Country Report: China (August 2020)

Danielle F. S. Cohen (assisted by Dong Jiaxin)

In the summer of 2020, Chinese analysts continued to grapple with the implications of the COVID-19 pandemic for the future of multilateralism and globalization. They questioned whether the pandemic would accelerate existing competitive and nationalist trends or serve as a turning point toward a more cooperative international environment. They also assessed US opposition to China’s Digital Silk Road, an increasingly important component of the BRI.

Triangular relations were on Chinese minds as well. One focus was Russia’s approach to North and South Korea. Another focus was Japan’s position between China and the United States, In both cases, the situation appeared promising for China. Russia’s objective to undermine the US position in Northeast Asia and Japan’s reluctance since 2017 to agree with the US FOIP strategy reinforce Chinese confidence. A third article explored the Sino–US–Russian triangle.

The Impact of COVID-19

In a forum featured in Guoji Wenti Yanjiu, No. 3, 2020, Ruan Zongze argues that the global struggle to combat the COVID-19 pandemic is linked to the existence of two competing world orders: a multilateral order, championed by China under Xi Jinping, and a unilateral order, championed by the United States under Donald Trump. Ruan situates the current pandemic against the history of major episodes of infectious disease and argues that it poses a common existential threat to humanity. Given the irrelevance of national borders to a virus, he argues that a coordinated global response is necessary. In particular, he praises the effectiveness of the World Health Organization in coordinating the pandemic response (an assessment that runs counter to that of many in the United States). However, he cautions that the world faces a number of serious problems: both the immediate threats to health and survival posed by the virus and the secondary impacts, such as the damage to economic development, the rise of social unrest, and growing social inequality.

Ruan argues forcefully that only a multilateral response—as championed by China—can offer the coordination needed to defeat the virus. Such an approach is consistent with the Chinese slogans of pursuing “win-win” solutions and “mutual benefit.” However, the pursuit of a multilateral approach to global governance, both in regard to the current pandemic and more generally, is challenged by those seeking a unilateral approach—namely, the United States. The pandemic has strengthened anti-globalization voices, as countries close their borders and international trade and movement are disrupted. It has exposed the weaknesses of existing multilateral institutions as they struggle to coordinate the efforts of scores of different national governments. And in contrast to past global crises, the great powers have not been able to set aside their disagreements to develop a common response. Instead, each national government is pursuing its own strategy, exposing a major collective action problem.

Ruan blames the United States for this uncoordinated response. Rather than fighting the common battle of humanity against the virus, he argues, the United States is more intent on using the pandemic as a front in its geopolitical competition with China. Such an approach is consistent with the Trump administration’s “America First” policy, under which the United States has withdrawn from a number of international mechanisms and abandoned its global leadership role (while Ruan argues that China does, and should, play a major role in global governance, his point here is that the United States is no longer willing to provide important global public goods). He also blames the United States for crippling the World Health Organization at a time when the world needs this organization most by withdrawing its support. By contrast, Ruan praises China’s actions as part of the “international community,” which has largely resisted this unilateralism. He highlights Chinese coordination with Russia, Europe, ASEAN, Japan, and South Korea as examples of its commitment to the common good.

Ruan contends that China and the United States have been unable to overcome their differences to fight this shared threat, in contrast to previous crises like September 11th and the 2008 global financial crisis, because of missteps by the United States. During these two earlier crises, which erupted in the United States, the United States led the response while the Chinese provided support. By contrast, COVID-19 first appeared in China, which then took the lead in mounting an aggressive response. Ruan pointedly remarks that these quick measures bought time for the rest of the world to prepare and that China has provided humanitarian assistance and produced crucial medical supplies for the international community. In contrast, the Trump administration has stuck to its isolationist policies and promoted only its narrow self-interests. (Ruan attributes this approach to the Trump administration’s general withdrawal from international affairs, but the US failure to mount a comprehensive national response suggests a more fundamental unwillingness or inability to govern.)

While praising China’s global efforts (and promoting the complementary role of Chinese medicine in battling the virus), Ruan insists that China is not trying to replace the United States as the “leader” of the global world order. Rather, he argues, China is merely fulfilling its responsibilities as a major world power. US arguments to the contrary reflect a fixation on zero-sum great power politics, as well as a cynical effort by some Washington politicians to distract from the US failure to muster an acceptable response. Although, in Ruan’s view, China has no desire to engage in great power competition, he argues that the withering of multilateral institutions makes such an outcome more likely by eliminating spaces in which China and the United States could work toward a more cooperative outcome. Ruan concludes with a plea for stronger Sino–US cooperation to combat this shared challenge and for greater US support for international institutions, such as the UN, the WHO, and the G20.

