
China, Leverage, and Values - chaostheory
https://stratechery.com/2019/china-leverage-and-values/
======
Leary
The fundamental questions that America needs to answer are:

What are the aspects of the current economic relationship with China that are
beneficial to the US, and what are the aspects that are harmful.

What policies should it adopt to manage its relationships with China while
maintaining its values. Whether it should act unilaterally to achieve those
objectives, or coordinate with its allies.

What are the near-term and long-term consequences of Cooperating with China
vs. Competing with China in a new cold war, considering China's power will
likely rise in comparison with the US's.

~~~
_bxg1
A more interesting tactic would be to make economic sanctions dependent on
values-based policies. Stop censoring certain kinds of speech, and we'll lower
tariffs a bit. Stop persecuting Uighurs, and Huawei can have Android back.
Strongarm the communist party into being less evil, instead of bluntly
attacking China as a whole. I think most of China's people would pressure its
government to agree to those kinds of deals. It's really just those at the top
who are doing all the bad stuff. The rest are just excited about their
newfound prosperity and want to hang on to it.

~~~
anthuman
You can't sanction major economies without hurting yourself. It's why
sanctions are used on nations with weak economies. Systematically important
economies like the US, EU, China, Japan, etc are "unsanctionable".

Sanctioning china for "values" is as absurd as china sanctioning the US for
"values". How would everyone react to china sanctioning the US or Europe for
invading much of the middle east and north africa. Everyone would laugh.

Also, sanctions are acts of war at best and war crimes at worst. Economic
sanctions exist to starve and hurt the population to punish the government. By
any objective measure, it is a war crime and crime against humanity.
"Luckily", rules and laws don't apply those with the greatest weapons.

Also, I highly doubt most of china's people would side with the US against
their own government. No more than we'd side with China over the US
government. That's not how people work. Especially if foreign government are
attacking your own government.

Either we go to war with them or we decide to live with them. China has 1.4
billion people. The idea that we'd pressure them to act a certain way is
ludicrous. More than anything, it'd probably have the opposite effect.

~~~
_bxg1
> I highly doubt most of china's people would side with the US against their
> own government.

Every week there's another article about a new way Chinese citizens are
circumventing their government's censorship. Nobody _likes_ being kept under
heel. And I seriously doubt the concentration camps would have widespread
support - most likely their existence is censored from the rest of the
population altogether.

They wouldn't be siding against their own government, they'd be siding against
_the authoritarian communist party_. They'd be choosing things they really
want (economic growth) in exchange for the ending of actions they either don't
care about or dislike. The CP is already in a precarious balance, trying to
maintain strength without turning the general population against them. Some in
China already wish it would bend to the sanctions. The above kind of deal
would raise the pressure on the party, weakening the tumor sitting on top of a
major new contributor to the world economy.

~~~
anthuman
Really? Censorship? And here in the US, people are trying to circumvent
censorship too. So what? Doesn't mean we are going to side with china over the
US. Also, there have been articles of china's demise for decades now. If you
enjoy cringe, look up gordon chang and read some of his stuff.

But I agree with you about nobody wanting to be kept under anyone's heel. Do
you know any chinese history? Do you know whose heel's they think they've been
under for 200 years? The west's heel. Nationalism and economic growth is how
the chinese government maintains power and I don't see that changing anytime
soon.

As for the "concentration camps", I'm guessing the support depends on how it
is framed. If the chinese government frames it as punishing separatist
terrorists, I'm betting it will have as much support as japanese internment
had in the US.

Also, the authoritarian communist party is their government whether you like
it or not. Considering the economic growth that china has experienced, I'm
betting the party and the government has enormous support amongst the
population. And in any confrontation with a foreign government, the people
almost always rally around their government - authoritarian or not.

Finally, "some" in china might want their government to "bend to the
sanctions", but I'm guessing the vast majority of chinese don't. Also,
historically, governments tend to fall when they appear weak, especially in
relation to a foreign power. Also, you are conveniently ignoring the fact that
there are "some" in the US who think we should "bend to their sanctions".

