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Showing posts with label CCP. Show all posts
Showing posts with label CCP. Show all posts

Wednesday, November 1, 2023

The New World (Dis)order (five part series)

(Image: dotcom)

NOTE: This is the final part in a five part series.
PART I: American Adventurism, Non-Interventionism, Trumpism and Afghan Chaos
PART II: The Misunderstanding of Vladimir Putin
PART III: China Awakens Under Xi Jinping
PART IV: Crony Capitalism and the West’s Achilles Heel

The New World (Dis)order

Part V: The New World Dis(order)

“Experience has shown how deeply the seeds of war are planted by economic rivalry and social injustice.” -Harry Truman

In May, China released a film designed to showcase their military prowess, called Born to Fly. The film begins with American-accented, English-speaking fighter pilots causing havoc in the South China Sea while boldly declaring “We will go whenever we want,” after being asked by the Chinese pilots to leave their territory.

While the film was critically panned, the message it carried shows China being bullied by developed nations and made it clear that the only way for China to defend herself, from enemies on all sides, was through technological innovation and personal sacrifice.

A month later Chinese state media broadcast a documentary series called Chasing Dreams. The eight-part docuseries was released to commemorate the 96th anniversary of the People's Liberation Army (PLA). This one featured the PLA’s readiness to attack Taiwan, featuring drills that simulated precision strikes against the island, and testimonials from serving soldiers pledging to die in their effort to retake Taiwan.

These propaganda pieces are part of stepped up efforts by the Chinese Communist Party (CCP) to fan nationalism while showcasing China’s military prowess. Today, China's shows of force are not restricted to celluloid. This year we have witnessed a never before seen flurry of spying and aggressive tactics by China, against the United Sates.  

In February, we learned of a Chinese spy balloon flying over U.S. military bases and restricted airspace. In April, the FBI uncovered a secret police outpost in lower Manhattan, and an electronic eavesdropping facility in Cuba. PLA pilots and sailors have been increasingly engaging in dangerous skirmishes with U.S. military aircraft and naval vessels in the South China Sea and Taiwan Strait.

The Pentagon recently declassified a report that showed 180 such incidents of “coercive and risky” maneuvers against the US military by China - more in the past two years than in the entire decade before. In August, the U.S. had to dispatch four warships and a reconnaissance plane after China and Russia carried out a joint naval patrol near Alaska. Eleven Russian and Chinese ships sailed close to the Aleutian Islands, in what one expert described as a “historical first.”

Adm. John Aquilino, head of U.S. Indo-Pacific Command, said he has seen Chinese-Russian joint operations increase over the past year and expects their cooperation to grow. He added that in the context of China’s support for Russia’s invasion of Ukraine, it makes their joint action not only concerning but also creates a more “dangerous world.

A day after the Alaskan intrusion the U.S. Navy had to deploy more than 3,000 troops to the Red Sea in a bid to deter Iran from harassing and seizing commercial vessels around the Strait of Hormuz. Since 2021, Iran has “harassed, attacked or seized” 20 internationally flagged merchant vessels. A few weeks later Iranian Revolutionary Guard vessels dangerously shone lasers multiple times at the cockpit of a U.S. attack helicopter that was operating in international airspace.

These intrusions by Iran and China are not limited to military actions.

China has been stepping up its espionage game to levels never before seen by a nation state actor. The heads of the intelligence services for the U.S., UK, Canada, Australia and New Zealand, known as the Five Eyes, appeared together on a news program for the first time ever, to publicize the threat posed by China’s hacking activities. They admitted that all countries spy, but China is taking espionage to another level by stealing corporate intellectual property, academic research and much more. So grave is their concern that the FBI Director warned that China’s espionage was a “threat to our way of life”.


China is not alone in the sophistication of their espionage and influence operations. Semafor broke news of a massive Iranian influence operation that was launched in 2014 by the Iranian Foreign Ministry, called the Iran Experts Initiative (IEI). They learned that the IEI managed to infiltrate the highest levels of U.S. and EU policy circles. At least three of the people on the IEI’s list were, or became, top aides to Robert Malley, Mr. Biden’s special envoy to Iran. Mr. Malley, was recently placed on leave and had his security clearance revoked.

Meanwhile, Tehran has been strengthening ties with Moscow. The WSJ reviewed foreign intelligence documents, shared with the U.S., which stated that over the last six months Iran has ferried large quantities of artillery shells and other ammunition across the Caspian Sea to help resupply Russian troops in Ukraine. The Journal reported that based on documents they reviewed Iran had shipped more than 300,000 artillery shells and over a million rounds of ammunition to Russia so far. 

In October, a top Iranian general met with his Russian counterpart in Moscow. After the meeting both countries released statements pledging increased co-operation, amid reports that Iran is increasing its support to Russia in advanced drone and missile development technology. While there is no concrete evidence that Iran helped plan or execute Hamas’s cowardly murder of  innocent, unarmed Israeli civilians, we know that Iran is the main financial backer and supplier of weapons and training to both Hamas and Hezbollah.

Iran's foreign minister has publicly warned Israel that if their strikes on Gaza continue, then “the region will go out of control.” At the same time on Israel’s northern border Hezbollah has been stepping up attacks. In the midst of all this chaos, China dispatched six warships to the Gulf region, in what Beijing’s state media called a “goodwill visit”.

China too has deep ties with Iran. They recently caught the world by surprise when they announced that they had brokered a deal for Iran to restore diplomatic ties with Saudi Arabia. The Saudis cut ties in 2016, after Iranian protesters stormed its embassy in Tehran. While this was a major diplomatic victory for China, it was seen as another sign of the US’s waning influence in the Middle East. 