In a second contribution to this forum, Zhang Yunling argues that although economic globalization will change as a result of the pandemic, it will not disappear. The spread of the virus thrives on the density of global linkages and efforts to clamp down on its proliferation by shutting down borders have severely interrupted global trade. Opponents of globalization argue that the pandemic demonstrates the inherent vulnerabilities it produces. The business community has focused on the collapse of global supply chains, while politicians have stressed the national security and economic problems created by external dependence for critical supplies.

In Zhang’s view, the pandemic will hasten changes in globalization processes that were already underway. The open, multilateral trading system, which allowed for rapid growth in the post-Cold War era, has come under attack as a result of changes first exposed by the 2008 global financial crisis. The ascendance of developing countries, particularly China, in the aftermath of this crisis called into question the existing global economic order. Concern about trade deficits and widening income inequality led to widespread adjustments in economic policies. The United States, and other developed countries, began to turn against multilateral institutions, particularly the World Trade Organization and adopted more protectionist policies. Populism became an increasingly powerful force, as people blamed globalization for lost jobs and income.

The pandemic, Zhang argues, will accentuate many of these trends. Businesses, which benefited from the cost savings enabled by global supply chains, must now contend with the vulnerabilities these extended chains produce. The first disruption occurred when the virus first appeared in China, causing factories to shut down and other countries to increase customs enforcement. Although China’s management of the pandemic has enabled it to restart production, a second disruption has occurred as the spread of the pandemic has interrupted business operations in many of the developed countries. As a result, companies must now emphasize the security of their supply chains, rather than simply minimizing costs. Meanwhile, government officials now view external dependence as a significant national security threat and there is increasing support for policies that bring crucial industries back home. In the United States and Japan, Zhang contends, these security concerns have produced xenophobic, protectionist policy initiatives.

These global shifts will impact China’s position in the global economy. The epidemic has emphasized the risks inherent in extended supply chains with multiple links. Companies will respond by moving critical functions back home and simplifying their chains. These considerations will accelerate the withdrawal of some production from China, a trend already underway because of rising labor costs. However, these tendencies will only alter the character of globalization, not eliminate it. Companies will continue to evaluate cost when deciding where to situate their production and source their components, and costs of moving back to countries like the United States will often be too high. In addition, China will remain a significant and important market, meaning that it will often be efficient to continue to produce goods there. Meanwhile, Internet and network technologies will strengthen companies’ abilities to secure their supply chains.

Zhang concludes that China must continue to support globalization and multilateralism and oppose protectionism and unilateralism in order to achieve its economic development strategy. China must be prepared to respond to efforts by the US and other countries to use the pandemic as an excuse to “decouple” from China and exclude Chinese companies from global supply chains. However, Zhang concludes that interdependence has deepened to the point where globalization is irreversible; the nature of globalization may change, but globalization cannot be eliminated.

In a third contribution to the forum, Cui Hongjian assesses the implications of the pandemic for the global structure. On the one hand, he argues that the pandemic may strengthen pre-existing trends, such as great power competition, nationalism, populism, and deficiencies in key international organizations. On the other hand, the pandemic may be a critical turning point: the inability of states to effectively defeat the pandemic on their own may encourage deeper international cooperation and globalization may be transformed rather than rejected. Which of these two trends will dominate depends on three factors.

First, the disparate effectiveness of various countries’ responses to the pandemic has disrupted analytical frameworks that focus on essentialized understandings of East and West or regime type as key explanatory variables. Western fears of a power transition from West to East spur great power competition. However, the pandemic has highlighted the importance of competent governance as the most important factor in battling the virus. By this measure, Cui argues, China has shown itself to be far more successful than other major powers like the United States, Europe, and Russia. Nevertheless, Cui urges major powers to focus on developing the capabilities to resolve future crises rather than looking for a “new cold war.”

A second key factor is whether the pandemic leads to reforms of the global governance agenda. Given the possibility that the pandemic could cause widespread economic devastation and geopolitical conflict, Cui argues that such reforms are essential. The international community must develop an effective multilateral public health mechanism. Reforms that strengthen the WHO and investment in regional public health mechanisms are vital. The global governance agenda must expand to address secondary issues produced by the spread of the virus. For example, Cui anticipates that immigration crises will intensify as people flee countries with insufficient medical resources. Likewise, Cui expects that disruptions in global economic markets may trigger a global food crisis. The need to promote both human security and sustainable development will be crucial aspects of global governance for the years to come.

