The conflict between the United States and China has evolved into a brand new aspect since the last week. This time, things might get worse than expected as the U.S. government is being quite hysterical about China’s technological rise.
For the last three years now, I’ve been telling in my articles how America is lagging far behind China in terms of progress in civil technology. It is an undeniable fact that China has been systematically engaging in more technological activity across the Globe, including Africa, not to mention its unstoppable rise in digital world.
While China continues to follow its own road map without directly or indirectly interfering in conflicts across the Middle East, North Africa, Latin America and South-eastern Asia, substantially paranoid rumours have been circulating that the country will sooner or later become a dominant global power, having a say in world affairs, including a special voting power known as the right to veto.
In the meantime, it does not go unnoticed that the U.S. Government treats Chinese companies unfairly, as extensions of Beijing’s government, despite the fact that Americans have been using diplomacy as a tool to prevent conflict across the globe. I wonder what might be the reason for such a harsh treatment.
Could it be that America is trying to establish a new world order on the pretext of needing to deal with coronavirus-led recession, considering the fact that hundreds of thousands of American companies with supply lines already entrenched in China and the Far East ?
Or is it a response to China and other Far Eastern corporations that are engaged in colonialist efforts across the globe by means of high technology?
I do believe that the founders of Huawei must have predicted beforehand that they would eventually such challenges. Everywhere in the world, the operations of companies offering critical infrastructure and digital services so successfully that they can almost become a monopoly, improving their power and market share with each passing year, providing its customers with high value added products and services, are always stopped by their opponents for various reasons. These opponents may use legitimate or illegitimate methods to get a share of the pie. Even governments, regulatory authorities, and non-governmental organizations support or take part in this unfair process. They allow you to create a monopoly in market if you serve their purpose, but if you don’t, they would spare no efforts to cast you out from the market.
The real reason behind the US-Huawei conflict may be arising out of or relating to differences between their economic and political systems. I am referring to the competition between the West, the birthplace of the modern capitalism, and China, a late bloomer, a novice at capitalist practices with a relatively new legal infrastructure for this system.
It is a known fact that International Institutions has warned China several times so far, about its exchange rate regime, incentive systems, loans & credits scheme, and its unfair trade practices. Because of China’s predatory pricing strategy where it sold its products below cost, all the production efforts of many other countries came to naught. China should really be grateful to its banking sector for offering very cheap (almost free) loans that greatly contributed in the country’s economic success.
But, is it true that China was severely warned by the West in the past? Or was it only for show? If you will allow me, I will try to address these questions in the passage below.
China is known for having violated the rules of global trade and international diplomacy more than once. During my time in Turkish Exporters’ Assembly as its Secretary General (from 2000 to 2007), I had personally filed some complaints with the WTO and the U.S. Government, even with the Cato Institute, about China’s unfair trade practices.
But the talks I held with these authorities showed me that neither Americans nor the WTO or Cato Institute had any complaints about China’s unfair practices. Apparently, they did not care about China’s behaviour which can be very harmful to competitors, especially engaged in textile and manufacturing of low-value added products. Americans thought that that no other company in the world could challenge their dominance over technology market as they seemed quite happy about the colonialist actions of U.S. technology companies worldwide. So, they chose to remain unresponsive to the struggles of Turkey and other emerging markets against China’s unfair practices. I clearly remember that all our efforts to invite officials in the United States and in U.S. Embassy in Turkey into a solution-building conversation have been for naught. Even the Cato Institute defended China, “Do you want them to starve? They have every right to engage in trade activities just like you do”, they said with a sharply reproving tone. But now that I think about it, I realize that Chinese were right. We were being naïve. We should have never tried to persuade the Western world into taking an action to stop China’s unfair trade practices and never got involved in their trade game in the first place. Maybe, we should have tried to pursue our own interests.
But that’s all water under the bridge now and today’s China has become a technology giant that rivals America. It even leads the way in successful innovation, R&D, digitalization and branding, all activities and notions that the Western world has always been bragging about. But this time, China went too far in the eyes of the United States. Quickly changing their minds, Americans started to bully China with a blatant disregard for international law and global trade rules. But now, why no one has the courage and the confidence to stand up to the United States, saying the same things Americans once said to us, “Do you want them to starve? They have every right to engage in trade activities just like you do”. Unfortunately, no one will have the power to make a stand against all forms of bullying as long as “the strong continue to rule the weak” as the French say.
Let’s not also forget that China’s total volume of imports and exports amounted to approximately to 5 trillion USD last year, which means China is not only the world’s largest exporter of goods, but it is also one of the world’s biggest importers. China no longer sells cheap products. Today, Chinese companies have become globally dominant, offering products that are designed to meet the needs of the digital world.
