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The West Keeps Writing Off China. But China Today Is Not About The West

Op-Ed Commentary by Chris Devonshire-Ellis – May 16th, 2022

Beijing’s influence is being aligned with Moscow and New Delhi as Washington and Brussels begin to move away

Western media content has regularly been beating up on China for several years now, with negative content consistent, although the stories do change. The Belt and Road Initiative, now in its eighth year, with 143 countries and an estimated total overseas expenditure (but not to the West) of US$4 trillion is an on-going target of accusatory comment – most often the allusion to ‘debt traps’ – since unmasked as untrue by both Chatham House and the John Hopkins University.

Negativity about China’s domestic market access has been a constant theme, although China’s most recent ‘negative list’, which identifies domestic market areas restricted to foreign investment is its most liberal yet.

The treatment of China’s Muslim Uyghurs has been a more recent theme, although quieter of late, as if US support for Saudi Arabia’s war against Yemen, (99% Muslim), with a population double that of China’s Uyghurs at 30 million, has killed 56,000 people and is responsible for a famine affecting 17 million is largely ignored – as was the grisly murder of the Saudi journalist Jamal Khashoggi, for which no punishments were meted out despite overwhelming evidence it was ordered at the highest levels of Saudi authority. Saudi human rights abuses are OK, whereas China, with far lesser blood on its hands, is vilified.

China’s handling of Covid on its own doorstep has also been roundly criticized, with huge commentary concerning lockdowns in Shanghai, yet the United States recently passed the 1 million Covid death mark, being the highest single national fatality total in the world. China, with a population five times the size, has a current Covid official death toll of less than 6,000, although it may well be rather more. However they are certainly not to levels of those experienced by the US. China criticism as a deflection of one’s own national shortcomings is an old political, and still oft-used media mechanism.

The death of Hong Kong has been much anticipated, with the US kicking it as well by dropping its preferential trade agreements after deciding ‘One Country Two Systems’ had become too aligned with mainland China. Actually, Hong Kong continues to enjoy preferential tax and duty rates at far lower rates than China’s mainland. It is also having finishing touches put to its various ‘Connect’ schemes, which will see Hong Kong’s repositioning as a financial services centre, open to foreign investors, looking to service the estimated US$3 trillion in private hands in mainland China. Those savings need international management expertise to divest risk and they will receive it. Hong Kong will boom once again as the ‘Greater Bay Area’ project is gradually introduced.

The list goes on, however I will stop just there. Reading the Western media suggests largely that China is essentially doomed, destined to be increasingly controlled by surveillance cameras, a lack of judiciary, hardline politics, and abusive officials. Yet it is the United States that has the world’s largest number of surveillance cameras per head of population, at 15.28 per 1,000 citizens, not China.

China’s courts, while still developing, do find judgements for foreign companies in litigation against Chinese ones, despite the bias hype. As for hardline politics, the current Roe v Wade decision by the US supreme court will effectively criminalize abortion, while in China it is permitted, although medical guidance is required. Meanwhile it’s not just China who has rotten Government officials, the US (and many other countries) do as well. Remember Trump? If so, you remember the man who may yet become the next President of the United States, suggesting that China’s method of Governance is rather more stable than that in Washington’s politics.

Yet at the end of the day, the battle for people’s minds and opinion (already stated by the US Government as being a large part of their campaign against Russia as totally evil) doesn’t really impact China per se. The global political dynamism has already moved away from Washington, and to some extent Brussels (as it has sought shelter under the US dominated NATO) and is currently hovering above a triumvirate of Beijing, followed by Moscow and New Delhi. London meanwhile is noisy but otherwise nowhere to be seen. Sri Lanka, a member of the British Commonwealth of Nations, and a former colony, didn’t bother to request the presence of the British High Commissioner in its ‘Foreign Experts’ panel, convened by its President to discuss a way out of Sri Lanka’s economic problems. Instead, knowledgeable representatives from China, India, and Japan were bought in to discuss dealings with the IMF and sovereign debt restructuring.

The IMF meanwhile has moved to increase China’s RMB Yuan holdings in its so-called ‘reserve basket of currencies’ while the Euro and British Pound Holdings were reduced. (The US dollar percentage was also increased).

