Teer Strategy Talks To David Rennie, The Economist's Beijing bureau chief
David Rennie (49)
CAREER
2018 - current: Beijing bureau chief and Chaguan columnist at The Economist
2013 - 2018: Washington bureau chief at The Economist
2012 - 2017: Lexington columnist at The Economist
2010 - 2012: British political editor and Bagehot columnist in London at The Economist.
2007 - 2010: European Union correspondent and Charlemagne columnist in Brussels at The Economist.
On The Ground: Episode 1
In On The Ground, Teer Strategy explores major political risks around the world with experts - may it be politicians, journalists, academics, think tankers or any other group of analysts - working in the country or region under discussion.
Mr. Rennie has witnessed quite some world history first hand. In this interview, he does not just give an On The Ground account of his conversations with ambassadors, business bosses, foreign journalists and senior officials in Beijing during the COVID-19 pandemic. He also speaks on the 2016 United States Presidential Elections, which he covered from Washington. He was in Brussels at the time of the 2008 financial crash and the Russian invasion of Georgia. Finally, as the paper’s British political editor he covered the events leading up to Brexit from London.
In this interview Mr. Rennie and Teer Strategy answer two main questions:
Why does China seem unafraid to antagonise over 60 percent of the world economy at the same time?
Why has the response from the European Union - and many other democratic countries - so far been limited?
Teer Strategy spoke to Mr. Rennie on July 10.
To be taken seriously, China administers “an educational dose of pain” to the world. It might lose something essential: Europe’s trust.
During the COVID-19 pandemic, China has made few friends. A spokesperson of its Ministry of Foreign Affairs suggested the US military might have brought the virus to Wuhan. In the worst clash at China’s border with India in decennia, 20 Indian soldiers died. China threatened retaliation against the UK on two occasions. First for excluding Huawei from the construction of the country’s 5G network. Then for its pledge to create a pathway to citizenship for three million Hong Kong citizens after China’s parliament adopted a National Security Law for Hong Kong. Beijing slapped tariffs on Australian barley and banned the exports of beef. European leaders accused China of waging ‘a global battle of narratives’ over the pandemic, spreading disinformation and committing cyber-attacks against hospitals. In a recent opinion poll, almost half of surveyed EU-citizens indicate that their view of China has grown less favorable. Only 12% mention an improvement.
Part 1: China’s Assertiveness
Why do China’s leaders seem unafraid to antagonize over 60 percent of the world economy at once?
The cynical answer is that they do not think they are taking a real economic risk. China’s leaders believe they are delivering an educational dose of pain which teaches governments (particularly those of smaller American allies) that it is time to take China very seriously. There is a new scary mafia boss on the world stage, the message is. He may come around and break your kneecaps if you mess with him and ally yourself to the American rival boss.
China’s leaders are very cynical about Western talk about human rights, Hong Kong and sanctions. Their calculation is clearly: as long as there is money to be made, people will stick around. Chinese leaders remember their own history. There is hardly a more brutal event than sending in tanks and troops to clear the student protests in and around Tiananmen Square in 1989. Within a year or two, however, the world was back trading as normal.
“Ambassadors, diplomats and business bosses here in Beijing worry that Chinese hardliners are getting used to being able to drip-feed out visas to only those foreigners who look particularly useful.”
At the moment we are not seeing an exodus of Western businesses either. On the contrary, one of the biggest concerns foreign companies have right now is bringing their bosses, engineers and factory general managers back into China. Visas are a privilege granted to a select few. Ambassadors, diplomats and business bosses here in Beijing worry that Chinese hardliners are getting used to being able to drip-feed out visas to only those foreigners who look particularly useful.
After the pandemic the response of democratic governments, however, might be more substantial. Is China’s leadership miscalculating?
It is a dangerous game for a foreign journalist to tell the Chinese government that they have misjudged their own self-interest. China has just imposed this very strict National Security Law on Hong Kong despite any number of warnings of real consequences by Western governments.
Telling the Chinese that they misjudge their own interests is what countries like the United Kingdom, the Netherlands or even superpowers like America tried during the entire 40-year period of China’s reform and opening-up. Classically, when negotiating the return of Hong Kong to China, the British foreign secretary compared Hong Kong to a precious and beautiful vase from the Ming dynasty. Would it not be a tragedy if it was dropped?
By imposing a law this broadly worded without even pretending to consult the Hong Kong government or people, China is signalling that they think we do not understand their interests. Clearly, they value national security much more than international agreements about Hong Kong. That feels alien to you and me. Operating in a Marxist-Leninist one-party system, however, control and power come above a whole lot of other considerations.
So have China’s leaders worked out every risk that comes with their posturing?
China’s leaders might misjudge a couple of things about us. They cynically bet that we will just stick around because their market is so large and lucrative. They expect that international banks will not leave because China represents such a large percentage of future global growth. They think that when countries like the United Kingdom or the Netherlands talk about human rights, the rule of law or the responsibility to respond to egregious breaches of agreements this is 100% a negotiating tactic and 0% the truth.
