To end the trade war and meet its centenary goals, China must embrace soft power and become more likeable
- Beijing should treat broad anti-China sentiment as a chance to not only speed up structural reforms, but also embrace soft power changes that will make the Chinese dream easier to achieve
Upping the ante, US President Donald Trump ordered tariff hikes on all remaining Chinese exports.
While most concessions represent the structural reforms China needs, contrary opinions prevail that they should be implemented in a way the nation can live with.
Caving in with a loaded gun overhead is reminiscent of past national humiliations. The anti-imperialist May Fourth Movement spirit remains alive. It is also felt that China has given in too much while America has conceded too little.
With the economy stabilising, some believe China could outlast the current Trump administration with a prolonged trade war. Widening tariffs to catch all Chinese exports will disproportionally hit US consumers, importers and manufacturers.
Moreover, the longer the impasse, the more anxious Trump is likely to become. The prospect of a solid “win” against China could become elusive as the presidential election process draws near.
Trump’s warning that China is badly beaten and runs the risk of having to accept a far worse deal sounds like American anxiety rather than strength. As White House economic adviser Larry Kudlow admits, both sides would suffer.
The trade war is part of a bipartisan consensus for 360-degree resistance against a rising, assertive China. Its economic practices and perceived geopolitical ambitions are seen as threatening the US-led global order.
Apart from trade, the US is mounting anti-China measures on technology, supply chains, access to research, the South China Sea, Taiwan, space, human rights and ideology.
Claims of China becoming an existential threat appear overblown. While China’s military has advanced by leaps and bounds, it is still a long way behind the US in terms of sophistication, flexibility and global reach.
The first is to become a “moderately well-off” nation by 2021, the 100th anniversary of the Communist Party of China.
The second is to attain the status of a “strong, democratic, civilised, harmonious and modern socialist country” by 2049, the 100th anniversary of the founding of the People’s Republic of China. These goals define the “Chinese dream”.
China’s manufacturing industry is already the world’s largest, bigger than that of the US, Germany and South Korea combined. The country will overtake the US as the world’s largest consumer market this year.
However, growth is slowing and demographics are worsening.
China has been stuck in the “middle-income trap” for 25 years, compared with South Korea (23 years), Taiwan (27 years) and Singapore (29 years).
China’s annual 3 per cent total factor productivity growth for the past five years may be a cause for optimism. Nevertheless, there are fears that time is running out for China to escape the trap.
A lot depends on how soon much-needed structural reforms are implemented.
Vice Premier Liu He, in charge of the current US-China trade talks, is its former secretary general.
Reforms are either stuck in neutral (for example on cross-border investment and the financial system) or worsening (in state-owned enterprises, trade, competition, fiscal affairs, land and labour).
If China’s first centenary goal is to be realised by 2021, Beijing will need to speed up these reforms. However, vested interests die hard.
China would be wise to capitalise on US trade talk and other anti-China pressures to steamroller through some of the more critical reforms.
Similarly, China’s second centenary goal of becoming a respected global power by 2049 is facing intensifying headwinds.
Clearly, if China wants to lead at the world’s top table, it will need to make itself likeable to more nations.
With decades of dramatic achievements, Beijing doesn’t need to copy the West’s political model. But to become a respected great power, it will need to be more tolerant within, and more empathetic abroad.
In the South China Sea, it could observe a common code of conduct, and joint development and management of ecology and resources.
With anti-China pressures in a world fraught with unilateralism, chauvinism, nationalism and protectionism, China should turn the tables by nurturing a “community of common destiny”, promoting multilateralism and open, innovative, inclusive and sustainable development.
A more likeable China would reap powerful dividends in its quest for greatness.
Andrew K.P. Leung is an independent China strategist. Email: [email protected]