According to an Axios Middle East reporter, for China brokering the deal between Iran and Saudi was less about bringing peace and more about ensuring that two of its most important partners in the Middle East are able to get along so that Beijing can achieve its economic and political goals. Days after this rapprochement, China, Russia and Iran held joint military drills in the Gulf of Oman.

China’s ties with Saudi Arabia have been deepening at the same time that we have seen US-Saudi ties fray. Saudi and UAE leaders refused to take President Biden’s call to discuss the Ukraine crisis when the war began, and despite strong U.S. protestations the Saudis have continued to partner with Russia to coordinate cuts in oil production. 

When Mr. Biden visited Saudi Arabia this year, he was received by the governor of Jeddah without any ceremony. When Mr. Xi arrived he was welcomed with fighter jets, honorary cannon fire and the Saudi foreign minister was waiting on the tarmac. At the recent G20 climate minister’s meeting, the Saudis teamed up with China and refused to discuss a 2025 global emissions target, wrecking the entire summit, according to the FT

China also flexed its muscles at the BRICS. At their summit in South Africa, China pushed for the expansion of the bloc, despite strong opposition from India and Brazil, who voiced uneasiness at allowing openly anti-western countries to join. In the end China got its way and Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates were welcomed as the bloc's newest members. At the summit it was announced that the BRICS’ development bank would start lending in South African and Brazilian currencies in order to start to cut their reliance on the US dollar.

It is clear that China is actively working to build an alternate world order to counter U.S. dominance. One that is based on authoritarian ideals and runs counter to Western liberal ones. Nowhere is this more apparent than in Africa, where China has built and runs a training school on authoritarianism. 

The Mwalimu Julius Nyerere Leadership School in Tanzania was funded by a $40 million donation from the Chinese Communist Party (CCP) and built by a Chinese construction company. The Central Party School which runs the the institution is the same body responsible for training China’s top party officials.

According to a joint investigation by Axios and Danish paper Politiken, China is using the school to teach African leaders about authoritarianism as an alternate governing style to democracy. Teaching them how to fuse a political party with the state. China’s goal seems to be to cultivate a global authoritarian-friendly political bloc, with access to markets, as the West increases sanctions against certain technologies and industries. It is no coincidence that the African continent happens to be rich in raw materials and energy. 

While China claims the school is a way to promote Africa’s social and economic development, the investigation found that behind closed doors “economics takes a back seat to political training”. Through interviews with African officials who have attended the training, the media outlets learned that the real story contradicts the one asserted by CCP officials. Chinese teachers sent from Beijing are telling African leaders that the party should sit above the government and court systems.

The school is a partnership between the CCP and the ruling parties of Tanzania, Mozambique, Namibia, Angola, South Africa and Zimbabwe. While all six of the countries are multiparty democracies - one thing they share in common is that each has a ruling party that has been in power for decades. Perhaps the most telling sign is that while the school’s offerings are available to young members from these ruling parties, politicians from opposition parties are not permitted access to the school.

If there is any doubt about China’s desire to build an alternate world order, then the evidence was on display in October this year when Mr. Xi hosted 130 countries to celebrate the 10th anniversary of his Belt and Road Initiative (BRI). The forum was meant to demonstrate the convening power Mr. Xi has built in the decade since launching his signature foreign policy initiative, and to showcase the challenge China now poses as a global rival to the U.S.

Mr. Putin made the trip to China, only his second foreign trip since an international arrest warrant was issued for him. Trade between Russia and China has grown dramatically over the past year and is expected to reach $200 billion by the end of the year. Recent data shows that Beijing is propping up Moscow’s economy, accounting for around half of Russia’s imports. This includes exporting goods like microchips and trench-digging excavators that may have military applications.

While it can be argued that the BRI enables China to encroach on Russia’s sphere of influence with Central Asian countries, their goals overlap in wanting to keep the secular authoritarian rulers of Belarus, Kazakhstan, Kyrgyzstan and Armenia in power, to guarantee stability in the region and keep Western influence at bay.

Meanwhile, another longtime ally of China, North Korea, has been launching more missiles this year than any year prior, including 25 in a single day. The reclusive country is now preparing to sell weapons to Russia. A month after the Russian Defense Minister Sergei Shoigu visited Pyongyang, Mr. Kim Jong Un traveled to Russia’s main spaceport to meet with Mr. Putin. 

The two dictators agreed to greater economic and security cooperation and lashed out against the U.S.-led global order. After the meeting, according to the Russian news agency TASS, Mr. Kim Jong Un described Russia’s war in Ukraine as a “sacred struggle to punish the gathering of evil that claims hegemony and nourishes expansionist illusions.” This marks a major shift; prior to the meeting the North Korean dictator had been reticent to publicly support Russia’s invasion. 

Historically, Russia too kept North Korea at arms length, supporting sanctions against the country. Through the 2000’s and again in 2016-17 when the UN Security council limited oil supplies and cracked down on North Korea’s labour exports, Russia supported sanctions. With this newfound friendship, experts believe North Korea will supply artillery shells and in exchange will receive energy supplies and technology transfers to build nuclear submarines and spy satellites - two things Mr. Un has long wanted but lacked the technological know-how to build.

Then there is Africa’s Sahel region, which has been dubbed the ‘coup belt’ because since 2020 there have been coups in Mali, Guinea, Chad and Burkina Faso. In July, there was a military coup in Niger. Until this year Niger had been the only stable democracy in this volatile region. 

The instability being caused by these coups is being exploited by Al-Qaeda affiliated groups and the Islamic State, both of which have gained ground at an alarming pace across the region. To counter these terrorist groups, the U.S. and France had established military bases in Niger and the country was considered a key security partner and nerve center for disrupting terrorist activities across the North African region. 