If you think that chinese people are going to side with a foreign government
against their own ( authoritarian or not ), then you really don't know history
or human nature.

~~~
_bxg1
> And here in the US, people are trying to circumvent censorship too.

I don't know what you're talking about; the US is the least-censored country
on earth. You can't even pull provable, inflammatory falsehoods off of
Facebook without people crying censorship here (which is its own problem).

> there have been articles of china's demise for decades now

I'm not talking about its demise. Quite the opposite. I'm talking about its
people being smarter and more worldly than they get credit for, despite
president Xi's very best efforts to the contrary. It has academics who are
regularly imprisoned for criticizing the government and advocating for
personal liberty. Scores of people cheat around the latest propaganda app
([https://www.nytimes.com/2019/04/07/world/asia/china-xi-
jinpi...](https://www.nytimes.com/2019/04/07/world/asia/china-xi-jinping-
study-the-great-nation-app.html)). People use GitHub, for lack of better
options, to exercise some small amount of free speech
([https://www.npr.org/2019/04/10/709490855/github-has-
become-a...](https://www.npr.org/2019/04/10/709490855/github-has-become-a-
haven-for-chinas-censored-internet-users)).

There's a will. Chinese people don't want this kind of country. Many of them
have just given up fighting it. We could help.

> I'm betting it will have as much support as japanese internment had in the
> US

Japanese internment has been looked back upon as one of the greatest human
rights transgressions the U.S. has ever committed. It wasn't at the time, of
course, but that can't be helped. It's also beside the point. I'm not saying
"America is good and China is bad". I'm only saying, Xi's ruling party is bad.
America has done some bad things too. It's still doing some bad things, like
what's happening at the southern border.

Maybe what you don't grasp is that Americans are free to criticize their own
government. We can have our own sets of values. I have a pretty low view of my
own country right now. That doesn't mean I can't also point out China's
problems and America's opportunity to do something about them. Of course, I
also have very little faith in my government to take that kind of opportunity
right now.

~~~
anthuman
I didn't say the US is the most censored country. I just said we have to deal
with censorship here too.

Once again, you harp on censorship. I'm against it too. But what does that
have to do with what we are talking about? I don't like censorship in the US
but that doesn't mean I'm going to support the chinese government over the US
government. For some strange reason, you seem to believe that just because
people don't like their own government, they'll support foreign governments.
That's not how life works. Every citizen in every country has gripes against
their government, but that doesn't mean they would welcome foreign
intervention in their own country.

And if the chinese people don't like their government then let them deal with
it. Not sure who you are or what your agenda is that you think "we could
help". Who are "we" that we have to interfere in other countries?

I'm american. I complain about the government, the establishment press and
censorship all the time. What are you? You seem to claim to be american but
want to "help" the chinese people overthrow their government. And for someone
who claims to be american, you seem to claim to know how the chinese think and
want. I suspect chinese people know what chinese people think and want. It's
as strange as a chinese person saying they know what americans think and want.
How would they know?

------
mistermann
I have this constant feeling that life on Planet Earth circa year 2000 or so
onwards is playing out kind of like a bizarre imitation of the old movie Lord
of the Flies. To me, it feels like everyone is absolutely batshit insane.
Everyone (well, mostly) is so sure of themselves, so sure of what is right and
wrong. As if life is so simple.

It seems to me that the rate of scientific progress has vastly outpaced that
of the humanities (or, whatever is the appropriate "balancing" field to
science) for so long that humans have become a danger to ourselves, for a very
long time now, on several different fronts. We are simply not mature and
responsible enough to be wielding this much power, yet here we are. And
there's very little reason to feel very optimistic, that I see anyways.

[https://en.wikipedia.org/wiki/Lord_of_the_Flies](https://en.wikipedia.org/wiki/Lord_of_the_Flies)

~~~
tasuki
> I have this constant feeling that life on Planet Earth circa year 2000 or so
> onwards is playing out kind of like a bizarre imitation of the old movie
> Lord of the Flies. To me, it feels like everyone is absolutely batshit
> insane. Everyone (well, mostly) is so sure of themselves, so sure of what is
> right and wrong. As if life is so simple.

Apart from scientific progress, what has changed? Humans gonna human.

------
iliketosleep
The author is correct in saying that China fired the first shots in the trade
war with effectively shutting out major US companies with its protectionism,
while China's expansion into the US went on unrestrained. If this process
continued on unchecked, China would definitely replace the US as the world
power. China is an authoritarian state, with core values that are at odds with
the US. Therefore, the stakes could not be higher, and now could very well be
the last time that the US has enough leverage over China to actually come out
on top.

~~~
throwaway34241
I agree with the article that the US can damage China's economy for several
years by restricting components (but that it also will eventually be able to
domestically produce the components required). I also agree with the article
that doing so would hurt the US companies that produce the components that
China no longer could buy.

What I don't get, is what specifically will be achieved by doing this? How is
the US coming out "on top"? I get that China has different values than the US,
but I don't understand how restricting components fixes that.

~~~
ardy42
> What I don't get, is what specifically will be achieved by doing this? How
> is the US coming out "on top"? I get that China has different values than
> the US, but I don't understand how restricting components fixes that.

I'm just speculating, but it could perhaps hurt the desirability of their
advanced exports on the world market, and create space for other countries to
fill the void. One of China's current political advantages is that it's the
current "workshop of the world," and if that's reduced they may end up being
less influential.

It's unlikely to affect the domestic political situation there, but that may
be a lost cause for this generation.

~~~
throwaway34241
So to use a specific example of what I think you are saying about restricting
components making other countries more influential: Huawei can't buy Qualcomm
chips, so they use Chinese chips instead (which are inferior for several years
before they catch up), so they are less competitive in Europe and Samsung
sells more, which causes Korea to have a bit more worldwide influence compared
to China over that several year period?

