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China faces growing US displeasure

It does not seem that there is any easy or likely long-term fix of the many issues that now divide the US from China.

It does not seem that there is any easy or likely long-term fix of the many issues that now divide the US from China.

by
John Redwood

in Features

10.10.2019

Apple has withdrawn its HK maplive app in Hong Kong. The Hong Kong authorities claimed the app was being used "to target and ambush police ", and to "threaten public safety." It followed on from the spat over The National Basketball Association in the US condemning remarks that were in sympathy with the Hong Kong protesters. Both organisations defended their customer base in China by accepting the view of the Chinese and Hong Kong authorities.

All this goes to show that some US companies and organisations have big commercial interests in the China/Hong Kong market, and reminds us that an ever-vigilant China will use this commercial presence to promote its views. I read that Apple has removed the Taiwan flag motif from the library available to Hong Kong users, at China's request. What these exchanges are also doing is extending the depth and duration of the trade war with the US and digging US politicians into a firmer stance against China than before.

President Trump began the trade hostilities, basing them on the wish to open the Chinese market to more US exports, especially in the agricultural area. He targeted the asymmetric tariffs and other barriers on goods trade. It soon became widened to include intellectual property and technology, which in turn spread to issues of government power and influence on a global scale. President Trump played down the issue of the protests in Hong Kong, and did not push hard on the civil rights concerns in mainland China, largely accepting these were internal Chinese matters. Today he is more likely to have to press on these worries as well, given the movement in US politics and public opinion.

Elizabeth Warren, the influential left-wing challenger for the Democratic Presidential nomination, has tweeted that "China is trying to use its market power to silence free speech and criticism of its conduct". The current front runner for the Democrat candidature, Joe Biden, says he wants to hold a World Democracy Summit if elected. One of its main aims would be to get technology companies to "make concrete pledges for how they can assure their algorithms and platforms are not empowering the surveillance state, facilitating repression in China and elsewhere", etc.

As talks get underway again between China and the US over a range of trade issues, it is possible there can be some agreement about tariffs and trade arrangements for products of particular interest to the two sides, and that would be welcome. It does not seem, however, that there is any easy or likely long-term fix of the many issues that now divide the US from China. The disagreements are not merely narrow Trump ones based on America First trade, but are widely held across the US political spectrum about the style and nature of government and the use of technology by the state. The adoption of a tougher anti-China stance by the Democrats reduces President Trump's scope to compromise. It makes a digital divide or cyber curtain more likely.

The Chinese economy has been slowing for a variety of domestic reasons, as well as suffering a bit from the tariffs. The stock market was a great performer until April this year and has still offered a good return for the year to date. Given the change of mood in the US, which controls substantial investment monies and has great influence over the world media, we are moving to a less positive stance about China.

The challenges of the digital revolution, the growing divide between the digital systems of China and the West, and the different model China adopts towards information and social media regulation will mean less western enthusiasm for investment in China. China meanwhile has to wrestle with major transformations of its economy, tackling the difficulties of the banking system, the environmental issues from rapid industrialisation and managing public opinion in a single-party state.

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