In Xi’s China, economic needs can take a backseat to security

In Xi’s China, economic needs can take a backseat to security

To revive its stagnant economy, China decided this year to attract foreign investors and stabilize its ties with the West. But those goals are clashing with what China’s leader Xi Jinping considers his top priority: bolstering national security in a world he sees as fraught with threats.

Mr. Xi warned that China must fight a US campaign to contain and suppress the country’s rise. In this worldview, foreign rivals are using spies to undermine China’s economy; Russia is not treated as a pariah but as a vital partner in mitigating the NATO threat; and the diplomatic stage is a place to assert China’s influence and reshape the global order in its favor.

At home, the authorities sent a chill to foreign companies by launching a nationwide crackdown on consulting firms with international ties. China’s state broadcaster has accused Western countries of trying to steal sensitive information in key sectors with the help of advisory firms that help investors navigate China’s murky economy.

Abroad, China’s efforts to improve ties with Europe – to drive a wedge between the United States and some of its most important allies – have been complicated by Beijing’s proximity to Moscow. On a visit to Germany this week, Chinese Foreign Minister Qin Gang dismissed criticism that Beijing was not doing enough to end Russia’s war in Ukraine. He also warned that China would retaliate if the European Union decided to impose sanctions on Chinese companies accused of supplying Russia with technology for its armed forces.

China’s increasingly strong approach has also raised concerns in Canada. That government accused a Chinese diplomat of intimidating and gathering family information from a Canadian lawmaker who was an ardent critic of Beijing’s treatment of Uighur Muslims. After Ottawa ordered the Chinese official out, Beijing expelled a Canadian diplomat in Shanghai in a tit-for-tat move.

“China’s ability to manage multiple and competing interests, domestic and global, is fast becoming a defining challenge for Xi,” said Evan S. Medeiros, a professor of Asian studies at Georgetown University who served as an adviser to President Barack Obama.

While this is not new, Medeiros said, it has become much more difficult as China’s economic recovery has become more strained with slowing export growth and rising unemployment rates. “Xi seems to think he can assert himself and attract other countries, relying on the gravitational pull of his economy and global frustration with US power. Those are big bets.”

The campaign against consulting firms has puzzled observers, given recent assurances from China that it was open for business again after three years of strict Covid measures. But companies’ access to data on Chinese industries, including defence, finance and science, appears to have set off alarm bells in the country’s security apparatus, which now takes precedence over economic decision-making.

The party has long struggled with the tension between its distrust of the outside world and the need to maintain global ties to spur its growth. Xi, however, stressed at the annual legislative session in March that he prioritized security, calling it the “foundation of development”.

“President Xi has made it very clear that security trumps development,” said Ryan Hass, a senior fellow at the Brookings Institution who was director for China on President Obama’s National Security Council.

“If that requires cracking some skulls at the consulting firms and scaring off foreign capital in the process, then that’s a price he seems willing to pay,” added Hass.

Ultimately, Beijing is betting that access to China’s expansive market is simply too attractive for foreign companies and governments to give up.

Mr. Qin concluded his four-day Europe trip on Friday after making additional stops in France and Norway, with competing interests looming far and wide.

In France, Qin sought to build on last month’s friendly talks between Xi and President Emmanuel Macron, who traveled to China with a bevy of French business leaders. Qin met French Foreign Minister Catherine Colonna on Wednesday and told her that “China is ready to work with France and other countries to increase the pie of opportunities for cooperation and development.”

Macron defended Europe’s “strategic autonomy” from Washington, particularly over contentious issues like Taiwan, the autonomous island claimed by Beijing. Beijing wants more countries in Europe to follow Macron’s example. But the continent remains deeply divided over China, mainly because Beijing continues to provide economic and diplomatic support to Russia as it wages war on the doorstep of Western Europe.

The scathing tone of Chinese diplomats has not done China any favors either. Last month, its ambassador to France, Lu Shaye, set off a diplomatic firestorm after questioning the sovereignty of former Soviet states such as Ukraine. The remark, which was dismissed by the Foreign Ministry, may have reflected an exaggerated level of confidence within the Chinese leadership about China’s appeal.

“China believes it has a relatively high degree of flexibility to use aggressive tactics to protect its interests because the Europeans cannot afford disruptions,” Hass said. “We’ll see this theory put to the test going forward.”

Anxiety over Beijing’s assertiveness has pushed more countries into the arms of the United States, including longtime allies Japan, South Korea and Australia, as well as compromisers like the Philippines. It has also brought India closer to Washington than ever before, something that previously seemed unthinkable in US foreign policy circles, given Delhi’s history of non-alignment.

Analysts say these kinds of self-inflicted injuries are inevitable under Xi’s leadership. The more Xi feels insecure and threatened, the more his nationalistic tendencies compel him to back down, regardless of the costs.

“The regime is in a defensive position after the failure of the ‘covid zero’ policy and the economic slowdown, so Xi has to show a strong face,” said Suisheng Zhao, a US-China expert at the University of Denver. “As long as he feels vulnerable, he will try to project to the world that he is powerful, stands firm and will defend all of China’s so-called vital interests.”

Still, talks this week between China’s top diplomat Wang Yi and Jake Sullivan, the US national security adviser, hinted at a possible thaw in relations between Beijing and Washington.

As relations with the West falter, China has stepped up its flirtation with the global south, holding recent meetings with Pakistani and Afghan foreign ministers as Xi is set to chair the first China-Central Asia Summit on May 18. .

“From China’s perspective, given its deteriorating relations with the advanced, democratic countries of the global north, this makes sense,” said Bates Gill, executive director of the China Analysis Center at the Asia Society Policy Institute.

China’s intention is to be “a much bigger player in the global south,” Gill added, so that it can “leverage that influence into the broader geopolitical rivalry with the United States.”

Olivia Wang contributed research.


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