US/China, Schrodinger's cat, Huawei and my Chinese friends

It is increasingly apparent that China, under the Chinese Communist Party (CCP), is a wanabee revisionist power. It wants the balance of power in Asia to tilt, eventually massively, towards itself, and away from the United States. It is just beginning to remold the world’s trade and financial architecture to serve its own needs. And most profoundly, its leaders view liberal democracy – at home and abroad – as a threat to their own survival, and so they try to undermine it, quietly, while actively bolstering autocracies like Venezuela and North Korea.

All this stuff is fairly low-key right now, and deniable. But it doesn’t take much to connect the dots – the huge spending on a blue-water navy, building out a city of military bases in the South China Seas, the establishment of a new multilateral development bank, the stilted ambition of Renminbi internationalization, the continuous piping of anti-democracy propaganda onto everyone’s smartphone. And as China grows in economic influence, it’s likely that more resources are going to be thrown at such ambitions. Just as the United States nurtured institutions after the Second World War which reflected its own democratic system and market-based economy, it stands to reason that China will try to shape the international system and its neighbors’ to more reflect its own illiberal and state-led growth model. Illiberal hegemons do not nurture liberal world orders.

This is not a story of an established power getting irrationally paranoid at the rise of a misunderstood peer, the badly-named, badly-conceived Thucydides trap. That take goes down well on the shores of Zhongnanhai but it ignores all the positive ways the United States has promoted China’s development and integration into an international system. That US strategy has only recently changed, after Beijing had shown in numerous ways that it was not that interested in sustaining that order. No, this is about China’s leaders deciding they’d had enough of this world order. One reads so much about the baquan (hegemon) in CCP writings because that’s what they want to be.

So almost three decades since the end of the Cold War, the tectonic plates of the international system are grinding again, the rumbles are getting louder and things are just beginning to fall down the cracks.

I wish it wasn’t so. To my Chinese friends, I say that I think there’s ample evidence to suggest that this was not a fight of the West’s choosing. “The West” helped nurture China’s rise out of poverty – poverty which the CCP did its level-best to expand in its first chaotic thirty years in power. Whether it was billions of dollars in development aid from Japan, or the strong backing Washington gave to China’s WTO entry, or the mass selling of technology and education to Chinese firms and students. All these things helped raise living standards in China.

Sure, these moves were not selfless, but self-interested, and that’s fine. They show that the West saw in China a partner in a mutually beneficial relationship. (And that’s the only form of relationship which ever really works…) There’s still a co-operative relationship to be had, I believe, which would continue to benefit China’s hard-working and sorely-deserving population. And on some issues, climate change particularly, the interests are the same and that co-operation should continue.

The problem in the relationship began here in Beijing. The leadership of one political party, the Communist Party, has a monopoly on power and derives its legitimacy from two things: a materially-better life and a strong Han identity. Both bind the Party to the people. It stands to reason that the majority of Chinese people really like being better-off, feel justifiably proud of many aspects of their country, and mostly try to ignore the nastier nationalist politics.

But its there. Since the early 1990s, the CCP leadership has nurtured a nasty nationalism which, at root, prioritizes Han Chinese.

This is not how a friendly regime intent on a cooperative relationship with the West would act. In fact, it’s almost as though the CCP needs an external enemy to legitimize its rule. And if you secretly treat someone as an enemy for long enough, vilify them in all your internal conversations and publications, one day they’ll hear about it, and figure out that you don’t like them all that much. And this is where I think we’ve arrived at with the West. It is no coincidence that John Garnaut and Matt Pottinger, two super-smart journalists who liked China enough to learn good Chinese and who wanted to tell its stories, returned home knowing that the Communist Party was not their friend. In fact, they determined it was a threat to liberal values and have since been instrumental in the push-back from Australia and the United States. Losing hearts and minds is almost official policy when it comes to foreign journalists. If there was such a thing as anti-soft power, this would be it. It’s been such a quick shift in consensus in Washington because once the dam broke, the evidence all pointed one way.

But as the West shows, when the economics get stagnant, political leaders can find it all-too-tempting to double-down on the identity politics. And, yes, I think we’re running now at 3-4% real GDP growth (on which more here). And I’ve seen good evidence that the wages of low-skilled workers not growing in real terms at all. So conditions are ripe for the CCP to ramp up the Han nationalism (on which more here).

