Small Wars Journal

Waking up to the Chinese Incursion

Mon, 07/20/2020 - 9:07am

Waking up to the Chinese Incursion

by Allyson Christy

 

Beginning with US President Richard Nixon’s journey to Beijing, advanced economies have underwritten China’s rise through foreign direct investment (FDI) and mentorship.

                                                                                    —Daniel Araya, China’s Grand Strategy

 

What may be understood today as a power impasse starting decades ago, yielded globalization advantages to a state clearly at odds with democratic values. Given that American industries, including steel, leather, and tires were presumed to decline from the 1970s, growth in Chinese productivity began to weigh on job losses, trade imbalances, and debt, creating a pattern of economic disparities, coupled with Beijing’s quick rise to power. Global supply chains suddenly widened vulnerability gaps — troublingly noted to information and communications technology and rising dependence on foreign outsourcing. Defense contractors connected to similar supply patterns, accompanying America’s manufacturing decline. Only later did it seem to highlight national security.

Historic connections to trade deficits, unfair business practices, secrecy, theft, military expansion, and charges of regional hegemon may echo a timeline of events that are marked to concurrent and problematic imbalances. Public introspection implores a review of policies that have supported the Chinese Communist Party (CCP) over four decades. Underscoring primacy goals in world affairs with the rapid modernization of the People’s Republic of China, urges attention to reviving America’s manufacturing and workforce strength, resilience, global standing, and security.

Jimmy Carter’s 1978 decision to recognize China led to annulling formal ties with Taiwan, whereas officially accepting the One China Policy was purposed at offsetting geo-political anxieties. By 1972, the Chinese regime had already secured a seat on the powerful United Nations Security Council. Moreover, the U.S. stood to benefit from strained relations between Beijing and Moscow. Agreements and compromises would soon follow, eventually expanding the international field. Richard Nixon’s and Henry Kissinger’s Ping Pong Diplomacy had provided the opening.

The 1972 Shanghai Communique may have been the real tipping point to Sino-rapprochement with the U.S., as it concurred with Nixon’s objectives and historic visit that year. Preliminary negotiations in the interim included common ground on normalization of relations and nuanced views for reducing conflicts. While it may have advantaged an end to the Vietnam War and helped to leverage influence in the Chinese-Soviet rift, the Communique set in motion a blueprint for future policies that would rock support for Taiwan, open trade routes, and expedite Chinese wealth and power.

By the mid-1980s, a tentative military relationship was developing between Washington and Beijing. Prospects seemed lucrative, though lukewarm and mixed with skepticism. Though China had engaged in limited arms sales from the 1970s, it was the Iran-Iraq Conflict that facilitated a means to becoming a significant weapons supplier. Before the end of the decade, China was already ranked fifth for selling weapons to the third or developing world, and in 1991, that status changed to one of the five major suppliers of conventional weapons in the world.

 

Momentum was charting a new leap forward.

Other nations similarly followed suit. By 1990, the Shanghai Stock Exchange re-opened—closed since 1949. Two years later the International Monetary Fund (IMF) rated China to third largest global economy. Yet despite continued strains over the 1989 Tiananmen Square Massacre, a totalitarian regime was rapidly transitioning to second largest country attracting foreign investments. In 1994, Bill Clinton also decided to renew its most-favored-nation-status. Prominence as a top 10 trading nation the next year further confirmed future capabilities.

While diplomatic dialogue primarily launched China from an impoverished country, two decades later as the twentieth century came to an end, its economic power was certain. Clinton pushed hard for Congress to ratify permanent trade relations which passed in 2000. The following year, membership in the World Trade Organization (WTO) was finally approved — another Clinton supplication. Three years into the new millennium, China was America’s third largest trading partner.

Indicators revealed trade with the U.S. had jumped from $5 billion to $285 billion between 1980-2005 — a relatively short time period. An alarming deficit was already distressing the trade relationship. There were now $81 billion imports to $13 billion exports — netting a loss of 880,000 high-wage manufacturing jobs. And as charges of unfair trade practices grew, reported losses in manufacturing jobs from 2000-2015 were purported to total 5 million.