“If you force Europeans to blatantly betray our values, then you miss the flip-side of being a smaller European country.”
I think we are more complicated than that. We aspire to have principles. If you force us to blatantly betray our values, then you miss the flip-side of being a smaller European country. Countries like ours have spent a tremendous amount of effort negotiating world trade rules, the United Nations, international conventions and the treaties of the European Union. We did so precisely because we do not want to live in a world of might makes right.
Speaking to people like me off the record, senior Chinese officials are pretty clear about how they see international politics. The world consists of big and small countries, they stress. When small counties talk about values and criticize a big country like China then they must be insincere. Either this is a negotiating tactic or something another big country like America has put them up to.
Beijing’s current approach to its relations with the world better resemble Trump’s America First platform than Reagan’s idea of the US as a shining city on a hill, you argued. How so?
There is constant debate about one question when ambassadors and foreign journalists meet and when CEOs talk among themselves in Beijing: What does China want?
There is no evidence at the moment that China is a kind of missionary power in the way that Reagan's America was. At least the rhetorical position of the US was: ‘we are the leader of the free world.’. The Washington Consensus – meaning freer markets, capitalism and liberal democracy – was thought of as basically the highest achievement for human society. American leaders wanted countries to adopt its political system. They were willing to put treasure and blood behind that mission.
“China’s core message is: ‘China’s rise is inevitable, resistance is futile and collaboration with us could be profitable.’”
It is much less clear that China, even this much more assertive version under Xi Jinping, wants everyone to study its leaders’ political theories. Xi’s China is not the Soviet Union of the 1920s and 1930s with its Comintern agents jumping around trying to foment revolution. Neither does it behave like China under Mao with its revolutionary aid to ‘liberation struggles’ in Africa or Latin-America.
China, Today, is driven by strategic concerns. When the business-friendly, broadly pro-American President Macri replaced the left-wing populist Kirchner government, China continued to invest massively in Argentina. China’s core message, as described to me by a very smart diplomat, is: ‘China's rise is inevitable, resistance is futile and collaboration with us could be profitable.’ This better resembles that fairly bleak, value-free ideology of America First.
During this pandemic, China seems to have done better than some leading Western countries. Will this lead to bigger ambitions?
There is a phrase you would hear from analysts a few years ago: “China wants to make the world safe for autocracies.”That is, chipping away at the post-Cold War belief that democracy is the only legitimate form of government.
“China does not want to take care of the world’s problems and be its policeman. That stance is not motivated by benevolence, but by selfishness.”
Particularly now with COVID-19, Chinese leaders would like others to admit that their authoritarian, collective, tough tech surveillance is very effective. And that others would buy that equipment. However, that is still not quite that shining city on a hill missionary mission. China does not want to take care of the world's problems and be its policeman. That stance is not motivated by benevolence, but by selfishness.
Part 2: Europe’s Response
‘What would you have us do?’ Western envoys sighed when you asked how their countries might respond to the Hong Kong National Security Law. Are European leaders unable or unwilling to stand up to China?
To some countries in Europe, it is almost vulgar to imagine that they can affect the course of world events. I was in Brussels as our correspondent when Russia invaded Georgia. I remember listening to the foreign minister of a small European country at an informal emergency meeting held in Avignon. This minister said: ‘Countries like the United Kingdom or these other do-gooding Northern Europeans who talk about sanctioning Russia or demanding that troops leave Georgia, well... That is nonsensical.' The message seems to be that Europe’s role in the world is nothing more than to adapt. You still see some of that rationalization of impotence dressed up as realism in the China context.
In other respects, the situation is not as desperate. One of my favorite sinologists, Francois Godemont, distinguishes between offensive and defensive European policies. On those policies aimed at changing China's behavior there is not much evidence of European unity or effectiveness. However, defensive conversations have become far more momentous.Serious talks take place about investment screening through which Europe communicates that it sees Chinese money as different from – say – Swiss money. Intelligence sharing and cyber security are being discussed. Finally, conversations to determine whether Europe trusts Huawei enough to build something as sensitive as 5G networks are becoming more serious.
Germany’s presidency of the European Union is supposed to rebalance Europe’s economic relationship with China. Will Chancellor Merkel steer the bloc towards a more confrontational position?
German business is very wedded to the policy of engagement. Germany alone is responsible for around 43% of all EU exports to China. Without China, Volkswagen would be a much less successful company. But even in Germany you find much greater willingness to say: China is both a commercial and a systemic rival. China is trying unbelievably hard to try and stop Europeans from using the phrase systemic rival.
