Xi Jinping poses not only a risk to China but to the whole world as well.By Lee Kok Leong, executive editor, Maritime Fairtrade
Xi, general secretary of the Chinese Communist Party (CCP), is a threat both to the Chinese economy and to the prosperity of the free and open world. Importantly, investors and CEOs have to ditch their preconceived notion and see Xi for what he really is: a political risk to their business interest. It is time they put their own profits and interests first and to remind Xi that their values and integrity are not for sale.
On top of causing economic upheaval within China with his Maoist policies, Xi also undermines confidence in the global economy with his aggressive foreign policy. He unleashes his wolf warriors and a new generation of Red Guards against investors and businesses that do not sufficiently show loyalty to him. The seriousness of this risk is compounded by the fact that some of the companies and even countries are strategically dependent on China, either for import of critical goods or as an export market.
Predatory economic policy
It should not be forgotten that the Covid-19 pandemic, originating in Wuhan, has made clear the dangers of this dependence. Before alerting the world to the outbreak, the CCP ordered domestic surgical mask manufacturers to stop export and officials also mass-purchased the remainder of the global supply.
Many countries were caught by surprise and there was a huge shortage of masks and other medical equipment like respirators, and hospitals and medical personnel were under tremendous strain because of this lack of critical resources. Once Xi claimed to have control the spread of the virus, he engaged in mask diplomacy to try to improve the country’s international image.
Additionally, the Belt and Road Initiative is a debt-trap diplomacy with the use of loans and aid to gain influence around the world. For example, in 2018, the Sri Lankan government was forced to hand over the Hambantota Port and 15,000 acres of surrounding land to China for 99 years after defaulting on loans payment. This transfer effectively gave Xi control of a territory along a strategic commercial and military waterway a few hundred miles off the shore of rival India.
Xi uses China’s economic power as a geopolitical weapon to upend the international rules-based order to serve his hegemonic ambition. He has long shown a willingness to threaten the prosperity of those who question his malign actions and expand his power and influence at the expenses of others.
Critics say the current China is not a model world citizen and cannot be expected to become a responsible stakeholder in the international community. Indeed, it may be time for investors to reduce their exposure and for companies to relocate their supply chains to other stable, low-cost and business-friendly regions, such as Southeast Asia.
Xi is threatening freedom of trade
Starting September 1, the CCP demands that all foreign ships entering the South China Sea and East China Sea must register with its maritime authority and to provide detailed information including the ship’s name, call sign, current position, next port of call and estimated time of arrival.
This regulation is the second such instance this year that the CCP coerces neighbors and advances expansionist objectives, following a law introduced in February that allows the Chinese Coast Guard to fire weapons at foreign ships in disputed maritime waters. These moves cause tension and destabilize the region and they are yet another direct assault on the international rules-based order.
Taken together with the CCP’s unlawful and sweeping maritime claims in the disputed waters, among the busiest sea lanes in the world, these two militaristic foreign policies signals that Xi is ready to solidify totalitarian control and if there is no meaningful resistance, then Xi is about to have a stranglehold on 20 percent to 33 percent of maritime trade, including the all-important crude oil. With this threat to freedom of navigation, lawful commerce and free trade, investors and CEOs should be worried as there are serious and far-reaching consequences for their businesses.
Brunei, Malaysia, the Philippines, Taiwan and Vietnam have competing claims in the South China Sea, while Japan and South Korea have their own disputes with the CCP in the East China Sea. In 2016, an international tribunal ruled that the CCP’s sweeping claims of almost the entire South China Sea had no legal basis.
Nationalism taken to the extreme
Yet another example of investors suffering at the hands of Xi happened on September 1 when a Japanese-themed attraction in Dalian was forced to close just 10 days after opening due to anti-Japan sentiments. Investors of the US$928 million project were left in the lurch after government officials ordered the closure. Another similar incident occurred in October 2020 when officials in Guangdong closed the Japanese-themed Ichiban Street.
The closures show a lack of legal protection for investors, who are without any recourse to compensation or have any way to get back what remained of their capital, and also highlight the fact that there is much uncertainty and a lack of stability in the business environment.
With Xi pushing his Maoist policies and a new generation of Red Guards agitating the people, this tide of extreme nationalism and anti-foreign sentiment is not going to abate anytime soon. It is speculated that other foreign-themed attractions will also be targeted soon, for example the Shanghai Disneyland, Beijing Universal Studios and Shanghai Summer Festival which draws on Japanese culture.
A lack of trust
A measure of trustworthiness is to look at the allies that a country has, because as the saying goes, birds of the same feather flock together. In this regard, Xi can count North Korea, Pakistan, Iran and the Taliban as allies, who all share similarities: untrustworthy, repressive regimes with the economy not doing well.
Be that as it may, North Korea in early September turned down 3 million Sinovac vaccine doses and it is speculated that this ally does not trust the safety and efficacy of China-made vaccines. On August 15 after the fall of Kabul, the capital of Afghanistan, the CCP said that China is “ready to develop good-neighborliness and friendly cooperation” with the Taliban, a regime that engages in killings, beheadings and oppression of its own citizens.
Since March 2020, Xi has, without evidence, been promoting the totally unfounded theory that claims the Covid-19 virus originated from a U.S. military lab, with the intention of deflecting attention away from Wuhan. In August, he doubled down on the conspiracy and ordered his wolf warrior diplomats and propaganda machine to call for a World Health Organization (WHO) investigation into the U.S. Army Medical Research Institute of Infectious Diseases at Fort Detrick, Maryland.
This misinformation campaign came about after the CCP rejected the WHO’s request in July for a second probe into the origins of Covid-19 to include audits of labs and markets in Wuhan, the original epicenter of the pandemic.
Trust, integrity, rules-based order, and a free and stable environment are important for businesses to thrive. In their chase for profits and prosperity, it is time for investors and CEOs to ask themselves: Can they still trust Xi Jinping?
Image credit: Naresh777 / Shutterstock.com