Third, like Zhang, Cui expects that the vulnerabilities in global supply chains laid bare by the pandemic will result in a transformation of globalization processes. Concern about supply chain interruptions will lend support to US and European claims that the return of industries from abroad is necessary for security. Governments will stress the importance of domestic supply chains for crucial goods, which now include medical products. Profit and cost will no longer be the only critical considerations. These tendencies will accelerate economic regionalization. However, Cui warns that excessive economic separation of the various regions will undermine the efficiencies of comparative advantage and an excessive emphasis on security over profit will result in market failure. The future of globalization will depend on whether actors can effectively balance economic regionalization and the equitable distribution of the profits from globalization. Facing an uncertain future, Cui urges countries to respond to the challenges posed by the pandemic by reforming their systems, strengthening their capabilities, and cooperating with each other.

Sino–U.S. Relations and the “Digital Silk Road”

In Guoji Wenti Yanjiu, No. 4, 2020, Zhao Minghao assesses the US policy response to China’s “Digital Silk Road” initiative. Zhao argues that increasingly negative US views of this initiative are grounded in the Trump administration’s perceptions of China as a strategic competitor. US opposition to the Digital Silk Road is therefore part of broader US concerns about the geopolitical implications of the BRI.

Zhao identifies a number of reasons that the US views the Digital Silk Road as a strategic threat (although he finds these fears overwrought). First, the United States is worried that the Digital Silk Road will give major Chinese companies like Huawei, Tencent, and Baidu a competitive advantage over US competitors like Facebook, Google, and Apple. It fears that Chinese companies will take the global lead in important technologies like 5G and artificial intelligence. Second, US analysts suggest that the Digital Silk Road will provide a cover for Chinese cyberespionage. In their view, Chinese-designed networks may send sensitive financial information back to China for analysis, while submarine fiber optic cable projects will allow the Chinese government to eavesdrop on US submarines. Third, US observers worry about the potential creation of dual-use technologies that move from commercial applications to military ones. For example, efforts to develop technologies for smart cities could result in military applications like the deployment of autonomous vehicles. Finally, US experts contend that the Digital Silk Road will enable China to create global norms and regulations around the governance of networks and the digital economy. They argue that the Chinese model of localized data control and Internet censorship stands in contrast to the US emphasis on free and open governance. Chinese “digital authoritarianism” might hamper global privacy and free speech.

In light of these concerns, the United States has become increasingly active in challenging the Digital Silk Road, as evident in both government practice and policy proposals drafted by think tanks. In 2018, the Trump administration launched the Digital Connectivity and Cybersecurity Partnership, which, Zhao argues, serves as an important mechanism for coordinating interagency efforts to partner with foreign governments to ensure that networks are open and secure in the strategically important Indo-Pacific region. The United States also supports American and foreign companies so that potential clients have alternatives to Chinese companies. In addition, the United States has coordinated with other countries to check Chinese efforts to write global technical standards and other international rules. Finally, the United States shapes global public opinion toward the Digital Silk Road through its technical assistance programs.

US efforts to check China’s Digital Silk Road are particularly evident in Southeast Asia, a key site for both the BRI and Sino–US geopolitical competition. The United States has developed a number of specific initiatives to provide alternatives to Chinese programs, such as Innovation Connect (part of US–ASEAN Connect) (2016) and the US–ASEAN Smart Cities Partnership (2018). The United States has also attempted to recruit ASEAN as an ally in its perceived competition with China over global governance of cyberspace and the digital economy and the creation of rules to regulate these areas. Furthermore, the United States has enlisted Japan as a partner in resisting the Digital Silk Road through measures such as the Japan–US Strategic Digital Economy Partnership.

Although he views these US policies as a nuisance, Zhao argues that they will be of limited effectiveness in blocking China’s Digital Silk Road initiative. The Trump administration’s opposition to certain Chinese companies has raised concerns in the United States, both from companies whose operations are negatively impacted and by government officials who believe that such actions will ultimately damage US interests. The United States has also had only limited success in persuading its allies and partners to limit their cooperation with Chinese companies. This is most evident in the jockeying over whether to allow Huawei to provide key equipment for 5G construction. Moreover, Zhao contends that developing countries are far more interested in affordably meeting their own digital needs than in becoming pawns in the competition between China and the United States.