It pains me as almost all of my Chinese friends want nothing more than to compete on a level and peaceful playing-field with their Western counterparts. They have nothing to do with the militarization of the South China Seas or the mass incarceration of their fellow citizens for their faith out west. Most of them don’t buy the anti-foreigner stuff. Sure, my friends might haphazardly and passively support such moves by their government, especially when their national pride is pricked and the criticism from us laowai is dumb, or dumbly phrased, but if the Beijing authorities tell them the SCS has always been China’s or that a million+ Muslims are terrorists, well, they mostly kind of trust that.

And certainly, they won’t actively oppose it – it’s got little to do with them. Since 1949 the communists have laid waste to most of the social bonds which exist outside of family. These people work damn hard, and need to spend every other waking hour worrying about their kids’ schooling and parents’ healthcare. And they see how most of the success of their country rests on shoulders like theirs, rather than the inglorious leadership of the hopelessly-corrupt Party. If you’re at Huawei, working your 996, having sweated through an electronics engineering degree, after working your butt off to get into an OK university, the idea that Huawei’s success comes down to stealing Cisco’s code, feeding off the subsidy-teet or is a tool of state security, is an affront.

These friends are very happy to criticize the government’s policies and corruption at home, but this discontent usually ends at the water’s edge. There are a few things going on here. First, it’s natural to be proud of what your group has achieved; so there’s a wonderful patriotic pride in what China has achieved that people should enjoy. As a Silicon Valley friend told me the other day; “I get taken more seriously these days, now that China’s risen”.

Second, ideology chief Professor Wang Huning and his minions know that nationalism is the strongest force in the political universe, and they’ve worked hard to ensure that the following equation is hard-wired into all official education and entertainment: the Chinese Communist Party equals the Chinese State equals the Chinese people. To question the Party’s foreign policy is not to engage in a debate; it is to be a traitor to the state, neigh, the race. Thus, critics are always “Anti-China”, never “Anti-CPP”. This is what turns healthy patriotism into the CCP’s putrid nationalism.

Third, Wang and team have got plentiful fodder to work with. The cataclysm triggered by the US invasion of Iraq is clear and awful – why on earth would anyone in China think Washington had their best interests at heart? It really doesn’t help matters that some of the loudest anti-CCP cheerleaders in Washington also want to rip up the liberal world order, play fast-and-loose with facts, or really know so little about China that its easy to write-them off as ignorant thugs. And “the West” looks like a real mess right now; the Chinese government at least provides an environment where it’s still possible, with hard-graft and hard-networking, to enter the middle class. One’s peer in the US is suffering stagnant wages, sky-rocketing healthcare costs, collapsing bridges and kids being drilled on how to outrun an MK-37. The US is hardly the shining city on the hill anymore, regrettably.

Now, this CCP-infused national pride doesn’t stop many wanting to emigrate to the US, Europe, Australia, etc. With a bundle of cash in hand to insulate one from the problems enumerated above, liberating your kid from China’s pressure-cooker education system, buying cleaner air and an airy house, and not having to worry about how well your guanxi networks will hold when personal disaster strikes – these are all big draws. And the husband can even keep one foot in China, running the firm. Until now, you thus could straddle the two worlds with some advantage. Like an electron in super-positional state; spinning both up and down, Schrodinger’s cat in the dark box. No one called you on in which state you wanted to be.

But now the lid on the box is being lifted. Perhaps the arrest of Huawei’s Meng Wanzhou was the critical act. Suddenly, there was a call on your loyalty as a Chinese, and that was extremely uncomfortable. Meng had just been a good daughter, a hard-working businesswoman; side-stepping some ‘ridiculous’ rules to get a deal done is dull, every-day stuff in Beijing. Ignore the dad, and she is just a middle-class Chinese person who’d worked hard and comfortably straddled both worlds.

But the US government called her on it – and that cost her her freedom. The quantum state de-cohered, the cat had to decide, and Chinese friends had to choose where their sympathies lay. And that is extremely uncomfortable. As far as political values go, most are far happier in a liberal environment; but culturally, of course, they identify as Chinese. For many folk, its simply the language which binds them. And, unlike their overseas cousins, they’ve never experienced a non-CCP form of Chinese-ness.

