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Liberal democracies can contain authoritarian China

By Chris Lewis - posted Thursday, 4 June 2020


Given an increasingly aggressive China in recent years, liberal democracies can contain the Chinese Communist Party’s (CCP) ambitions, albeit the looming Cold War between liberalism and authoritarianism may cause “an unprecedented crisis that will lead to the biggest wipeout of wealth in history”.

To put it simply, the world cannot trust the CCP, albeit many nations may take its money whenever it can.

Despite the troubles facing many liberal democracies, with immense social, economic and political cleavages particularly evident in the United States (US), the imperfections of any liberal democracy are exposed yet such societies remain vastly superior to what exists in China under the dubious leadership of the CCP.

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For example, while the CCP gloats about its effective response to the coronavirus outbreak which began in Wuhan, the Economic Times states on 30 April 2020 that

China locked down all domestic traffic internally by end January 2020 but pushed to open foreign travel till end March. Data from Tom Tom traffic index, a traffic location site that covers 416 cities across 57 countries show that as a result of this strategy, China, intentionally or otherwise, was able to lockdown its cities unknown to the world. While this reduced the spread of the Coronavirus within China, China’s aggressive foreign travel policy led to a virus explosion worldwide.

The CCP’s behaviour with regard to the coronavirus will only compound growing concern in many liberal democracies about China.   

While a March 2020 Pew poll found that 66% of Americans had an unfavourable view of China compare to 26% favourable, a 2019 Pew poll found similar opposition in many liberal democracies, including Japan 85-14, Sweden 70-25, Canada 67-27, South Korea 63-34, France 62-33, Netherlands 58-36, Czech Republic 57-27, Italy 57-37, Australia 57-36, Germany 56-34, UK 55-38, Philippines 54-42, and Spain 53-39.

Greater concern about China has emerged in response to the mass detention in Xinjiang of over a million Uyghur Muslims, a reality enabled by China’s annual domestic security spending reaching $US193 billion in 2017, and the CCP quashing its own domestic media investigations about key policy issues with 48 journalists in Chinese prisons as of December 2019.

The CCP, by taking on the liberal democracies, is promoting a battle that it will not win, within the  reality that both China and the more powerful liberal democracies already spend a substantial part of their national gross domestic product on military spending.  

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Take recent CCP legislation that is intended to quash dissent in Hong Kong which, besides showing the world a total disregard for existing democratic norms, will erode any hope that the yuan will become a reliable and convertible currency that can challenge the longstanding safety of the US dollar.

With the value of the yuan protected by the CCP’s extensive capital controls, which prevents a major capital flight, the CCP now jeapordises its own ambitions by undermining Hong Kong’s open society which has long served as a gateway to the West to attract global capital.

It is estimated that 60% of foreign direct investment in and out of China during 2018 went through Hong Kong, that Chinese banks still hold more assets in Hong Kong than any other region ($1.1 trillion in 2019), and that Chinese businesses during 2019 tapped Hong Kong’s debt market for 25% of their $131.8 billion in offshore US dollars.

As of early 2019, the CCP’s actions had already eroded business confidence to the point that many want to leave. With Chinese businessmen aware that the CCP (under Xi Jinping) had increased its control of every aspect of Chinese society at the expense of economic and political liberalisation, one poll (by Hurun) of 465 wealthy individuals found that only one-third remained very confident in the country’s economic prospects compared to nearly two-thirds two years earlier. The poll also found that 14% had no confidence in the CCP leadership, with nearly half considering migration to a foreign country, a reality confirmed by investor visa applications to the UK alone soaring by 45% in the first quarter of 2019 with 67 approved, more than half of all those issued.

With widespread distrust of the CCP, it is hardly surprising that much greater pressure has emerged in recent years to temper China’s rise.

Already, with China taking contested territory from neighbours in the South China Sea, the US, Japan and Australia are working with other nations to help counter balance China in the Pacific, including India which has the third highest level of military spending in the world as of 2018.

While Australia too has much to lose in the short-term if it alienates the CCP, given that China received about 32.6% of Australia’s total Australian goods and service exports for 2018-19 (around $A153 billion), more Australian voices are calling for a new national security strategy that focuses on both national economic resilience in terms of trusted supply chains and the military threat. This includes the reality that China supplies 90% of Australia’s imported medicines, and Australia has only 29 days’ worth of liquid fuel stocks at refineries and wholesale terminals, compared to the International Energy Agency’s 90-day fuel security benchmark.

In economic terms, and despite some tensions between the US and European Union (EU), there is also support for President Trump’s call for “dramatic” reforms to the World Trade Organisation (WTO) with most concern about China, with WTO director-general, Roberto Azevêdo acknowledging the need for change.

This includes support from Australia’s Morrison government, although tempered by its ongoing commitment to a rules-based multilateral trading system.

Most liberal democracies accept that China is the worst culprit with regard to unfair trading practices. While trade between Europe and China is worth around 1 billion Euros per day as of 2019, the EU by the end of 2019 had 93 of its 140 trade defence measures targeting China, compared to 10 for Russia, 7 for India and 6 against the US.