The general Western viewpoint therefore that China is politically bankrupt, is losing trade and investment and cannot be relied upon is inaccurate. While China’s Covid containment measures have undoubtedly come at a price, that price is being felt by West, as supply chains, with containers stuck as Ports have been locked down, coupled with the effects of the Russia-Ukraine conflict – itself largely a Western construction (Putin wanted NATO to move its troops back from the Russian border, and was refused) this does not mean that China itself is going rogue, or losing its importance to foreign investors, and crucially, foreign buyers. Yet Western headlines suggest otherwise. Voice of America’s “Foreign Investors Consider Ditching China After Exports Slump“, The Economist’s “China’s Extraordinary Export Boom Comes To An End” among others all imply a Chinese economy going rapidly downhill. But this is not true, and the articles themselves are overly generalist in nature.

China’s GDP growth in 2022 is still expected to reach about 5%, even with what remain significant problems. Yet China’s problems are temporary, (such as Covid) and exaggerated. Overall exports slowed at a rate not seen for just two years, while many export sectors, such as metals, fabrics and grain were sharply up, meaning export slowdowns are industry selective, rather than a common problem. The latter export figures for grains are particularly noteworthy as many countries are now banning exports due to shortages. But China is not.

What this actually means is that some foreign investors in China, and especially those from the United States are only now realizing that perhaps a ‘China Plus One’ strategy ought to be deployed. Yet the common wisdom is already well over a decade old – we established our first Vietnam office way back in 2009, and back then the rationale was the cost advantage. While that still holds true, it is been accelerated by both the recent US-China Trade War and the current Covid situation (which will eventually pass).

As for global growth forecasts, against China’s expected 5% GDP growth for 2022, the European Union expects 2.7% for the year, while the United States achieved GDP growth at 1.4% for Q1 2022. Simply put, even with China’s problems, EU investors would still double their money in China as opposed to Europe, while in the US they would more than triple their investments by being in China as opposed to remaining in the US economy. Now that is Hard Data.

Naturally, how successful you are also depends on your business model and the type of business engaged in. Some are more likely to show a better RoI than others. But comparing with Asia, too we can see impressive growth figures. Supply chains are bypassing Russia leaving many European exporters with new consumer markets to find. Asia is a logical choice, with India possessing a middle class market of over 500 million and a GDP growth rate for 2022 of 7.5%, and for ASEAN overall a middle class consumer market of 350 million and an expected GDP growth rate of 5.2%.

This is having other consequences, although the apparent direction of these is only now starting to become more obvious. Firstly, it is that China’s future doesn’t lie being wedded too, or beholden to the West, a point that will dismay all the American and European commentators forming their opinions from Washington or Brussels. They will continue to add flavor, but their relevance is diminishing.

Instead, the new, and more powerful centres of China analysis and of Beijing’s own focus are moving to Moscow, and to New Delhi, as China looks to the East, not to the West, for future economic development and political influence. It is a route already mapped out by Moscow and is increasingly being supported by India. Other regional hubs, including Singapore, Islamabad, Jakarta in addition to Ankara, Dubai, and possibly Tehran will also start to garner more attention, while bodies such as the Shanghai Cooperation Organisation are underpinning all these developing influences, as are trade agreements and blocs such as the Eurasian Economic Union and the Regional Comprehensive Economic Partnership (RCEP).

The truth of the matter is that geopolitically, China is not about the West. It is about the East, and this shift is rendering American and European influence, investment, and opinion less, rather than more important. To understand China – and Asia – one needs to be based in the region. Observing from the Western perspective simply doesn’t cut it anymore – as regional alliances are now moving East.

Chris Devonshire-Ellis has a 30-plus year career in China and Asia and has established two primary businesses in the region: Dezan Shira & Associates and Asia Briefing.

The author may be contacted at chris.devonshireellis@dezshira.com

Disclaimer

Any views or opinions represented in this blog are personal commentary, belong solely to the contributor and do not necessarily represent the views of Asia Briefing Limited or Dezan Shira & Associates.

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