As a long-time observer of and participant in the American debate about China, I can see that a new front is opening, as per articles over the weekend in the New York Times. Intelligent people are asking: What do China’s current hiccups mean for U.S. policy toward Beijing?
The first article by my old pal Peter Goodman is entitled, “Slowdown in China Puts World on Notice.” It covers the slowdown in foreign investment, China’s real estate bubble, youth unemployment and all the other business and economic threads. Goodman speculates that there could be an “unruly exodus of money” from China. “That outcome most unnerves government officials, given that it could bring joblessness, business insolvencies and social strife.” He adds: “The loss of faith of large numbers of people could bring turbulence.”
A second view comes from Paul Krugman in the form of an essay, “Why Is China’s Economy Stumbling?” He cites Adam Posen, president of the Peterson Institute for International Economics, who wrote recently that this is “the end of China’s economic miracle.” Krugman adds his own dark warning: “You don’t have to study much history to be aware that autocratic regimes sometimes respond to domestic difficulties by trying to distract the population with foreign adventures.” President Biden has hinted at the same outcome–some sort of Chinese military action.
All this is over the top and ignores the authoritarian grip that Xi Jinping has over his people and what they know. His high-tech surveillance state means that any form of dissent or protest can be met with decisive counter-attack. There were some protests against Xi’s COVID lockdowns and the party-state did respond, but never was there any hint that the protests could spiral out of control. The authorities were able to trace who took part by analyzing the cell phones of participants, which revealed their physical whereabouts. And the government can largely control the movement of capital.
Similarly, proclaiming the end of China’s economic miracle and suggesting that maybe it will spark military aggression ignores the huge power at Xi’s fingertips. The country has foreign exchange reserves of about $3 trillion and it may have another $3 trillion hidden in state-owned banks and enterprises. For at least another five to 10 years, Xi has all the wealth he needs to fund his military buildup, the global expansion of Chinese influence, and continued repression at home.
The real problem with this debate over China’s economy is that it detracts from what the real debate should be, which is: How can America and the world respond to China’s clear projection of power inside the world’s democracies? Recent headlines tell the story: Chinese actors penetrated the email systems of the State and Commerce Departments, as well as the U.S. military. The spy balloon flew over sensitive U.S. military installations and may have been able to detect the frequencies the military uses to communicate. That could be helpful to China in detecting patterns of communication and perhaps jamming them. The Chinese also have explored how to disrupt the U.S. Navy’s communications in Guam, which would be a crucial step in disrupting any naval action in the Pacific. Elsewhere, we’ve learned that the Chinese have placed malware in critical U.S. infrastructure that our nation’s government CAN’T FIND. China’s spies have penetrated the U.S. military, as per the FBI’s arrests of two young Chinese-Americans serving in the U.S. Navy in California.
The list goes on and on, as co-author Michael McLaughlin and I document in Battlefield Cyber: How China and Russia Are Undermining Our Democracy and National Security,” which is being published tomorrow by Prometheus. To see our explanation of how the United States landed in this mess and what it must do to respond, buy the book on Amazon or BarnesandNoble.com. And let’s focus the debate on the really important issues.
