China's economy - including the risks to the world economy from a conflict over Taiwan
China's economy - including the risks to the world economy from a conflict over Taiwan
Responsible Statecraft’s Ben Armbruster takes a look at how anti-China sentiment is promoted by interested parties - not all of whom have peace and democracy as their highest priorities:
First, hype the threat. …
Second, … completely [ignore] the wider context and the complexities of U.S.-China and U.S.-Russia relations …
And lastly, [lead] to the idea that more money for the Pentagon is in order.
Armbruster is analyzing a specific example involving an NBC News recent on a recent joint China-Russia naval exercise near Alaska.1
This Deutsche Welle report looks at the economic risks to the world - particularly to Taiwan and the US - from a confrontation over Taiwan.2 Both China and the US need to look for ways to de-escalate the situation. On the US side, encouraging a move to formal independence of Taiwan from China is one of the riskiest things it can do.
One of the people prominently featured in this report is Ambrose Conroy, CEO of the business consulting group Seraph. It’s a reminder that business lobbies, including but not limited to arms manufacturers, have their own views of what policies would most benefit their clients. Those are not necessarily identical to what the optimal US foreign policy toward China may be.
Adam Tooze has begun a series of articles looking at the state of China’s economy:
The news out of China is not good. Growth has slowed dramatically in recent years. Under the impact of zero-COVID it was sometimes brought to a halt. The recovery since the abrupt end of zero-COVID has seemingly run out of steam. The housing market is in crisis. China has been spared the inflation that afflicted the rest of the world. Instead seems to teeter on the edge of deflation.
Reading the business-cycle is a difficult business at the best of time. Though one measure of inflation - CPI - moved into deflation this month, China’s core inflation actually appears to have bottomed out and ticked up slightly.3
Tooze also urges care in evaluating prognostications from interested businesspeople - Western or Chinese -, especially ones quoted anonymously: “It is hard to know how seriously to take such spleen from aggrieved business people. Are they representative of opinion at large or is there selection bias at work, in that those who are most upset are also most likely to talk to a Western journalist.“
After years of China being largely regarded by the public in the US and the EU as a kind of authoritarian capitalism that provided cheap labor, cheap goods, and lots of tourist business to the West, and now after a decade of the US prioritizing the political and military containment of China, views of the People’s Republic of China are definitely shifting.
But it’s also important to keep in mind that among the three biggest powers, the US for decades cooperated with China in order for both countries to balance against Soviet power. The most obvious power-balacing realignment now would be for the US to try to improve relations with Russia to balance against China, and for the EU to improve relations with China to balance against the US.
European countries also have an obvious interest in reducing tensions with and military threats from Russia. But the Russia-Ukraine War and the new polarization between Russia and NATO that came with it have thrown a big wrench into such calculations.
Joseph Nye, Jr. warns:
Intense competition in US domestic politics has spurred a constant escalation in the demonization of China and talk of a new cold war. While the US-China rivalry cannot be ignored, demonization is a poor guide for strategy.
The US and China are far more interdependent than the US and the Soviet Union were during the Cold War, with their ties spanning the economy, climate, and health. A clear-eyed strategy would take that into account. For example, it may make sense to ban Chinese companies from sensitive communications, but it does not follow that we should ban Chinese solar panels.4
Über-Realist Stephen Walt looked in January at China’s position from the viewpoint of great-power geopolitical calculations. He believes that Chinese President Xi Jinping made some avoidable mistakes that he has more recently been trying to repair through a charm offensive:
His basic approach to foreign policy simply wasn’t working. It was a mistake to openly proclaim the goal of becoming a (if not the) leading world power by the middle of this century. It might be a worthy goal, but such a bold boast was certain to alarm the United States and put a number of other countries on their guard as well. It was a mistake to combine a major military buildup with militarized “island-building” in the South China Sea. It was short-sighted to reject the ruling of an international tribunal that dismissed Chinese territorial claims in this crucial waterway, and counterproductive to threaten Taiwan and Japan by sending planes and ships into contested areas. It made little sense for Chinese troops to clash with Indian forces in the remote Himalayas.
And it was surely a mistake to align China so closely with Russia on the eve of its invasion of Ukraine. Either Xi got duped (if Russian President Vladimir Putin didn’t tell Xi what he was planning), or he chose to tacitly back a brutal partner who turned out to be less capable and competent than Xi thought. Either way, it’s not a good look. Worst of all, these worrisome policies have been pursued and defended through aggressive, hyper-combative “wolf-warrior” diplomacy, based on the odd idea that repeatedly bullying and belittling foreign diplomats and government officials was going to win them friends and enhance Chinese influence. [my emphasis; paragraph break added]5
Walt sees the current situation (as of January 2023) as offering China a good opportunity for “a policy of strategic patience.”
Even close U.S. allies do not want to sever their economic ties with China (and to be clear, neither do many U.S. businesses), despite their objections to China’s human rights practices and eff orts to challenge the regional status quo. As Dutch Prime Minister Mark Rutte told a Davos audience last week [January], “China is a ‘huge economy with huge potential and a huge innovation base,’ even if ‘legitimate security concerns’ exist.” French Finance Minister Bruno Le Maire echoed this view, saying, “The U.S. wants to oppose China, we want to engage China. … I strongly believe that in the world game, China must be in,China cannot be out.” [my emphasis]
Yang, Maya (2023): US dispatches warships after China and Russia send naval patrol near Alaska. The Guardian 08/06/223. <https://www.theguardian.com/us-news/2023/aug/06/us-navy-warships-china-russia-naval-patrol-near-alaska> (Accessed: 14-08-2023).
How the China-Taiwan conflict could be devastating for the global economy. DW News YouTube channel 05/26/2023. (Accessed: 14-08-2023).
Tooze, Adam (2023): Whither China? Part I - Regime impasse? Chartbook 08/12/2023. (Accessed: 2023-13-08).
Nye, Joseph, Jr. (2023): Joseph S. Nye, Jr. Says More… Project Syndicate 06/06/2023. <https://www.project-syndicate.org/onpoint/an-interview-with-joseph-nye-on-us-china-rivalry-soft-power-ukraine-taiwan-2023-06> (Accessed: 14-08-2023).
Walt, Stephen (2023): Foreign Policy 01/23/2023. <https://foreignpolicy.com/2023/01/23/can-china-pull-off-its-charm-offensive/> (Accessed: 14-08-2023).