“To Europeans, China is the avatar of globalized competition. ”
There is one final part of European defeatism that is much harder to fix. A city like Brussels, where I was posted for five years, feels tired and old. As if it has a crisis of self-confidence. Particularly it seems unsure whether it can cope with hard competition. The thing Europeans want to preserve are their social security nets, long holidays, early-retirement schemes and good health-care. The sentiment is that these privileges are challenged by new competitors in Asia who are willing to work harder for less compensation and fewer benefits. To Europeans, China is the avatar of globalized competition.
Overcoming this defeatism is a gigantic task – not for the foreign policy world – but for politicians. Europeans should be made to believe that we are competitive in plenty of ways. That we do have a high-tech sector. That we can compete on a global level.
The ground has been shifting under Merkel’s feet, however. A parliamentarian from the junior party in her coalition government called her position ‘behind the times.’ Manfred Weber, leader of the largest party in the European Parliament and a close ally of Merkel sounded like an American politician when he said: “John F Kennedy said ‘I am a Berliner’. I say today: I stand alongside the citizens of Hong Kong.” Will Merkel change her position?
One reason why Germany has not been much interested in politics or values is that the Chinese and German economies were fantastically complementary. Germany was uniquely able to make the clever machines that go into Chinese factories. China then used these to manufacture the goods it exports around the world.
“China basically intends to replace Germany in lots of areas. This will change political dynamics.”
Today, China is also getting good at making these machines. It has been very aggressive in forcing German companies to transfer technology to their Chinese partners. In addition, many technologies Germany sells in China are simply changing. China basically intends to replace Germany in lots of areas. This will change political dynamics.
I am half-skeptical and half-impressed about Manfred Weber or other members of the European Parliament. The European Parliament often says pompous things about global affairs. Then again, they do not control the German budget nor a military, nor do they have to raise taxes or fund unemployment benefits when a factory closes. Their main task is just to talk.
What else might lead the European Union to change its position on China?
China may find that in lots of small ways there is new friction in their relations with the world. That even timid, defeated Europe does no longer want to give China the benefit of the doubt. Trust is an unbelievably important factor in 21st century globalization. Twenty years ago, China’s role in domestic politics in the United States came in the form of a containerload of imported t-shirts. American politicians would complain about lost jobs on cotton mills in North Carolina.
“China requires trust in Europe at precisely the moment that China’s aggression in places like Hong Kong are undermining it.”
Two decades later, China wants to sell us airliners, semi-conductors and medical devices that sit inside your heart telling some distant data-center whether you are about to die. China wants to sell us autonomous vehicles with cameras and microphones that know everything about you. They want to sell us nuclear power stations. That is no longer an argument about who makes our shirts. That is about a very high degree of trust – for the lifetime of that service.
China requires trust in Europe at precisely the moment that China's aggression in places like Hong Kong are undermining it. On 5G and Huawei, Chinese ambassadors go out and say: ‘if you reject Huawei, we will punish you; your most lucrative business will be damaged.’ If you boil that down, China's message is 'trust us or we will hurt you.' There is not a lot of logic to that position. In many small ways, China’s current posturing could end up costing them a lot.
Politicians mistakenly employ spreadsheets when populists employ stories, you argued. What stories can European leaders tell to overcome defeatism in their competition with China?
I covered the beginnings of Brexit and the 2016 election of President Trump. Trump would go into coal country wearing a miner’s helmet and say: I will bring back the coal. I love coal. Hillary Clinton would show up with a spreadsheet explaining that jobs had disappeared because of the prices of natural gas and metallurgical coal in South-Dakota. Twenty minutes in, she still had not said she loved coal.
The Chinese public is being told a powerful story about its COVID-19 response. ‘You sacrificed. You locked yourselves behind closed doors for weeks. You broke the chain of transmission in China,’ the story goes. Like all the best propaganda, it is partly true. Hundreds of millions of Chinese were inside not earning income for weeks.
The Chinese government, however, then adds: ‘Your sacrifice bought time for the rest of the world to prepare. However,look at these decadent, tired, corrupt western democracies. In America, Britain and Italy, they squandered the time you bought them. They are too selfish to wear a facemask or stay indoors. Their governments are basically corrupt playthings of capitalist oligarchs. Our one-party system is superior.’ That story is fantastically successful within China.
In Europe we see bits of interesting storytelling. Emmanuel Macron has his woes in France. One of the things he used to get elected, however, was telling stories about how France and Europe would look after people and protect them. How citizens could be heroes in their own story.
“Protecting ourselves against China is inseperable from the equally difficult task of defending openness, globalized transactions and liberal values.”
If Europe is coming to a moment of new realism about the fact that China is actually a grave threat many things that we hold dear, then we must ensure we do not tell stories about xenophobia, protectionism and about yellow peril. We should speak about the values that make us strong. The rule of law is about making the world safe for small and big countries. In order to thrive and remain open to each other. Protecting ourselves against China is inseparable from the equally difficult task of defending openness, globalized transactions and liberal values. That challenge is gigantic. It can, however, not be dodged.