Beijing Rules: How China Weaponized Its Economy to Confront the World. By Bethany Allen. New York: Harper, 2023. 336 pp.
For far too long, the story of America’s approach toward the People’s Republic of China (PRC) was based on what I like to call “hopium”—the belief that bringing Beijing into global markets and institutions would expose them to liberal-democratic values, thereby paving the way to the country’s democratization. It was a convenient story, especially for the probusiness lobby that eyed the PRC as a place with cheap labor, scant environmental regulations, and no unions. Of course, the net sum from this strategy was something very different. Instead, it created a near peer competitor to the United States, delinked trade from human rights, and inadvertently created a serious challenge (and sometimes spoiler) to the institutions of global governance.
The West’s addiction to “hopium” had another cost: It bought Beijing time. Axios journalist Bethany Allen’s new book, Beijing Rules: How China Weaponized Its Economy to Confront the World, examines how Beijing has used economic coercion, the promise of its vast market, and strategic positioning inside key international institutions such as the World Health Organization and the United Nations to leverage its position as “it faced a short window of strategic opportunity to pull ahead of a distracted West” (p. xvii).
According to Allen, trends have now emerged that suggest that “the era of morality-free trade in the international sphere and the blind veneration of corporate profits in the domestic sphere may not continue indefinitely.” In particular, the economic and political shock of the covid-19 pandemic led to the West’s realization of the danger of being overly dependent on PRC supply chains. Similar to the OPEC oil embargo of 1973, the Chinese Communist Party’s decision to weaponize masks was a wakeup call for world leaders to stop relying on Beijing and start diversifying supply chains.
“The global rush for PPE [personal protective equipment] was perhaps the first time the full impact of highly motivated Chinese diaspora communities could be felt in such a tangible way,” as people in cities around the world “could not find masks in their local pharmacies” after Chinese diaspora communities bought them up to send back to the PRC, Allen explains. “In January and early February , it was difficult for anyone to foresee that the entire world would soon be starving for PPE and that the individual efforts of people in overseas Chinese communities, when spurred by the top-down guidance of globe-spanning party organizations, would result in $1.2 billion worth of PPE sent back to China within a period of less than two months,” writes Allen (p. 23).
Allen describes the CCP’s use of China’s diaspora communities as a “dual-function strategy.” She writes:
Party leaders choose to use—abuse, in fact—legitimate organizations for their own political purposes. Dual-function goes hand in hand with United Front Work, both inside China and beyond its borders, and stems from the party’s fundamental belief that its power belongs everywhere. The strategy has obvious ill effects. It casts suspicion on community organization and fans fear of a ‘fifth column,’ the idea that a significant number of members of a society are secret sleeper agents loyal to a foreign power (p. 44).
Revelations about Chinese nationals spying for the Party have become more frequent, including in a recent Wall Street Journal story on use of Chinese nationals to spy on U.S. military installations. Intelligence-gathering clearly is more important to Beijing than concerns over possibly planting seeds of distrust in diaspora communities. Perhaps stirring this dangerous “fifth-column” pot serves Beijing’s interests over the longer term as it strengthens the CCP narrative that there is dangerous prejudice toward Chinese nationals in the United States. But Allen is correct when she argues, “If Beijing truly cared about the well-being of overseas Chinese communities, it would scrap its dual-function strategy once and for all” (p. 67).
Allen’s chapter on Beijing’s infiltration of Zoom’s video-conferencing services may give readers pause, as it did me. Public events addressing topics sensitive for the Party often experienced a bad connection or an interruption of the broadcast, and Allen’s reporting suggests that Beijing can reach into a U.S. company and censor online events anywhere in the world. I twice experienced this personally—during an event held by members of the European Parliament on the PRC at which I was an invited speaker and at another event held on Taiwan. Although I had only a gut unease that these interruptions might stem from direct interference, Allen details how the CCP scuppered an online event organized by Wang Dan, a U.S. citizen and former student activist in the prodemocracy movement who in 2020 tried to hold an online event commemorating the Tiananmen Square massacre.
Allen notes that many companies have decided to practice preemptive obedience to smooth business relations with the PRC. Of course, obsequiousness from parts of the business community toward Beijing is not a new phenomenon. But the Chinese government’s recent raft of sometimes contradictory regulations, including anti-espionage regulations, make doing business in the PRC even more difficult since even an employee’s message on social media or the pursuit of basic due-diligence reporting could be interpreted as espionage under the new rules.
