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Beijing
would like the world to see China as a benign power, a responsible
member of the international community that contributes to global
wellbeing. Sometimes that’s easy. Sometimes it’s hard.
Take, for example, President Xi Jinping’s pledge this week to make any Covid-19 vaccine China develops available to the world. It was a well-timed message that helped assuage growing concerns countries will hoard vaccines for their own populations.
The
contrast was stark when, a day later, U.S. President Donald Trump
announced that he intends to permanently end U.S. funding for the World
Health Organization unless the agency addresses a series of grievances,
including demonstrating “independence from China.”
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Chinese
President Xi Jinping learns about progress on a coronavirus vaccine
during a visit to the Academy of Military Medical Sciences in March.
Photographer: Xinhua
Events
don’t always conflate to burnish China’s image, of course. Beijing’s
recent clash with Australia, for instance, is one that threatens to
generate more concern than admiration.
Canberra
first drew China’s ire by calling for an international probe into the
origins of the coronavirus. Shortly thereafter, Beijing barred exports
of meat from four Australian slaughterhouses and this week slapped tariffs on its barley. It was also revealed that Chinese officials have compiled a list of other Australian goods that could be targeted if the spat escalates.
Economic
retaliation has become one of Beijing’s more called-upon tools. When
South Korea agreed to deploy an U.S. missile system in 2016, China
stopped the flow of tourists. A spat over disputed islands in 2010 saw a plunge in Chinese exports of rare earths to Japan. China cut off imports of Norwegian salmon after the 2010 Nobel Peace Prize was awarded to Chinese dissident Liu Xiaobo.
That said, Beijing also understands that retaliation has a cost. Its threat to introduce an "unreliable entity list"
of foreign companies, for example, was first made in mid-2019 as the
trade war with the U.S. heated up but has yet to manifest. With American
tariffs already discouraging foreign investment, such a list could
easily have further hurt Chinese growth by convincing even more
multinationals to do less in China.
But now
the threat is back. Hu Xijin, the editor of the Global Times newspaper
who has previously reported on upcoming Chinese actions using social
media, tweeted last week that China would retaliate against
any further American limits on Huawei by activating the "unreliable
entity list." Not long after that, the U.S. began requiring foreign
chipmakers that use American equipment to stop supplying Huawei.
Retaliate
and China could well spark another round of escalation with the U.S.
Already, Trump has begun to muse about terminating the phase-one trade
deal the two sides signed in January. On the other hand, Beijing is also
wary of appearing weak domestically, especially with widespread job
losses due to the pandemic. How China responds will tell us much about
Beijing's priorities.
Financial Decoupling
Tensions between
the U.S. and China have been boiling for weeks as both sides have
sought to deflect blame for the pandemic. Yet financial markets have
largely shrugged off the rhetoric. Indeed, an index of Chinese companies
trading in the U.S. was at a three-month high until it fell
on Wednesday. That's when the Senate passed a bill that could delist Chinese companies
such as Alibaba and Baidu unless they can prove they're not controlled
by a foreign government. With what appears to be broad support
for similar legislation in the House — and Trump having earlier said the
administration was looking at Chinese companies
listed in the U.S. that didn't follow American accounting rules — the
risk of this bill becoming law looks real. American exchanges could soon
become far less welcoming to Chinese companies.
Taking Control
Opposition
lawmakers have warned that Hong Kong’s status as an international
financial center is in jeopardy after China announced dramatic plans to
rein in dissent by writing a new national security law
into the city’s charter. The law — which is expected to pass China’s
rubber-stamp parliament before the end of its annual session May 28
— will curb secession, sedition, foreign interference and terrorism in
the former British colony, local media reported Thursday. Privacy advocates fear the law will lead to increased surveillance and censorship in Hong Kong.
Any
attempt to impose security laws now could reignite the unrest that
hammered the city’s economy last year and serve as a flash point amid
broader U.S.-China tensions. Unlike in mainland China, Hong Kong
maintains an open internet and relatively loose constraints on online
speech. But after Beijing signaled its plans, Hong Kong saw a spike in downloads of VPNs, which help people to bypass web restrictions and disguise their digital footprints.
Number Crunching
China has abandoned its usual practice of setting a numerical target
for economic growth this year due to the turmoil caused by the
coronavirus pandemic, according to the text of Premier Li Keqiang’s
annual policy address on Friday. The report points to “the great
uncertainty regarding the Covid-19 pandemic and the world economic and
trade environment.”
Shifting
away from a hard target for output growth breaks with decades of
Communist Party planning habits and is an admission of the deep rupture
that the coronavirus has caused in the world’s second-largest economy.
With the growth outlook depending also on the efforts of trading
partners to rein in the pandemic, the government is shifting its focus
to employment and maintaining stability.
$100 Billion
There was
some good news for China Inc. this week. Some recent private
transactions in shares of ByteDance, owner of the popular TikTok video
app, have valued the Beijing-based company at more than $100 billion.
That would put it in the neighborhood of corporate titans such as IBM,
HSBC and Texas Instruments. The privately held company also made a big
hire. Kevin Mayer, the architect of Walt Disney's direct-to-consumer
video strategy, was named TikTok's CEO
this week, three months after getting passed over for the top job at
Disney. One of Mayer's first challenges will be convincing
U.S. lawmakers like Senator Marco Rubio that the app is not a threat to national security.
What We’re Reading:
And finally, a few other things that got our attention:
- China’s economic outlook is sunnier, even if skies are not as blue.
- What you should know about China’s vaccine efforts.
- Unemployment in China threatens to become a big problem.
- How to home school in a tiny Hong Kong apartment.
- This company is winning China friends in the Middle East.
- The WHO sits in a perilous spot between Trump and China.
