Many are now seeing the beginning of the end of globalization. With China’s rapid growth since the 1990s, do you expect the country in future to rely less on globalization – understood as world market dynamics?
Patrick Ziltener: All indications are that globalization will continue, but not on a one-to-one basis as during the push towards globalization witnessed over the past 40 years. China clearly states its interest in continuing globalization, but with a much stronger Chinese influence. Chinese rules, standards and methods will become more widespread and the West will no longer be in a position to continue to dictate the rules. We have lost sight of the fact that East Asia continued to globalize while that process was already stagnating in the West: China forged ahead with the Regional Comprehensive Economic Partnership (RCEP) in the Pacific, while Donald Trump buried the Western-dominated Trans-Pacific Partnership (TPP).
In other words, globalization is no longer “global” but fragmented globalization, with spheres of influence, each globalizing at its own pace and intensity.
Indeed, with the Pacific region intensifying and liberalizing – while nothing is happening in the West. The WTO continues in stalemate and China does not see it as the main arena, but is instead focusing on regional integration and, of course, the new Silk Road. Once a “rule taker”, China is now a “rule maker”. But let us not forget that China is already competitive throughout the world market. When the World Bank invites tenders for projects, it is Chinese bidders that succeed 40 per cent of the time.
And yet, for its growth, China has not relied on the prescriptions of the globalizers, as embodied by the “Davos Man” and the Washington Consensus. What were the success factors behind China’s rise?
China has studied everything, including the rise of Japan, South Korea, Taiwan or Singapore, and in so doing has learned that world market integration is possible and able to unleash very powerful dynamics, but that the entire process must be steered. Incentives are provided and spaces opened up, but always step by step and never in the form of a “big bang” triggered through an ideological economic policy; it is done very pragmatically. It began with the special economic zones of Shenzhen and those in Fujian province, and once these experiences were evaluated, laws and regulations were adapted and gradually extended to other sectors. This blend of market forces and control has unleashed incredible momentum, which was prepared and monitored through a state infrastructure policy. The entire undertaking was never guided by the idea of complete liberalization.
And China has not given foreign companies carte blanche either.
There are always red lines somewhere on the horizon, and the leeway available to companies depends entirely on the way they fit into the Chinese agenda: they are either given the red-carpet treatment or asked to leave. This is why entrepreneurs have such contrasting experiences. For a time, it appeared that the influence of state-owned companies was waning and disappearing. This is no longer the case, however, and it is very clear that the state-controlled sector is and will always be a cornerstone. The authoritarian tendencies are also apparent in the economy – party groups must be formed in every company, including foreign ones. Walmart in China therefore has a Communist Party group. Most often they have no direct influence on company operations, but they represent a kind of reinsurance, in that, if something is not going in the right direction, they are a tool through which to effect the adjustments desired by the leadership.
How, then, is the right direction determined? Has anything changed, or is it always simply about growth and economic power?
The supreme and overarching goal is political stability, in other words, “regime survival”. Then comes economic growth, though not just economic growth, but the development of Chinese companies capable of competing in the world market – like Huawei. Policymakers very openly identify the priority areas, whether aviation, agricultural engineering or robotics. At some point there will be world market competition from some rather large Chinese companies, which will teach our ABB and our Novartis, and eventually, also Nestlé, the meaning of fear.
Let us get back to the issues of the moment. The war in Ukraine has confronted the Chinese Government with a dilemma: on the one hand, it would like to see a “Eurasian” alliance with Russia against the USA, on the other, the West is much more important to the Chinese economy.
Do you share this view? If yes, how will the Chinese leadership navigate this situation?
The whole thing is extremely unpleasant for China, as was clear from the first press conference, where are the Foreign Ministry spokeswoman had to do some very careful manoeuvring. On the one hand, China insists on the principle of non-interference and refraining from the use of military means. On the other, and this is true also among the population, the West is considered largely to blame, the argument being that NATO’s eastward expansion and the containment of Russia are the main causes of the war. China therefore does not really approve of Russia’s behaviour, and this, in my view, is welcome news. On principle, China would never resort to such means, it will never, for example, absorb Taiwan into the motherland, in the way Russia has done with Crimea. Instead, it becomes a strategic game, one that already began when Xi Jinping stated that the problem of Taiwan would not be left to future generations.
But how then will that work without military means, if Taiwan does not find it so appealing to become part of China?
I consider one scenario to be the most likely, it is a long-term one and entails isolating and cutting off Taiwan. A first move could be for China to say that it no longer considers supplies to Taiwan and shipping traffic to be secure. What that would do to the Taiwan stock market is abundantly clear. Thanks to methods of this kind, whereby the ground is cut from under the feet of Taiwan, it will at some point fall like a ripe fruit into China’s lap.
You have researched the new Silk Road and China’s influence in Africa. Is there any truth to the often-heard claim that China is just another colonial power?
