Economic policy

The Trump administration has floated the idea of sanctioning Chinese officials and members of the Communist party of China. Before we ask whether this is a good idea, let’s ask how Sino-US relations got to this stage.The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?The post-Mao dictatorship in China has lived by the principle of “repress at home and be open to the world”. It has imported knowhow from abroad. There are an estimated 360,000 Chinese students currently enrolled who have come through America’s open door. Over 40 years, at least a million have returned to China and fed their new technical knowledge into the existing authoritarian structures that have built the dictatorship. It might be the most momentous personnel transfer in history. When I applied to study in the US in the 1980s, I filled out a questionnaire that asked if I had ever been a member of the Communist party. The point of the question was presumably to avoid ideological risks. But it is beyond doubt that the Chinese students coming in with me included many party members who were headed to some of the US’s finest schools, often with scholarships. Americans generally assumed that these students would feel the appeal of liberal values, which they would then take back to China. What happened more often, though, was that Chinese students were quick to see the cultural differences between the two countries, and to draw the very logical conclusion that American values are fine for America but would never work in the Chinese system.If those US hopes for the exportation of values had panned out, much of China would have been won over by now. But what has actually happened? Returnees are now leaders in much of Chinese business and industry, but anti-American expression in China is as strong today as it has been since the Mao era.Washington bears much of the responsibility for what has happened. In the years after the Tiananmen Square massacre in 1989, administrations of both parties touted the absurd theory that the best plan was to let China get rich and then watch as freedom and democracy evolved as byproducts of capitalist development.But did capitalist competition, that ravenous machine that can chew up anything, change China? The regime’s politics did not change a whit. What did change was the US, whose business leaders now approached the Chinese dictatorship with obsequious smiles. Here, after all, was an exciting new business partner: master of a realm in which there were virtually no labour rights or health and safety regulations, no frustrating delays because of squabbles between political parties, no criticism from free media, and no danger of judgment by independent courts. For European and US companies doing manufacture for export, it was a dream come true.Money rained down on parts of China, it is true. But the price was to mortgage the country’s future. Society fell into a moral swamp, devoid of humanity and difficult to escape. Meanwhile, the west made their adjustments. They stopped talking about liberal values and gave a pass to the dictatorship, in which Deng Xiaoping’s advice of “don’t confront” and Jiang Zemin’s of “lie low and make big bucks” made fast economic growth possible.European and American business thrived in the early stages of the China boom. They sat in a sedan chair carried up the mountain by their Chinese partners. And a fine journey it was – crisp air, bright sun – as they reached the mountain’s midpoint. But then the chair-carriers laid down their poles and began demanding a shift. They, too, sought the top position. The signal from the political centre in China changed from “don’t pick fights” to “go for it”. Now what could the western capitalists do? Walk back down the mountain? They hardly knew the way.Covid-19 has jolted the US into semi-awareness of the crisis it faces. The disease has become a political issue for its two major political parties to tussle over, but the real crisis is that the western system itself has been challenged. The US model appears to others as a bureaucratic jumble of competing interests that lacks long-term vision and historical aspiration, that omits ideals, that runs on short-term pragmatism, and that in the end is hostage to corporate capital.Are sanctions the way to go? A foreign ministry spokesperson in Beijing recently remarked words to the effect that the US and China are so economically interlocked that they would amount to self-sanctions. The US, moreover, would be no match for China in its ability to endure suffering. And there he was correct: in dictatorships, sacrifices are not borne by the rulers. In the 1960s Mao said: “Cut us off? Go ahead – eight years, 10 years, China has everything.” A few years later Mao had nuclear weapons and was not afraid of anyone.The west needs to reconsider its systems, its political and cultural prospects, and rediscover its humanitarianism. These challenges are not only political, they are intellectual. It is time to abandon the old thinking and the vocabulary that controls it. Without new vocabulary, new thinking cannot be born. In the current struggle in Hong Kong, for example, the theory is simple and the faith is pure. The new political generation in Hong Kong deserves careful respect from the west, and new vocabulary to talk about it.“Sanctions” is a cold war term that names an old policy. If the US can’t think beyond them, the primacy of its position in this changing world will disappear. More