Nevertheless, US policies do have negative implications for China’s strategy. US pressure on its allies and partners to refrain from doing business with Chinese companies creates a more difficult business environment. Some developing countries feel pressure to “pick sides,” and may be inclined more toward the United States. Zhao also blames the United States for preventing multilateral cooperation on the digital economy, arguing that its zero-sum approach undermines the efforts of international institutions like the WTO and the G20. Furthermore, the United States has made rule-creation and standard-setting into areas of great power competition. Zhao concludes that China must work to overcome the United States’ “Cold War mentality” and pursue productive partnerships with various countries despite US opposition.

Russia

In Eluosi, Dongou, Zhongya Yanjiu, No. 3, 2020, Li Lianqi and Jiang Zhenjun write about a shift in Russia’s policy toward the Korean Peninsula from passive to active, with Russia intent on playing a leading role as a great power in Northeast Asia. This means increasing its military influence as a factor shaping peace and stability on the peninsula; seeking a strategic balance favorable to Russia; forging economic cooperation with both sides; and working closely with China to end the state of the US as unilateralist driver. This is the one arena where the interests of four powers (Japan too) intersect, prompting Russia to seize the opportunity that has opened since March 2018. China, North Korea, and South Korea have all appealed for Russian cooperation. In a span of 18 months, there were 12 summits with Kim Jong-un, beginning to relax conditions and putting it at the center of a framework of summitry. Russia’s “turn to the East” began in 2009, when it agreed that China has the leading role in resolving the peninsular question. However, with the Eastern Economic Forum of 2018 and the Putin–Kim summit of 2019, Russia took a more active role. Its primary goal is to reduce the US role on the peninsula while avoiding a serious military confrontation. Stability and peaceful resolution are listed in the article ahead of denuclearization. In June 2017, Russia set forth its plan, winning China’s agreement, aiming for the resumption of Six-Party Talks while fearing a “Ukrainian-style” scenario. With no multilateral talks in sight, Russia had to boost its military influence to prevent war and US deployment of an anti-missile system. In September 2018, it conducted large-scale military exercises, and in July 2019 it joined China in the first joint combat air patrols—consistent with the nature of the Sino-Russian strategic relationship.

Russia’s aim is apparently to contain the US–Japan–ROK alliance system, including warning Seoul about THAAD anti-missile deployments. While the US opposes Six-Party Talks and Russia’s participation in talks on the peninsular question, improving ties to North and South Korea raises Russia’s voice: for the North, cancelling $10 billion in debt, opening the Khasan–Rajin rail line; establishing a center for Russian culture and language; declaring a friendship year; maintaining operation of a nuclear station; aiming for $1 billion in trade in 2020; and building trust with Kim; and for the South, seeking nuclear reactor dependency; and supporting leadership by Koreans on the peninsular question. Given the territorial dispute with Japan, Russia sees the peninsula as its gateway to Northeast Asia. It foresees an enduring security system in Northeast Asia, which it can lead, but first it is expanding high-level secret talks with the North. It seeks an economic corridor linking Russia to the Korean Peninsula, China, and Mongolia as a positive part of a new international economic order, making the peninsula a bridge. On June 22, 2018, Moon met with Putin, joining in a 32-point declaration with nine bridges, building on ample complementarity. Overall, the article praises Russia’s successes and agenda, treating it as consistent with China’s. The US has sought to put itself at the center in a North Korea–South Korea–US triangle, while Russia strives to reduce US influence on the peninsula. It supports Kim Jong-un’s stage-by-stage approach. The article notes, however, that there are limits to Russia’s room for maneuver or to act unilaterally. It aims to win cooperation, but lacks the stature of China and the US. In the foreseeable future, its new Korea Peninsula policy is complementary to China’s: it supports a political framework on regional conflict, removal of US unilateralism, and a peaceful path for peninsular development.

In the same issue, Zhao Huasheng argues that the international order is being forged with great powers in the lead, with three of them—China, Russia, and the US—the most influential. Zhao first asks who is weakening the liberal international order. The relative fading of the West is seen not just in the economic and military arenas, but also in politics, culture, and the appeal of its development model. Americans attribute the decline variously to Trump or to China, but China’s rise is secondary. China does not accept this order fully and does not use the concept. Ideology is where it challenges the order most, and BRI was only recently advanced. Yet China’s rise has been a positive force for the existing order. Russia both supports the postwar order and is viewed as a challenge to its stability. It is the US that has caused the problems in the relationship with Russia, causing Russia to respond. The West is riveted with problems from within and from carrying the idea of a liberal order to an extreme. Readers are told that China and Russia think alike, but the US is the state that undermines the postwar order and disagrees on what that order is. Was it a balanced order or a US-led order? Was the UN at its core or the US alliances? Should it be multipolar or unipolar? Is national sovereignty primary or not? Should anti-missile system non-proliferation prevail? Even on the international economic system, China and Russia share the same anti-protectionist principles. In one sentence, the long article vaguely observes that China and Russia are not completely in sync on building the international order, adding that Russia is more critical and even revolutionary, while China is more conservative and gradual although changing of late. In addition, Russia lacks national power to alter the order. They differ, we are later told, on India joining the Security Council, raising a possibility of disharmony.

