• July 19, 2024

Crouching tiger or hiding dragon?

The world was bracing for the new cold war. AUKUS became a reality. The QUAD leaders met in DC. News outlets were already churning out stories against China’s alleged ambitions. Stories about Uyghur suffering failed to provide as effective a hook that many expected owing to the lack of hard evidence, so the attention gradually shifted to the Belt and Road Initiative which includes the China Pakistan Corridor as its flagship. So, an unending series of reports started appearing in the international media claiming that China was saddling inefficient and poor economies with insurmountable debt. The Hambantota bankruptcy story had proven to be a propaganda godsend. It felt for a heartbeat that the impossible sounding decoupling was almost an inevitability. But then suddenly the whole story has changed.

Two developments are enough to confuse all China watchers and pro-cold war pundits. The first is the breakthrough in the Huawei case. Almost three years ago, Meng Wanzhou, the company’s CFO and the daughter of the company’s founder, was detained on arrival in Canada. For a case of misreporting to HSBC which could have led to the bank’s inadvertent breach of Iran sanctions, she could be extradited to the United States. After years of hectic diplomatic negotiations and a court deal, last week she flew back to China. This brings to an end an added chapter of hostility between China and the US.

But if the Huawei case was such a source of friction between the two countries, wait until you hear about the other development. Actually, a series of mind-numbing developments. Huawei is a telecom giant that was once accused of conducting digital espionage for the Chinese government by the leading US intelligence agencies. With a presence in 170 countries and with almost two hundred thousand strong workforce it is China’s leading MNC. If China was ready to go to any length to get it out of trouble you would think it is ready to throw its weight behind all major private corporations of the country. Suddenly we do not know anymore. The jolts began with billionaire Jack Ma’s curious disappearance and reappearance after three months.

Late last October Jack Ma’s fintech Ant Group was ready to offer its IPO. Suddenly, the flotation was stopped and he disappeared. By the time he reappeared in January this year his companies had lost around 76 billion in value. Then in July when tech giant Didi had launched its 4.4-billion-dollar IPO in the US, the company was subjected to a security review and its apps banned from tech stores. Next in line was delivery giant Meituan. The Chinese government’s these measures and disciplinary actions against entertainment celebrities have been popular so far. But do they indicate a gradual shift to Chairman Mao’s days of the closed economy? There was no dearth of hot takes on what this all means ranging from the calumny of China-baiting critics to rationalisation and praise by Sinophiles. And then came the real estate giant Evergrande crisis, with the property developer saddled with 300 billion dollars of debt missing the second payment deadline.

There are only a few real explanations for the billionaire scrutiny. For the first, you will have to wait another week because it is too fascinating and global a prospect to be wasted in the margins of a discussion focused on something else. The second explanation, coming from some well-informed speculators is about President Xi Jinping’s political career. Next year the Communist Party’s 20th Congress decides whether to renew President Xi’s term in office for another five years. These pundits then whisper that until this happens there is no harm in aligning with the populist sentiment. But if history is any guide China’s leaders seldom change course halfway through their career. In fact, Mao doubled down in the face of pushback from his defence minister against the Great Leap Forward policies. Only former President Jiang Zemin comes to mind who would have continued sterner policies following the Tiananmen Square episode had it not been for the gentle nudge in opposite direction by Deng Xiaoping’s Southern Tour.

But if it is indeed a return to Mao’s model it would be a reversal of the hard labour of three men namely Deng Xiaoping, Jiang Zemin and Wen Jiabao. China watchers already have a hard time reconciling this policy direction with President Xi’s personal history. He was 10 when his father, a former party bigwig, was purged and sent to work in a factory. During the cultural revolution, the unruly mob of student vigilante militants called the red guard, ambushed and attacked his home. His family had to endure unspeakable tragedies as a result. At the age of 16, he was sent to a village where he would live in a cave house for seven years. He escaped to Beijing, was caught, sent to a work camp to be disciplined and then repatriated to the village. He had to work hard to get accepted in the Communist Youth League and the Communist Party. Now, the pundits believe that after this much hardship one cannot want a return to Mao’s China. But so far, as they say, President Xi has proven to be an enigma wrapped in a mystery.

There is a third explanation too. That the Covid crisis came at the worst moment when China had already spread itself thin around the world due to its BRI commitments. This might be leading the economy towards deficits. Hence, the crackdown to compensate.

Bear in mind these speculations are just that. China’s information flow is continuously questioned by the western media. And those of us who have lived long enough to remember the last cold war can easily recall how militant journalism and the entertainment industry were against the Soviet Union. Even innocent-looking Reader’s Digest used to dish out a monthly dose of anti-Soviet content. You can choose to believe whether it is true or false but cannot be too sure of anything.

That said just wrap your head around the consequences of a possible, if not probable, Chinese withdrawal from the world economy. So far you have heard some Indian and western pundits vociferously arguing for decoupling and confrontation. But this talk is merely talk. No one can even imagine a China shaped and sized hole in the world economy. Economies like those of the US, Europe, Eurasia, China, Japan, the Arab world, India are too big to be allowed to fail or to decouple. We will have to find a way to keep them open and integrated. The proponents of a new cold war on both sides of the divide need to wake up and smell coffee. Twenty years of our lives were destroyed by terrorism, the economic crash of 2008 and now Covid. We cannot afford another decade or two of global economic meltdown.

Published in The Express Tribune, October 2nd, 2021.

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