Opinion | China must champion openness to defeat the Cold War mentality
By Tom Fowdy
Over the past week the Biden administration unveiled new restrictions on US outbound investment targeting China for the first time. These measures seek to ban investors from three critical sectors of China's high-tech economy, including semiconductors, artificial intelligence and quantum computing. They have been in the works for some time, and should not surprise anyone. The White House has been brazen and hyperaggressive in its war on China's technological advances, including imposing sweeping blacklistings and export controls on the semiconductor industry writ large, and even forcing third party countries to join those restrictions. It seeks to hobble China's economic development, despite claiming not to do so, although many continue to question if such measures will ultimately work.
The start of US restrictions on investment in China are seen as damning to investor confidence. Although they may be narrow, the political signal which they send is unmistakeable. Already, hawks decry them as being insufficient. This, coupled with geopolitical tensions, means that businesses can only increasingly see risk ahead. What if these rules change or broaden? What if things get worse? In just the flash of an eye, the US have orchestrated a climate which has killed the notion of China being a "market of the future". No matter how many times they claim they are not pursuing "decoupling", they are unequivocally lying about it, because the environment they have facilitated is simply too toxic.
It is no coincidence amidst the environment that is emerging that Foreign Direct Investment (FDI) in China has collapsed to an all time low since 1998. There are a number of reasons pertaining to this, including diminishing confidence in China's own economy amidst a sluggish recovery, falling global demand for exports, and of course tensions themselves which have ushered in a global "chill" amidst the implications of the war in Ukraine.
Many of the recent shifts in China's economic decision making have of course been geopolitically motivated, a product of growing distrust of the United States, which have included regulatory actions against US companies based in the country, as well as increasing securitization and oversight of the business environment at large. The steady rolling out of more rules, bureaucracy and loopholes has created a large scale inconvenience which coupled with the growing political risk, which all combined gives the signal of "unwelcome", not helped of course by the exuberant negativity of the western mainstream media in pushing this exact narrative.
On one hand, we must confront the reality that the world has indeed changed, the US views China as its primary geopolitical rival and has pursued an irreversible ripping up of globalisation in order to facilitate its own hegemonic objectives. It seems that this power struggle and challenge is here whether we want it or not. On the other, China must learn and become more adept at beating these challenges by not "conforming" to them, thus legitimating the structural reality. In other words, China's only way to truly win is to become a champion of openness and optimism.
It must avoid in every aspect, falling into the trap of becoming a "New Soviet Union", which of course US foreign policymakers desire the most. How so, you may ask? That is defined as here as a country, feeling insecure from foreign aggression, ultimately locks itself into a dead heat military competition while isolating itself from the world, allowing the US to shape a comprehensive narrative that frames it as a global aggressor, and falls into economic and technological stagnation. It must instead fight tooth and nail not to enable, but resist the push for decoupling, ideological and bloc confrontation generated by the US and its closest allies, it must seize the initiative.
During the early days of the COVID pandemic, in 2020 and 2021, China had that initiative, because it presented itself as a bastion of stability, certainty and order amidst a world of pure chaos, which allowed it to push forwards in foreign investment and growth when no other country could. Yet in 2022, everything started to go wrong as it lost that initiative. The Biden administration's America is hardly a strategic genius, but it has been able to capture the geopolitical initiative by creating a context whereby it is able to turn the screws on Beijing.
Before things go downhill, China needs to seize that initiative back by doing something extraordinary, ambitious and defiantly optimistic.
The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.
The views do not necessarily reflect those of DotDotNews.
Comment