Asia vs China, Europe vs Russia: parallels?
The ongoing discussion in many countries of the Asia-Pacific with regard to future attitude towards China, and the equivalent discussion in and among European countries regarding Russia – as exemplary shown in the context of the Skripal poisoning incident in London – have a common denominator. How should countries in either region handle their relations with large, commercially important but ever more authoritarian governments in their near-abroad?
To make sure, the intent here is not to compare China and Russia, too diverse countries and economies to put into the same basket. But compare you can and should their two present leaders. Not since Stalin in the USSR, and not since Mao in China have single men in Moscow and Beijing exercised such total control over their respective countries. A consequence, for better or for worse, is the respective perception abroad of Vladimir Putin and Xi Jinping. In the New York Times the normally cautious conservative David Brooks calls Putin ‘the most influential man on earth’. This rare sobriquet hitherto mostly reserved for the man in the White House, could as well be affixed to Xi who, contrary to Putin presides with no term restriction over a growing, not shrinking population and economy.
But the main point here is the perception abroad of country and person. Much accelerated by the Trumpian self-immolation of the American pretense to be the leader of the free world, we have vivid confrontations in Europe between the ‘Putin -Versteher’, arguing with Russian needs of national preservation and the commercial imperatives of undisturbed relations with Moscow on one hand and on the other those who see Putin as a dangerous, neo-soviet Macho, particularly active with regard to money and might for him and his court in the Kremlin. (For details on the latter, check out Mikhail Zygar’s ‘All the Kremlin’s men ‘). It looks like the China debate in the Asia-Pacific runs basically along the same lines, culminating in the crucial question of how far you can trust the man at the top and his favorites.
Nowhere is that last point more apparent than in the respective treatment of Chinese nationals in the Asia-Pacific and Russian nationals in Europe respectively. Especially when they come with money to invest and buy companies or real estate. So far that money has been talking. If Theresa May’s government wanted to really strike at the core in Moscow it would start seizing English assets of those ‘Kremlin men’. If Germany wanted to really move against Russia, they would start with blatant defacto agents of Putin such as former Federal Chancellor Gerhard Schröder.
It appears that the debate in the Asia Pacific, albeit different from country to country, revolves among the same core. Is everything Chinese, are all Chinese entitled to the same treatment like any other investor or individual from abroad, or is the China Communist Party CCP with its great enabler Xi so much part of institutions and companies, and of at least some minds to treat them as foreign agents?
Looking at the economic stakes these are questions that must preoccupy not only think tanks and the media but very much also most other decisive actors both in Asia and in Europe. Especially now when both China and Russia become ever more authoritarian, guided by ‘Chinese Dreams’ and Post-soviet revanchism to rectify perceived historic wrongs. What price would Europe be ready to pay in lost energy imports and missed machinery exports with regard to Russia? Could the Asia-Pacific do with substantially diminished amounts of both export of raw materials and foodstuffs to China as well as Chinese investment?
Some defensive barriers are already being put into place with regard to Chinese investment, such as first laws of restriction or at least intense discussions thereof, in both European and some Asian countries. The US, otherwise internationally retreating, has already been active in such homeland defense, even if Trump’s ‘trade war against China’ – much ballyhooed but aimed primarily at his home front – is disregarded. The hitherto relatively obscure US Treasury Department ‘Committee on foreign investment in the US’ (Cfius) is rapidly becoming a frontline instrument of controlling foreign, but especially Chinese investments and might soon be fashioned to also control the reverse stream, such as American technology exports. As we have said before, it is not totally inconceivable that we shall see internationalization of such controls, the way COCOM (Coordinating Committee)-rules within NATO (and friends) for exports to the USSR and Eastern Europe were in place during the Cold War.
And if some think that Swiss companies, large or small, might escape the fight of global elephants, then they could be in for a rude surprise. Today’s global value chains are far too interconnected to offer refuge to companies from ‘neutral’ countries. And that goes both for Asian countries such as Indonesia flattering itself to be a bridge between China and the ASEAN, and for European countries such as Switzerland, the only larger economic power in Europe with a free trade agreement with China already in place.
As recently demonstrated by the targeted measures of the Trump administration against oligarchs of Putin’s inner power circle such controls and restrictions can very quickly spread to secondary actors anywhere. Did all Swiss SME’s, catering to Sulzer, really see the blow against their interests coming when Sulzer’s principal owner Renova/Viktor Vekselberg was hit by US sanctions?
As we like to repeat at Share-an-Ambassador to both clients large and small, be sure to do your geopolitical due diligence before any economic activity in new, difficult or changed markets and keep up your vigilance by staying geopolitically literate ever after.
Picture: AFP