Are supply chain disruptions the beginning of the end of globalization?
To fight China's economic extortion, take a page from the Cold War
You may have missed it amid the usual flurry of social media trends, but for a time, there was a campaign amongst politicos and policy wonks alike to encourage the purchase of Australian wines in response to what amounted to a ban from the Chinese Communist Party. In March, some 11,000 liters of wine were seized in Shenzhen alone, as the party imposed over 200 percent anti-dumping duties. The duties were the latest in a string of moves by Beijing to punish Canberra for supporting an international inquiry into the origins of the coronavirus, but are also indicative of the growing tension between the two countries.
While the import duties on wine and the resulting social media campaign may seem silly, they are indicative of a much more alarming trend in the behavior of the Chinese Communist Party, which amounts to economic extortion and coercion in support of its geopolitical aims.
The economic extortion isn't limited to Australia. In Africa, allegations of bribery followed Huawei as it attempted to secure an exclusive contract to build a 5G network in Namibia. A member of city council was allegedly offered upwards of $360,000 to drop her opposition to the agreement. In Ecuador, a dam project that was ostensibly intended to help lift the country out of poverty led to a national scandal with shoddy workmanship, unmet promises, bribes and the Chinese Communist Party effectively owning the dam in question as Quito could not keep up with the payments. In Sri Lanka, too, the Chinese Communist Party, through the Belt and Road Initiative managed to get Columbo to hand over a port and some 15,000 acres for a 99-year lease after the government couldn't make payments on the development project.
In case after case, we see the Chinese Communist Party offering overly generous terms to countries in need of development and assistance, only to saddle them with unrealistic payments while corrupting the political systems of the countries in question and ending up with the assets in the end. General Secretary Xi Jinping would make a great stand-in for Tony Soprano if they decided to reboot the series and set it in Beijing.
The good news is that countries are waking up to the threat of extortion by the Chinese Communist Party. In April of this year, Canberra ended two investment agreements between the State of Victoria and Beijing - a 2018 memorandum of understanding and a 2019 framework agreement, both of which were part of the Belt and Road Initiative.
The problem is that in many ways it is too little too late and too uncoordinated. What has been missing is leadership from Washington. We need to offer competitive financing and loan guarantees for countries wishing to rebuild or redevelop their infrastructure - guarantees not loaded with quid-pro-quo requirements or onerous terms that will ensure their failure. We need to call out the economic extortion of the Chinese Communist Party vocally and often in international fora and multilateral engagements. We need to advocate for international norms and standards that conform to liberal western rules, and not the authoritarian proclivities of the Chinese Communist Party.
We also need to be prepared to step in where the Chinese Communist Party sets countries up to fail. When those agreements become too onerous or too expensive, Washington and its affiliated financing arms need to be ready to step in and support those capitals against the predatory behaviors of Beijing.
Here, on 5G, we need to aggressively push for open standards and encourage the development of non-Huawei and ZTE products, and continue to highlight just how risky these products are. In Australia, again, government security experts found that they would need to install some 300 security precautions into the 5G network and even still they would not be able to guarantee security from Chinese Communist Party interference. There was little they could do to ensure that Beijing would not just turn the network off if Huawei gear was installed on the communications backbone. Think about that - 300 security measures and still no guarantee of security. That's just how risky this equipment is, regardless of how attractive the prices are or how good the services may be.
Washington needs to wage "lawfare" just as aggressively as Beijing is presently doing. This means leveraging the law to our advantage and thinking creatively to counter the influence and economic extortion of the Chinese Communist Party. We know how to do this - we did this throughout the Cold War - and we can do it again. By developing smart, consistent and innovative policies, we can push back against Beijing's efforts, not out of protectionist desires, but the desire to have a free and liberal international order that is based on the rule of law, not economic extortion.
Mike Rogers is a former Republican representative in Congress who was a chair of the House Intelligence Committee. He is now the David Abshire chair at the Center for the Study of the Presidency and Congress. Follow him on Twitter: @repmikerogers