The Chinese communists believe that the West is weak and, possibly, that this is their chance...
In 1986–1987 I spent some time in the Far East, helping to set up a free-market think tank in Hong Kong. The British colony was then at crossroads, after the United Kingdom had agreed to hand over control to China—which really meant to the Chinese Communist Party—in ten years’ time. In the preceding four decades, the city state had been very successful economically, but I could sense much apprehension at the impending regime change. The example of Hong Kong should indeed give passionate opponents of colonialism food for thought. Here was a colony where the great majority sincerely, even fervently, desired to remain under British rule. It is true that China, by allowing some kind of restrained capitalism after Mao’s death in 1976, has progressed rapidly. But Hong Kong has done much better. In 2020, GDP per capita was estimated to be $59,000 in Hong Kong and only $17,000 in mainland China. It should be recalled that there are four Chinese economies in Asia, with mainland China lagging far behind the other three. In 2020, GDP per capita was estimated to be $98,000 in Singapore and $55,000 in Taiwan. These numbers tell an extraordinary story.
I had an interesting time in Hong Kong. I met many millionaires and even billionaires who confidently informed me about the reason for their success. Invariably, it was that they were themselves resourceful and innovative. It did not seem to occur to any of them that just an hour’s drive away, in Guangdong Province in China, there were undoubtedly many individuals who were just as industrious and enterprising; they however had remained poor. Why was that? Of course my rich companions was right that they had themselves created their wealth. But the reason they had created it was that they were fortunate enough to live under a regime which allowed, and even encouraged, wealth creation, innovation and entrepreneurship—a regime of free trade, private property and limited government. With justice, Hong Kong could be called ‘Adam Smith’s other island’. As I observed in an article in the Asian Wall Street Journal in January 1987, the Hong Kong government was weak enough to allow the private sector to flourish, yet sufficiently strong to protect private property rights. Nowhere was Edmund Burke’s expression of ‘wise and salutary neglect’ more appropriate.
Even if this was before the collapse of communism in Central and Eastern Europe, I suggested to my friends and in articles for the Icelandic press that the same might happen in Hong Kong as in Ancient Greece after the Roman conquest: Arguably, in spirit the Greeks were the ultimate conquerors because the Romans adopted Greek customs and manners. Perhaps Hong Kong would not turn into a communist society. Instead, China might learn from the example of Hong Kong and develop into a commercial society. She would join the West where she would certainly be much appreciated. I pointed out that the Chinese communists had, in the 1984 Sino-British Joint Declaration, committed themselves to respecting the autonomy and capitalism of Hong Kong for at least fifty years according to the principle of ‘one country, two systems’. It would be in their self-interest to keep Hong Kong as an indispensable source of material and human capital, I argued. They badly needed its entrepreneurship.
I was partly right, for a while. China needed Hong Kong and did not make many moves to restrict freedom in the ‘Special Administrative Region’ for the first fifteen years after the transfer of sovereignty. But I was completely wrong in the long run, because I had not fully realised that the primary goal of the Chinese communists is their own survival, not necessarily the economic success of their subjects. The Chinese rulers are not legitimate: they are usurpers. They have no real mandate from the people. China can be regarded as a country under occupation, not this time by the Manchus (as in 1644–1912), but by the Chinese Communist Party. The leadership of the party may have discovered, like rulers of other communist countries, that Marxism as the complete abolition of private property rights to the means of production is bound to fail (for reasons that Ludwig von Mises had set out already in 1920). They therefore made what seems to be an informal pact with their subjects about tolerating capitalism in exchange for a monopoly on political power. But China is a one-party state, only sustainable through systemic violence and extensive surveillance of the population. If and when the rulers feel threatened, they break their solemn promises and try to arrest any development towards more freedom, including of course the possibility to vote out the Communist Party.
