The “H&M incident” created by the Chinese Communist Party is an international shock, but it is only one of its means of economic coercion. In fact, the economic impact of the Chinese Communist regime, which has rapidly risen to become the second largest economy in the world, has long been seriously underestimated, intentionally or unintentionally. How to effectively respond to the CCP’s economic coercion has long been a huge challenge facing the world today. This is a big topic, and this article will only touch on two.
First, it is a prerequisite to have an accurate and in-depth understanding of the characteristics of the CCP regime based on universal values.
As we all know, any judgment we make, either explicitly or implicitly, contains a value premise. The economy of the Chinese communist state is not homogeneous with the economy of the United States, the economy of the West, or even the economies of developing countries; the manifestation of the difference is the deformed economic system and policies of the Chinese communist state and its economic structure and economic consequences. The international community ignored this problem for a long time, and only when the debate over the market status of the Chinese economy and the debate over whether China is still a developing country broke out did it begin to realize the seriousness of the problem.
Why are the Chinese and foreign economies different in quality? In 2013, an internal CCP document circulating on the Internet called for “seven non-speaks”, i.e., “don’t speak” about universal values, freedom of the press, civil society, civil rights, the powerful bourgeoisie, judicial independence, and the historical mistakes of the Chinese Communist Party. The “seven no’s” are universal values, freedom of the press, civil society, civil rights, the powerful bourgeoisie, the independence of the judiciary, and the historical mistakes of the Chinese Communist Party. In fact, this is directly related to the operation of China’s economy and its order. The extent of the CCP’s control over the Chinese economy and its nature is far beyond the reach of Western economics and far beyond the experience of the average Western citizen.
Based on its unique ideology, the economy is only one of the basic means by which the CCP achieves its ultimate goals, and the CCP has already “weaponized” the economy. For example, a commentary in the Australian media SBS pointed out that this kind of “retaliation is more ridiculous than the traditional Chinese war of “killing a thousand enemies and wounding 800”. It is even more ridiculous than the traditional Chinese war of killing a thousand enemies and wounding a thousand oneself, because it becomes a self-inflicted wound of “killing 800 enemies and wounding a thousand oneself”, which brings more serious damage to China. Such a thing is unbelievable for a normal country, but it is indeed the norm for the CCP. Therefore, the major foreign-related economic policies of the CCP cannot be simply analyzed in terms of policy, but must be understood in the context of the CCP’s ideology.
In short, the international community must adhere to universal values in countering the CCP’s economic coercion. Because universal values not only constitute the moral basis for the normal operation of the economy, but also are the nemesis of the Chinese Communist Party’s ideology, abandoning them will only lead to degradation together with the Chinese Communist Party, unable to escape from its clutches.
The world today is already a global village, and in dealing with the CCP, the “fairness and reciprocity” principle and the “distrust + verification” approach proposed by the Trump administration can effectively avoid being exploited by the CCP.
Second, the Chinese Communist Party is a “holistic threat” and must be countered at three levels: macro, meso and micro.
At the recent high-level talks between China and the United States in Alaska, the top Chinese diplomat Yang Jiechi openly challenged the U.S.-led international order, and the international situation is rapidly evolving toward a bipolar confrontation pattern between China and the United States. By challenging the United States, the Chinese Communist Party is also challenging the entire Western society and the international order established after World War II. For the United States and the West, the CCP is a “holistic threat” and should adopt a “whole-of-government strategy” against China (“whole-of-government” approach, including Congress, state and local governments, the private sector, civil society, and academia). In the economic field, there are three levels of operation: macro, meso, and micro, but they must be integrated and consistent with universal values.
The so-called macro level mainly includes two aspects.
One is the development and improvement of international economic rules, WTO reform is a focus. A major challenge is to solve the problem of the Chinese Communist Party exploiting WTO loopholes, and the international community must make a major breakthrough in this regard, otherwise the Chinese Communist Party will either divide and disintegrate or drag its feet in a deadly manner. on March 31, the British International Trade Minister Truss, who chaired the Group of Seven (G7) trade ministers, said, “The time has come to take a strong stance against China and its behavior in the global trading system. The time has come to get tough on China and its behavior in the global trading system, but also to modernize the WTO. In many ways, it is still stuck in the 1990s.” Truss also said that “fundamentally, our like-minded democracies need to win the battle for the soul of global trade.” Regional economic integration is another focus, and the U.S. and the West should push for the “fangs clause” – clause 32.10 of the U.S.-Mexico-Canada Trade Agreement (USMCA) signed in 2018, which states that any member of the agreement with “non-market economies,” the other members can withdraw after six months and establish their own bilateral trade agreements. This is seen as a possible isolation of the Chinese Communist Party in the global trade landscape.