Beijing’s rise as a tech superpower, greater influence at the United Nations, and support of Russia make it harder for countries to act blissfully unaware of China’s desire for a larger role in shaping global norms and crafting a global order that helps to preserve one-party authoritarian rule.
In December 2017, Australian prime minister Malcolm Turnbull spoke plainly about the PRC’s increasingly corrosive engagement. He detailed what he called the CCP’s “three Cs”: covert, coercive, and corrupting activities. Eight months later, in August 2018, Australia banned Chinese companies Huawei and ZTE from providing 5G technology on national security grounds. Meanwhile, in parts of Europe, including Germany, this Chinese-made tech is still part of the communications infrastructure. Sometimes, the EU muddles through in Mr. Magoo fashion, funding Huawei research, thereby using European taxpayers’ money to create systems that may censor and control European citizens’ ability to express themselves and make society less resilient and transparent.
Beijing has also devised new tools to weaponize its economic clout. Its Anti-Foreign Sanctions Law (AFSL) introduces legal provisions to resist foreign sanctions, for instance, prohibiting individuals and entities from helping to implement such sanctions. This creates a catch-22 for foreign companies operating in the PRC, as it makes it sometimes impossible for them to both comply with U.S. sanctions and follow PRC laws. Many choose the option of silence. “The AFSL’s mere existence effectively makes acquiescence to Chinese demands on human rights issues a formal condition of access to the Chinese economy,” Allen notes (p. 189).
In early August, one of Germany’s biggest venture-capital funds announced plans to invest $700 million in Chinese start-ups. Clearly, preemptive obedience toward Beijing by many European companies and leaders is not falling by the wayside. Nevertheless, the author appears optimistically to have put Europe in the column of “like-minded democracies”—those countries that are standing alongside the United States in defense of the liberal international order. But as one visiting Japanese analyst in Brussels recently told me, no one in Tokyo—and probably many other capitals—is entirely sure what “like-minded” means. The fragmentation of European policy on the PRC risks repeating the “hopium approach.” There is a serious danger that this loosely defined collection of “like-minded” states will not follow U.S. policy toward the PRC or view it through the same security lens.
Allen points out what many people have stated before: that “major global issues such as climate change” cannot be solved without cooperation from the PRC. But she fails to address what appears to already be happening—the bifurcation of the global system with the PRC, Russia, North Korea, and Iran (along with attempts to expand BRICS and the Shanghai Cooperation Organization) on one side of the ledger, and the United States and its “like-minded partners” (whatever that really means) on the other.
Xi Jinping clearly has a higher tolerance for risk than did his immediate predecessors. He has chosen to maintain a more confrontational approach with the West, even as he struggles with a stalling domestic economy, high youth unemployment, and the reputational risk of being handcuffed to Vladimir Putin’s failures.
Beijing’s new rules have made the PRC, as U.S. Secretary of Commerce Gina Raimondo put it after her recent meetings there, “almost uninvestable.” Even longtime supporters of Beijing, such as former investment banker Stephen Roach, have adopted a more skeptical approach to the meddling kingdom.
Allen focuses her analysis largely on the United States and seems to take for granted that Western partners will follow the U.S. lead on China. Yet the CCP’s capture of European elites should be cause for concern. While the anti-coercion rules and mechanisms for screening foreign direct investment that the EU has adopted may look good on paper, they may have very little impact. For example, German chancellor Olaf Scholz recently approved the sale of an almost 25 percent stake in Germany’s largest port in Hamburg to a Chinese buyer over the objections of NATO, the EU, and six of his ministries.
Allen’s book concludes with an entire chapter of suggestions on ways to shore up democracy and withstand Beijing’s external meddling and economic coercion around the world. There is no doubt that guidance on this score is needed. However, some of the advice in Beijing Rules seems unworkable, as it would require financial resources that the United States is unlikely to be able to muster because of competing demands on the budget, including defense spending for Ukraine, a green economic transition, and servicing the U.S. debt. Still, Allen offers an informative and extensive account of how the CCP is using a growing body of confrontational tools to spread its influence. That alone should puncture rosy hopes about Beijing’s intentions.
Copyright © 2023 National Endowment for Democracy and Johns Hopkins University Press