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Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

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October 14, 2022

The following article from Christian Science Monitor offers some interesting contrasts on how US views China with US policy of containment.

China does reflect on the recent history of suffering under colonial powers from 1840’s. It is not surprising that Xi Jinping’s drive to make China more self-sufficient and fortify it against foreign threats. In fact, it has been PRC’s national policy. A major factor in implementing this policy is the unfriendly influence of foreign powers. One example is the permanent exclusion of China in the US led International Space Station. Pushing toward self-reliance is China’s only choice.

But self-reliance is not the same as self-isolationism. China’s space stations are open for global participations. China under Xi has actively developing the one-belt-one-road initiatives with progresses around the world. Unfortunately, US sees China initiative as a challenge to US supremacy and calling for boycotts.

The statement that “In his eyes, China is besieged by “hostile foreign forces” bent on thwarting its rise and bringing about the party’s collapse. National security, Mr. Xi says, is China’s “top priority,” is in direct contrast to the US focus on national security and openly stated that the goal of Biden’s national security strategy is to “contain China.” Biden and his team have labeled China is the most consequential threat that the US ever faced. China, in Biden’s eyes, is public enemy No. 1 even before Russia.

Biden matches his words with actions, see the following quotes in US media:

  1. America curbs Chinese access to advanced computing.
  2. America’s goal is likewise no longer just to stay ahead of its rival in the tech race but to “put the high-end Chinese chip-design industry out of business.”

Before Biden, President Trump’s strategy was clearly an “isolationism.” Before we criticize China’s domestic leadership and policy, one should review the US leadership and policy.

Yes, isolationism may backfire, but anyone pursues isolationism may suffer whether China or the US. US and China are competing for the global primacy, there is no doubt that winner would have a sound policy and united support from her people.

Safety or stagnation? Why China’s isolationism may backfire.

Ann Scott Tyson Fri, October 14, 2022 at 8:14 AM Christian Science Monitor

One day in late August, shortly after China’s leaders reportedly gathered at the Bohai Sea resort of Beidaihe to put the finishing touches on the agenda for next week’s 20th Communist Party Congress, a government think tank posted an obscure academic article online, sparking a surprising debate.

The article challenged the mainstream view that the isolationism of China’s Ming (1398-1644) and Qing (1636-1912) dynasties severely weakened China, recasting the policies as targeted efforts to defend China’s territory and culture against “aggressive Western colonial forces.”

Chinese netizens and China watchers alike interpreted the article – unusual for having no named author – as a political bid to lend historical ammunition to Chinese leader Xi Jinping’s drive to make China more self-sufficient and fortify it against foreign threats.

With Mr. Xi poised to gain a rare third term at the twice-a-decade political conclave that opens in Beijing on Sunday, a critical question is whether his emphasis on buttressing China will succeed in making it strong and autonomous – or instead deepen its isolation and bring economic stagnation.

Mr. Xi’s push for self-sufficiency has enormous implications for the rest of the world. China’s rise over the past 40 years was fueled by its market-oriented economic reforms and opening to trade, which unleashed the private sector and brought in foreign technology and investment. Now the top trading nation, China is the number one trade partner to more than 120 countries.

But since taking power in 2012, Mr. Xi has transformed China’s priorities. Mr. Xi’s approach is rooted in his darker view of the international environment compared with those of earlier Chinese leaders, experts say. In his eyes, China is besieged by “hostile foreign forces” bent on thwarting its rise and bringing about the party’s collapse. National security, Mr. Xi says, is China’s “top priority.”

“Xi places much greater emphasis on national security than he does on economic policy,” says Richard McGregor, senior fellow for East Asia at the Lowy Institute, an Australian foreign policy think tank.

China’s arch foe, in Mr. Xi’s view, is the United States – and he uses the rivalry to mobilize the party and silence internal critics, says Mr. McGregor. He says anyone who opposes Mr. Xi risks being “branded as disloyal and working against the motherland” as it faces “an epochal showdown with a rival superpower.”

