Is China’s Imperialist Threat to the West Growing or Weakening?

NOTE: This post was updated on April 16, 2020.

The explosion of the COVID-19 coronavirus on the international scene emphasizes yet again that China has no intention of merely coexisting with the family of nations. Harboring imperialist ambitions, it is no friend of the West. Indeed, all nations should be wary of China’s intentions. What is the nature of China’s imperialist threat? Is it growing or weakening?

What the COVID-19 Pandemic Tells Us

The origins of the COVID-19 pandemic and the way it grew tell us a lot about the Chinese imperialist threat to the world.. The epidemic began in Wuhan, China sometime in December of 2019. Exactly how it started is very uncertain, and a great deal of speculation has been made about it. One highly probable possibility is that a natural transmission occurred from a bat to a human. Another possibility is that it was spread by people who ate contaminated food in an unsanitary seafood market. Suspicion has also been cast on a Wuhan biological laboratory, the Wuhan National Bio-safety Laboratory, that might have bioengineered or cultivated a natural virus. The conjecture that it had been bioengineered as a biological weapon has been debunked by recent lab studies. 

Nevertheless, that still leaves the possibility that the Wuhan lab cultivated a natural virus that then somehow was released. In fact, there is a growing amount of evidence that this is exactly what happened. The CCP then covered up the accidental release of the virus from the lab.

However the Wuhan virus was released upon the world, officials of the Chinese Communist Party (CCP) have consistently downplayed its potential danger. First, they attempted to suppress the news about it, even domestically. When the existence of the Chinese epidemic could no longer be denied, the CCP then claimed the virus could not be easily spread from human to human. In spreading this propaganda, they were aided by the World Health Organization (WHO). The head of WHO, Tedros Adhanom Ghebreyesus, repeatedly praised the Chinese handling of the epidemic.

This Chinese propaganda, supported by WHO, had the effect of lulling Western governments about how serious the threat was. Not appreciating how virulently the virus would spread, Western governments (among others) failed initially to take measures to restrict travel to and from China, or to isolate those who were infected. The resulting viral spread then brought the rest of the world to its knees.

What does this history tell us about the CCP’s attitude to the world outside China? First, they care little about how their actions might harm other nations, so long as their own goals are served. Second, they care much more about their own reputation and standing in the world than in the health problems they are exporting to other nations.

Yet a third lesson arises from China’s irritation at being named as the source of the coronavirus pandemic. Moving into damage-control mode, China’s Ministry of Foreign Affairs made a brazen accusation in March. They claimed a U.S. Army athletic team that attended the Military World Games in Wuhan last October intentionally introduced the virus. There is absolutely no evidence, other than the team’s attendance, that the charge is true. Yet, blaming the United States for the origin of the disease, Chinese officials hinted they might deny the export of life-saving pharmaceutical supplies to the U.S. As with other supply chains originating in China, the U.S. has become dangerously dependent on China for such supplies. China supplies between 80 percent and 90 percent of U.S. antibiotics. In addition, it provides 95 percent of our ibuprofen, 91 percent of hydrocortisone, 70 percent of acetaminophen, 40 to 45 percent of our penicillin, and 40 percent of our heparin. China’s stranglehold on such goods would greatly strengthen the threat China poses for the West. Does the U.S., or any other country dare to subject themselves to such blackmail?

China’s Imperial Ambitions

It is not as if we needed the coronavirus pandemic to tell us China has designs on the rest of the world. The pandemic is just one additional and very traumatic reminder of that fact. China’s mercantilist policies, their de facto alliance with Russia and Iran, their attempted domination of both the South China and East China Seas, and their enormous military buildups all tell us of China’s imperial ambitions.

China’s mercantilist policies are designed to bring as many of the world’s economies under their control as possible. To the extent they are successful, they strengthen China’s threat to the rest of the world. In the past, China has pursued this goal by making other countries dependent on supply chains originating in China. This was made possible by a vast supply of cheap labor. In addition, China required foreign companies that set up shop in China to become partners with and invest in Chinese companies. In forming partnerships with those Chinese companies, American companies were forced to surrender intellectual property to them.