 

Did warning bells ring the approaching century?

A labor review study from 1986 had begun forecasting worrisome decreases in manufacturing and producing, mainly against service industry expansions. Criticism and alarm were drawing attention to the disappearance of well-paying factory jobs, evoking additional concerns over earning disparities. Analysts expounded on consequences likely to affect socio-economic structures: 

"It is argued that the declining smokestack industries have a large proportion of middle-income earners, while the growing service and high-tech industries have a more bipolar wage structure, with more high or low earners. The shift among industries, therefore, will lead to a declining middle class."

An opposing view held that a slight drop of middle-income employment was marginally offset by a falling-off of lower-paying jobs. However, new skills requirements were becoming game-changers. And middle-class well-being going into the twenty-first century did not appear to be a sobering thought in political discourse. Bipolar wage gaps only seemed to widen. Though disproportion was confounding balance of trade, foreign exchange, and GDP equations, other factors frustrated domestic manufacturing and labor. Automation, reductions in vocational programs, training, and apprenticeships, excessive regulations, unions, and costly litigation, likewise implicated harmful policies.

Growing reliance on cheap imports may have been one issue effectually haemorrhaging the industrial base, imposing long-term liabilities on labor, skills, and income discrepancies. A changing consumer class became ultimately dependent on inexpensive Chinese goods, many cut-rate products — from food and cosmetics to household items, and virtually no regulatory compliance on matters like child labor, safety, or the environment. Understanding the wider market scope is nonetheless complex. Trade deficits, currency manipulation, worries over bond debt, and complexities of decoding GDP may have implied bold writings on the wall, but consistent political spin and slack solutions were not mitigating these trends.

Following the 9/11 attacks, homeland security, terrorism, and fighting wars in Afghanistan and Iraq dominated foreign policy. The decade ushered Arab Spring uprisings, wars in Syria, Libya, and Yemen, and a nuclear Iran — issues that partly monopolized Washington’s attentions. And yet China’s growing clout seemed largely unchecked, at least at the start of the millennium. Beijing stretched its ambitions beyond a regional role, to exploiting the developing world and emerging markets, modernizing its military, widening a strategic configuration to secure growth and multinational authority.

Chinese influence expanded with investment strategies in the Middle East, Africa, Eurasia, and Latin America. Operating soft-power tactics to secure its supply chain stratagem, Beijing integrated loan deals to countries willing to assume debt-risk, in return for constructing infrastructural systems such as ports, highways, and pipelines. Its global objectives  transcended beyond the ancient Silk Road, into projects currently under the auspices of the Belt and Road Initiative. Similarly, the Made in China 2025 hinted at controversy over its ambitious goals to ultimately control high-tech in the global markets. Though the government has downplayed the title, critics insist the plan has not been abandoned.

 

Overlooked realities or naivety?

The question begs on whether China was viewed as a hopeful economic partner, or was aggressive competitor somehow missed or ignored? Shock and anger have recently exacerbated market and consumer anxieties. Tracing the rise to competitor state may necessarily recall historical junctures, excluding the pandemic-driven charges today, of pariah state. Although China dominates in manufacturing sectors, complaints of cyber-spying, theft of technology, intellectual property, and military secrets have largely gone unpunished, or merely with slight penalties.

Notwithstanding troublesome trade practices, but evidences of filthy markets and suspicious links to a virology lab in Wuhan, have underscored alarm and skepticism about a pandemic that has nearly immobilized the global economy. Diplomatic relations are strained further due to accusations of deception and misrepresentation in the early information and warnings of COVID-19. Sino-centric market dominance has also elevated public focus, mostly over knowledge that much of the world’s pharmaceutical and medical supplies are manufactured in China.

However, another sobering reality is certain as focus on the Pacific realm is mounting. “Beijing’s military build-up and modernization has reached the point that US policymakers and defense planners are paying very close attention.” Neighboring countries have been troubled by Chinese aggressions from building artificial islands, to intensified territorial and maritime challenges, and presaging menace against separatism at Hong Kong protestors. Recent border confrontations with India have dangerously escalated and turned deadly.

