The Chinese whispers
Never in its entire history has China been as strong as it is today
A few days before Donald J Trump was sworn in as the new president of the United States of America, Chinese president Xi Jinping used the annual Davos meeting to portray himself and his country as the anchors of stability and reasonability in an increasingly volatile world. While throughout his campaign and even after assuming office Trump has shown a worrying lack of distinction between fact and fiction, Xi is seen as the voice of responsibility. This view is not only shared by those who slavishly follow Chinese propaganda but by a large, world-wide community of decision makers.

There can be no doubt that during the forthcoming four years the relations between the United States and the People’s Republic of China will be the crucial equation in the world economy as well as in geopolitics. Trump has made it clear that he knows no taboos when dealing with the Chinese. This refers not only to trade issues but also to the very delicate question of the approach to Taiwan. For Beijing the principle of one China is sacrosanct. Washington must know that in extremis the Chinese will not shirk back from using military force to punish Taiwan, which in their view is a “rebellious province”.
It is no secret that since some time the wind has turned against globalisation. In a number of countries forces that favour nationalism and protectionism are on the upswing. Brexit, the victory of Trump and the growing strength of rightwing populists forces in France, Germany and Italy are seen as clear indicators that the world is on the brink of a new era, which might be as radical a break with the past as had been the case with the end of the Cold War and the collapse of the Soviet Union. There is a justified worry that with this emotional wave of anti-globalism a lot of positive institutions and policies that during the past four decades have brought peace and prosperity to a large part of the world will be thrown overboard.
It is obvious that in such a situation the business world is looking for political leaders that can turn the tide. President Xi Jinping who is also Secretary General of the Communist Party of China and Chairman of the influential Central Military Commission is using this opportunity to present his country as a decisive force of good in the world. While under the great reformer Deng Xiaoping China had kept a low profile, in recent times the country has reasserted itself as a world power, in fact as the only power that can match the United States. Not only in China but around the world the opinion is gaining ground that while the US is a power in decline, which is increasingly curtailing its global influence, the future belongs to China.
Nobody can doubt that during the past four decades China’s economy has made spectacular progress. Never in its entire history has China been as strong as it is today. And in all likelihood it is going to become even stronger in the foreseeable future. But will Beijing really be able to replace Washington on the world scene and, more importantly, will it advocate the policies of free trade and market economy that have been at the core of the economic progress the world has witnessed since World War II?

First of all, even if Xi rightly claims a prime seat for China on the world stage, we should not forget that for the large majority if its population the People’s Republic is still a developing country. America may need a huge dose of refurbishment, but in China’s case the socio-economic challenges are of truly gigantic nature. While Trump may doubt climate change, large and populated parts of China are facing ecological crises of existential significance. Equally, future economic reforms may call for a more open and transparent financial system, but in reality China’s public sector banks and governmental financial institutions sit on dubious credits of monumental dimensions.

In Davos Xi Jinping was lecturing sensibly on the need for global trade and openness. However, we should not forget that the China he leads steers a mercantilist course. Foreign companies that produce in China face discrimination and government subsidies as well as licensing policies are used to favor domestic players. The way China operates in many parts of the developing world, particularly in Africa, has nothing to do with open markets and fair competition. This is also reflected in the credit policy of the newly established Asian Infrastructure Investment Bank, which is controlled by China.
Finally, during the past three decades it served China well that the industrialised world had opened its markets. Therefore, while appreciating the huge progress China has made from the days, when under the leadership of Mao Zedong it promoted “world revolution,” one should not forget that the Middle Kingdom still has a long way to go to replace the United States as the leader of those forces in the world that are determined not to be swept aside by the current tide of protectionism and nationalism.
Urs Schoettli