How China uses globalisation as a weapon | Dominic Lawson

China has subverted economic globalism to its own ends. It is, notably, the world’s oldest continuous political unit. Throughout history there have been several occasions where it spread its influence throughout parts of the globe. The most recent was in the early days of the Ming Empire where Chinese fleets under the command of the famed admiral Zheng He reached Southern Asia and across the East Coast of Africa. For reasons still debated by historians, Ming China turned inwards. They ended their expeditions to the far corners of the globe and burned their fleets.

We will never know how history may have turned out if that ancient Chinese empire had not turned inward but what we do know is that the modern incarnation of the imperial regime, the Chinese Communist Party, is intent on not repeating the mistake of their ancestors. 

Debt-trap diplomacy and resource dominance

The most iconic form of this can be found in the Belt and Road Initiative. This represents history’s most ambitious infrastructure project which seeks to connect the entirety of Eurasia and Africa into a network of roads, ports and railways, with China at its heart. 

In tandem with the new infrastructure projects that are being built across Asia and Africa, China is acting as creditor to some of the world’s most indebted regimes. Countries such as Djibouti and Sri Lanka, nations which anyone intending to be repaid would never dream of loaning to, have become big recipients of Chinese funds. This suits China fine because Beijing gains leverage to demand the use of such countries for military expansion, as they have done in both countries. 

The quest for raw resources, particularly industrial metals and fuel, is also motivating China’s expansion. Within Africa, China holds a dominance of the production and supply line for critical raw industrial materials. Of course, continental China is the global manufacturing hub and we may expect them to be seeking out these materials. It is to some extent natural.

But we should be fully aware that this conquest is also motivated by a strong desire to outmaneuver the West.

The Chinese are thinking forty years into the future and intend to control the raw materials we need for the coming transition to a more advanced economy - what some technologists refer to as the ‘fourth industrial revolution.’

Cobalt, for instance, is a resource which is vital in the production of electric cars. As the West transitions into the full use of electric cars, our demand for it will skyrocket. It exists in it’s largest quantities in the DRC (Democratic Republic of Congo). And, for some years now, China has owned the entire production line, from the mines which take it out of the ground, to the factories which create the batteries from it. 

Rare-earth elements, used in the production of advanced AI, satellites and mobiles, are estimated to be owned at a stake of 90% by the Chinese state and her corporate appendages. 

A report from the EU which analysed this phenomenon warned that it may be too late and that China could have already achieved monopoly over the production and refinement of raw materials needed to transition to a post-carbon economy and stays competitive in the coming decades.

This all heralds a dangerous world in which the global production is at the mercy of a ruthless military regime. One that needless to add does not share the same respect for human rights and religious freedoms as the West and its allies. Much like the Arab oil states sought to use their control of the petroleum market to punish the United States for its support of Israel during the ‘70s, it isn’t hard to imagine China strong arming Western economies for receiving the Dalai Lama, or daring to acknowledge Taiwan. 

Should this come to pass, it won’t even matter that the United States is capable of defeating China in a war. In this eventuality, we will have already been thoroughly checkmated.

Winning without war

The ancient treatise on combat by the scholar Sun Tzu is remarkable because, despite being a book devoted to winning wars, so much of it is concerned with how to avoid them all together. The best means of achieving victory is to position your assets in such a manner that your opponent finds himself checkmated before even realising he was at war. That, the scholar argues, is the supreme mark of strategic excellence. 

Sun Tzu’s philosophy has found adherents throughout the world’s most powerful militaries. The Art Of War can be found in the libraries of institutions as far afield as Sandhurst and West Point. And of course, his descendants in the Chinese military and state apparatus have predictably internalised his maxims. 

What is unique about the Chinese use of Sun Tzu is how it has also been applied beyond merely the scope of the military. It has seeped into every facet of diplomacy and economics as well. 

Modern China is the best example of the concept of the ‘military-industrial complex’ - a labyrinthine nexus where big business, the military, and intelligence networks act as tightly connected organs of the same entity. All are devoted to the same disciplined goal of promoting Chinese interests. All work in tandem with the Communist Party acting as its brain and central nervous system. 

This system is also possessed of a clear-eyed and realistic understanding of Chinese military weakness compared to other great powers, particularly the United States.

For all the titanic growth of its economy, and its ability to project power abroad, China’s military strength is still minor compared to that of the United States and its allies which surround it. Being aware of this deficit of comparative strength, Beijing has refined non-military means of usurping the hegemony of the United States. 

Much of this mindset was elucidated within a strategic manual written at the turn of the millennium. The title loosely translates as ‘Unrestricted warfare.’ Written by two high-ranking Chinese military officials, the book rightly posited that globalisation would provide Beijing with the perfect means by which it can rearrange the balance of power away from the West and into the favour of China.

The thesis of the manual has proven prescient, as the last decades have shown that globalisation is one of the best means by which China has been able to weaken the West and gain a dominant position within the developing world.

So what is to be done?

The tale of how China came to hold such a dominant position is a story of our political elites lacking long term vision and choosing free-market ideology over the national interest. 

In a world where state capitalism is increasingly dominant, a completely free market is a fantasy. Western companies will often be faced with Chinese corporations who are supported by state coffers. Likewise, any Western firm which seeks to sell into the immense Chinese market will be subject to CCP restrictions on operations, and state backed hacking and IP theft. 

Accepting this may be particularly painful for the Conservative Party, which has only recently begun to reluctantly shed it’s neoliberal skin. But it is fundamental if the UK will retain any economic independence. 

This trend is already deeply embedded in global supply chains but there are ways that we can mitigate the monopoly of China over global production. 

The first step is to find alternative countries to base Western manufacturing. 

If corporate leaders can’t resist the prospect of exploiting a poorly paid and maltreated work force, then they can at least use ones from countries which aren’t a threat to us. Countries such as Vietnam or India are nations with whom we share common political interests. And their level of development allows firms to take advantage of lower production costs. 

However, the optimal decision would be for Western governments and businesses to begin a concerted effort to repatriate their manufacturing bases from China immediately. 

A local production process has multiple benefits for our society and the world. Most germane to this topic is that no single power will be able to monopolise vital resources. But others include a stable economic foundation on which to rebuild deprived communities and families. We know that factory closure is heavily correlated with family breakdown and communal disintegration. One study found that de-industrialisation was the single biggest predictive factor for the rise in divorce and subsequent increase in family breakdown and male suicide.

So the repatriation of industry and manufacturing allows us to kill two birds with one stone. And emerging technology may provide us some salvation in this endeavour. 

At the start of the decade, Bank of America released a report which laid out the key trends which will define the coming years. One prediction was that the increasing capability and decreasing cost of artificial intelligence and 3D printing would remove the incentive of multinationals to base their operations in the developing world. 

The report also suggested that national governments would become more interventionist and begin large-scale employment projects based around equipping their populations with the skills to work, alongside these new arriving technologies. 

While this still leaves Western nations sensitive to potential Chinese dominance of raw material supplies, it may act to rob Beijing of a vital portion of revenue and leverage that they currently hold. 

Looking back on this episode, we may remember the pandemic as being a wake up call to the fragility of our global trade system and how it has been exploited. 

It may seem obvious that allowing a ruthless military regime to have dominance of the globe’s most vital goods (including, ironically, the world’s medical supplies) is dangerous. But very often, people require disaster to wake them from their complacency.

For too long, economic globalism has been treated like a fact of nature. Instead, we must remember that it is ideology and like all ideologies it can be expunged. Because if it isn’t, we risk this current crisis becoming nothing more than a speed bump in the building of a world ruled by the Chinese Communist Party.