By Ken Moak
It appears the political and security elites in the United States are preparing for an OK Corral-type showdown with China. On December 1, the US Justice Department asked (some would argue pressured) Canada to arrest Meng Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei, on a provisional warrant. It went on to charge two Chinese government employees with stealing information from firms and governments in 12 countries.
The big question is: Why now and what does the US hope to gain from these provocations?
China’s economic, technological and military rise
A brief look at China’s accomplishments in the economic, technological and military realms might shed light on the question.
The size of China’s economy is estimated at US$13.7 trillion in nominal exchange rate measurement and it met the targeted growth rate of 6.5% in 2018, according to China’s National Bureau of Statistics (CNBS). China’s growth rate is far greater than that of the US, estimated at around 3% by the US National of Statistics. If the trend continues, the Chinese economy could well topple that of the US, becoming the biggest economy in both measures.
The remarkable annual average growth rate of nearly 9% has allowed the country to spend lavishly on research and development and higher education, estimated at over US$260 billion and US$175 billion, respectively, in 2017 by the CNBS. A big chunk of higher education spending was on science, technology, engineering and mathematics (STEM).
As a result, China produces over 6 million STEM graduates each year and a similar number worked in research. These millions of STEMs are the country’s best and brightest scientific and engineering minds.
This might be a more compelling explanation of why the country is fast closing the innovation gap with and even surpassing the US in some areas – 5G, AI, driverless cars, high-speed railway, etc – than China stealing American secrets.
Huawei is at the forefront of 5G technology and the biggest (and some would suggest the best) telecommunications equipment manufacturer in the world. According to the company’s press release, almost 170 countries are using its equipment. Huawei is also the world’s second-largest smartphone producer, surpassing Apple but behind South Korea’s Samsung.
Other than the US, Australia and New Zealand, no country has accused Huawei of being a “spy” for the Chinese government. Indeed, France and Germany welcome the company’s investment.
It is probably the fear that Huawei might displace Apple that the US barred the company’s products from entering its market and asked Canada to arrest its chief financial officer. According to Jeffery Sachs, a Columbia University professor and Washington Post columnist, Meng Wanzhou’s arrest might have been politically motivated, contrary to what both the US and Canada have claimed. This allegation was supported by Trump himself when said he would intervene if China would not give him the “deal” he wants.
While China is not interested in getting into an arms race with America, it is spending heavily on developing new weapons systems to ensure it has a credible deterrent. The latest is the JL3, a submarine missile that can carry 10 nuclear bombs with a range of over 7,500 kilometers. Together with its DF21, DF26, DF31 and DF41, China has achieved that credible deterrent capability.
America’s ruling elite upset and frustrated
The US political, security and intelligence communities are upset with China because it is able to challenge American supremacy but cannot do anything about it short of a nuclear attack.
It was not supposed to be that way. The US did not expect China to transform itself from an impoverished and backward country into a superpower within four decades. Based on Soviet economic performance, the West and Japan, in fact, laughed at Deng Xiaoping’s “Socialism with Chinese Characteristics,” dubbed “state-capitalism.” Indeed, they cheered for India.
However, the West, the US in particular, and Japan are shocked because China has done so well. According to the World Bank, China’s economy was just a little over US$250 billion in 1978, the year Deng opened the country up and established economic reforms, turning away from dogmatic central planning to a market economy with Chinese characteristics.
Since then, China’s economy has grown enormously, reaching nearly US$13.7 trillion in 2018. Along the way, the government managed to lift between 750 and 800 million people out of poverty, build the largest and most sophisticated high-speed train system in the world, and establish a formidable space program, just to name a few accomplishments.
In a span of 40 years, China has managed to become a near-peer power of the US, economically, technologically and militarily, and therein lies the frustration: having China as an equal is unthinkable but stopping her is unimaginably costly.
Is Beijing as “evil” as the US says?
It could be argued that the “communist” government might be more responsible and caring than any in the West, including the US. According to the World Bank and other supranational institutions, the Chinese government has lifted 800 million people out of poverty and elevated over 400 million to middle-class status within 40 years. In doing so, it has erased considerable human misery and lived up to its stated aim of “serving the people.”
Putting economic development at the forefront has not only benefited China, but also the world. Since the 2008 financial crisis caused by the US, China has contributed to a third of global economic growth by buying huge quantities of resources and other goods and services around the world. Indeed, the Australian China hawk Tony Abbott even admitted that it was China that made his country the “lucky continent.”
Because of huge industrial and infrastructural investment from China, many countries in Africa, Latin America and Asia are beginning to develop more rapidly.
What did the “holier than thou” US do to improve the lives of its poor and middle class?
A final comment
Demonizing China with “fake news” would only make the world a more dangerous and miserable place. US provocations in the South China Sea in the name of “freedom of navigation operations” could lead to a military clash, risking American, Chinese and other people’s lives.
As the UK’s last colonial governor of Hong Kong, Chris Patten, painfully discovered, China is too big to be bullied. The US and its allies should do the right thing for their countries: work with China to make this world a better place.
There is nothing to be gained from conflict. Spending more money on defense translates to less money for improving people’s lives.
Ken Moak Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China’s Economic Rise and Its Global Impact in 2015. HIs second book, Developed Nations and the Economic Impact of Globalization, was just published by Palgrave McMillan Springer.