The Future. 

            Can the United States (and the “rest of the West”) “win” a competition with China when they are late in even recognizing that a competition is underway?  In the view of some observers, the answer is “Undoubtedly Yes,” even if they don’t share Donald Trump’s belief that trade wars are easily won. 

            China has vulnerabilities.  One of them may be Xi Jinping himself. 

            First, the “new” China of Xi Jinping scares people.  This is intentional.  Xi enjoys making his power evident.[1]  He has belabored Australia and Lithuania economically over trade issues, launched “military exercises” around Taiwan as a response to Speaker Nancy Pelosi’s visit; and shows no interest in moderating the behavior of North Korea as it fires missiles through Japanese airspace.  That is driving people back toward the American camp. 

Second, China’s rapid economic growth has emphasized investment over consumption.  That has created a certain underlying dissatisfaction among the mass of ordinary Chinese.  Part of Xi’s early program lay in shifting from an investment-based economy toward a more consumption-based economy.  He hasn’t been able to fulfill that intention.  Perhaps he never intended to and just used it as a claim to power. 

Instead, he has been preoccupied with consolidating both his own power and that of the Chinese state.  Part of that assertion of authority appears in his treatment of the high-tech sector.  The government has insisted that the companies pay close attention to government goals.  Major entrepreneurs have suddenly come in for rough treatment.  The case of Jack Ma is emblematic.[2]  Reportedly, many tech industry leaders are urging their children to find a way to build a life elsewhere.[3]  Kids aren’t their parents, so this doesn’t mean that China is losing future tech talent.  It does give a sense of the current state of mind of leaders in the tech industry. 

            For the moment, there is a recognition that semiconductors, broadly conceived, hold the key to modern manufacturing.[4]  The Biden administration recently has limited China’s access to semiconductors, related manufacturing equipment, and even people who work in key areas.  The intention, in one view, is not merely to fire a shot across China’s bow to make it more amenable to talks.  Those days are past, at least for the moment.  The goals is “strangling large segments of the Chinese technology industry—strangling with an intent to kill.”[5]  Those policies could be—and likely will be—strengthened and extended into other areas.  A Sino-Western confrontation could be just beginning. 

            “It seems that Xi doesn’t have great judgement.”[6]  Unfortunately for all concerned. 

---

[1] Case in point: Chinese ex-President Hu Jintao escorted out of party congress – Bing video 

[2] On Ma, see Jack Ma – Wikipedia 

[3] Ip cites Sebastian Mallaby, The Power Law: Venture Capital and the Making of the New Future (2022).  The book gets a far more favorable review in Foreign Affairs The Power Law | Council on Foreign Relations (cfr.org) than it does in the New York Times ‘The Power Law’ Is a Funder-Friendly Look at the World of Venture Capital – The New York Times (nytimes.com)

[4] See National Security and the Economy. | waroftheworldblog, for more ponderous editorializing on this subject. 

[5] Gregory Allen of the Center for Strategic and International Studies, quoted in Ip, “In Economic Race, U.S. Benefits From Xi’s Rule,” WSJ, 20 October 2022.  On Allen, see Gregory C. Allen | Center for a New American Security (en-US) (cnas.org)  Like Doshi, Allen appears to be a young fogie. 

[6] Andrew Batson, quoted in Ip, “In Economic Race,…”  On Batson, see Andrew Batson – Gavekal Research