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Home >Opinion >Columns >China’s strategic ambitions and America’s exposed Achilles heel

There was exciting breaking news on Friday morning of a conversation that American President Joe Biden had with Chinese President Xi Jinping. Closely following it was a request made by American businesses to their president, asking him to remove trade barriers against China. American business is keen to placate China.

Despite repeated failures, Americans believe that those who become acquainted with their way of life, with their capitalism, will surely want more of it and in perpetuity. Hence, it is a matter of time before all other societies, civilizations and cultures abandon theirs and clamour for all things American, including US-style capitalism, its democracy and culture. Samuel Huntington had asserted in his 1996 book, The Clash of Civilisations, that modernization was not the same as Westernization, or for that matter Americanization. Many other cultures may prefer to modernize without Westernizing themselves. Evidently, neither Washington DC nor New York has read his book.

Nearly a year ago, yours truly wrote in these pages (bit.ly/3BX8Fd0) that the best insurance against China’s success was Beijing. In a similar vein, it can be said that the biggest threat to America’s superpower status are American elites and their interests. None exemplifies this better than Wall Street. Non-financial businesses in America are not too far behind. There are many memorable lines in an essay that Cai Xia wrote and was released by the Hoover Institution (hvr.co/3A5M7q0) to coincide with the centenary celebrations of the Chinese Communist Party. One of them is this: “China must deceive the West by hiding its long-term strategic goals, pretending to be weak and harmless, in order to take advantage of Western markets, technology, capital, and talent, while waiting for the opportunity to strike back and win the ultimate war. This was an ancient strategy that Chinese kings and emperors had used many times in the past." This is what “Hide your strength and bide your time" meant. China appears to think the time has come. It began to act like it from 2008 onwards, and for that, it must thank Wall Street. It remains China’s trump card. Generally, American business, it seems, does not get it (or perhaps care).

Thus, while geopolitically, China seems to have a measure of the US, it has simultaneously embarked on another part of its game plan. That is to move towards ‘common prosperity’. In other words, growing the economic pie is now done. Redistributing the pie is Beijing’s new policy objective.

Along with that, the cultural vestiges of capitalism would also be purged. China tolerated the visible manifestations of American culture as long as it felt that the economic benefits outweighed the costs. With US capitalists and policymakers showing neither the willingness nor stomach to reform their capitalism, China has correctly concluded that it must act before it is too late. Hence its recent restrictions on gaming and entertainment shows.

On Sunday, friends in the neighbourhood were approvingly citing China’s restrictions on teens spending time on gaming to three hours per week. They felt that children in other places would be walking around like zombies in their adult years, given how badly screen time fries their brains, whereas Chinese children would grow up to be healthy and intellectually active adults. Whether or not there is natural parental hyperbole here, Beijing’s recent edicts on private tuitions to be offered as a not-for-profit activity and its restrictions on gaming have touched a chord in India, and may even be welcome. The fact that they are seen as the right thing to do offers us confirmation that, given a long rope, capitalists are seen as ready to hang society first. In the Indian context, readers should recall an article I wrote two weeks ago in this space on packaged food labelling in India (bit.ly/391dfdF).

We can think of the pursuit of ‘common prosperity’ and the purging of uglier elements of capitalism as a ‘third way’. Countries went the communist route and failed. Countries went the capitalist route and are now busy self-destructing with their addiction to free money. But there exists a third route. Use capitalism to create prosperity and then switch to socialism to share the spoils. China’s is thus a great experiment whose outcome can show the path (or not) to the rest of the world.

So, is the timing right? China thinks so, but there are reasons to doubt it. There is a debt overhang. China could not entirely avoid the temptation of debt to drive economic growth post-2005. Growth will be needed to service and repay debt. Of course, China can renege officially on debt repayments, but we don’t know how that would play out for household finances, even if resistance is ruled out or suppressed. Second, will its war on cultural degradation not rob Chinese entrepreneurs of creativity and imagination? Third, given these two risks to the strategy that China is pursuing, are its answers to growth to be found in making the South China Sea its own sea? In forcefully re-integrating Taiwan with the mainland and in the expansion of its Belt and Road Initiative?

Interesting times lie ahead, but also troubling times, given the emasculation of the American will.

V. Anantha Nageswaran is a member of the Economic Advisory Council to the Prime Minister. These are the author’s personal views.

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