Crouching Dragon, Hidden Tiger, and No Bull

Partha Chakraborty-

China’s moves for global hegemony need be contained. It’s about time to call their bluff.

An expression caught my eyes today in the context of China-America trade war, “Chimerica”. Immediately I recalled another very similar word – “Chindia” as in “China-India”. Long before the majority of today’s Chinese population were born slogans like “Hindi-Chini Bhai Bhai” (“Indians and Chinese are brothers”) – even “China’s Chairman Our Chairman” – rocked campuses of my birthplace, Kolkata. A year or so later PLA fired mortars across McMahon Line starting a Sino-Indian war that bruised India’s military ego.

Partha Chakraborty

Brothers up in arms indeed.

“Containment” is a word that would best fit relationship with China for any country, especially US. We need to first acknowledge the fact that we have treated China the wrong way all along. A trade war is a small price to pay to pivot back a long term strategic objective.

If you browsed headlines on China recently you will be forgiven for thinking we are back in the 1950s and talking about Great Détente (not) with the Iron Curtain. China launches parallel GPS with the Pakistani military as its client. China aims to rewrite the rules of the Internet – much beyond having a nearly closed version already there. Chinese Bridge and Road Initiative bares its claws and reveals as no less than a play to encircle US bases and India, snagging up ports in Sri Lanka and Africa already. China steals top-secret satellite technology from Boeing. Chinese concentration camps in Xinjiang reach a level of efficacy that would have made Nazis proud – to be sure they are not incinerating Muslims, not yet anyway. China sends alleged woman spy to Mar-a-Lago. Feds busting birth-tourism scam unearth tip sheet entitled “Strategies to Maximize the Chance of Entry”. Even Tom Clancy plots have fewer levers to twist an opponent.

None of the above has any obvious commercial purpose not already achievable through normal channels.

For the longest time, we treated China like we wanted to be treated. “To understand China, Look to America’s History” proclaimed an Op-Ed in The Wall Street Journal (March 19, 2019) – we were trespassers in a European game at some point too, but we define that game now; give the newbie some room to
1 Partha Chakraborty is CEO of Switchboard Systems, an early stage Blockchain technology startup. Partha previously spent fifteen years in all parts of the Investment Management value chain, including as an entrepreneur. Partha lives in Southern California with his family. 2 All opinions are of the Author alone, and do not necessarily represent that of Switchboard Systems. The author alone is responsible for any error or omission.
experiment as the thought goes. At least, we got our big box stores filled with knock-off knick-knacks on the cheap, and we can ship discards back to the same shores for recycling. Our technology transfers are helping them produce value-added items that we actually want to buy. And we will have none of the smoke-stacks that make us cough while we swipe for the next nanosecond-long thrill.

China never played that game – they played a long game where the first inning looks awfully like on our turf. They were, and still are, far better than us in identifying their own place in the table while seeing all players three steps ahead. As we have seen it play out in South Asia – and that was long before China elevated close to half a billion people out of poverty – players on the other side of the table were there because each, individually, was a master of the long game already.

We should hold this truth to be self-evident in playing their game. The Chinese world view is awfully simple – it’s us versus them. “Them” might differ, other players may fall in place to align themselves with “us”. On the surface, it is no different than any game theoretic exercise, especially no different than what the US played against the Soviet empire. Except that it is. Three primary differences are below.

First, the Soviet system was more about economic braggadocio. They would produce million-ton steel more if that helped them thump chest louder, no matter if anybody wanted it. As the torchbearer of Communism Russia was more inclined to prove Marx right than make their own people comfortable. The first promise of the Chinese Communist party is to uplift most of its people economically.

Second, China has perfected a mix of autocratic control with selective economic freedom, the cut-throat market even, and it will play to its benefit. Take AI for example – researches are being done in China that is unthinkable in the US except in a very controlled setting. Chinese researchers are impervious to concerns about morality, ‘regulators’ are greased enough to look the other way, state-controlled corporations can have beyond-economic access to capital and resources if they do state’s bidding. It is a perverted arranged marriage of control and economic adventurism that is beyond the pale.

Third, Soviet foreign policy was always about going toe-to-toe with the US, just about being careful that wars were fought only by proxy. Chinese foreign policy is a near-perfect rendition of “speak softly, but carry a big stick”. Chinese overtures are never expeditionary and always avoid the appearance of a client state on the ground, North Korea excepted. China carries no burden to promote Communism across the world, it only needs the world to sway to its demand, and that alone, while playing capitalistic tunes.

It is an even more sinister game than we played with Mad Men with funny Ushanka on top. A necessary first step for us is acknowledgment. Let us not be fooled by capitalist dimples under the long gown, it ain’t no juicy tomato. A cautionary tale was when Chinese promoters used Government “supervision” to lower the price of listed shares, arm-twisted outside investors to take the company private, only to relist it inside China at multiple valuations. As bed-fellows, both Party Mandarins and capitalist playboys are more than willing to give a little love for a little lick back.

China is threatening us with a bifurcated world. Uncharacteristically for them, ruling mafia revealed their hand too soon, the country’s economic survival is still questionable except by being factory floor for the rest of the world. China realizes that better than any else, but they are more accustomed to picking up a fight with global leaders who are not used to calling their bluff.

We can call their bluff by accepting the rupture as fait accompli.

In a fissured world of the future, our primary geopolitical-economic objective is to contain China, as was with Soviet Russia. It is a shame that a million ethnic minority are herded and conditioned for servile existence with technology that we may have helped create in the first place. It is as much shame that memories of the freedom of expression are dying inside Hong Kong. Let us make sure we put China on the defensive every chance we get. We took client states of Russia to task for much less.

Let us build a more tangible and mutually beneficial relationship with India. We need to use our influence to insure crimes against minority there are dealt sternly within the purview of Indian Laws, aligning our fundamental values. We should ramp up military collaboration, technology assistance and, people-to-people interactions. It will go a long way if we label Pakistan as a terrorist sympathizer, India will step inside Afghanistan, in return, lessening the drag on American forces who will be better put to checkmate China elsewhere. Talking about check-mate, an interesting idea might be a US-India-Japan joint occupation of illegal Chinese navy outposts in the South China seas. This will firmly put US intentions on the map.

On the economic front, we must ramp up diversification away from Chinese manufacturing. Rightshoring goods and services will require consistent carrots and sticks approach, alongside upsized awareness campaigns as to the source of items we purchase. Candidates for higher offices must take the lead in a proud display of support for goods and services produced onshore whenever possible. Rosie the Riveter will be retrained, if need be, to be of use in the Shinola factory in Detroit. We need to move away from dependency on China as a market of agricultural goods too, e.g., replacing beans with hemp and the like.

Sure, a bifurcated world shall have economic costs. I can guaranty that China has already priced that in their calculations, and it is a pity that only now we hear so much about the forgotten soybean farmer – an idea to consider is to levy a tax on corporations who shipped jobs to China to pay for American jobs that stayed behind but now in jeopardy. We also need a change in mindset, useless cheap trinkets do not really make us better off, and it may not be a bad idea to think of life with fewer of them.

Un-American, you say? Say that to the Greatest Generation. They learned to make do with little, and work harder to make most of the things they could use. And look what that got them.

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