Now that Chinese wages are rising, as well as transportation costs to export goods out of China, this way of making other countries dependent on China will become less effective with time. To replace it, China has begun a program to become technologically dominant over the rest of the world. Chinese leaders call this their “Made in China 2025 Program.”  This program is a blueprint for reshaping China into a technological powerhouse that is internationally dominant in specific advanced products. These products include advanced information technology, robotics, clean energy vehicles, and communication technology (particularly 5G internet communications). China’s aim is not just to become competitive with Western nations, but to replace them altogether in high tech industries.

Another example of Chinese commercial imperialism is their Belt and Road Initiative (BRI), as illustrated by the theme image at the top of this post. The BRI is a plan to construct a 21st-century replacement for the ancient “Silk Road.”  This new silk road will consist of a “belt” of overland routes, together with maritime “roads” of shipping lanes. To construct the land routes,  China will invest in a vast network of highways, railways, and energy pipelines. The routes would extend westward through the former Soviet republics of Kazakhstan, Kyrgyzstan, and Tajikistan to connect to the Middle East, and ultimately to Europe. They would extend southward to Pakistan, India, and Southeast Asia. The maritime “roads” part of the plan calls for Chinese investments in ports along the Indian Ocean. The plan is to extend Chinese maritime traffic from Southeast Asia to Africa and ultimately to Europe.

Most of the cost to build the BRI will not be borne by China directly. Instead, China is offering low-cost loans to hosting countries to do the actual work. These loans are offered by China’s two policy lender banks: the China Development Bank (CDB) and the Export-Import Bank of China (EXIM). Since the financed projects often have more of a political justification than an economic one, these loans are frequently of questionable value and provide extraordinary risk. After all, how much can Tajikistan and similar third world countries produce that is worth hundreds of billions of dollars in loans? China is offering these loans for economically unsound projects that give China access to local markets and resources. The countries accepting the loans are then at the financial mercy of China.

An example of this is what happened to Sri Lanka, which accepted Chinese loans to develop the port of Hambantoto. By the end of 2016, the net revenues of the port ($1.81 million) were far less than the $361 million  (85 percent of which was provided by China’s EXIM) invested in port improvements. At the end of 2017, a financially desperate Sri Lanka handed the port over to a Chinese state-run company in a 99-year lease. This kind of outcome looks to become very common, so much so that China’s BRI lending has acquired the name of China’s “debt-trap diplomacy.” China does not need to conquer countries militarily to acquire an empire.

 Will China’s Economy Continue to Grow Robustly?

China has the will to acquire an empire, but does it have the means?  China’s economy must grow robustly to support the material needs of a growing imperium.

Ever since Deng Xiaoping started moving China in a capitalist direction, Western nations had great hopes it would join the community of nations as a status quo state. The West, in general, expected China to evolve toward a more democratic and free-market state.

Instead, China has remained a revisionist power with profoundly undemocratic institutions. Not only have they not evolved toward democracy, but they are reverting back to socialism. Under Deng, state-owned companies were privatized, and even stock markets to sell stock in those companies were permitted. Privately-owned companies are still allowed, but they are increasingly being brought under the control of the state through regulation and the influence of state-owned investment banks. Nevertheless, private ownership of companies is becoming to an increasing extent a polite fiction. This is a form of socialism that historically has been called fascism. China’s reversion to fascist socialism under Xi Jinping perfectly mirrors Russia’s assumption of fascism under Vladimir Putin.

The tremendous growth in China’s GDP after Deng’s reforms was created precisely because economic power was taken away from the state and given to private companies. Those private companies were much more capable of allocating capital than the CCP ever was. Now that the central government is taking back economic control, we can expect economic growth to stagnate again, just as it always does under socialism.  A weakening Chinese economy would then weaken China’s threat to the rest of the world. See the posts  Historical Lessons on Economics and Politics, More Historical Lessons From Europe, and  Lessons from the Developing World for some historical evidence about this.