That seems plausible, but also pretty speculative and it seems like there
could be negative consequences too. For example, if the Chinese market
switches over to Chinese chips, a lot more money will be invested in Chinese
chips and they will probably develop more quickly. Normally the US complains
about China blocking US products, the US blocking US products seems a bit less
usual.

The article points out that there a problems with China, and points out that
there is a policy available that will hurt US companies and Chinese companies.
I feel like I am missing the part though, where this policy fixes the problems
with China. I feel like I need to understand that part before I am convinced
that this is a good idea.

~~~
CharlesColeman
> That seems plausible, but also pretty speculative and it seems like there
> could be negative consequences too. For example, if the Chinese market
> switches over to Chinese chips, a lot more money will be invested in Chinese
> chips and they will probably develop more quickly.

Those negative consequences presume that the Chinese won't have the goal of
switching over to domestic chips if they have access to American chips, but I
think that's false. They've shown a strong desire to pursue import
substitution and then turn those companies into international competitors.
Denying the American supplies forces them to switch before they're ready,
rather than when they're fully ready.

It's also not guaranteed that the Chinese investments will bear fruit. For
instance, China has been trying to acquire modern jet engine technology for
decades and decades, and still hasn't succeeded. IIRC, jet engines and
microchips have a major characteristic in common: most of the magic is in the
manufacturing techniques and those are difficult to reverse engineer from
finished products.

------
youeseh
Is there a resource where we can check the current state of tariffs between
the US and China? Which tariffs are currently in effect? Which tariffs are on
their way? Whats their status? etc.

~~~
dba7dba
IMHO, tariffs is meaningless when it comes to trading with China. China govt
should simply stop requiring foreign firms to partner up with local firms
and/or placing arbitrary restrictions on imported products. Sure many nations
do it, but China is an extreme case.

Edit: I got downvoted but what part of my statement about China incorrect?

~~~
internet_user
That tariffs are meaningless. If they are so meaningless, maybe full-blown
sanctions should be applied.

------
panarky
Blocked in China:

Twitter, Google, YouTube, Github, The New York Times, Facebook, Instagram,
Whatsapp, Bloomberg, Tumblr, Signal, Reddit, Netflix, Le Monde, Wikipedia,
Reuters, Dropbox, Bing, Discord, etc., etc., etc.

Who started this trade war after all?

~~~
eo3x0
This doesn’t include the fact that all foreign enterprises in China are
actually 51% owned domestically. Tariffs, while severe, are no where close to
this extreme protectionism.

The US finally decided to bring a knife to a gun fight.

~~~
dis-sys
what are Apple/Microsoft's domestic partners in China?

note that, not talking about Apple's data center partner or Microsoft's cloud
partner, just talking about Apple/Microsoft's core business (iphone, mbp,
windows, office etc) here.

------
yalogin
This is the only Trump initiative I support. Hope he doesn’t do his usual bow
down to the aristocrat routine and back down for whatever reason he sided with
Putin, Saudis. This is a fight that the US must win. The only issue is Trump
picked fights with the EU and they probably will use that as an excuse to not
help out. The fight with China should have been done as a coalition to begin
with.

------
42yeah
IMHO why can't both take one step back? Forbidding technologies flow leads to
different standards in different countries. China forbode Google, Twitter, etc
from rooting in China years ago, so China developed a totally different
ecosystem than the rest of the world (basically) to take their place: baidu as
search engine, QQ as IM, weibo as social media. This made Chinese hard to take
a peek to the outside world, while the outside world also has a hard time
peeking in. And now US is doing pretty much the same. Just when Chinese
companies are trying to develop overseas business, US bans them. And as people
from US and China cannot communicate, hatred grows and lotsa Chinese are now
volunteering to ban foreign products. This is truly meaningless.

~~~
radicaldreamer
The whole point of the West's policies is to increase competition at the low
end of the labor market (manual, commodity, factory) while maintaining
protectionism at the high end (intellectual property, media, culture, and
technology), which is not coincidentally where elites are concentrated. The
idea is to keep the price of labor as low as possible (to maximize profit for
the owners of enterprises).

~~~
Fjolsvith
How does the West's policies increase competition at the low end of the labor
market? By your argument, the West is harming itself by cutting off access to
cheap Chinese labor.

------
Invictus0
I see China moving to appease the Americans in the short term and then working
to secure their economic independence in the long term. The truth is that the
Chinese know that they have overplayed their hand here; that Trump can raise
tariffs all day long and it is foolish to race to the bottom with him. By
making the requisite concessions in the trade war, which, as Ben noted, has
historically been tilted to their favor, they will be able to steady their
economy as they continue to build up their advanced technology infrastructure.

~~~
SubiculumCode
If the China tariffs last too long, it seems logical that supply chains will
move outside of China. This might be ok for China, which is purportedly
looking to pivot to a consumer based economy, but it might not be on their
chosen timeline.

~~~
hyeonwho4
Disposable income of the Chinese consumer is almost all locked up in housing.

~~~
Fjolsvith
Supporting:

[https://news.ycombinator.com/item?id=19967740](https://news.ycombinator.com/item?id=19967740)