This is what has been happening for the last nine years, since President Xi Jinping took power in 2012. By unilaterally passing a ‘security law’ for Hong Kong on 30 June 2020, only 23 years after the transfer of power from the United Kingdom, the Chinese rulers in effect annulled the 1984 Sino-British Joint Declaration. To advocate secession from China or ‘collude with foreign forces’ will now be punishable by a maximum sentence of life imprisonment. Beijing will operate a security force in Hong Kong which is not controlled by local authority. The Chief Executive will be able to appoint judges to hear national security cases. If the security law is in conflict with Hong Kong law, it takes precedence. The law applies not only to Hong Kong citizens, but also to non-permanent residents and people in other countries, in fact anywhere. Nobody with a Chinese connection seems to be safe. Shortly before the law was passed, a Chinese court sentenced Gui Minhai, a bookseller based in Hong Kong and a Swedish citizen, to ten years in prison for selling books critical of the rulers in Beijing. The court announced that Gui—who had been lured into China—would not appeal the sentence and that he had humbly asked for his Chinese citizenship to be reinstated.
It seems moreover that the Chinese Communist Party is no longer honouring its informal agreement to tolerate local capitalists, at least if they do not tow the party line. In March 2020, an outspoken billionaire, Ren Zhiqiang, disappeared after publishing a scathing attack on President Xi for his handling of the covid-19 epidemic. In September of the same year Ren was sentenced to 18 years in prison, allegedly for ‘corruption’, after a one-day trial. In October 2020 Jack Ma, the colourful founder of e-commerce giant Alibaba and the second richest man in China, publicly criticised the financial regulators and the state-owned banks of China. Days later, Ma was called in for questioning. Soon after, regulators suspended a much-anticipated public offering on the Shanghai and Hong Kong stock exchanges of a business group in which Ma had interest, the Ant Group. Ma himself disappeared for months, and in 2021 Alibaba was fined $2.8 billion for ‘anti-competitive practices’. A subdued Ma has reemerged, and stays silent. In the first half of 2021, three private education entrepreneurs saw their wealth plunge after regulators launched a campaign against them, based on comments on education by President Xi. In July 2021, the billionaire Sun Dawu was sentenced to 18 years in prison for ‘picking quarrels and provoking troubles’. Sun who made his money in food processing had publicly accused the government of trying to cover up the extent of the 2019 swine flu. Incidents such as these are only surprising to those who thought China might develop gradually and peacefully into a liberal democracy under the rule of law, like I hoped in 1987.
The affable President Xi looks like everybody’s favourite uncle, but he behaves more like Orwell’s Big Brother. The government has erected a digital wall around China, blocking Western social media such as Facebook, Twitter, Instagram, Snapchat and Youtube, and even Zoom, Google maps and Whatsapp. Books about the Maoist terror are banned, for example Jung Chang’s and Jon Halliday’s meticulous and revealing biography of the cruel dictator and Frank Dikötter’s account of the terrible famine in 1958–1961, claiming perhaps 45 million lives. There are many institutes, school courses and books devoted to ‘Xi Jinping thought’ which seems to be the Chinese version of national socialism, with an authoritarian state allowing some private property rights on pragmatic grounds but trying by force to construct a collective identity and mobilise the masses for the purposes of the rulers: as English political philosopher John Gray observes, it is somewhat reminiscent of European fascism between the two world wars. Persecutions against Christians have begun again, and in remote Xinjiang, in Central Asia, since 2017 hundreds of thousands of Uyghur Muslims have been sent to labour camps, although all information about this is tightly controlled. In Tibet, the ancient Buddhist culture is slowly being destroyed, and all opposition is mercilessly put down.
During my brief stay in Hong Kong, I occasionally travelled to China (which then required the assistance of a travel agency) while I tried to gain some knowledge, however, scant, of Chinese history. There is certainly a libertarian streak in the culture. As the ‘Old Master’, Laozi, said two thousand and five hundred years ago:
A leader is best
When people barely know he exists
Of a good leader, who talks little,
When his work is done, his aim fulfilled,
They will say, ‘We did this ourselves.’
