The case for realistic engagement with China

Via Financial Times

The relationship between the US and China is close to breakdown. Washington and Beijing are locked into increasingly bitter disputes on a range of issues — including trade, investment, security, education, Hong Kong and the origins of the coronavirus.

The dangers of such a situation are obvious. At worst, they could lead to a war — with both Taiwan and the South China Sea as potential flashpoints. Even if outright conflict is avoided, a collapse in co-operation between Beijing and Washington would have grave implications for the management of problems that threaten humanity, including global health and climate change. The implications for international prosperity are also profound.

For the past 40 years, the bedrock of the US-China relationship has been globalisation — rooted in beliefs about the mutual benefits of trade. That, clearly, is no longer a sufficient basis for understanding. Donald Trump, the US president, has long rejected the idea that the trade relationship is mutually beneficial, and similar doubts are growing in Europe. The increasingly militant tone of Chinese foreign policy, under President Xi Jinping, also means that security issues and questions of values are rising up the agenda.

When it comes to trade and economics, the coronavirus pandemic has accentuated the trend for western nations to rethink their dependence on Chinese production. It is inevitable that supply-chain resilience, not just cost and efficiency, will weigh more heavily in future. At a time of rising geopolitical tensions, democratic nations also need to make themselves less vulnerable to potential Chinese economic pressure. An increased focus on security means that it is right to look at China’s role in providing key technologies that have implications for privacy or critical infrastructure — such as 5G networks.

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However, while it is legitimate to make security more of a consideration in trade with China, trying to force through a massive repatriation of manufacturing from China to the west is a bad idea, on grounds of fairness, cost and international influence. Western nations have every right to demand fully reciprocal access to Chinese markets. But Chinese companies and Chinese people cannot be targeted simply on grounds of nationality. They have a legitimate right to compete in the international market. Indeed China’s efficient, low-cost production brings real benefits to western countries.

A Trump administration effort to cut China out of world markets would not just be a mistake on grounds of cost and fairness. It would also be a geopolitical blunder, since America cannot assume that the world will follow its lead. Preserving strong economic, educational and business ties is also important in the struggle to prevent US-Chinese rivalry ever spilling over into war. That matters because China’s current behaviour over both Hong Kong and Taiwan merits a stronger western response that will inevitably lead to an increase in tensions.

China’s move to impose new national security legislation in Hong Kong threatens to snuff out freedom of expression in a great global city — a move that is likely to have implications for the rule of law. Sadly, it is therefore legitimate to consider withdrawing the special treatment of Hong Kong under US law and the trade privileges that go with it — although the final decision should depend on how heavy-handedly the new legislation is applied. Britain’s decision to make it easier for millions of Hong Kongers to apply for UK citizenship is also an important response.

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China is making increasingly threatening noises towards Taiwan. As a vibrant democracy, it deserves more support — through upgraded contacts with western nations and participation in international organisations, where Taiwan has a lot to offer on issues from health to cyber security. Beijing’s reaction, even to such modest moves, is likely to be ferocious — so democracies should act together, rather than leaving Taiwan reliant on an increasingly erratic Trump administration.

A reset in the west’s relationship with China — involving tougher stances on Hong Kong, Taiwan and trade — should be based on a new policy of realistic engagement. Actions must be based on clear and defensible principles, which stress an underlying goodwill towards China and its people, and a firm desire to work together on global issues. As the current pandemic reminds us, national rivalries ultimately matter less than our common humanity.