The U.S. spent $500 million training and arming the Niger military and has 1,100 troops soldiers stationed there, whose future is now in doubt. The French had 1,500 troops that have been withdrawn as a result of the coup. The French troops had relocated to Niger after a coup in Mali, which forced them the leave that country. After pushing the French out, Mali’s military junta ejected UN peacekeepers and then invited Russia’s Wagner Group to deploy in their place.

China is not the only authoritarian regime asserting itself on the global stage. Russia too has been acting with increasing aggression, even before the Ukraine invasion and the revelations about its support for Iran's transfer of weapons to the conflict in Ukraine.

The latest concern is that Russia’s Wagner group, while not responsible for the coup in Niger, will take advantage of the vacuum. A fear that was heightened after supporters of the coup were seen on the streets waving Russian flags, and one of the coup leaders travelled to Mali to meet with the Wagner-allied military junta there.

Russia’s Wagner Group, now without its leader, started to spread its tentacles in Africa around 2017. Wagner established operations in several African countries with much of their activity happening in countries plagued by civil war like the Central African Region (CAR), Libya, Mali and Sudan. Wagner’s services include combat operations, security, training and disinformation campaigns. They are compensated through direct cash payments or given rights to precious mineral and resources.

In CAR, Wagner defended the regime of the current President against rebel groups after he changed the constitution to remove term limits. In return, they got unrestricted logging rights and control of the lucrative gold and diamond mines in this impoverished African nation. Now, after the death of Yevgeniy Prigozhin, the Russian government is taking control over Wagner’s contracts as it realises that it is a way for Mr. Putin to procure minerals and resources while evading sanctions.

Africa is not the only part of the world where Wagner has spread it tentacles. In 2015, Mr. Putin came to the aid of his friend Bashar al-Assad, in Syria and it was confirmed that Wagner mercenaries fought alongside the Russian military, and were responsible for turning the tide back in favour of the Syrian dictator.

In 2019, when Nicholas Maduro’s regime was under threat from popular protests supported by the U.S., Wagner mercenaries flew into Venezuela to beef up President Maduro’s security. That same year they helped quash a revolt led by senior military officers against Maduro’s regime. It is fair to say that the only reason President Maduro’s regime has survived, despite being an international pariah and one of the most sanctioned countries in the world is because it receives financial and military support from Russia, China, Iran, Cuba and Turkey.

The fact is that long before the Israel-Hamas war broke out the world was on the road on to disorder with growing instability in Africa’s Sahel region, coups in Myanmar and Kazakhstan, and US and China’s growing rivalry and deepening animosity.

President Xi Jinping has set 2027 as the deadline for China's military to be ready to "fight and win" and 2049 for the country to lead the world in "composite national strength and international influence.” While the US-China clashes echo the US-Soviet rivalry of the Cold War, the differences may be more instructive than the similarities according to scholars

China presents a far greater military, economic and technological threat to America than the Soviet Union ever did. China is far more integrated in the world economy than the Soviet Union ever was, and the American and Chinese economies, which together account for 40% of global output, are interconnected and reliant on each other; which was not true with the Soviet Union.

Many experts had opined after the fall of the Berlin Wall in 1989 and the collapse of the former Soviet Union soon after, that the world would enter a virtuous cycle of growth, prosperity, tolerance and freedom. They believed America would remain a unipolar power with no rivals on the world stage, and that America’s brand of liberal democracy and free-market capitalism would win. Far from becoming a unipolar power, America is no longer the only game in town.

One yardstick for gauging the success of U.S. soft power is through the spread of liberal democratic values in the thirty years since the Cold War the Cold War ended. If we look at the number of countries where citizens enjoy similar rights to free speech, free press, free and fair elections, and other liberties, a 2022 study found that of the 195 nations on earth, just 34 are liberal democracies with these freedoms.

Over the last seventeen years we have seen a steady rise of authoritarianism and an erosion of democracy, along with curtailed press freedoms and growing human rights abuses all over the world. Perhaps the most important lesson of the failure of U.S. policy, especially with respect to China, is that embracing capitalism is not a magical ingredient to ushering in democratic freedoms. China has never been and will never be interested in joining a US-led global club, relating to economics, politics or security.

Another reality is that while most Western nations remain staunch U.S. allies, they are heavily reliant on China for their supply chains and economic well-being. French President Emmanuel Macron said this year, on a plane ride back from his meeting with Mr. Xi, that Europe must not become “America’s followers” and should not blindly follow the U.S.’s lead in supporting Taiwan against China's aggression. He is not alone. 

European citizens in 11 countries, who are steadfast in their support for Ukraine and stand against Russia, when surveyed recently by the European Council on Foreign Relations said unanimously that they would want their country to remain neutral in a conflict over Taiwan between the U.S. and China. 

Then there are a number of powerful countries with whom the U.S. has a complicated relationship, like India, Saudi Arabia and even smaller ones like Qatar, on whom the U.S. is reliant. All of them wield far greater influence than they did during the Cold War. It would be fair to say that during the Cold War it was easier to determine friend from foe, but in the new world disorder there will mainly be shades of gray. 

Take the kingdom of Qatar. This tiny oil-rich Gulf nation on the face of it could be considered a staunch U.S. ally. It is home to the Al Udeid Air Base, the largest U.S. base in the Middle East. The base has served as a critical center of operations for the war in Afghanistan and continues to be for strikes on Syria. In fact, the relationship with Qatar is so important that last year the White House designated it a “Major Non-NATO Ally”.