I nevertheless noticed what seemed to me, rightly or wrongly, to be the total absence in Chinese history of the notion of a loyal opposition. The principle was always that the winner took all, not that there could be a smooth transfer of power from one faction to another. Therefore I find it remarkable that both Taiwan and Singapore are nowadays relatively well-functioning democracies, with governments being peacefully voted in and out of office in Taiwan, whereas in Singapore the dominant party at least allows challenges. But Taiwan is under threat. The Chinese government insists that the island is an integral part of China, to be annexed at an opportune time. Apparently, it is President Xi’s ambition to be the Chinese leader who can unite the island with the mainland. Therefore, he has removed the term limits on his office, previously in force, and is now in effect President for Life.
The Chinese Communist Party certainly does not confine its aggression to Taiwan. In the South China Sea, the Chinese government has laid claims to the remote Spratly Islands, located in strategic shipping lanes but with no history of Chinese control. When the dispute was brought by the Philippines to a special tribunal at the Permanent Court of Arbitration in the Hague, China refused to participate in the process, and she has not acknowledged the unequivocal and unanimous 2016 ruling of the Tribunal that her claims are without any legal foundations. For example, the aptly named Mischief Reef where China has built a military runway and port facilities falls according to the ruling within the Philippine Exclusive Economic Zone, EEZ. But the Philippines has not the means to enforce the ruling, and nobody is going to war over a reef. Chinese fishing vessels also operate with impunity inside the EEZs of other countries in the region, such as Indonesia and Malaysia. For China, might is right. The attitude of her rulers to the countries nearby is the same as that of the Athenians to the Melians in Thucydides’ famous dialogue: ‘The strong do what they can and the weak suffer what they must.’
Countries much farther away have also felt the effects of China new ‘wolf-warrior diplomacy’. In December 2018 Canadian authorities arrested Huawei executive Meng Wanzhou while she was travelling through Vancouver. (She is the daughter of the company’s founder, a nebulous character with ties to the Chinese military.) This was not a political move. It was done at the request of U.S. legal authorities who alleged that Meng committed bank and wire fraud and wanted her extradited. What happened however ten days later was hardly a coincidence. The Chinese police arrested two Canadians who did business in China, Michael Spavor and Michael Kovrig, charging them with espionage. This seems to have been a classic case of ‘diplomatic hostage-taking’. In August 2021, Spavor was sentenced to 11 years in prison. Kovrig is still languishing in prison, awaiting his verdict. Canadian diplomats were denied access to the trials. The two hapless Canadians probably were only guilty of being in the wrong place at the wrong time.
Australia is another target. When the Australian government in the spring of 2020 called for an independent international inquiry into the origin of the covid-19 pandemic, the Chinese government swiftly took action. First, the import of beef from several Australian companies was banned. Then hefty tariffs were imposed on the import of barley and wines from Australia, while the import of coal was totally blocked. It also caused concern in Australia when the Chinese authorities in August 2020 arrested an Australian citizen who worked as a television journalist in Beijing, Cheng Lei, after she had expressed a wish to go to Wuhan in order to find out more about the origin of the covid-19 pandemic. Charged with ‘illegally supplying state secrets overseas’, she was initially kept in a cell without natural light or fresh air, and denied access to a lawyer. Once a month, she was allowed a video call with the Australian consul, in a room to which she was led from her cell blindfolded and in handcuffs. She is not allowed to speak to her small children who are in Australia, and she has been warned that it might have dire consequences if her Australian family would discuss her case publicly. Cheng seems to be yet another pawn in the Chinese Communist Party game of intimidation.