Relations among this trio will shape the future international order to a great extent, Zhao argues. None of the three can unilaterally build it. China is a rising superpower. Although Russia is also a threat to the US, it is not a competitor. The ideological battle is between China and the US. The pandemic has intensified this clash, exacerbating one leg of the triangle, weakening the liberal international order, and helping China to fill the vacuum, some surmise. Finally, readers are told Russia sits on the mountain watching the tigers fight, and there is a possibility the US will seek to improve ties to Russia, not being so concerned about its system as China’s.  China and Russia could diverge on politics and security, extending to the international order, the article then warns.

Japan

In Guoji Luntan, No. 3, 2020, Gui Yongtai discusses Japan’s response to Sino–US strategic competition and insists that Japan enjoys considerable autonomy in economics and is debating how much technology should be shared given clashing priorities of security and economy. Should there be decoupling, the foundation of Japan’s economic growth would be threatened. As for the Indo-Pacific initiative, Japan is not really coordinating with the US, as it downplays competition with China’s BRI. Japan may face harder choices, as discord with the US on China keeps rising.

Since 2017, the US consensus has turned to containment. At first, Japan feared that Trump would turn toward China, compromising on North Korea, the South China Sea, and the Diaoyu Islands for a trade deal. On technology competition, later, Japan grew concerned that Trump was taking too hardline a position. Japan is in step with the US, but not on trade and not on geopolitics with China, readers are told. Since the end of 2017, Sino–US and Sino–Japanese relations have moved in opposite directions. Indicative of this was the contrast between the late 2018 “new cold war” speech by Pence and Abe’s three visits to China over a brief time span, opening a new era in bilateral cooperation. Japan cannot accept the destruction of mutually dependent relations.

The article traces official US commentary on FOIP and notes that Japan also has repeatedly pushed this concept, but insists that what the US advances is not what Abe had initiated. They disagree on attitudes toward decoupling and BRI. Also, they differ in their thinking about China as a strategic competitor. Japan decided to participate in BRI. Thus, in late 2017, Trump turned to all-out competition, while Japan shifted from competition in the main to parallel cooperation and competition. Japan’s FOIP changed significantly. In its first version, it sought a Quad in broader Asia. India proved not to be enthusiastic, leaving only Australia plus the US. In 2012, Abe proposed “Asia’s Democratic Security Diamond” again for a Quad. In August 2016, this had morphed into FOIP. In 2017, however, in response to US advocacy of it, Japan denied any intent to contain China and talked about this being only a preliminary concept. Soon, it advocated harmonious coexistence of FOIP with BRI. Without acknowledging any differences with the US, Japan refused to accept confrontation. At Shangri La in June 2018, Quad talks were muddied. Modi sought inclusiveness and ASEAN centrality, opposing a return to an era of great power competition, and the US then saw a chance for cooperation with China. It appeared that the Quad was not a strategic framework, but rather a rubric for diplomatic consultations. By November, Abe had changed FOIP from a strategy to a vision, less a geopolitical Quad than an inclusive regional quest opposed to US efforts to contain China. Consultations in the Quad became symbolic, not substantive. The Quad ceased to be the center of strategic cooperation for Japan, concludes the article. Bipolarity is rejected in favor of multipolarity to avoid great power conflict in Asia, as other states refuse to be dragged into a confrontation. Countries aspire to strategic autonomy. They aim to avoid military matters in order to pursue economic ones. Japanese consider China essential for preventing a setback to regional integration even if China is regarded as the principal strategic challenge. The goal is to balance cooperation and competition, economics, and security. In the trade war, technology war, and geopolitics, Japan’s response to China differs from that of the US. Japan wants to rely on the Chinese market. It opposes decoupling despite adopting control measures. While strengthening its alliance, it intends to draw some boundaries, avoiding military competition with China. One value of the alliance was to defend the international order, but Trump does not do it. On separate issues, Japan is choosing to side with the US or not. Japan wants it both ways, readers are told.

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