Qatar too has made major investments in America. According to a 2022 study by the National Association of Scholars, it is the largest foreign donor to American universities. It has donated a whopping $4.7 billion, between 2001 and 2020, to top tier colleges. The Qataris’ own stakes in major NHL, NFL and NBA teams and iconic properties, like the Empire State Building. They controversially hosted the 2022 Football World Cup, after spending years buying their way into European football, acquiring a controlling stake in one of France’s best league teams, Paris St. Germain, in 2011.

However, Qatar owns the Al-Jazeera network, the most powerful media voice in the Arab world. Though the network claims it has editorial independence, it has given airtime to a Muslim Brotherhood related cleric Yusuf al-Qaradawi, who was denounced by the Anti-Defamation League as a ‘Theologian of Terror’. In 2017 Saudi Arabia, UAE, Egypt and Bahrain severed diplomatic ties with Qatar and cut off air, sea and land routes, after accusing it of supporting extremist groups, like the Muslim Brotherhood.

Then there is the uncomfortable truth that a few minutes drive from the Al Udeid air base you can find the home of Hamas’s de facto leader. The Qatari government not only openly hosts a group designated a foreign terrorist organisation by the U.S., UK, European Union and Canada but is one of its biggest benefactors. The country is also home to the Taliban leadership, who established an official office here in the early 2010s.

Similarly, even as Saudi Arabia has grown closer to China, and we have seen bumps in their U.S. relationship, they are not about to turn their back on the U.S. and align with China anytime soon. While China was brokering the deal with Iran, the Saudis were negotiating with the Biden administration to normalize relations with Israel, in return for a NATO-like defense pact with the U.S. and help to develop a civilian nuclear program. Then there is the fact that even though ties with Iran were restored, the Saudis and Iranians continue to have an uneasy relationship and are still engaged in a proxy war in Yemen.

India, the fourth largest economy in the world, also sits in this gray zone. Much to Mr. Biden’s chagrin Mr. Modi has refused to condemn Mr. Putin’s invasion of Ukraine, and in direct violations of sanctions, dramatically increased India's purchase of Russian crude.

The reason India can operate in this gray area is that the U.S. sees it as the biggest bulwark against China. Though India and China share a common ally in Russia, they remain sworn enemies, which explains why India got a free pass on buying Russian oil and why Mr. Biden has been careful not criticize Mr. Modi on India's backsliding of democratic norms.

There is no love lost between Mr. Xi and Mr. Modi. The former chose to skip the recent G20 summit in India. It was the first time Mr. Xi missed a G20 meeting since he came to power in 2012, and Mr. Modi was conspicuously absent during China’s display of global influence at the BRI anniversary.

The Indian Prime Minister not only has remained steadfast in his refusal to join Mr. Xi’s infrastructure building program but has instead promoted alternatives. At the G20 summit Mr. Modi announced, with Mr. Biden, plans to build a rail and shipping corridor connecting India with the Middle East and Europe.

Compared to the Cold War, today’s geopolitical landscape is far more complex, more fragmented and has far fewer alliances that can be taken for granted.

Further, many Western countries are themselves rife with domestic political turmoil. China, Russia, Iran, North Korea and others sense the weakness in the West’s power, as witnessed by the UK’s disastrous exit from the European Union, the U.S.’s refusal to ratify a major trade pact with Asia, the failed wars in Afghanistan and Iraq, and the chaos of the Trump years.

Even within democracies, leaders like Brazil’s former President Jair Bolsonaro and President Trump in America have been sowing distrust among the electorate around election results, in a bid to stay in power. India, under Mr. Modi, has seen its rating fall for the fourth consecutive year and is now ranked as “partly free” by Freedom House.

As a result many authoritarian leaders no longer feel the need to maintain a “veneer” of democracy. In the last few years, we have witnessed farcical elections in RussiaNicaraguaCuba and Guatemala and seen a surge in coups as far afield as SudanMyanmar and Kazakhstan.

The report states that China, Russia and other dictatorships have succeeded in shifting global incentives “jeopardizing the consensus that democracy is the only viable path to prosperity and security” while actively encouraging and supporting authoritarian approaches to governance.

In the new world disorder, authoritarian regimes are no longer isolated but instead able to thrive and actively collaborate with one another and can count on China and Russia to help prop them up, like in Belarus, Myanmar, Venezuela and  Syria.

Additionally, while misinformation and disinformation have always been weapons used by governments, the difference today is that they can be supercharged with artificial intelligence and disseminated via social media platforms that enable it to spread across the globe at light speed. Intelligence officials say that fake videos are being used aggressively by all anti-American actors, and some experts estimate that more than 90% of the content on the internet will be fake or doctored in the near future.

Much like with the Ukraine war, China and the U.S. once again stand on opposite sides of the Israel-Hamas conflict. On the world stage China has been offering itself up as a neutral peace broker in the Middle East. The Chinese foreign minister traveled to Egypt to meet with the leaders of the Arab League and held a flurry of calls with Saudi Arabia, Iran and Russia to coordinate their Middle East strategy. 

Yet the truth is that China's professed neutrality hides deeper ambitions according to experts, who say that China sees this crisis as a way to diminish U.S. influence, rather than to seek regional stability. As a result, they have refused to condemn Hamas, in a bid to curry favour with Arab countries, whom they see as natural allies to promote their agenda to “legitimize authoritarian practices and erode human rights protections”. Yet there is a danger that by overplaying their hand and alienating Israel to appeal to Arab nations, China's efforts could backfire and spark wider turmoil.

