Chinese President Xi Jinping has been talking tough and flexing military muscle on the international stage in recent months but now he appears to be worried over the adverse fallout of his belligerent foreign policy on the economic front.
The US ban on hi-tech components such as processor chips to leading companies like Huawei has had a crippling effect on the Chinese economy. Several multinational companies (MNCs) are also chalking out plans to pull out investments from China which would slow down both growth and access to the latest technology for the communist country.
Addressing the International Import Expo in Shanghai this week, Xi said: “China wanted to make its market the world’s market as it moved towards a new dual circulation’ economic model. It will reduce the country’s import restrictions, treat all companies registered in China equally and sign more trade agreements with other countries.”
A Reuters report from Shanghai quoted him as saying that the world needed to work together, stand against unilateralism and not “throw punches” at each other as the global economy faced many challenges, especially with the pandemic.
This concern also came to the fore at the four-day meeting in Beijing of the Central Committee of the Chinese Communist Party headed by Xi himself, which concluded in the last week of October.
China will promote “technological self-reliance” under the latest five-year development plan but will open further to trade, Han Wenxiu, a key adviser to Xi, said at a news conference after the meeting.
“China will provide countries around the world with larger markets and more opportunities,” an AP report from Beijing had quoted Han as saying.
According to Chinese media reports, Han also said: “As the two largest economies in the world, the economic ties between China and the US are determined by the complementary of their economic structures and the openness of the global economy. A complete decoupling between the two countries is unrealistic and will not benefit either nation or the world. China will promote high-level opening-up to provide more opportunities for the rest of the world.”
The comments reflect the serious concern in China’s top leadership as other countries are following the US in taking steps to disengage with the Chinese economy. An isolated China wants to attract more foreign investment in high-end manufacturing and is desperate to prevent the exodus of multinational companies.
China has developed good technology and industrial base of its own through unscrupulous industrial espionage and reverse engineering in brazen violation of international laws on intellectual property rights. However, the country still lags in crucial areas such as processor chips. The democratic world is hitting back by cutting off this supply chain.
Xi’s “internal circulation” strategy discussed at the central committee meeting aims to depend mainly on the domestic market for the country’s development, but at the same time it says this will be supported by “external circulation”.
He wants to leave the door open for much-needed foreign investment and overseas markets to fuel China’s economic growth.
However, analysts opine this is not likely to happen as matters have gone too far and China stands alienated in the world. With the US decoupling from the Chinese economy, other countries have also stepped up their plans to scale down economic engagement with the dragon. Japan, for instance, has started offering subsidies to its companies to shift their production lines out of China.
China had a dream run on the economic front as it succeeded in nearly doubling the size of its economy over the last 10 years with its GDP now exceeding a staggering $14.92 trillion this year. This was achieved through the use of technology and investments from the advanced countries to establish the world’s biggest supply chain for manufacturing goods. These commodities were then exported to these very countries to rake in huge profits.
The flip side of the thriving economy is that it has enabled authoritarian China to modernize its military base into a formidable juggernaut that pushes its coercive foreign policy aimed at establishing its hegemony around the globe. An ambitious Xi is in fact out to change the international order to establish China as a superpower with a blue water navy, powerful air force and a huge arsenal long range ballistic missiles.
The communique issued after the Communist Party’s central committee meeting also states that China would strengthen national security capabilities and maintain “strategic composure” in the face of newly emerged challenges and conflicts internationally. Defence capabilities would be beefed up in line with the economy.
In the last six months an arrogant China has proved that it only believes in having its own interests and not friends as a result of which most countries don’t trust the leadership any more. They have veered around to the view that their companies should not have invested in China in the first place as they have ended up creating a monster.