Personally, I think the Meng arrest warrant was probably a tactical mistake on the part of the US government. Shut down Huawei’s access to US technology if you think they’re a national security threat, OK. But this action, a government vs. an individual, smelt more of Big Power bullying than due process. This is not to claim she’s innocent of lying on those bank forms or is it to suggest that Beijing’s hostage-taking of two Canadians in retaliation was anything other than thuggish. It’s just to say that Huawei, the corporate entity, was the problem, and letting the individual slide would have helped in the PR war. That said, the recent export ban on Huawei ripped that box lid off, so maybe that splintering of loyalties is inevitable anyway.

The US is losing friends in China. You can read the disillusionment on Wechat. I felt it when tempers began to fray at a dinner with a US-educated Chinese financier when talk turned to the trade war. He said ‘the West’ was being hypocritical, that Western businesses had made loads of money in China, that many of them happily transferred their technology for. (In many cases this is correct.) A Chinese friend recently called me out for being “more anti-China these days”. He was unimpressed by me saying I was actually criticizing CCP policy.

What is at root a clash of value systems too easily maps onto ethnic identity. This is not a White vs. Han Chinese fight, however much the CCP would love to paint it as such. The West had feudalism, it had tyrannical Kings and all-consuming fascist societies; there’s nothing inherent ‘Western’ about democracy; it’s just that those countries stumbled upon it as a not-as-bad-as-all-the-other-political-systems a few years before others. Look at Japan, Taiwan, Indonesia, India, all places which see democracy serving them, with their different histories and cultural traditions. Somehow we need to ensure that my Chinese friends, and the millions like them, continue to be more attracted to the values which ‘the West’ currently embodies. And become more embarrassed about the nastiness at the heart of the Communist Party’s Han nationalism.

It’s going to take a smart and transparent government to deal with this. And we don’t have a lot of that these days. And there’s going to be collateral damage, sadly, whatever we do.

But there are at least a few things we can do. First, we need to highlight Chinese voices when criticizing those CCP policies which damage China’s own well-being. China’s future is a matter for Chinese people to decide. Second, our problem is the Communist Party, not China, or Chinese so lets be vigorous in the terms we use. And even a Communist Party under a more enlightened leadership would work too, if that is possible. Third, on Twitter I notice mass buck-shotting of folk as ‘Wumao’, CCP-supporters. Now, I admit I sometimes do despair when analysts who should know better engage in silly ‘whataboutism’ or always seem to take one side. But we also need to recognize the Communist Party’s achievements, and we need to be more generous in our engagement with Chinese friends who are genuinely torn between these two worlds. Write the wrong person off as a Wumao and you’ve lost a potential ally. So take your time in determining who is a friend.

Fourth, lets be transparent about the reasons we do things. Those visa rejection letters should explain that its the CCP we have the problem with; we want to engage, but the Party ruins it with their sponsorship of mass IP theft. And for Huawei, lets have a clear statement of what the problem is. How about this:

“Huawei is a great company - it might have stolen others’ IP over the years, but its also become lean, innovative and hungry in ways most firms cannot. It is leading in 5G technology. We respect that. We know that the vast majority of Huawei’s staff take pride in the firm and work incredibly hard. And most of the time, Huawei operates just like any other company. That said, there’s a bunch of evidence that Huawei’s activities overseas have been coordinated with Chinese state security, the bugged Africa Union HQ project among them. The reason for our action is that the US government believes that Huawei - like any other firm based in China - is vulnerable, without any real legal protection, to being told what to do by China’s state securities agencies. We are sure our Chinese friends who live and work in China understand that to be the case. Huawei is at the leading edge of a number of critical 21st century technologies; and those will inevitably used by the Chinese security services and military. We would welcome China to take a bigger role in the world - and over the years, the American government and business community has engaged hugely to support that effort. But we constantly see the Communist Party talking about the US as its enemy, spending billions on its military to drive the US and its friends out of Asia, going to great lengths to support dangerous states like North Korea and dictatorships like Venezuela. These are not the acts of a friend or of of an emerging power which wants to bolster the liberal world order or a fair global market. And we need to protect our freedoms. Therefore it is with much regret that we are instructing US firms to stop selling technology to Huawei.”

Something like that.

Short-term none of this will work to reduce tensions, but over the years, it just might help a bit.