China, the BRI & TikTok Teens: An Interview

Daniel Wagner, who has written 3 books about China over the past two years, has a new book out devoted to the topic, called The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.

How would China define the Belt and Road Initiative as a success?

Publicly, Beijing already sees the BRI as a success, based on its own unique metrics. It sees the BRI as an excellent platform for projecting its soft (and hard) power, having successfully spread its influence around the world, reinforcing existing relationships, creating new bilateral relationships, and promoting the development process at the same time. Privately, Beijing knows very well that the backlash it has received as a result of the BRI from many recipient countries is the direct result of the hubris with which it unleashed the BRI upon the world.

What is the worst-case BRI scenario for China?

That the backlash continues and gets worse. So many countries have been reconciled to highly indebted poor country status as a result of the terms and amount of Chinese lending under the BRI, so many governments have regretted signing agreements that give Beijing all the cards, and so many people (and the environment) have suffered as a result of the BRI that “the vortex” of negative impacts is only likely to increase with time. The “pivot” Xi spoke of in 2018 has been lackluster and well below the expectations that arose among BRI nations as a result of the promises he made to them.

China owns ports in Kenya and Djibouti. In the latter, China (as well as several other countries) operate naval ships. Will the BRI, with the crippling debt that it brings to many African nations, usher in a resurgence of neo-colonialism in Africa (if it hasn’t done so already)?

Port ownership is a central tenet of the BRI rollout. Beijing has purchased significant ownership in ports, or outright ownership, in ports throughout the world – even in Europe – as part of a well-crafted strategy to expand its maritime reach. Beijing has already been accused of practicing neo-colonialism in Africa. African leaders, governments, and the people of Africa have rebelled against the negative impacts of the BRI, which include, as you mention, the extreme levels of indebtedness, environmental degradation, and a loss of sovereignty.

Why didn’t Obama and the EU try to counter the BRI with a Western equivalent?

The U.S. and the EU came to the party too late. To Beijing’s credit, it rolled out the BRI with great speed and precision. As usual, the West was asleep at the wheel while this was going on. Sort of like, the West was figuring out which running shoes to put on while Beijing was sprinting around the world at high speed. America has initiated several programs since the BRI was launched in 2013, the most notable of which is the U.S. International Development Finance Corporation. Even that $60 billion initiative falls well short of the $1 trillion Beijing will ultimately spend on the BRI. The U.S. and the West need to do much more.

Will the U.S.-China trade war escalate to a cold war or fizzle out?

Neither. The foundation of U.S. policy toward China that has been laid out with the trade war as its centerpiece is here to stay, regardless of who gets into the White House in January. There is broad bipartisan agreement about the need to maintain a firm stance against a plethora of Chinese actions in America and around the world. That said, no one wants military conflict, on either side. My hope is that they will find a way to get along and practice “coopetition” – clashing where they must and cooperating where they can, though that is becoming less and less frequent.

Why aren’t the U.S. and its Western allies developing a plan to compel companies to move all of their Chinese manufacturing outposts to competing hubs like India, Taiwan, and Vietnam?

Frankly, I wish they would, and I don’t understand why so many American (and other foreign) companies are still choosing to remain in China. It long ago ceased to be competitive on a labor or operating condition basis. Many companies continue to believe that a pot of gold is at the other end of the rainbow in China, but many of them will take a decade or more to discover that they may never become profitable, or as profitable as they believe they should be, by continuing to stay there. Yes, China’s 1.4 billion population has huge “potential” appeal, however, the draconian operating environment, ill will toward U.S. companies on the part of the government and much of the Chinese population, and a judicial system stacked against foreign companies are all reason to consider relocating to somewhere less expensive, friendlier, and with better long-term potential for profitability and a favorable operating environment.

Will India be able to eventually stick up to China’s String-of-Pearl strategy and general economic dominance or is it too far behind to ever catch up?

If New Delhi were to devote the kind of resources Beijing is devoting to its navy, it could certainly give Beijing a better potential counter-punch to the String of Pearls strategy it has been deploying for years, which, in essence, entails “surrounding” India with ports in countries friendly to Beijing, while simultaneously building up its navy. However, China already has the world’s largest navy; India is nowhere near that number in terms of ships and naval resources. The most that New Delhi can do in the short-to-medium-term is to build up its own navy and enhance its relationships with friendly countries in Asia.

The 1999 Chinese military book Unrestricted Warfare advocated among other things flooding enemy countries with drugs. Is China flooding the U.S. with fentanyl intentionally, like a modern-day Opium War?

Unrestricted Warfare means there is no restriction to what Beijing will do to spread its influence and cause damage to its enemies. Flooding enemy countries with drugs like fentanyl is part of that objective, but we should remember that in order for that strategy to work, there must be sufficient demand for the drug, and drug enforcement measures must be insufficient to stop it. The U.S. and other Western countries are partly to blame for the problem, of course, but this also speaks to the degree of dependency on China the rest of the world has allowed by virtue of all the drugs that are manufactured (and tainted) in China. Both sides are to blame.

What are your thoughts on the ongoing war on TikTok raging in America and India?

The TikTok issue is multifaceted. It is not simply a matter of Chinese ownership of the platform, but also the data that the Chinese government gains access to. Under the National Security Law of 2015, any Chinese company must hand over its data to the Chinese government upon request. The videos posted on TikTok might seem, on their face, to be perfectly harmless, but it forms part of a mosaic of digital and other information that the Chinese government gathers on people all over the world. When combined with all the cyber hacking the government does, it helps Beijing to learn more about millions of people who use the platform. That, to me, is the real issue here.

Can you rate the alleged threat posed by Huawei’s 5G network rollout? Are Nokia and Ericsson strong enough to serve as a counterweight?

Here again, the West has itself to blame for making itself so dependent on Huawei. Yes, Nokia and Ericsson are good examples of Western alternatives, but the truth is, the West in general, and the U.S. specifically, should have been out front on 5G many years ago. I firmly believe, however, that Huawei hands over its data to the Chinese government just like the owners of TikTok do, so for me, there is no question that banning Huawei from sensitive aspects of national telecommunication systems is absolutely necessary. I don’t understand why any Western government would allow Huawei to have access to any of its sensitive systems. The U.S. government is certainly right to push other governments to restrict Huawei’s access to their national systems.

How will China’s DCEP cryptocurrency shape the future of global finance?

The DCEP is another good example of how Beijing is ahead of the curve and futuristic in its orientation to technology. America and the West could learn a lot from Beijing on this. China will be the first country to roll out a national digital currency – and deploy it abroad. Beijing intends to use the DCEP to bolster the yuan in the process, but plans also to encourage the host countries of the BRI to adopt the DCEP for future trade and investment transactions. The implications are potentially profound. The rest of the world will be playing catch up (as usual) and Beijing will enjoy a huge lead on this barrier-breaking technology. In the process, of course, it will also be able to collect information on all the users of the DCEP, which only Beijing controls. That is entirely consistent with the manner in which Beijing operates on a whole host of issues.