This danger is evidenced by the fact that even as China claims to be playing a neutral role, their state media has been blaming America for the conflict and has been perpetuating tropes of Jewish control of American politics. There has been a surge in antisemitism on Chinese internet and state media has often been selective with the information it shares. Chinese media reported on the hospital explosion in Gaza, stating Palestinian claims that Israel was behind the attack, but did not share subsequent intelligence analysis and video footage that suggests it was likely a failed Palestinian rocket destined for Israel.

However, despite all this, while the danger of a regional conflagration is high, it is not inevitable. Even as China takes advantage of the situation and seems to be stoking the fires, like the U.S. it wants a stable Middle East because it has a lot to lose if the conflict widens into a regional one.

As the world's largest oil importer, China needs a stable Middle East to fuel its economy. Around half of China’s oil imports come from the Persian Gulf. The Saudis are China’s no. 2 source of crude oil, Qatar is one of their top suppliers of liquefied natural gas, and they have been increasing oil imports from Iran which they get cheaper due to sanctions. 

The good news is that while it might be for different reasons, neither America nor China want the Israel-Hamas conflict to spill into a regional war. Working together each can use its respective influence to bring down the temperature. The U.S. has leverage with Israel and China has influence with Iran, who are Hamas and Hezbollah’s principal backers.

Another reason for pause is that the American and Chinese economies are deeply intertwined and while there has been political rhetoric about decoupling, the truth is that it would be near impossible to do, at least not without severe economic pain for both nations. This is why we have started to see a softening in tone from both sides. The U.S. is now talking about de-risking from China and Mr. Xi announced a few days ago that China is willing to cooperate with the U.S. and wants a more stable relationship, based on “mutual respect”.

Instead of trying to decouple and divide the world between them, the U.S. and China need to learn how to live and work alongside each other in a way that allows for intense competitiveness but also fosters collaboration to deal with global issues like climate change, energy, space and cybersecurity. 

As the Economist notes, the world has become more fluid and transactional. Just as China offers dictators infrastructure, technology and arms with few strings attached, the U.S. will need to compete on transactional terms with its own basket of incentives that include free market access, technology transfers and security agreements, but it will have to do so without trying to force Western liberal values down the throats of these countries.

This does not mean the U.S. should acquiesce to China’s aims of authoritarian expansion or turn a blind eye to human rights abuses, oppression and unfair trade practices; it does mean that the US will need to recalibrate how it engages with a growing majority of nations who are taking neutral positions and seek a more pragmatic approach that will allow them to cut the best deals with both China and America.

The US-led world order still has a profound interest in seeing the spread of liberal democracy and that goal should not be abandoned. The US must be transactional but principled and assert its leadership more responsibly, using carrot and stick, rather than trying to do it forcibly.

The last time I checked the majority of the people in the world still were still clamoring to emigrate to America, and not to China. Most people in the world prefer freedom to oppression, but that does not mean they necessarily want America’s style of democracy. 

America must remember this and never use military force or attempt to install democracy like they tried and failed in Iraq and Afghanistan. 

Instead, America needs to inspire and lead by example, not instruction.

Saturday, July 1, 2023

The New World (Dis)order: PART III: China Awakens Under Xi Jinping

(Image: contrainfo dotcom)

NOTE: This is the third in a five part series.
PART I: American Adventurism, Non-Interventionism, Trumpism and Afghan Chaos
PART II: The Misunderstanding of Vladimir Putin
PART III: China Awakens Under Xi Jinping

PART IV: Crony Capitalism and the West’s Achilles Heel

PART V (November): The New World (Dis)order

PART III: China Awakens Under Xi Jinping

“If the U.S. side does not put on the brakes and continues down the wrong path, no amount of guardrails can stop the derailment and rollover into confrontation and conflict.”
Chinese Foreign Minister Qin Gang

From 2008-2013, there was one particular leader who was closely studying America’s actions and lack thereof. Xi Jinping became vice president in 2008, around the time Barack Obama became president. 

Xi’s rise was meteoric after being named chairman of the Communist Party and Central Military Commission in 2012. Holding the reins to the party apparatus and military, he began consolidating power by launching anti-corruption probes to purge the military and party ranks of rivals and non-loyalists.

As Mr. Xi consolidated his grip on the party we began to see a bolder China emerge onto the world stage. It is not a coincidence that this transpired around the time the world started to perceive a weaker, divided and non-interventionist America.

For most of the last century Chinese leaders have followed Deng Xiaoping’s strategy of "hiding our capacities and biding our time.” The idea was to avoid provoking hostility until China had the military and economic strength to challenge US hegemony.  Xi Jinping’s China didn’t simply come out of hiding but has embraced a far more aggressive and muscular posture at home and abroad. 

During Covid-19 Mr. Xi implemented a zero-Covid policy which involved forcibly locking up residents and publicly shaming those who broke quarantine. He authorized a genocide against Uyghurs in China’s Xinjiang region and oversaw a brutal crackdown in Hong Kong, a territory to whom China had promised press and other freedoms until 2047 under the ‘one country, two systems’ handover agreement with the British in 1997. 

In the last few years, China has provoked India with the Chinese military violating agreements along their shared border, leading to deadly clashes. Beijing packed Hong Kong’s legislature with loyalists and passed a draconian national security law. This law applies not only to local residents but to “people outside [Hong Kong] - who are not permanent residents”. China openly threatened the UK with dire consequences for offering residency to fleeing Hong Kong citizens.

In 2012, China launched their first aircraft carrier, after spending years modernizing their navy. Soon after they started to flex their muscles in the South China Sea, laying claim to disputed territories and territorial rights. 

A year later, they consolidated bureaucratic control over multiple maritime agencies to create a State Oceanic Administration that would match the size of Japan’s coast guard, the largest in the world. That same year they announced the creation of an East China Sea Air Defense Identification Zone over disputed territories and demanded that all non-commercial aircraft submit air plans prior to entering the area or risk being shot down. 

