Wall Street and Main Street don’t want war with China...SCMP

Tuesday, February 1, 2022 11:01 PM

Immediate need of Confucius.—Ezra Pound

Dear Friends + Interlocutors,

Alex Lo of the South China Morning Post (Hong Kong) has written another thought-provoking article. See readers’ version below. If you link onto the SCMP website, you should be able to access readers’ comments, some of which are fascinating.

Lo picks a fight with John Mearsheimer, the premier American foreign policy theorist, regarding the “strategic error” narrative. Lo cites Mearsheimer's April 2014 article in The National Interest. I don’t understand what point Lo is making, and he doesn’t elaborate.

Mearsheimer’s article is entitled, “Taiwan’s Dire Straights”  and everyone should read it who is interested in China. It is a great article. For one thing, it contains a primer on Mearsheimer’s important “theory of great power politics”. 

And secondly, he concludes at the very end that at some point in the future (ie, now) the best option for Taiwan is the Hong Kong solution: 

Once China becomes a superpower, it probably makes the most sense for Taiwan to give up hope of maintaining its de facto independence and instead pursue the “Hong Kong strategy.”

Well, I agree. Read it yourself and see what you think. 

Back to Lo. I have come to the conclusion that America should regard China as a prime asset to be nurtured and managed. Lo points out that Wall Street and corporate America have arrived at a similar conclusion. It is a realistic one.

Being neither a businessman nor an economist, I don’t know what kind of economic system China has, but it certainly works. And the U.S. should stick with China, not get into a fruitless zero-sum fight with it.

The closest analogy is the unfortunate rivalry between England and Germany circa 1900, which led to World War I. The elites in Whitehall were too short-sighted. 

Imperial Germany was not a threat to England or to its Empire. Indeed, Germany had done nothing wrong; it was too successful. Just like China today.

The Second World War was simply a continuation of the first one. What did England gain? It supposedly won both wars. Today, German industry owns Rolls Royce and Bentley. What does that tell you? Where is the British Empire?

Without the Great War of 1914, the royal houses of Russia and Germany would still be intact. And so too, at least an outline of the British Empire. Europe would not have become a dystopic, fratricidal battleground. The 1918 pandemic could have been avoided. 

And today Washington would not be so full of grandiose ideas. In short, the world would be a better place.


by Alex Lo, South China Morning Post, 31 January 2022

  • Many US hawks now think Washington should have halted China’s rise when it could. Far from being an American-centric narrative, this is a Washington-centric one
In Washington, there is now an entrenched narrative that the United States made a monumental strategic error in allowing China’s rise, which turned the communist country into a direct threat. 

Many knowledgeable people, quite rightly, have considered the whole narrative historically inaccurate, economically unsound and politically indefensible. Quite simply, keeping a billion Chinese in poverty was neither possible nor even desirable for the world economy.

Unfortunately, writing recently in Foreign Affairs, John Mearsheimer, a prominent proponent of the neo-realist school of international relations, has again repeated this narrative.

“What was avoidable, however, was the speed and extent of China’s extraordinary rise,” he wrote. “Had US policymakers during the unipolar moment thought in terms of balance-of-power politics, they would have tried to slow Chinese growth and maximise the power gap between Beijing and Washington. But once China grew wealthy, a US-Chinese cold war was inevitable.”

Now he sounds like someone who passes judgment after the event, having written against this very claim in The National Interest in 2014!

I would not say this false narrative is an American-centric argument; it’s a Washington-centric one. Wall Street is doubling down in China. Corporate America, from Tesla to Apple, is expanding its presence in the country. China welcomes such companies. I doubt these Americans want war with China, or even containment.

In 2020, foreign direct investment in the US plummeted by 49 per cent year on year to US$134 billion, according to the United Nations Conference on Trade and Development. By contrast, FDI in China grew by 4 per cent to US$163 billion during the same period. 

The year 2020 marked the first time FDI in China overtook that in the US, making China the world’s largest recipient of foreign companies’ investments. And of course, many of these companies are American.

China welcomes American business in the way that the US has rejected Chinese business. Consider the latest plan to delist Chinese companies from US stock exchanges. The rivalry between China and the US and its continuation are also a function of a bitter contest between the corporate and political elites in the US. 

Beijing has said repeatedly it does not seek regional hegemony or dominance; nor does it want to spread its system of governance. You may not believe or trust the Chinese, but at least they don’t claim to be championing Chinese communism for world conquest.

Believing conflict is inevitable is itself a self-fulfilling prophecy, as it narrows your vision and excludes alternative considerations – like peaceful coexistence and compromise.