Chinese Whispers

All the time, beneath most people’s notice, China was making its furious progress, building clutches of power stations every month and buying up global debt like it was the first day of the Harrods sale

After the unipolarity of the past twenty years — the Soviet Union had slipped away, America strode freely forward, though not without wobbles — the financial crisis reified what we all knew: the eagle was looking slightly balder, its fiscal feathers rapidly falling out. All the time, beneath most people’s notice, China was making its furious progress, building clutches of power stations every month and buying up global debt like it was the first day of the Harrods sale.

Entrepreneurs, wealth managers and governments are certainly not ignorant of what this means for us. Businesses are being snapped up, even — especially — tiny technology firms which can be massively scaled up, and natural resources from fertile countries are always a target. The wise wealth manager has his eye on the East, knowing that Chinese supply and demand can make and undo companies, causing stocks and bonds to bounce and slump. And diplomats all try to win China over, in vain using their skills to advance their national interests, the inequality of the negotiating parties rendering it almost pointless before they begin.

Moreover, as Spear’s found out when writing about China, its might is having a chilling effect across the world. Private banks are afraid to talk about their businesses in China lest they embarrass the Chinese government, which is hardly reserved about taking reprisals (if the Google affair is anything to go by). With the Chinese politburo as technocratic and hyper-observant as it is, anything you say, in print or on the internet, can and will be used against you.

This is the situation that faces us, and it is one we must be justifiably cautious about. Yet if we face the next 50 years in our position of fear, we are likely to miss out on the attendant benefits of dealing with China. We would like to think that Western companies will avoid collaborating with Chinese human rights abuses, but the opportunities opening up and the market of a billion-plus people are tempting. Which manufacturer or businessman would not want to sell into China? In that capitalising society, more people want more things and have more money for them.

Nevertheless, we should not simply accept the rise of China as something we can do nothing about. We may not be able to halt it, but by giving our populations an education fit for the 21st century and encouraging businesses which innovate, we can assert ourselves further. As he notes in
The End of the Free Market, his eye-opening book on state capitalism, Ian Bremmer (read Spear’s interview with him here) says that innovation is what state capitalism prevents, as it leads to challenges to the entrenched order, but is also the thing which leads to great growth. This is not something we have ever shied away from, and it will be our biggest strength.

CHINA SPECIAL
INTO THE DRAGON’S DEN
Is Shanghai the new London? It’s poised to become a centre of finance and luxury — but not everyone is convinced, finds Josh Spero

REMOTE CONTROL
Harry Dean gets meditative as he discovers China has more than just shiny cities in its peaceful and
ancient countryside