My definition of colonialism encompasses coercive measures, which are enforced through the use or the threat of violence. This is the renowned gunboat diplomacy, which I do not see China practising. Of course, one may now also use the term neo-colonialism, in other words domination and manipulation by non-military means. To an extent that is the case but, especially in the early phases of the new Silk Road, the Chinese would come and ask: “What do you want?” And if the president of an African country said he wanted a highway leading to his home town or home village, then it was built, with no thought to its economic implications. That has now changed somewhat, as projects are being better identified and executed. It is all a learning organism, in that assessments are made, experiences are shared, new standards are then set, and this on a continuing basis.
But the people often take a different view.
Some initial research findings show that successful projects, e.g., a new railway line in Nigeria, positively influence attitudes to China. But in most of the countries that I have looked at, there is considerable popular distrust of their own government and, in equal measure, of China. The distrust is all the more intense when they do things together in circumstances that are not transparent. It is expressed in sentiments like: “Our corrupt elite is in cahoots with China and plundering all our resources”.
So is it, after all, primarily about commodities, as in the traditional colonial division of labour?
China is keen to have an uninterrupted supply of commodities that are crucial to Chinese industry, including such advanced fields as information and communication technologies. There is, of course, a scramble for commodities in the Congo or Zambia, for example, and China too is present in those places, as one among several players; we are also host to such key players right here in Switzerland. But the research reveals one difference. Chinese companies are keen to have a steady supply of these resources to China, irrespective of the world market price, while Western companies react to the world market price by either ramping up or cutting back production, and hiring and firing staff. With respect to these resources, China also makes “swap deals”, which means offering the possibility to pay for infrastructure projects with commodities. This is not a new practice, others did it long before China, which itself has experienced the same thing: there have been Japanese infrastructure projects in China, paid for with Chinese resources. But China does much more than merely securing commodity deals; it also carries out infrastructure projects such as the construction of dams, sports stadiums, parliament buildings, or the headquarters of the African Union. However, China does not pitch this as development aid, but as “win-win” situations, confident in its belief that it outperforms the West in this regard.
And how does this actually differ from infrastructure projects funded by the West?
There is no environmental impact assessment, no social impact assessment, and there are no conditions attached; this naturally appeals to African politicians. Nor are there any transparency-related or anti-corruption stipulations. The second major benefit for African governments is speed. China is able to build an airport in the space of two, three or four years, and this plays a pivotal role, especially in places where elections need to be won.
Is China therefore weakening democracy in Africa – yet another topos – or even contributing to authoritarianism?
China’s stated intention not to interfere in the internal affairs of other countries is entirely plausible. In principle, the type of government is of no consequence. Whether authoritarian rule, dictatorship or democracy – if there is a suitable project, China will do it. Second, China is not in fact interested in exporting any style of government. China does nevertheless promote the stability of these various regimes through developmental successes, at least in places – but then there is an authoritarian dimension. What I find especially alarming about this is that China also exports methods for stabilizing regimes, in the form of public opinion shaping, and through surveillance technologies. For example, China trains experts in manipulation techniques that she herself employs on social media, for instance. This already embodies the danger of authoritarianism and of reinforcing authoritarian tendencies on the part of governments that came to power by democratic means.
Turning now to one last topos: China is using its investments and projects to drive Africa into debt bondage.
Yes, we have seen that trend. On the one hand, it has to do with China’s still limited experience in debt management, and it is now realizing that over-indebtedness can prove problematic. Still, the research could not to prove that China actively pursues a strategy of indebtedness designed to make countries dependent and no longer able to service their debt, so that it can then dictate terms. There is a handful of countries whose debt to China is so enormous that it has to be said that they are in effect dependent on China. Djibouti is a case in point. Most countries have several financial mainstays, however.
China embraces entirely different notions of economic and political systems. It could be a good thing if China formulates alternatives to the neoliberal prescriptions of the Washington Consensus, but what is the situation regarding the UN system, the values that are dear to us, including human rights, minority rights, political participation by civil society, and the like?
This should set alarm bells ringing for us. In this regard, China has aggressively announced the following: “We will change this system, it will be less Western-inspired and will take on stronger Asian, and more specifically, Chinese characteristics.” What from a Chinese perspective is an overemphasis on individual civil liberties is being downplayed in favour of economic and social rights to development and the right to security; in our view, this is indicative of further elements of authoritarianism. For the first time since the end of the Cold War, a player is openly formulating an aggressive agenda that challenges the dominance of Western institutions and Western values. This must be taken most seriously. What we have seen so far have been symbolic moves: for example, China mobilizes friendly countries against the accusation of a deteriorating human rights situation. China then puts on a show in the UN and says, okay, we have been criticized by 24 Western countries, but there are 50 UN Members that repudiate this, and are of the view that “it is not justified”. Such conflicts will grow in number, and not just at the symbolic level. In many respects, the UN will become less able to act when it comes to measures that have already been taken by the West, including sanctions or interventions in defence of human rights.