China’s Dream – Trade War and Peace

Over 3000 international companies from 150 nations including 90 New Zealand exporters are participating in the forthcoming China International Import Expo (CIIE) which opens in Shanghai on 5 November.  Conceived as a means to show China’s openness to the rest of the world, CIIE is a symbol for the dream of a more prosperous and integrated China, but it takes place against the background of a debilitating trade war.  Business carries on, but competing economic visions will need to find a way to co-exist if global trade is going to be the engine of future progress and sustained prosperity.

China’s dream but not as we know it

President Xi Jinping’s dream (中国梦)is one with Chinese characteristics.  He speaks of a “new era” for Chinese development, one from which China will emerge as a “moderately prosperous” (sic) and “fully developed” nation.  The China dream is to be achieved largely by cultural and economic rejuvenation, including the sharp crack-down on corruption underway for several years now and the embracing of a new technologically-based economy particularly in areas like artificial intelligence (AI), robotics, biotech and in the digital space.  There are many aspects of this dream to admire – notably its focus on eliminating poverty and promoting environmental sustainability – but also to raise concern – its neglect of individual freedoms and social and religious diversity, for example. On the economic side, the China dream foresees an expanded role for China’s state-owned enterprises and the use of massive state subsidies – that’s a problem for the rest of the world which sees them as a root cause of global market distortion. Initiatives like the “Made in China 2025” industry policy are likewise seen as a narrowly conceived bid for economic dominance in the high-tech sector.   Other models are more usefully based on principles of economic inter-dependence and co-operation, like the Belt and Road Initiative (BRI), which, if the geo-politics can be avoided, offers scope for enhanced connectivity. 

China’s dream, America’s nightmare?

Across the Pacific, President Donald J Trump has also has a dream, one firmly focused on preserving, seemingly at any cost, US pre-eminence both in economic and security terms.  The trade war unleashed against China is still limited in scope but is doubtless having an impact – most noticeably, on the US agricultural sector, which is being deprived of a lucrative market by Chinese retaliation.  Where this will end no-one really knows, not the least of whom the Chinese who may be at a loss to understand what exactly they need to do to avoid the worst.  That’s because this conflict is no longer really about trade per se – it is a much wider contest of competing economic and social visions as the US challenges the very basis of the Chinese dream itself.  That makes the current environment even more worrisome. 

This is no longer really about trade per se – it is a much wider contest of competing economic and social visions 

Can the rest of us share in China’s dream?

This is the difficult background against which CIIE takes place.  The organisers and those attending including over 90 from New Zealand, co-ordinated by NZTE, are motivated by dreams of increased trade and business and doubtless these will be realised as China mobilises its enormous buying power from across the country.  “In times of crisis, keep shopping” is a strategy that was used once before (by President George W Bush).   CIIE provides a great opportunity for New Zealand companies to showcase their products to Chinese consumers, develop new relationships and consolidate existing ones.

But deeper thinkers need to pay attention to the bigger picture.  China and the United States are two huge poles of economic activity with the ability to deliver much needed prosperity to the rest of the world.  They are themselves already highly integrated.  Their friends and partners have a key interest in their mutually assured success.  Rather than picking sides, we in New Zealand and others need to be doing all we can, both bilaterally and through the multilateral institutions to which we belong, to encourage the greater alignment of these competing dreams and visions.

This post was prepared by Stephen Jacobi, Executive Director of NZIBF.  Stephen also serves as Executive Director of the NZ China Council and will be attending CIIE.  From 2005-2014 he was Executive Director of the NZ US Council.