A 2015 Pentagon report found that China had reclaimed more than 3,200 acres of land in the southeastern South China Sea and were “weaponizing these man-made islands”. The report concluded that in addition to building facilities on disputed islands, China was “increasing its role and power around the world, while continuing to modernize and build up its military and inventory of ships, missiles and aircraft.”

In March 2022, the U.S. Indo-Pacific Commander confirmed to the Associated Press that China had fully militarized at least three islands in disputed areas of the South China Sea. They armed these islands with anti-ship and anti-aircraft missiles, laser and jamming equipment and fighter jets. This happened despite the fact that Xi Jinping had made public assurances that China would never convert these islands into military bases. 

Last year, the Solomon Islands shocked the world by signing a security pact with China. It allows the Chinese navy to dock warships on the island and allows the island to call in Chinese security forces, to restore “social order”. 

The agreement also gives Chinese forces the authority to “protect the safety of Chinese personnel and major projects.” Both Australia and America sent high-level delegations to dissuade Solomon’s PM from signing the agreement but failed to change his mind.

Why all the fuss over six small islands with a population of less than 700,000 people?

Australia is concerned about having the Chinese military stationed less than 1,200 miles from their shores and America is worried about reduced freedom of navigation in the South Pacific because the Solomon Islands sits at a major trade transit point through which massive amounts of global cargo flow.

This agreement was a startling reversal for a country that had been both a diplomatic partner of Taiwan’s, and a long time Western ally. It can in part be explained by the 2016 election of President Tsai Ing-wen, in Taiwan, and her refusal to endorse the “one-China principle”. After the Taiwanese elections, Mr. Xi’s administration went into overdrive to persuade countries to sever ties with Taiwan. 

Today, only 13 countries, many of them small, less-developed nations, have formal relations with Taiwan. China recently persuaded Honduras to sever ties with Taiwan. This was a major rebuff to Washington, who had been working hard to get Central American countries to support the island nation.

China is reported to be building a secret naval base for its military in Cambodia, though both countries have denied this. If true, it would be their second such outpost outside their territory, and first in the strategically significant Indo-Pacific region. Australia's Defense Minister recently warned in a speech that China’s "military buildup in the region was occurring at a rate unseen since World War II”.

Last year, the US Commander of Strategic Command, Vice Adm. Chas Richard, issued a more ominous warning. He said America’s military edge, which has thus far provided a deterrence against China, “is slowly sinking.” He added that China is putting capacity in the field faster and that if this continues, “it isn't going to matter how good our [operating plan] is or how good our commanders are, or how good our forces are—we're not going to have enough of them. And that is a very near-term problem."

Even as China flexes its military might, Mr. Xi understands something previous Chinese premiers failed to see: that military might and financial muscle alone will never allow China to rival America on the world stage. They also need to build soft power. 

With soft power in mind, in 2013 Mr. Xi launched the Belt Road Initiative (BRI). The BRI is modeled after The Silk Road created 2,100 years earlier by the Han Dynasty to build trade routes linking Europe to Asia. However, Mr. Xi’s ambitions go far beyond trade. By investing in developing nations and making their economies co-dependent, it allows him to bring them into China’s sphere of influence.

Within seven years of launching the BRI, 139 countries have signed cooperation agreements. This includes 39 countries in sub-Saharan Africa, 34 in Europe and Central Asia, 25 in East Asia and the Pacific, 18 in Latin America and the Caribbean, 17 in the Middle East and North Africa, and 6 in South Asia. Currently, the BRI, including China, accounts for 40 percent of the world’s GDP and 63 percent of its population.

To put the scale of BRI in perspective, over the last decade, China has doled out more than $1 trillion across Asia, Africa and Latin America. This makes China the largest government lender to the developing world, almost equalling the total loans of all other governments combined.

In Africa, more than 60% of the revenue major international contractors collected in 2019 went to Chinese companies, according to a 2021 paper by Johns Hopkins University. In 2022, China’s trade with Africa was five times greater than that of the US. This, in addition to the fact that the Russian Wagner Group, a private military contractor, has been providing security assistance in several African countries. 

These ties to China and Russia are a large part of the reason why many African nations, including South Africa, have been reluctant to condemn Russia’s invasion of Ukraine. After neglecting the continent for many years, the US is now playing catch-up to try and blunt China’s influence with recent high-profile visits by the US Treasury Secretary and one by the Vice President.

In 2014 China launched the Asian Infrastructure Investment Bank (AIIB) to rival the Asian Development Bank (ADB), which lends money for infrastructure projects to Asia. According to China it was necessary because unlike the ADB, which funds projects ranging from environmental protection to gender equality, the AIIB would be focused on building infrastructure in poor Asian countries. Most world watchers believe the true reason was to expand China’s influence in the region at the expense of Japan and America, who hold more sway at the ADB.

Over the last decade, China has been increasingly using its economic clout to bully and punish nations that act in ways it deems unacceptable. In 2011, China blocked salmon imports from Norway after they awarded the Nobel Peace Prize to Chinese dissident Liu Xiaobo. In 2020, they blocked agricultural, beef and other imports, after the Australian government supported a global inquiry into China’s early handling of Covid. As the war of words escalated with Australia, China even threatened them with a missile attack.

When Lithuania, an EU country of less than 3 million people, let Taiwan open a trade office in Vilnius, China halted its own exports to Lithuania to starve their manufacturing industry of components and raw materials. Then they took their vindictiveness to a new level by letting Chinese goods, that had been paid for by Lithuanian companies, get mired in new red tape and endless inspections delays.

