“We want to continue a major trade and investment relationship with China, just not…in the realm that might help them to leapfrog over us sometime in the next ten years in military technology.”
The speaker was Nicholas Burns, the U.S. Ambassador to China in December 2023. His remarks pointed to the great China exit as American firms look for ways out.
Our Man in Beijing
Ambassador Burns is in a delicate situation. He is the conduit of information for the two most powerful nations on earth.
At first blush, many might see the ambassador as the consummate American diplomat. He was the U.S. Ambassador to Greece during the Clinton and George W. Bush administrations. Then, he served as Ambassador to NATO before doing a long stint at Harvard University’s John F. Kennedy School of Government. He took the China posting under President Biden in 2022.
At the same time, he has made surprisingly strident statements about China. Coming from a career diplomat, the observation that China’s advancements in military technology could become a threat to the United States is unusually bold.
Increased Repression and Global Ambitions
In June 2024, Ambassador Burns gave an interview to CBS reporter Lesley Stahl, which the network carried on its “Sixty Minutes” program.
“If you track China from the death of Mao to the opening of China to the world, we’ve seen a closing of sorts…increased repression of the people of China.”
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Indeed, the closing days of Mao Zedong’s life were marked by the incredible repression of the dictator’s “Great Proletarian Cultural Revolution.” That decade (1966-1976) stands out, even in the blood-soaked annals of Communist repression. To say that Xi Jinping’s record is similar to Mao’s is a potent statement.
However, Xi has ambitions that far exceed Mao’s. Where Mao worked to recast Chinese culture in his image, Xi has yearnings on a truly global scale. As such, the ambassador admits that they clash directly with those of the United States.
“[T]hey want to become and overtake the United States as the dominant country globally… We don’t want to live in a world where the Chinese are the dominant country… This is the most important, most competitive, and most dangerous relationship that the United States has in the world right now.”
A Half-Century of Misplaced Optimism
Before going further, it makes sense to look back over the U.S.-China relationship over the last fifty years, as implemented by Presidents Nixon, Ford, Carter, Reagan, both Bushes, Clinton and Obama.
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Throughout this period, the American government’s attitude was that assisting China’s economy served the best interests of the United States. A succession of secretaries of state heralded every new—and usually lopsided—trade deal between Washington and Beijing. The State Department and the mainstream media applauded companies that commenced or expanded Chinese operations. Strong commercial relationships, the doctrine held—promote peace.
The optimistic thinking behind this stand was simple. Making good customers of the Chinese would plant the seeds of capitalism and private property. A strong market economy would, in turn, breed political liberalization. Soon, they argued, China would become a far-eastern version of the United States. Even better, with its massive population and low wage rates, China could help the American economy thrive. The Chinese people would take over low-skill production tasks in factories bearing the names of American companies and, at the same time, consume vast numbers of U.S.-designed products.
Mao’s successors, Deng Xiaoping, Jiang Zemin and Hu Jintao, played along. They could recognize a good deal when they saw it. The U.S. government and American companies would take all the economic risks, and China would get a massive boost on the road to prosperity. Mao’s and Stalin’s infamous “Five Year Plans” would pale next to the massive industrial expansion.
Xi Jinping Removes the Mask
In the meantime, Americans acted as if they were not dealing with Communists. None of these leaders rejected Marxism; they merely softened the edges of Mao’s excesses. Ultimately, Xi Jinping demonstrated how short-sighted this thinking was.
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First, Xi laughed at demands that China respect the American companies’ intellectual property rights. Knowing that China lacked the technical expertise to innovate, they simply imitated advanced technologies from plans provided by the Americans. Then, they made the copies available to Chinese commercial competitors and the military.
Xi also created new bases in the South China Sea by dumping massive amounts of earth around two small islands. This would place both the Philippines and Australia within easy striking distance. The Philippines objected, taking its case to the International Court of Justice at the Hague. The Philippines won in court, but China rejected the verdict—as reported in a 2016 Associated Press report.
“‘This farce is now over,’ said Foreign Minister Wang Yi, in an interview with state broadcaster CCTV. Meanwhile, the Foreign Ministry said in a statement: ‘China opposes and will never accept any claim or action based on those awards.’”
Suddenly Shrinking Resources
However, attitudes are changing. China’s economic future is dimming as U.S. firms decrease their investments, preferring less volatile venues like India, Vietnam and South Korea. Such investments may prove unwise—India is part of the BRICS alliance with Brazil, Russia and China. Vietnam—while weak—is still communist, and China lusts after South Korea almost as much as it yearns to control Taiwan. (The Korean Peninsula was controlled by China to various extents from 108 B.C. to 1895 A.D.)
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Such long-term considerations aside, these investment shifts are signs of contraction in China’s economy. According to a recent Wall Street Journal article, major global players like Apple, Walmart, IBM, Honda and Hyundai are shifting their expansion plans to other countries. According to the Journal, “about 20% of the 306 respondents surveyed by the American Chamber of Commerce in Shanghai said they would be cutting investment in China this year.” Overall, “foreign investment into China fell 8% from the previous year.” CNN, Forbes, Reuters and A.P. carried similar articles.
Interestingly, those journals tended to limit their analyses to the “here and now.” Most cite the same government demands for increased control to which Ambassador Burns referred. Other than that, most of the rhetoric would be similar if the subject was the closing of plants in high-tax states like California and New York.
The Need for a Realistic Assessment
However, something far more significant is at work here. While it gave the Chinese government an excuse to heighten control over its people, the COVID pandemic hit China hard. First, many Westerners came to accept the thesis that the pandemic itself was caused by Chinese incompetence, magnified by the government’s refusal to accept adverse responsibility for anything. Second, the extreme nature of China’s isolation of its own people severely limited one of China’s chief assets—inexpensive labor. Third—and probably most importantly—China’s increasingly militaristic rhetoric should be forcing foreign companies doing business there to face the fact that their assets would almost certainly be confiscated by the government—and used against China’s enemies—in the event of military conflict.
It is long past the time to remove the blinders and see China as the adversary that it is. No amount of economic assistance will convince them to, in the words of kindergarten teachers, “play nicely with others.” Many of the errors referred to above result from seeing China as a “developing nation” that needs a little boost to contribute to global peace. It is an enemy, and the longer the U.S. takes to admit that, the more it adds to the peril that the nation will one day face.
Photo Credit: © Negro Elkha – stock.adobe.com