5 July 2020

Weekly briefing: China’s confidence trick

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It’s a bitter irony that in the week of the world’s most famous independence day, Hong Kong saw what remained of its own freedom snuffed out by the Chinese Communist Party (CCP).

The word ‘Orwellian’ is overused, but in the case of Beijing’s National Security Law, it is depressingly apt.  As Ron Shine set out earlier this week, the scope of the new legislation effectively means any efforts towards independence have been criminalised, with severe punishments for any infractions.

Historical obligations notwithstanding, there’s only so much a country of Britain’s size can do in response, but the Government’s bold offer of residency to Hong Kong’s BN(O) passport holders is very welcome.

It’s easy to look at this dispiriting spectacle as another sign of the CCP’s unstoppable might, sweeping all before it while Western nations are laid low by a combination of coronavirus chaos and identity politics inanity.

On the surface, China’s rise is extremely compelling. Massive, unprecedented increases in living standards over the last four decades, coupled with an assertive, nationalistic and ruthlessly ambitious government have understandably fuelled a narrative of renewed Chinese dominance – a view perhaps best expressed in the title of Martin Jacques’ 2009 book When China Rules the World. Along with this come warnings of a ‘new Cold War’ and ‘Thucydides’ trap’, whereby two pre-eminent powers – in this case China and the US – will inevitably come into conflict.

The problem with this kind of narrative is that it elevates a ‘grand arc’ view of history – in which China rose, fell precipitously and will now, inexorably, rise again – over a detailed analysis of American strengths and Chinese weaknesses.

As George Magnus has set out in his book Red Flags, Xi Jinping faces a cocktail of spiralling debt, slowing growth and a huge demographic crisis, all of which will weigh on his country’s future prospects. For all its glittering skyscrapers and dazzling tech, China is still a middle income country whose average consumption per head is nearer Peru than Portland.

Xi’s foreign adventurism deserves a degree of scepticism too. The Belt and Road Initiative, long touted as a show of Beijing’s power and ambition, is starting to look increasingly like a caravan of white elephants, with a host of projects abandoned or mothballed at huge expense. And while there is rightly much talk of Beijing buying influence abroad, recent skirmishes in the Himalayas – and Indians burning Chinese flags – are a reminder that Beijing is far from universally admired, especially when it comes to its near neighbours.

The mirror of China boosterism is the idea that the US is somehow in permanent decline, a thesis abetted by the chaotic scenes on America’s streets and the often incomprehensible approach of its current president. But take a step back, and the picture is still one of remarkable American success.  As the Heritage Foundation’s Jeff Smith notes, between 2000 and 2019, China added $12.9 trillion to its GDP. Over the same period, with a far smaller population and much lower growth rates, the US added $11.1 trillion.  US workers remain more productive than their Chinese counterparts, and the average US household far better off.

None of this is to suggest America is without its problems, or that China will not offer any challenge to its hegemony. But it is to caution against a self-perpetuating loss of confidence in the West and its values. It’s no accident that the world’s richest nations, and best places to live, are almost all democracies that observe the rule of law.  In a week when a beacon of free enterprise has been all but extinguished by a despotic communist regime, we would do well to remember that.

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John Ashmore is Editor of CapX.