In response to the news that many Cornish daffodils are likely to rot in the fields – and speaking to some Cornish friends, some of whom, I’m afraid to say, voted for Brexit – now, too late (often thanks to many of them inexplicably voting Tory too) and much to their general regret, there are... Read more

I was certainly delighted that Keir Starmer suggested ‘Recovery bonds’ as a method – in order to, well, recover from the Covid hangover. Yes, most on Progressive Pulse know that government creates money out of thin air so never needs bonds. But others of us might like bonds in order that those savings might earn... Read more

In 2005 I did my first economic projections of the major powers (published in a textbook) and concluded from the trends then that China would have a larger economy in purchasing power terms than the US in 2017, which is exactly what happened. In 2012, I wrote about the inevitable struggle coming between China and the West, as well as some comforting observations on the limits of that conflict based on the judgment that the West as a whole will remain more numerous and powerful than China, even though the US on its own has no chance in retaining its dominance. Today in 2021 that cold war is starting to materialise with the gradual severance of Australian trade with China, and US technological blockages starting to bite. These are the opening salvos.

What kind of conflict are we likely to get in the next decades? My end conclusion is that we don’t have too much to worry about, but let us start with looking at what the challenge of China will look like.

2020 belonged to China. The West inflicted huge damage on itself by its covid-policies: we destroyed about 5-10% of our own productive capacity, made our population a lot less healthy and productive, adopted an extra layers of superfluous negative productivity (eg tests), and inflicted a baby bust. In contrast, China has managed to keep growing in this period, even taking the opportunity to reign in the super-rich within China and expand the education of the middle classes. So whilst the West lost the equivalent of the economy of France, China restructured itself and forged a new free-trade zone in Asia (the RCEP).

The next round will also go to China. In a recent interview I sketched how China is likely to wow the world with a string of technological accomplishments, much like the Soviet Union wowed the West with its space program in the 1950s. The potential of the Chinese is enormous as they have three times the university graduates of the Americans now leaving university, and a far higher ratio than that in the physical sciences. So expect them to come up with the best computers, the best Artificial Intelligence systems, the most advanced Internet services, the most advanced Financial systems, etc. They are formidable and the West will soon see that.

Yet, to gain deeper insight into the nature of the conflict, we should look beyond capabilities and consider what the Chinese ultimately want versus what the Americans will be prepared to inflict. In the below I will use the word “the Chinese” for the majority of those now living in China, so not the diaspora or every single Chinese person in China.

The highest value in Chinese political life is what the symbol at the top means: social harmony. They want to quieten all voices of critique and all sources of strife ‘within’. The nature of their collectivism is a near total political divide between the harmonious ‘inside’ and the turbulent ‘outside’. As a result of that wish for harmony, the Chinese are not interested in physical conquest beyond the territory they feel is historically theirs because conquest merely invites disharmony.

I cannot stress enough how focused the Chinese are on their internal harmony. For a few decades after the Cultural Revolution they were relaxed about critique, but in recent years they have reverted back to their historical antipathy towards it. Voices of critique within the Chinese political body are like intense pain to them. Critique is regarded as violence. As a result, huge effort is made to quieten critical voices internally (as you can see with the Uyghurs and Hong Kong) and to keep any external critique outside of the consciousness of their population. It is the dominant motivation in interactions with the outside world: take opportunities to become richer but keep critique outside of the internal consciousness.

The West does not yet believe the extent to which this is what the Chinese government wants. It seems silly and futile to us, given how normal constant critique of leaders and policies is in the West. Yet, this is the key to what the Chinese want: critique-free interaction. It is a huge weakness on their side that we will ruthlessly exploit.

What China will aim for is a ‘safe zone’ for its own population to interact without being exposed to criticism of the Chinese government. In that safe zone, the Chinese will be tourists, businesses, students, etc. Inside that safe zone they will demand the swift punishment of anyone offending the Chinese leadership. The historical example of such a system familiar to the West is the “lesse majeste” (“insult to majesty”) law under which anyone criticising the king got punished. That is what the Chinese government will want within their safe zone. The Chinese will simply stop trade and interaction as much as possible with countries openly critical of its government. Australia is discovering this right now.

Korean history tells you what the Chinese expect from their safe zone. The Korean court was a vassal of the Chinese for centuries and made sure not to offend in any way, whilst otherwise having a vigorous trade. The ‘no offense’ condition was extremely strict and included more than just punishment for criticism of the Chinese emperor or Chinese customs. It extended to such seemingly trivial things as the colours used by the Korean court itself. When I visited Seoul I was told the Koreans made sure not to use red in the walls of their palaces because red was the colour of the Chinese imperial court. Hence the Korean court used green for the colour of its walls. That is the level of obsequious behaviour the Chinese will aim for in their ‘safe zone allies’: a complete lack of open offense on all things the Chinese are sensitive about (which is rather a lot).