The second is to make the deformed national economic system, structure and policies of the Chinese Communist Party an important issue in bilateral negotiations, and to resolutely counter the economic coercive behavior of the Chinese Communist Party. Trade and economic relations are interdependent, and while there are differences in the degree of dependence between the two sides, the Chinese Communist Party is “politically driven” and often uses this dependence to engage in economic coercion (even when it is actually in a relatively weak position) in order to achieve political goals, which must not be condoned. In addition, the Chinese Communist Party is also good at economic infiltration and technology theft, and must have corresponding countermeasures, such as strengthening the national security review of major economic acts involving China, anti-theft and intellectual property protection, and so on. In this regard, the U.S.-China trade war and U.S.-China trade negotiations initiated by the Trump administration have set a successful precedent.
The so-called meso level refers to strategic technologies, industrial chains, industries and new industries, etc. The CCP’s state-led “China Model”, which violates the principles of a free and rule-of-law market economy, is a major danger to the world economy. The Chinese Communist Party’s “Made in China 2025 Plan” has sparked widespread opposition. On March 31, the Office of the U.S. Trade Representative (USTR) released its 570-page “Trade Estimates 2021” report, which includes more than 30 pages on China. In a statement, the USTR said, “China’s state-led approach to its economy and trade has made it the ‘world’s number one violator’ of creating non-economic capacity, as evidenced by continued severe overcapacity in a number of industries, including steel, aluminum and solar. ” And the recent G7 trade ministers meeting issued a joint statement to resist “harmful subsidies”, meaning the Chinese Communist Party.
There are too many measures to counteract the CCP at the Chinese view level, and only two points are emphasized here. First, improve the international standard of products, as the basis of the global unified market. In other words, in addition to quality standards, product standards must also include environmental standards, human rights standards, etc., in order to benefit the sustainable development of the economy and social justice and harmony. The Chinese Communist Party is explicitly told that it must comply with international product standards if it is not to be “decoupled”. The H&M incident was triggered by the Better Cotton Initiative (BCI) and the boycott of many international brands for massive human rights violations in Xinjiang.
Second, strengthen export controls on strategic technologies, dual-use technologies, military weapons and equipment, and strategic goods to China. Originally, in 1949, the U.S.-led Paris Coordinating Committee, an informal international organization that imposed embargoes and trade restrictions on socialist regimes and was not open to the public and had no treaty, was officially dissolved on March 31, 1994, after the end of the Cold War, and the list of embargoed goods it had established was later adopted by the United States in 1996. The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Good and Technologies, signed by 33 countries on May 12, 1996, succeeded the Wassenaar Agreement. However, the Wassenaar Arrangement is a very loose organization, and the member countries can decide on their own the measures and ways to implement export controls with reference to the common control principles and lists, and approve their own export licenses, which is the so-called “national discretion” principle. This has been exploited by the Chinese Communist Party. Now, the loophole must be closed. (In 2018, the Communist Party of China’s Science and Technology Daily has compiled a list of 35 “neck” technologies & more than 60 core technologies that are not yet under control, indicating that the Communist Party of China is still lagging behind in many fields of science, technology and industry.)
At the so-called micro level, when China-related enterprises are infringed or bullied by the CCP, their home countries or corresponding countries should actively rescue them. For example, due to the huge subsidies provided by the Chinese Communist regime to some industries and enterprises, foreign enterprises competing with them have to face the situation of “one enterprise against one country”. For example, in the solar energy industry, Chinese companies have basically defeated European and American companies, which is due to the efforts of Chinese companies, but the support of the Chinese Communist Party is also essential.
Another example is the forced technology transfer problems suffered by companies involved in China, the cyber theft problems suffered by many companies, etc. In these cases, it is difficult for one company alone to compete with the CCP, and the support of the home country is necessary. The need for support from the home country goes far beyond the traditional “double reverse” measures (anti-dumping and countervailing) in a trade conflict, and requires a unified policy from the home country, for example, against the CCP as the U.S. did against the Soviet Union.
Conclusion
In his article “The Chinese Communist Trap of Economic Globalization,” renowned scholar Cheng Xiaonong points out that the economic globalization that began in the 1970s was too much oriented toward nationalization of production layout, resulting in the establishment of the “world factory” under the dictatorship of the Chinese Communist Party with global ambitions. As a result, economic globalization has fallen into the Chinese Communist trap, and the Chinese Communist Party has used economic globalization as a tool to control the politics and economy of other countries.
The U.S. and the international community must pay great attention to this issue, change the one-country layout of economic globalization to a diversified layout, and strategically contain the Chinese Communist Party’s manipulation of economic globalization, while cooperating with systematic operations at the macro, meso, and micro levels, so that the Chinese Communist Party’s economic coercion will be difficult to apply its techniques.
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