“You can’t wage war without considering peace…”
During my visit to Huawei’s Research and Development campus near Shenzhen last year, I saw that Huawei officials were able to come up with a special formula that combines Chinese traditional culture with universal values. Employing fewer workers in production processes and implementing a new type of capitalist based on social democratic ideologies, Huawei is a place filled with people who believe in international experience. As we all know, the thing called the “American Dream” is actually the “American Nightmare” where people working hard under a capitalist system hardly get what they deserve, where executives tend to take unprofessional approaches when it comes to promotions, employee benefits, and salary increases. On the other hand, having found a great way to make its employees of all levels happy, such as giving them a large share from the company’s earnings, Huawei is getting better and better each year along with its employees almost half of which are the company’s researchers and developers.
We all know that the United States is the world’s largest importer but we somehow forget that it ranks second in world exports. The fact that Chinese companies have become globally competitive rivals to U.S. firms seems to have driven Trump administration into a corner on the eve of presidential elections. It is almost impossible to ignore that Donald Trump calls Coronavirus the ‘Chinese Virus’ on purpose. Also, the fact that Australia has recently announced that it will sue Chinese government over its handling of the coronavirus pandemic may be described as the sign of a search for new alliances. Although the United States, Germany and Australia have demanded financial compensation from China for the damage caused by the pandemic, the United Kingdom chooses to remain silent for now. By the way, Huawei makes backbone investments in the UK’s and New Zealand’s telecommunication and digital infrastructure, which means the United States hasn’t quite find its new reliable ally in the fight against Chinese companies.
Accordingly, Trump administration is trying to divide the world into two main groups: “Those who buy Huawei’s products and those who don’t”. I must say that such attempts to split the world will do more harm than good, whereas we should try to work together in synergy as the people of the world.
Maintaining its patience so far, Huawei tries to raise public awareness, through the press conferences it regularly holds, of the unfair treatment the company faces every day. Chinese government, on the other hand, continues to maintain a diplomatic distance to the issue.
I do not think that Ankara will take the United States’ side in its fight against Chinese companies, especially considering Turkey-Huawei cooperation in building the digital infrastructure of many Turkish universities and telecommunication companies. There is not a single piece of evidence that links Huawei to malign activities contrary to U.S. national security as the U.S. government suggests. As Huawei smart phones and devices are becoming popular all over the world, American firms keep losing their IT infrastructure and smart devices market share.
Meanwhile, in Turkey, strange things have started to happen, especially in domestic politics. It’s hard not to notice that Trump administration has been considering several options like an American interference in Iran, Syria, Libya or Eastern Mediterranean in order to distract voters from the flagging economy due to the coronavirus pandemic, and has been organising some schemes to weaken Turkey’s hand so as to be able to prevent Israel and Turkey from coming to a mutual understanding without consulting with the United States. Trump administration further boost its voice to stop China from supporting other countries in the region or openly threatens them, saying that they are either with them or with America.
In short, American government and agencies that once chose to turn a blind eye to China’s and other far eastern countries’ unfair trade practices as long as they didn’t hurt U.S. interests are now doing everything they can to bully Chinese companies, which are in fact doing business in full accordance with world trade rules, just because they are hurting U.S. interests today.
When we look at this issue from a realistic point of view, we can see that there are two essential underlying reasons for this conflict: ungrounded U.S. policies and the authority gap in America dating back to Obama’s time. The fact that the American government is running wild today is because it is being manipulated by certain interest groups determined to influence public policy in favour of its shared concerns.
As Amin Maalouf says in his new essay “Le Naufrage des Civilisations” (The Wreck of Civilizations), the United States has sadly failed to exist in a unipolar world with its own values and norms. It constantly tried to invent new domestic and foreign enemies in the absence of the Soviet Union. These enemies were sometimes Japan, sometimes China, or Russia, but mostly the Middle East. So, America always had its enemies which served as a tool to distract voters from the rapidly deteriorating U.S. economy. This time, Huawei has been declared an enemy of the United States of America. But as Napoleon once said, “You engage in war to make peace under better circumstances”.
Honestly, no one knows exactly what is that the United States wants. One would think, “OK. Let’s make war. But what is the purpose of it if we won’t achieve a better peace when the war ends?” I just find it nonsensical to trying to divide the world into different fronts in terms of technology especially when we can grow and develop faster using digitalism and high technology.
There is an interesting passage in my latest book titled “İktisattan Çıkış” (Exit from Economics), which is available in bookstores in Turkish and in English translation as well. The passage mentions a 2010 IMF report briefly saying that ‘under the current and future pressures on public finances, public debt would spiral out of control in the absence of fiscal adjustment. Under unchanged policies, the net debt-to-GDP ratio of the G-7 economies would exceed %400 percent by 2050. To overcome this crisis, G-7 countries will have to increase their estimated GDP rate by additional 1 pts every year. Obviously, they will have to integrate High Technology with their production processes in order to achieve that goal.
In conclusion, it’s almost impossible for any G-7 economy to reduce its debt-to-GDP ratio without the help of rapidly emerging high tech companies such as Huawei. Trump may be planning on staying in power for another 4 years but I do believe that someone from the government will eventually realize the big price that America and the rest of the world will have to pay because of Trump’s meaningless war with Huawei, and take the necessary action to prevent a catastrophe.