In the 40-plus years since Jimmy Carter decided to sever diplomatic relations with Taiwan, China owns enormous authority, underwriting its version of a global order. That has included pressuring nations into cutting formal ties with Taipei and forcing its non-recognition from international bodies, including the World Health Organization (WHO). Although Congress passed the Taipei Act last year, meant to bolster Taiwan’s security and global standing, the legislation links to rising tensions between Washington and Beijing. The latter has flaunted readied bellicosity by accelerating a formidable maritime and military presence in recent years.

Claims that China is hindering research on the origins of the pandemic virus while it has tried to instead, thwart attention by blaming the U.S. military, are indications the communist regime is expeditiously protecting its power, in addition to trying to control the narrative. Donald Trump’s promises to deal aggressively over trade discrepancies may be wrought with new momentum.

 

References

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About the Author(s)

Allyson Christy holds an MA in Intelligence and Terrorism Studies from American Military University, in addition to an Executive Certificate in Counter-Terrorism from the International Institute for Counter-Terrorism (ICT) at the Interdisciplinary Center (IDC), Herzliya, Israel. Follow @allysonchristy

Comments

Tom Triumph

Tue, 07/28/2020 - 10:44am

We must recognize two things.

First, recent economic forces have shown that China is a shark that needs to keep eating or it will die. Its factories and labor all depend on growing markets and raw materials.  To keep people working, factories must keep going.  This has resulted in lower-than-cost production, subverting basic supply/demand price determinants one would get from a competitive market.  One area is subsidizing another.  The danger of this to a healthy economy and competition is why the trust-busters of the early 20th century took on Rockefeller and monopolists.  In addition, it has created its own markets, including the military.  Like Reagan in the 1980s, the Chinese are using increased defense spending to boost the economy.  But those weapons have a need, which fit well with China's regional expansive policies.

For raw materials, China is strengthening its footholds in Africa and South America.  In weakening our industrial economy, it is also making us depend more on agriculture and the export market for balancing trade deficits--making us even more of a supplier than a manufacturer.

Second, the move towards service jobs has devalued labor in America and created a large divide between the haves and have-nots.  Unlike manufacturing jobs, service jobs have little respect and pay accordingly.  Our fiscal policies are rooted in the American belief that hard work results in rising the economic ladder, but the middle rungs are now missing.  As people push for a $15 minimum wage or a livable wage, the push back has been that it will ruin the economy.  In short, the argument is that we are so weak as a nation that we depend on below-livable wages to function.  In fact, the recent UI had many recipients earning more than they did while working.  This is not a sustainable position.  Nor is it what we should value in our country.

China depends on work in keeping its populace under control.  It sees the collective good as more important than the individual, thus factory conditions and wages are often dangerous and lead nowhere.  Workers live in poverty and without a ladder out.  In America, those at the top talk of the "dignity of work" as a reason to not offer safety nets or minimum wages.  We do not want to be in a race to the bottom.  If we are, China has won.

America needs to seriously rethink its economy.  Manufacturing has changed.  Not only does basic economics show that many items we consumer should be made abroad, but here we are using more and more automation.  We need to stop competing with China and envision our ideal.  Universal healthcare would not only take the burden of providing health care off of businesses but allow workers to move jobs without worry about their family's health.  Service jobs should be a livable wage as they are both important and cannot be exported. 

Finally, America should focus on value added manufacturing.  While China can produce basic products it does not focus on quality.  If American firms focus on quality they win.  Americans are beginning to rediscover value over quantity, and willing to pay more for it.  The craft beer industry is a perfect example.  Firms that stress quality are smaller, making them more responsive to workers.  They also can pivot as the economy changes, and the failure of some does not mean a crisis in the entire industry.

What do Americans want?  They want to be happy.  They want time to enjoy the fruits of their labor--and they want meaningful labor.  We don't need more cheap junk but we have to envision what that world looks like moving forward--and then build it.