Once the Americans understand that this is what the Chinese aim for, how will they react? Its obvious: they will see this desire for internal social harmony as a weakness to be used against them. The great advantage the Americans have is that they themselves do not care about critique because they are used to it. The weapon of critique can be used against the Chinese, but not against the Americans. If it would still offend the Chinese, the Americans would build red palaces all over South Korea! In the countries they compete with the Chinese, the Americans will make sure to have constant high-level offense against the Chinese leadership. It’s a very cheap form of warfare that is very hard for the Chinese to counter.

What does that dynamic lead to? It means the Chinese will be forced into having ‘all or nothing allies’: they will be confined in terms of their extensive interactions to the set of countries that is wholly in a Chinese block. Outside of that block, targeted offense by the Americans will keep the Chinese away.

This does leave the possibility of neutral countries: countries the Chinese trade with but where they do not visit in large numbers. One should expect there to be a lot of countries that will try for that type of neutrality.

How will that type of neutrality go once the Americans have figured out the extreme sensitivity of the Chinese to critique and hence the cheap way they can be bottled up? It will mean forms of trade and interaction wherein the visiting Chinese are in an information cocoon. It is easy to see how this would go for physical trade or service trade via the internet: the ones interacting with the Chinese keep their mouth shut about Chinese politics. For tourists it will likely mean that Chinese tourists will be surrounded by Chinese intermediaries that shield the visiting tourists from local news and anti-Chinese critique. For things like mining, it means the Chinese will come in with their own contingent of workers and information structures such that they don’t get to hear what the locals think of them.

Neutrality will not be enough for intensive interactions though. So neutral countries cannot host large groups of Chinese students or business people, who can easily be targeted by the Americans and others. Neutral countries also cannot host Chinese military bases or joint in-person scientific endeavours. Those endeavours are simply too easy to disrupt.

Is a different dynamic possible? Is it conceivable that the West will let the Chinese have what they want and simply become obsequious too? I think not. Our democracies are too used to critiquing everybody. Our religions are also loud in their claims of superiority. Our idea of a single truth is also intolerant to someone else’s truth.

The nature of the Americans in their foreign wars is to be pragmatic and to declare their enemy an ideological opponent. They will fanatically employ a mantra of “You are either with us, the righteous, or against us, and thus with Satan”. The Americans will thus agitate, hack, plant, bribe, blackmail, invent, conjure, and allege whatever is needed to be as hurtful about the Chinese leadership as possible. They will deliberately target Chinese businessmen, students, and tourists. But they wont demand constant grovelling from their allies and are fine with having demonstrations against them. That makes them much easier to be friends with than China.

What is the worst the Americans can do that will force the Chinese government into desperate actions that involve a real risk of an actual war? The worst-case scenario is that the Americans manage to hack the internal Chinese information systems so that they are flooded with anti-government rhetoric, upsetting the social harmony not merely for a few hours but for months on end. That would be something the Chinese leadership cannot ignore and that would force them to react violently. However, that would be an act of war that I cant see the Americans technically capable of, nor politically willing to.

How would the cold war evolve in the longer run? No-one knows, but we can safely say that India will eventually become another major player. I also think Chinese politics is inherently unstable and will implode sooner or later as it has done many times in its history: the tragedy of Chinese politics is that in its search for internal social harmony it always finds the opposite because the furious pretense of harmony leaves it with no way to deal with the actual tensions bubbling beneath the surface. Historically though, when China imploded it mainly inflicted damage on itself, not on others.

Is this type of cold war good news or bad news? I think it is good news because the essential take-away is that Chinese foreign policy is very rational. It has the clear goals of finding opportunities whilst avoiding contact with critique. Since the Chinese are not really interested in conquest or in what others think, they will prove easy to contain and easy to interact with. I expect the Americans to employ their customary pretend-fanaticism and bottle up the Chinese in a relatively small sphere of influence, using the weakness of the Chinese that they cannot handle critique. Many countries will remain neutral.

I am hence optimistic. It will be a relatively placid cold war. It might even be good for the West if it is threatening enough to lead to internal revival. Maybe we should not fear the coming technological advances of the Chinese, but welcome them.

This twitter thread from Jolyon Maugham of the Good Law Project is both true and depressing, in equal measure: The situation is only confirmed when Liz Truss, not wanting the embarrassment of answering any questions related to the trade effects of Brexit, has apparently had them removed from the Parliamentary order paper. The control we... Read more