China even pressured EU countries to stop importing Lithuanian products. They halted shipments of auto components to German, French and Swedish companies from ports in China, because some parts were manufactured in Lithuania. The Lithuanian spat exposed the limits of power of a massive trading bloc like the EU, against the growing might of China. Apart from filing a complaint with the Word Trade Organization (WTO) and offering words of solidarity, EU was reluctant to do anymore, for fear of upsetting China. 

The fact is that the EU is reliant on China for their supply chain and China used Lithuania to send a message to the bloc. Theresa Fallon, Director of the Center for Russia, Europe, Asia Studies in Brussels summed it up saying,“Many European leaders look at Lithuania and say, ‘My God, we are not going to do anything to upset China.”

Prior to Russia’s invasion, China and the EU’s economic ties were mutually beneficial, and a way for both sides to limit their reliance on the US. However, after China’s bullying of Lithuania and support for Putin’s invasion, these ties have begun to fray.

At the 2023 Munich Security Conference, China’s top diplomat received a cold reception when he tried to woo Europe, by bashing the United States. His audience was aware that even as he spoke, in the background European security officials had discovered that official Chinese channels were hard at work spreading disinformation all over Europe.

Despite these tensions, it is worth noting that the EU’s largest economy, Germany, continues to have deep ties with China and is still their largest trading partner. At the end of 2022, the German Chancellor made a high-profile trip to Beijing. For now, Sino-German relations remain “cold politically and hot economically” as the Director of European Studies at Fudan University put it.

Meanwhile on the home front, Mr. Xi has been walling China off from the world. He aims to make China self-reliant and less dependent on the West. From the time he came to power Mr. Xi has feared “infiltration” of dangerous Western values, like democracy, press freedoms and judicial independence.

One of his first acts as premiere was to accelerate policing and censorship of the internet by banning anonymity and making internet providers responsible for deleting content deemed offensive or politically sensitive. He systematically clamped down on foreign NGOs and churches, and issued rules restricting the use of Western textbooks, banning any texts that promote “Western values”.

To understand why the man who once said in 2017 “Openness brings progress, while self-seclusion leaves one behind,” seems to be ignoring his own advice, we need to understand that Mr. Xi never embraced “openness” in the way we define it in Western democracies. Instead. Mr. Xi always viewed “globalisation” as a series of risks and rewards, enacting reforms in piecemeal ways to ensure that the Party never cedes control of the economy and is able to protect citizens from dangerous outside ideas.

Even prior to the Covid_19 lockdown, which closed China’s borders for two years, by every measure China’s global isolation had been growing. Foreign films accounted for less than 16% of box office revenue, down from over 50% in 2012. In 2021, the value of imported books and periodicals fell to their lowest level since 2017. The number of Chinese students leaving to study in Australia dropped dramatically last year. Even foreign remittances fell by more than half compared to figures for 2019.

In Mr. Xi’s vision of China the state plays a central role in guiding the economy, the private sector is loyal and aligned with the Party’s policy goals, and he is the leader who restores China’s power on the world stage. He envisions China as the center for global innovation, aided by government investment into domestic research and technology, which will help power productivity and propel growth. China as a self-reliant nation, no longer meek, or beholden to the West.

Over the past decade, the state has shuttered or taken control of many private businesses, absorbing them into state-owned enterprises, but the tech sector managed to escape Mr. Xi’s increasingly visible hand on the private sector. However, this changed three years ago, after Mr. Xi personally intervened to block the Ant Group’s IPO. 

In a speech a few days before the IPO, Jack Ma publicly criticized the government’s financial regulation, blaming it for holding back technology development. It is said that Mr. Xi was infuriated by this, but the likely reason is the complex ownership structure behind the Ant Group. A number of well-connected political families were shareholders, and could have posed a challenge to Mr. Xi’s leadership because they stood to collect billions from what would have been the world’s largest ever IPO. 

Since then Mr. Xi has singled out the tech sector, blaming it for widening inequality in China. Mr. Xi knows that if this inequality is left unchecked, it will lead to social unrest. 

A few months after launching antitrust investigations into big tech companies and announcing new rules to restrict overseas listings by Chinese companies, Mr. Xi gave a speech about pursuing a “common prosperity agenda,” in which he vowed to adjust excessive incomes and redistribute wealth to tackle growing inequality.

However, I believe the main reason for the tech crackdown has to do with the fact that a handful of entrepreneurs and companies have attained such great market dominance and influence over the economy that they threatened the clout of the Party. Chinese tech giants account for a much larger portion of the economy than their counterparts in the US and Europe, and I suspect that Mr. Xi’s began to view them as a threat.

To give you an idea of the dominance Chinese tech companies have, Alipay, a mobile payments app owned by Jack Ma’s Ant Group, is used by roughly 70% of China’s population. Ant has issued loans to 20 million small businesses and nearly a billion individuals. 80 million businesses use their apps and they run China’s largest mutual fund. Ant’s focus on serving the unbanked has made it a dominant force in finance.

Also, unlike in America and Europe, a small handful of Chinese companies have a multi-tentacled reach. They have built super apps with walled gardens, offering services that span e-commerce, payments and delivery, to social media, gaming and entertainment. This power over the economy and populous was likely viewed as a long-term threat to Mr. Xi’s leadership and the Chinese Communist Party dominance.

The tech sector was the last remaining threat to Mr. Xi having absolute power, ahead of being anointed de facto emperor of China, at the 2022 CCP Congress.  At the last congress, the party amended its constitution to enshrine Mr. Xi as the “core of the party and his political thought as its underpinning ideology”, clearing the way in March this year for the National People’s Congress to unanimously vote to rubber stamp Mr. Xi’s norm-breaking third term, putting him on track to be in premier for life. 