Push toward self-reliance

Internally, Mr. Xi has moved aggressively to strengthen the Communist Party and tighten its grip over the economy and society. He’s subordinated the private sector to state-run firms and expanded industrial policy, using huge subsidies to try to outcompete the West in advanced technologies. His stringent COVID-19 controls have closed China’s borders to many foreign visitors while requiring all inbound travelers to quarantine.

To ensure China can fend for itself in a dangerous world, Mr. Xi seeks to make the country of 1.4 billion people self-reliant in food, energy, and advanced technology. His push for self-sufficiency has gained urgency with the U.S.-China trade war, tensions over Taiwan, and the sanctioning of Russia over its invasion of Ukraine, says Minxin Pei, professor of government at Claremont McKenna College.

“Before 2018 and the trade war, their goal was aspirational. Today, it is existential,” he says, adding that China’s leaders “have elevated self-sufficiency to a level China has not seen since the end of the Mao era” in 1976, prioritizing it as “an issue of national survival.”

Yet China’s inward turn toward state-led self-reliance under Mr. Xi – together with his strict COVID-19 policy – has come at a cost in economic vitality and innovation, experts say.

Mixed results

Under Mr. Xi, annual gross domestic product has steadily declined and this year is expected to fall to 3.5% – missing the government’s goal of 5.5% – according to the Bank of China.

More importantly, economists say, China’s total factor productivity – a key measure of efficiency – has declined from an average of 3.5% a year in the 2000s to 0.7% in the 2010s, according to the International Monetary Fund.

Technological innovation is central to Mr. Xi’s economic strategy, but by directing investment through the state-owned sector, which is less productive, efficient, and innovative, Beijing undermines that goal.

“China has a system that’s really good at mobilizing resources. But innovation, technological creativity, needs … a lot of flexibility, it needs a lot of openness,” says Dr. Pei. “That is the fundamental dilemma faced by the Chinese government.”

Mr. Xi’s plan for China to dominate key technologies on its own underestimates the importance of international collaboration in achieving breakthroughs in areas such as semiconductors, experts say.

“Every single success story is done through collaboration,” says Yasheng Huang, professor of international management at the MIT Sloan School of Management. “I think they are going to have a very humbling experience with semiconductors.”

To be sure, China has enjoyed successes in homegrown technology, and over the past 10 years it has risen to 11th among countries ranked in the Global Innovation Index published by the World Intellectual Property Organization, a U.N. agency in Geneva. Chinese officials and experts warn that foreign restrictions on technology transfers to China – such as the recent U.S. tightening of controls on semiconductor chip exports – will backfire and spur Beijing’s efforts at technological independence.

Tensions between China and the U.S., European countries, and other developed economies have grown during Mr. Xi’s tenure, as illustrated by sharply negative turns in public opinion toward his leadership. “Despite its attempts to build a new global order by courting other authoritarian regimes, and its trade and investment around the world, China has become more isolated from countries in the West,” says Anthony Saich, professor of international affairs at the Harvard Kennedy School.

Inside China, Mr. Xi retains significant backing, especially from China’s nationalists. His poverty alleviation and anti-corruption campaigns have been widely popular, and his health policies have succeeded in keeping China’s COVID-19 cases and deaths far lower than in many other countries.

The path ahead

Next week’s party congress and related political events are expected to endorse both Mr. Xi’s third term and his broad agenda of self-sufficiency.

“For Xi’s third term, the trends in the recent years’ Chinese economy seemingly will continue, primarily the emphasis on self-sufficiency” and “the state-owned sector’s expansion at the cost of the private sector,” says Wu Guoguang, senior research scholar at the Stanford Center on China’s Economy and Institutions at Stanford University.

But with no end in sight to Mr. Xi’s COVID-19 mandates, many Chinese worry that as they endure continuous tests and unpredictable lockdowns, their nation feels increasingly quarantined from the rest of the world.

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