While the charges of subversion against people like Spavor, Kovrig and Cheng appear implausible, it is well known that Chinese agents have long been engaged in extensive industrial espionage in the West. The United States, the United Kingdom and the European Union have also accused the Chinese regime of recent major cyber attacks. The erratic behaviour of the World Health Organisation, WHO, during the covid-19 pandemic illustrates the clout China has gained within some international organisations, and her determination to use it. Indeed it seems, like Scottish historian Niall Ferguson has argued for years, that China has started a new Cold War against the West. Probably there are two main reasons for this. The first one is that President Xi and his supporters in the Chinese Communist Party think that the West is weak. They read stories about the self-hatred leftwingers in the media and the universities are trying to instil in the young, and being well-versed in Western classics they recall Plato’s thesis that a revolution occurs when the governing elite becomes a house divided. They observe debacles like the utter chaos at the Southern border of the United States, the ignominious retreat from Afghanistan and the unwillingness or inability of the European Union to undertake any significant and concerted action anywhere. For them, the West is decadent, soft, dissipated, vulnerable—a prey waiting for a hunter.
The second reason is that the communist leaders face a dilemma on the home front. They unleashed the forces of capitalism, but they do not want them to become too powerful. One of President Xi’s favourite authors is German writer Johann Wolfgang von Goethe whose poem on ‘The Sorcerer’s Apprentice’ is perhaps best known from Walt Disney’s adaptation in Fantasia that we all watched in our youth. The sorcerer leaves, telling his apprentice to fetch some water by pail. The apprentice is tempted to use what little magic he knows to let his broom do the work for him. Soon the floor is awash with water, and the apprentice has no idea how to stop the broom. He grabs an axe and splits it, but the two parts become one broom each, and the process goes on at twice the speed. The room floods, and everything spins out of control until the old sorcerer returns and breaks the spell. He tells the apprentice that only a master can summon and control powerful spirits. I would not be surprised if this is how Xi and his comrades feel: that they have to return to the ways of the old master, Mao, in order to control the forces they unleashed. They are retreating from capitalism. At the same time they face slower economic growth (partly as a result of this retreat) and adverse demographic changes.
The obvious way out for the Beijing power elite is to start a Cold War against the West and to seize Taiwan as soon as possible, to the thunderous applause of its subjects. Some might object that the West should just accept the eventual annexation of Taiwan by China, because this small island would not really be worth a real war. But this may be the wrong approach. First, the Taiwanese themselves are players in the game and they should not be underestimated. It is sometimes wise to bet on the best shots, not the biggest battalions. Famously, in 333–331 B.C. Alexander of Macedon defeated the much larger forces of Persian Emperor Darius. The Czechoslovak army was quite formidable in 1938, and if it and the large and well-equipped French army had combined to resist the Nazis, it would have been difficult, well nigh impossible, for them to seize Bohemia and Moravia. Indeed, Hitler was much impressed by the solid Czech fortifications he inspected after his conquest. Stalin thought he could easily occupy Finland in 1939, but the Finnish forces fought valiantly against the Red Army for more than three months, thus averting the annexation of their country. Israel in 1948 withstood the joint attack of her Arab neighbours. Just now, the Talibans have defeated the much larger forces of the Afghan government which for two decades has enjoyed generous economic and military help from the West.
In the second place, there are other players on the scene in Southeast Asia, with a combined strength surpassing that of China: not only the mightly United States, albeit at the other side of the Pacific, but also Japan, South Korea, Vietnam, the Philippines, Indonesia, Malaysia, and India. The governments of those countries do not want the bellicose rulers in Beijing to become too powerful. They would hardly view the conquest of Taiwan as the final move in the expansion of the new Chinese Empire. It is only if the Chinese military is able to seize Taiwan quickly that the question would be posed: Is Taiwan worth a war? If Kim Ilsung had known that his invasion of South Korea in 1950 would be resisted and repelled, then he probably would not have attacked. Deterrence requires the determination to fight, if necessary.
How should the West conduct the Cold War evidently started by the Chinese Communist Party? Without claiming any privileged information or prescience, just being an observer on a distant island in the North Atlantic, I would suggest five ideas, guidelines or approaches.
Ulderico de Laurentiis • 31.01.2022.
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