East, decline of the West” (东升西降) has become a familiar refrain for Chinese officials and state-controlled media outlets as they declared “victory” over COVID-19 and mocked the chaotic responses in the West—in particular, the U.S.—apparently with some “China experts” going along the same line, as I have documented here.

However, Admiral Davidson did not mention that the PLA, while seemingly impressive on the outside, is largely untried in real battles. This, together with the clandestine nature of the PRC’s political and military systems, makes it even harder for both the decision-makers within the PLA and the outside world to evaluate its strengths and conditions (same for other complex issues such as China’s economic growth or its handling of COVID-19 beyond the party line/propaganda). While I predicted last year that the India-China border tension would escalate to one of explicit armed conflict and casualties—which unfortunately turned out to be true just a few days after I posted my thoughts—the melee that actually ensued revealed little information about what would happen should armed clashes break out between the PLA and the Taiwanese armed forces.

China’s obsession with “sovereignty and territorial integrity” (主权和领土完整) has always been part of the core of its authoritarian ethnonationalism (the other part appears to be the “Chinese/Han race”), as is reflected in its “patriotic education” to the point where certain words and phrases such as “separatism” (分裂/分离主义) and “Taiwan independence” (台独) can stimulate strong emotions of contempt and hatred in an average school child. This, in turn, has prevented the average Chinese from ever thinking about these issues because the fear of themselves being associated with a (real or imagined) “separatist” or “Taiwan independence advocate” is so strong that they risk being crushed by the society they live in.

Absent credible external deterrence, taking bold action on Taiwan might just be a good way for the CCP leadership to galvanize nationalist support and deflect attention from increasingly thorny domestic challenges.

Standard
News Comments

China’s Anti-Monopoly Rules

The Financial Times reported that China’s State Administration for Market Regulation (SAMR) recently published draft rules to prevent “monopoly behavior” on Internet platforms such as Alibaba, Tencent, and Meituan.

Some observers are quick to point out that this move may be connected to China’s recent crackdown on Ant Group, teaching everyone, including Jack Ma, the wealthiest person in China and founder of both Alibaba and Ant, a lesson about who is in charge.

Others argue that such a move is imperative in its own right. These massive tech companies have repeatedly been caught engaging in various anti-competitive practices in recent years. Therefore, they say, the SAMR is merely making things better for the consumers and small businesses that rely on these platforms.

China’s approach toward anti-competitive behavior is an interesting case study. The PRC adopted the Anti-Monopoly Law (AML) in 2007 and has, for more than a decade, been refining its competition rules to catch up with Western developed economies, especially the United States. With the newly published rules, they have even leapfrogged to complex competition issues related to multisided platforms and business models that are built on network effects, the very same constructs with which the FTC and the DOJ are currently dealing.

That said, the objectives of the AML may still differ, sometimes substantially, from the established antitrust principles in the West. For instance, in addition to “safeguarding consumers’ interests” and “protecting fair market competition,” Article 1 of the AML has a “safeguarding the public interest” provision that may well include national/state security issues—issues that are increasingly pertinent given the series of events since the U.S.-China trade and tech war began to pick up momentum in 2018.

Now, consider the second narrative re China’s anti-monopoly rules against tech giants. The same can be said about state-owned enterprises (SOEs), if not in a more severe sense. Yet, China’s anti-monopoly enforcement rarely, if ever, touches them. If consumer welfare and business competition really are the top priorities for the CCP leadership, wouldn’t it make more sense to target SOEs first? Unsurprisingly, Article 7 of the AML explicitly exempts certain conduct of SOEs (e.g., the “exclusiveness in operation and sales”) from being scrutinized in the context of promoting market competition.

Standard
News Comments

The Left Needs to Be Reminded

Re: Reuters reported that China’s foreign minister Wang Yi recently softened his tone on the U.S.-China relations. In his speech, Wang appeared to be “seeking common ground while reserving differences.” Wang claimed that the two countries should not attempt to change each other, as “China cannot and will not become another America,” adding that a socialist system is suited to China and “its people’s choice.”

Wang Yi’s speech made a reference to the political system. His claim that “China will not and cannot become another America” clearly intends to appeal to those on the left, many of whom have long held that U.S. foreign policies are based on illiberal hegemony and an “imperialist mentality.”

However, in this case, it is delusional to take Wang’s word seriously. Politically, China has mostly been left alone in its own way in the past 30 years. It is still in its top-down authoritarian form that lacks the legitimacy to rule, unlike one provided by an electoral mechanism. On the other hand, forcing a change has not been a prerequisite for the West to engage with China during the same period.

So why a sudden rush of “imperialist impetus” from the U.S. now? Some may argue that this is because of President Trump, but just turning around and taking a quick look at all other countries in the Five Eyes as well as at China’s neighbors proves that such an argument is flawed.

The West is standing up to China because it is crucial for the West’s own self-preservation. The left needs to be reminded that whatever rights they enjoy and whatever activism they preach and practice are, first and foremost, founded on the very fact that they live in a society with civil liberties. And those civil liberties are not to be taken for granted—this is something they are fully aware of when it comes to President Trump but conveniently ignored elsewhere.

Standard
News Comments

China Hawks Are Going After Wolf Warriors

Re: Josh Rogin at the Washington Post recently wrote a piece on the Trump administration’s China hawks. The latest episode involves current national security adviser Robert C. O’Brien giving a speech in Arizona widely seen as the harshest anti-CCP statement a senior U.S. official has given in recent memory.

Since the election is only several months away, I think now is a pretty unfortunate time to predict whether these speeches are mere political positioning or preambles to more meaningful, actionable policies.

But I can see the logic behind these moves: “wolf warriors” and those doing CCP propaganda and foreign influence work have dug a massive hole for themselves to jump in without any real backups or plans to come out of the hole—even though their initial intention might be to tilt the balance in their favor by taking advantage of the pandemic.

Unsurprisingly, hawk-eyed China hawks and political executives inside the Beltway saw these shoot-oneself-in-the-foot stumbles as a godsend for them to introduce to the mainstream many of the hardline policy stances they have long yearned for. Regrettably, not all of these stances may lead to policies that align well with the U.S. strategic approach to the PRC or the effects that the approach is trying to achieve (the economic loss and brain drain resulting from restricting visas for Chinese students come to mind).

Having said that, those policies aiming for the development and control of critical future technologies should ALWAYS be given the top priority and deserve rigorous planning and analysis, because I believe this is also the area that the “single authority” and his small group of underlings/advisors are betting on in the long run (so it renders many of the recent IR talks such as the one by Yuan Peng of less importance or relevance).

Standard