From The Avoidable War (Kevin Rudd, 2022) pp 72-5
The publication of photographs by American reconnaissance aircraft of armed PLA garrisons and, later, military aircraft being deployed on the reclaimed islands quickly sunk Xi’s claims.
There is only a small step between the sense of being deceived and the even deeper sense of betrayal that follows. That’s because deception shatters trust, as much between states as between individuals. Indeed, as seen through American eyes, this is where we find ourselves in the continuing downward spiral of the US-China relationship. In America’s current view, not only has China deceived the US for decades about its long-term strategic intentions, but it has also betrayed the explicit content and implicit spirit of the contract it agreed to with the international community back in 2001, when China was first welcomed into the WTO. From Washington’s perspective, supporting China’s accession to the trade body was the single most important decision made by a US administration since diplomatic normalization in 1979, the effect of which was to turbocharge China’s economic nee, enabling it to become the largest trading power and second-largest economy in the world within a decade. However, China did not open its markets fully to the US and the rest of the West as promised. In the view of America and many of its allies, China continued to protect its industries (contrary to WTO rules), subsidize its exports, manipulate its currency, and steal intellectual property as a deliberate stratagem to accelerate its economic and military development. On top of this, China deployed the full resources of the state in a bold bid to overtake all its international competitors in the high-technology industries of the future. In other words, China had no interest in becoming a market economy anchored in the principles of competitive neutrality a provided for under the terms of its WTO accession. Instead, it intended to continue to use the full powers of its authoritarian capitalist mode to win an undeclared economic war against the US and the West. Eves worse, in the American view, Chins continued to run massive trade surpluses with the United States, serving to hollow out much of Americas industry at the same time.
The controversy surrounding Beijing’s “Made in China 2025” (MIC 2025) strategy provided yet another illustration of the same problem for American eyes. Increasingly, corporate America felt that China’s overall approach to trade and investment policy was becoming more nationalist, mercantilist, and protectionist. American exporters complained of a vast array of Chinese nontariff barriers, such as complex and arbitrary health-and-safety regulations on imported products, making it difficult for American goods and services to have competitive access to China’s ever-growing domestic market. Now, MIC 2025 proclaimed China’s intention to dominate all major global high-technology markets by 2030, listing each sector by name as well as the proportion of the global market that China intended to occupy by a given date.
This of itself was seen as ambitious but not necessarily offensive; many nation-states articulate long-term industry policy targets. But in America and in Europe, a line was crossed when China subsequently unleashed unprecedented state funding across an army of public research institutions to give effect to the strategy. China made assurances to foreign governments about competitive neutrality, but the Chinese aphorism on deception that “above, there are policies, but below, there are counterpolicies” (shang you zhengce, xia you duice) — seemed to be in effect. To American exporters and investors, the driving sentiment was that whatever international economic agreements China signed up to were largely a political smoke screen, behind which the deeply nationalist and protectionist orientation of the Chinese state continued to churn.
Meanwhile, a Chinese exclusion list proscribing multiple sectors from any form of inbound investment tied the hands of American investors seeking access to the most profitable areas of the Chinese economy. Indeed, where investment was permitted, it was often on the condition of reexport of products to third-country markets rather than allowing effective access to Chinese consumers. Added to this was unlimited official funding for a foreign acquisition spree by Chinese state-owned enterprises across Europe and the United States, as China sought to buy up high-tech firms around the world. At the same time, foreign companies in the Chinese market were prevented from acquiring full or even majority ownership over the joint ventures they were required to enter into with Chinese firms. US investors also complained of unilateral rule changing by various levels of the Chinese government and party once an investment had actually been made, by which time the investor was at the whim of local political decision makers. Corruption was also the “normal” price for doing business, particularly in the pre-Xi Jinping period, and a major problem for American corporations, given that they were subject to strict reporting and compliance requirements under the US Foreign Corrupt Practices Act. Finally, the absence of an impartial legal system for commercial dispute resolution meant that foreign businesses had a next-to-zero success rate in Chinese courts, leaving them exposed to the exploitative practices of local business partners and the various arms of the Chinese government. These problems were compounded by American business allegations of being forced to transfer technology to their Chinese joint-venture partners as a de facto requirement for doing continued business within China. Washington, therefore, concluded that Beijing was embarked on a comprehensive, state-driven strategy to dominate future global technology markets. Chinese protestations that China was still a poor, developing country in need of more time to adjust to international standards of economic competition were increasingly seen as a cynical public relations tactic by Beijing. It became clear that Beijing seemed to have no intention of complying with the terms of its WTO accession on domestic-market access and the subsidization of Chinese exports. Large parts of corporate America, which had long been the main pro-China constituency in American politics throughout the many storms in US-China relations over many decades, lost its enthusiasm for the China market. The American public also concluded as much, figuring that China knew perfectly well what it was doing in preferencing its companies and exporters at the expense of America’. Deception and betrayal are raw emotions. Once felt, they also give rise to a sense of righteous indignation and a resolution to adopt a radically different course of action for the future to avoid being tricked again and to punish the offending party. In this case, the offending party was China.
These are the sentiments that helped give rise to the Trump campaign’s successful political position against China in the 2016 US presidential election as well as Trump’s subsequent prosecution of the US-China trade war, beginning in 2018.
In Graham Allison’s analysis, the peaceful transition in global leadership after World War I between the UK and the US was made possible not just because of Britain’s postwar economic exhaustion. More importantly, it was because London concluded that, while it might have been undesirable to give up its global leadership role, it was not a catastrophe. America, in Britain’s view, was a familiar power, steeped in similar (though not identical) values, with an understandable worldview and national ambitions. America could, thus, be trusted to accommodate British interests and concerns, even if it took the lead. This logic simply does not apply between the United States and Xi Jinping’s China. The gulf between Chinese and American worldviews, communication, and trust is simply too wast to accommodate any such compromise.
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