During 2019, the European Commission also introduced a new framework to facilitate closer scrutiny of foreign investment in Europe, with member states encouraged to specifically review investment in sensitive sectors including critical technologies and infrastructures, as well as transactions involving state-controlled entities.

Of course, not all liberal democracies will be as strident in their opposition to the CCP. For example, Huawei continues to expand its foothold within Europe’s 5G landscape (including the UK), while the US, Japan, Australia and New Zealand have banned Huawei from building their 5G infrastructure.

And, while Chinese investors abandoned plans in 2018 to build a deep-water port in Sweden amid local concerns about the project’s environmental and security implications, with some of its cities/towns by early 2020 halting co-operation with Chinese towns over concern about free expression and human rights, Greece during 2017 pleased the CCP when blocking an EU statement at the United Nations criticising China’s human rights record given significant Chinese investment.  

In a Cold War where the distribution of resources will indeed matter, common sense will demand that the wealthy liberal democracies will have to work together to limit China’s influence. For example, during September 2019, Japan and the EU signed a major deal to build infrastructure and set development standards around the world, in what was seen as a response to Beijing’s Belt and Road Initiative.

A failure to cooperate may indeed lead struggling liberal democracies to welcome more Chinese capital, even when they may not agree with the CCP’s anti-democratic stance. For example, while polls show that the Greeks welcome Chinese investment, 69% of respondents in 2014 felt that China did not respect the personal freedoms of Chinese citizens, with 62.4% in 2017 expressing the view that human rights were not respected.

Already Greece and Italy have turned to China for substantial investment at a time when both have high debt levels, bear the brunt of the EU external migration crisis, and have had their calls for greater pan-European investment for the past three years rejected outright by core eurozone members like Germany, the Netherlands and Finland.

The end result is that China is increasing its presence in the European region. With the China Ocean Shipping Corporation (COSCO) now having stakes in at least 15 European ports, it acquired the controlling share of the Greek port of Piraeus in 2016, thus upholding the CCP’s plan that Piraeus will serve as a gateway to EU markets and Asia-European-African trade routes thanks to its close proximity to the Suez Canal.

With a lack of cohesion preventing all liberal democracies from effectively working together to counter China’s rise, the US will indeed sometimes use a carrot and stick approach to encourage allies to provide greater resistance to the CCP’s aims.

For instance, during May 2020, the US Secretary of State Mike Pompeo indicated that it would “disconnect” Australia from its ‘Five Eyes’ security relationship with Australia if the Victorian Labor government’s involvement in China’s ‘Belt and Road’ global infrastructure project impacts telecommunications that impacts upon US citizens and “security networks for our defence and intelligence communities”.

The US, which has already warned Israel that Chinese management of its Haifa port in 2021 could jeopardise continued use of the port by the US fifth fleet, also pressured Israel in 2020 not to accept a Chinese bid to construct the world’s largest desalination plant,

With China also building a new port in Israel’s Ashdod, the US is pressuring Israel to review foreign investment at a time when China is also looking to upgrade Lebanon’s deep seaport of Tripoli to allow it to accommodate larger vessels while seeking to build a railroad that would connect Beirut and Tripoli in Lebanon to Homs and Aleppo in Syria.

However, others argue that the US can win greater support against China by showing that it is a reliable trade partner, conclude more free trade agreements, and focus on the norms and values that it shares with other liberal democracies given that China uses 5G technologies as part of its campaign to suppress dissent from the Uighurs to Hong Kong.

Liberal democracies can also lead by their economic, social and environmental policy mix, with inequality in the US similar to China with Gini coefficient scores of 0.46 and 0.45 as of 2020, far worse than Sweden’s much more equal 24.9 and Australia measuring 30.3.

However, with the US spending around 18.7% of GDP on public social expenditure during 2018, the Chinese Premier Li Keqiang in 2020 admitted that roughly 600 million Chinese citizens still earn only $US140 a month compared to Chinese average income of ($US4,198), while only a very small part of its working population is covered by an unemployment insurance system as of 2020.

And all liberal democracies must uphold the rule of law to protect their many ethnic minorities, an approach at odds with the entrenched racism of China which targets its minorities, has the lowest immigration rate in the world (0.07% of the population), and offers no legal protection against racial discrimination with its recent racism towards Africans over the coronavirus leading to a huge public outcry across Africa.  

To conclude, the above reasons help demonstrate why liberal democracies can counter the CCP’s world ambition, albeit an increasingly aggressive approach by China will cement greater Cold war tensions that may be evident for years.

In agreement with others, the liberal democracies must remain “resolute in defending our security, interests and values” and “respect for international law, which China may further flout as its problems increase” given the CCP’s resistance to the rule of law shaped by an independent judiciary, a free press, civil society, and some sort of political accountability.

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About the Author

Chris Lewis, who completed a First Class Honours degree and PhD (Commonwealth scholarship) at Monash University, has an interest in all economic, social and environmental issues, but believes that the struggle for the ‘right’ policy mix remains an elusive goal in such a complex and competitive world.

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