While it may appear that Mr. Xi and China are at the pinnacle of their power, there is trouble brewing on the long horizon.

A slowing global economy coupled with rising interest rates and inflation are leading to an increasing number of debt defaults by developing nations which are struggling to repay loans received through the Belt and Road initiative. 

As a result other issues have emerged with these loans, from a lack of transparency and rampant corruption to labour violations and predatory lending practices. It has resulted in a number of countries finding hidden debt that was never officially disclosed on government balance sheets.

Additionally, completed infrastructure projects are falling apart due to poor quality equipment and construction flaws. These problems threaten to leave developing nations in worse shape because in addition to repaying loans, they will now need to spend money to repair these defects. 

Cracks were found in Ecuador’s Coca Codo hydroelectric plant, the country’s biggest power source. In Pakistan, officials had to shut down the Neelum-Jhelum hydroelectric plant after finding cracks in a tunnel, just four years after it went online. In Uganda officials identified more than 500 construction defects in a Chinese-built hydropower plant that has suffered frequent breakdowns since going online in 2019. The World Bank estimates that hydropower plants should have a lifespan of up to 100 years.

Also, China’s economy can no longer rely on easy growth through technological transfers.For much of the 1990’s and 2000’s foreign firms that set up factories brought advanced technologies that were forcibly transferred to local Chinese firms, or reverse-engineered at little cost. 

However, these transfers are increasingly being restricted, even though China continues to be accused of hacking and theft of intellectual property. The US put tough new export controls on advanced technologies, like semiconductor chips, in a bid to slow down China’s technological and military advances through illegal transfers.

In late 2022 and early this year, foreign investors pulled more than $100 billion out of China’s bond market and there was a dramatic slowdown in investments in the country’s stock market. But these investments are likely to bounce back because many investors sold for fear of getting caught up in sanctions aimed at Chinese entities, due to the country’s support for Russia's invasion, and because of Mr. Xi’s reluctance to lift the strict zero-Covid policies which were hampering economic growth.

In the early part of this year, after Covid restrictions were lifted, China’s economy has shown signs of a strong rebound with manufacturing showing the biggest improvement in more than a decade, services sector activity climbing and signs of stabilization in the troubled housing market

These figures were released ahead of the National People’s Congress in March, where Mr. Xi shared plans for “deepening structural reform” in the financial sector and tightening controls over science and technology in strategic areas like chips.

However, troubling systemic issues lurk beneath this short-term buoyancy. For years Chinese cities accumulated vast amounts of debt in a bid to boost GDP, by spending on wasteful infrastructure projects. 

Already struggling to pay off debt, these cities experienced a further strain on coffers to implement Covid restrictions. The situation is so bad that some cities are struggling to deliver basic services. Recently, a city went viral after announcing they could no longer provide bus services.

China’s housing market remains on tenterhooks after property owners suspended mortgage payments last year, over delayed and stalled projects. It is too soon to tell if this eroded confidence in home buying more broadly. Also, analysts expect that further government bailouts will be necessary to help debt-stricken property developers.

In 2022, China’s population declined for the first time in 60 years. This demographic crisis will result in a shortage of labour while simultaneously increasing healthcare and other social security costs. Aware of the looming crisis, the government has been trying to incentivize couples to have kids, raising the limit from 2 to 3 in 2021, but they have not succeeded in reversing declining birth rates.

They even tried paying couples but got pushback with people saying that the main issue is that the country has become one of the most expensive in the world to raise a child. They say that these government incentives do nothing to help with supporting ageing parents and dealing with the rising cost of education, housing and healthcare. 

A related problem is the high rate of youth unemployment. One in five urban youth were unemployed at the end of 2022. The latest figures for June this year show the unemployment rate among 16-24 year olds rising to 20.8%, which is four times the overall national jobless rate. This means China is now facing its worst unemployment crisis in four decades. Young people unable to find jobs and income are delaying plans for marriage and having kids, which is putting further negative pressure on the country’s birth rate.

While China says they have reopened for business and foreign investment, official figures show that the number of foreigners living in Shanghai and Beijing has been in steady decline over the past decade, and there is likely to be a mass exodus in the future. 

2022 survey by the European Chamber of Commerce found that 85 percent of expats living in China said that the government harsh Covid policies and inhuman lockdowns, had caused them rethink their future in the country.

It is not only foreigners who are fleeing Mr. Xi’s harsh policies. Wealthy Chinese faced with the prospect of income redistribution have been fleeing in greater numbers after Mr. Xi’s promise to narrow ‘inequity’, according to data compiled by firms which track the movement of the rich. They expect many wealthy families more to leave in 2023.

It is not just wealthy Chinese who are fleeing. The US has seen a marked increase in Chinese citizens willing to risk life and limb to pass through the treacherous jungle between Panama and Columbia, to seek asylum in America. Panamanian government data shows that in the first two months of this year, more Chinese migrants crossed into Panama than all of 2021 and 2022 combined.

More recently the government banned a prominent finance writer and two of his peers for “spreading negative and harmful information” because they had written about the country's spluttering economy and unemployment rate. While all this does not bode well for China, in the end their biggest threat might be the impacts of Mr. Xi’s desire both to remake the economy based on his ideology and to secure the Party’s grip on power. 

By giving the Communist Party even greater say in managing the economy, replacing tech leaders with academics and internationally respected economic officials with politicians loyal to Mr. Xi, he threatens to further erode the lines between party, government and private sector in ways that will have dangerous and unintended consequences for China and the rest of the world.

Read next installment in series:

PART IV: Crony Capitalism and the West’s Achilles Heel