A somewhat different way to say the same thing is found in my essay Achilles Heel of Autocrats: Their Economy. In that post, I likened the growth of threats from nations like Russia, China, and Iran to physical instabilities. A physical system is said to be unstable if some physical quantity, for example, the amplitude of a wave, grows exponentially in time. Eventually, any physical instability always saturates, i.e. ceases to grow, because it runs out of some conserved quantity such as mass or energy that is feeding it. As soon as the instability runs out of fuel, it stops altogether.

So what is the fuel that feeds the instability of China’s threats to the world? There are at least two kinds of fuel required that feed this instability. Without either of these sources of nourishment, China’s various threats to the rest of the world would collapse.

One of those fuels is the wealth provided by robust economic growth. Without that wealth, China would not be able to sustain their military buildup, nor finance their belt and road initiative and their “Made in China 2025” program. Yet, by returning to a socialist economy, they are beginning to destroy their capability to grow rapidly. Economies can grow over the long term only if they are decentralized as much as possible. Just ask the old Soviet Union or present-day Venezuela what socialism does to economic growth.

The reasons why a decentralized, free-market economy is required for long-term growth originate from a very basic fact. The most important truth about all large social systems of interacting human beings is that they are chaotic systems. This is most especially true of economies. What this means is that a small perturbation in the system can grow (or decay) in surprising ways. The paths the perturbation might travel through society can be totally unexpected. I have explored why large social systems are chaotic and the implications of that fact in the following posts.

• How Is the Weather Like a Country’s Economy?
• Chaotic Economies and Adam Smith’s Invisible Hand
• The Rahn Curve: What Makes Economies Grow
• Continuing European Economic Stagnation

Ignoring this most important fact about economies will inevitably cause the Chinese economy to stagnate and decay.

Another required fuel is the acquiescence and support of the Chinese people. This, in turn, is conditional on a robustly growing economy. The social contract between the CCP and the Chinese people is that the people allow the CCP to have dictatorial powers. In return, the CCP ensures a robustly growing economy to increase the incomes of the common people. When the Chinese economy begins to decay with the reversion to socialism, the CCP will have violated their part of the social contract. The social unrest that follows could well overthrow the CCP and its imperialist aims. Even if the CCP manages to hang on to power, they will be faced with an uncooperative population that will weigh them down in other ways. Faced with a need to police their own people, the CCP will find their attention and assets drawn away from imperialist goals.

It seems almost certain that both requirements for continued imperial expansion — a robustly growing economy and an acquiescent population — will be denied to the CCP. Such a development should decisively weaken China’s imperialist threat.

What Should the Rest of the World Do about China?

Nevertheless, in the short-term, the rest of the world faces a great quandary in handling China’s threat. The CCP has not changed its goals, and will not do so except under great duress. The Chinese government can be expected to blackmail Western countries to bend them to its will. China can do this by exploiting the dependence other countries have on the origins of their supply chains being in China. 

The good news is that the West now fully realizes this danger. Western governments can be expected to encourage companies to move the beginnings of their supply chains outside of China. Indeed, many Western corporations are already desperately trying to find new homes for their supply chain origins. Yet, to insulate the West from Chinese economic blackmail will still take some time

The coronavirus pandemic provides yet another motivation for corporations to move out of China. The pandemic inside China has interrupted corporate operations with wholesale lockdowns across the entire country. If China’s health system cannot be depended upon to attack such an epidemic from the beginning without the system being suppressed by CCP officials, then the economic thing for companies to do would be to get out of China.

Additionally, the West would be well advised to do something to limit China’s influence on such international organizations as the World Health Organization (WHO) and the World Trade Organization (WTO). China used the WHO to lull Western governments into complacency about the COVID-19 virus. By the time those governments woke up, they faced an exponentially growing epidemic. Similarly, China, having labeled itself a developing economy to the WTO, has been allowed to use WTO agreements to receive “special and differential treatment” from other countries. Examples of this special treatment include limiting access to their markets, and delayed implementation of WTO agreements and commitments. China has used all of these privileges to wrest manufacturing away from the West and to institute discriminating tariffs on imports from the West. Perhaps a stricter standard for granting developing nation status should be adopted. Another possibility would be to kick China out of the WTO altogether.

The countries of the West will have to band together and cooperate to weaken China’s threats to the liberal international order. Otherwise, they might discover they are part of China’s new empire.

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