Without freedom, businesses cannot thrive in China

Time to take a step back and review other options.

Hostage diplomacy, propaganda, total censorship.  As business is politicized, Xi Jinping has become the ultimate arbiter.  

By Lee Kok Leong, executive editor, Maritime Fairtrade

With the recent Huawei’s Meng Wanzhou incident, Xi Jinping has yet again showed that under his watch, China is not a safe place for doing business.  The incident reinforced the fact that hostage taking of foreigners including business people and working professionals, whose governments have stood up to Xi, has become a recurring tactic for China to achieve its geopolitical ambitions and to intimidate other countries into submission.  Therefore, with the highs and lows of international relations being play out regularly, increasingly, investors and CEOs are worried about travelling to and operating in China.

In China amid the current climate of nationalistic sentiments, the foreign business community has been relegated to being a pawn in the great power competition as Xi is committed to using people as bargaining chips.  This inhumane practice leaves a profound stain on China’s reputation and global standing.  The arbitrary detentions impact business decisions as the safety and security of staff are paramount to any decision to invest in or withdraw from a given market.  

The Meng incident also highlighted the widespread use of propaganda to turn an unfavorable narrative into China’s favor.  For investors and CEOs, in a country full of propaganda and tight censorship of the media and internet, without independent and unbiased sources of information, without freedom of the press and freedom of speech, it is indeed difficult to make any meaningful business and investment decisions.  

Additionally, Chinese legislation requires all companies to share extensive information about their operations with the government, and the law also made it mandatory for all companies based in China to allow the establishment of a Communist Party cell to “carry out the activities of the party”.  In other words, the party cells are there to educate and monitor to make sure all employees, including foreign ones, remain in line with the party’s positions.

Xi’s China is not business-friendly

By trumpeting that China is willing to do whatever it takes to achieve its agenda, including showing no respect to the rule of law, Xi has put a brake on economic growth, and destroyed decades of painstakingly nurtured international image, soft power and goodwill.  By and large, China and in particular Xi, has lost the trust of most of the global community and he has gained an unfavorable public opinion in many parts of the world. 

Xi may feel that it is better to be feared than trusted.  He may shrug off business, economic or financial concerns and continue to swagger on the world stage and engage in wolf warrior tactics, but he must realize that he cannot afford to antagonize all the people all the time.  Hostage diplomacy, propaganda and total censorship are losing propositions and run counter to China’s national interests.  Rather than a totalitarian regime, the international business community is looking for an open, transparent, safe and stable environment.

Putting a spin on hostage diplomacy

Meng, Huawei’s CFO and daughter of the founder, who was charged with fraud and violating U.S. sanctions on Iran, and has admitted to misleading U.S. investigators about Huawei’s business dealings in Iran, was released on September 24 and returned to China after three years of house arrest in her own luxury mansions in Canada. 

The propaganda apparatus described her as a hero and hailed her return as a symbol of China’s victory over the western powers.  State media People’s Daily said Meng’s homecoming was a “major victory of the Chinese people”.  There was no mention of why she was arrested in the first place and the fact that she had admitted to her wrongdoings.

On September 25 when the government-chartered plane with Meng onboard touched down at the Shenzhen airport, hundreds of people, full of national pride, gathered at the arrival hall to welcome Meng.  They held national flags, shouted nationalist slogans including “long live the motherland”, and sang patriotic songs.  Thousands more expressed their support for Meng on social media.

Canadians Michael Kovrig and Michael Spavor were essentially taken hostage and detained in China’s jails on December 10 2018, just days after Meng was arrested in Canada after an extradition request from the U.S.  Within hours of Meng being released, the two Canadians along with two American siblings, Victor Liu, a student at Georgetown University and Cynthia Liu, a consultant at McKinsey & Company, who had been slapped with exit bans since 2018 as they were visiting family in China, were all released.

Fake Swiss biologist and French journalist

The following cases further highlighted the extent to which Xi is willing to go to obfuscate the truth and fabricate lies in order to change history to suit his purposes.  Two fake personas of foreigners were created to broadcast foreign support for his totalitarian regime.  In this climate where even the supreme leadership and state media are constantly and flagrantly rewriting history and engaging in misinformation campaigns, it is indeed hard for investors and CEOs to discern the truth.  

In August, the state media was caught inventing a Swiss biologist, Wilson Edwards, who blamed the U.S. for politicizing Covid-19.  Multiple state-run media outlets quoted this fake biologist and said that he condemned the U.S.’s influence in WHO and that the international scientific community was disappointed in the U.S. for encouraging the WHO to investigate the origins of Covid-19.  

On August 10, the Embassy of Switzerland said this was fake news and investigation revealed that no such person existed and that the Facebook page quoted was created recently on July 24 and had just three friends.

On March 28, state-owned TV channel CGTN fabricated a fake French journalist to defend against Uighur genocide allegations.  The TV station presented an article purportedly written by a French journalist called Laurène Beaumond, who defended China, which has been accused of violating the UN’s Genocide Convention over its treatment of the Uighur community in Xinjiang.  However, French newspaper Le Monde, after an investigation, concluded that Laurène Beaumond does not exist.

The internet is a propaganda tool in China

For the rest of the world, it is inevitable that the internet will bring about timely and accurate information, different perspective regarding a problem or issue, and opposing ideas and opinions.  But in China, the internet is used as a propaganda tool by state media outlets, official social media accounts, and other actors with suspected government affiliations to spread false claims and misinformation.  The internet censorship system, the Great Firewall, restricts content and blocks all channels through which the people can gain perspectives that are different from official narratives. 

When there are no alternative sources of information, communist propaganda becomes more believable. And having grown up never experiencing universal values like democracy, press freedom and freedom of speech, or hearing of other international media, or using international platforms such as Twitter and Google, the people believe whatever the Communist Party wants them to believe.  

Therefore, inside China, the people are being brainwashed to think in a certain way, for example, all things foreign are no good, and it is unpatriotic, anti-Chinese, and humiliating China, if one is supportive or associated with them.

This is bad for investors and CEOs.  On top of not being able to make good business and investment decisions without any credible sources of information, the investors and CEOs must also be mindful that their local management teams and employees, given that they have been subjected to propaganda and brainwashing since young, may not be acting in the best interests of their employers.  In fact, given the prevalent officially-sanctioned culture of snitching, employees may at any time report their employers for any perceived transgressions.

In Xi’s China, the authority imposes harsh prison terms for online dissent, independent reporting, and even mundane daily communications, including about the Covid-19 situation, which is heavily censored.  Many people also face legal action for sharing news stories, speaking about their religious beliefs, or discussing politically sensitive matters with family members outside China.

Meet Xi Jinping, the enemy of capitalism

Investors and CEOs, to protect their investment and act in the best interests of their companies, must acknowledge the importance of independent reporting and the danger of fake news.  They need independent, evidence-based, in-depth, and timely news and information on all issues that will affect their companies and industries.

Investors and CEOs must not be naive when dealing with Xi’s China. The illusions of profits and market share should not make them blind to Xi’s ambitious political agenda, the true nature of his regime, which is a threat to capitalism and the rules-based world order, and his increasingly confrontational foreign policy.  Investors and CEOs must defend their companies’ values and interests.

Facing hostage diplomacy, propaganda and total censorship is a reality that both investors and CEOs must accept as the “new normal” and they will have to adjust to well into the future if they feel that despite the risks, Xi’s China is still a land of golden opportunities.

Image credit: windmoon / Shutterstock.com

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