Jamil Anderlini: The Legacy of the Opium Wars


Financial Times Asia editor Jamil Anderlini talks to Rob about the lasting legacy of the Opium Wars on Chinese foreign policy, and the future of Hong Kong.

Transcript

Rob Johnson:

I’m here today with Jamil Anderlini, the Asia editor of the Financial Times. Thanks for joining me today as Jamil.

Jamil Anderlini:

Thanks Rob.

Rob Johnson:

We have upon us, what I think you’ve accurately described as the new Cold War. U.S.-China relations are how would I say, quite strained, this has been a pathway we’ve been on for quite some time. In your mind why have they deteriorated? What’s the state of play now? How is the pandemic that has visited upon us as we start June of 2020? And what are the dangers of this deterioration? Where do we need to go to repair?

Jamil Anderlini:

Sure. Thank you, Rob. I would say that if you look at relations between the U.S and China, they’re really at their needier, they’re the worst that they’ve been since ties were normalized in 1979, I’d say they were probably worse than they’ve been since 1972 when Nixon and Kissinger made the very famous visit to Beijing. So really what we’re talking about is the worst state of this relationship in 40 or maybe 50 odd years. So if you want to understand why relations have got so bad, you really I think have to look at the underlying fundamentals between the two countries. Now, of course, some of it is personality. Some of it is the personality of President Xi Jinping or General Secretary Xi Jinping as he’s referred to in Chinese. Some of it is to do with Donald Trump and the personalities of these leaders does make a difference and is important, but there’s a fundamental, underlying shift that has happened that I think explains a huge amount of the deterioration in the relationship.

If you think about what engagement involved and why it was so successful between the U.S, particularly the U.S and China, but the rest of the developed world and China, why has China been grown so fast? Why has this relationship become so enmeshed between the Western China? China is more open now than it’s probably been since the Tang dynasty. If you think about it, I mean, millennia since China was this open to the rest of the world. So, why has this relationship worked? Well first of all, China was in the mid seventies, late seventies, China was coming out of a disastrous culture revolution, which followed on from the even more disastrous, great leap forward, its economy was basically not able to even feed its population, it was really in a disastrous state. And Deng Xiaoping in the late seventies, early eighties, he said, right, we’re going to open up to the world, we’re going to reform politically a bit. And he set the country towards what they call reform and opening up, which is the sort of great change in Chinese policy to sort of embrace the world.

And what happened was, the rest of the world looked at China and gradually it took several decades but it really sped up in the nineties and the early two thousands, the rest of the world saw a limitless pool of labor. It saw a country with basically no environmental laws or restrictions. It saw communists who were able to do business, that was what they saw. And so you had this enormous shift of global manufacturing in particular from Western developed countries to China. I think in the early two thousands, mid two thousands, it cost 15 times more to produce in Mexico for the U.S market than it did to produce in China for the U.S market.

And so the rest of the world decided to shift it’s manufacturing production, basically outsource almost everything that you could to China. And it also outsourced pollution, look at how polluted the West was in the eighties even in the nineties, and look out clean, relatively speaking most of the Western countries are now. That’s because they exported their pollution to China, and the Chinese people were the ones who basically suffered from that from an environmental perspective. Of course, the Chinese people became much, much richer because starting from a low base, they were able to find many more jobs. They had a huge demographic dividend, which really allowed this enormous rural labor force to move into urban areas and to work in factories.

Now, the reason I’m explaining all of this is because most of those factors have gone into reverse. And so yes the personalities of Xi Jinping and Donald Trump are important, and yes, the people in the decision making chairs at various times in the last decade are important, but I would argue much more important are the structural shifts that have gone, and the structural changes that were working to encourage engagement between the West and the East and between the developed economies and China, those structural changes, forces have basically all gone into reverse. China now has a shrinking labor force. China is now moved up the value chain and is producing much higher valued goods. So instead of the West, particularly America being able to sort of make the high value things and design everything, and then just get it made with cheap labor and polluting factories in China.

Now, China has introduced much stricter labor laws or stricter labor laws. If you look at the minimum wage in China it’s gone up 20% every year for a decade and more. If you look at what China wants to produce, it’s much, much higher valued products. And China is now innovating, it’s now doing what previously only Silicon Valley and Japan and Germany could do. So it’s now coming up with things that are competing with what’s produced in the West. So you have the benefits of engagement and the benefits of outsourcing diminishing all the time. And you now have China as a real competitor. China’s also to be Frank used some quite predatory trade practices, some quite predatory mercantile policies, which have allowed it to really beat some of its competitors who are playing on a more even playing field.

So many, many, many industries in China are still restricted from foreign investment. Most of those industries are not restricted in Western countries, but there is a growing feeling in most other countries driven frankly by those same Western businesses that have benefited over the last few decades, that there needs to be more reciprocity. And so I think just to point one more thing out that, if you go back a decade, Beijing’s biggest lobbying force in Western capitals, in Washington D.C and around the world, their biggest lobbyists were multinational businesses who have enormously benefited by outsourcing production to China, and later benefited from the large Chinese market.

However, over the last decade, one of the most interesting and important shifts that I’ve noticed and that I’ve observed, has been the total change in the attitude of these multinational companies, no longer do these companies go to Washington and say, hey, just be nice to China, engagement is the way to do it. Don’t meet the Dalai Lama, don’t criticize China for human rights issues. Don’t talk to Taiwan. All the things that Beijing sees is very important. These businesses used to lobby on behalf of Beijing for a whole host of things, today they’re lobbying against Beijing on almost every issue. And the reason is they feel not only have they been most of them and to a large extent shut out of the Chinese market or unfairly treated in the enormous Chinese and growing Chinese market. But they feel like their Chinese competitors who in some cases have stolen their intellectual property are now coming into their own markets in their home countries and competing with them there.

So you’ve seen a very, very real and very, very strong shift in the lobbying of Western businesses. And I think frankly, that’s one of the most important changes as well.

Rob Johnson:

Jamil, do you think that the financial policies that related to what you might call modernization of the Chinese market and global integration, which no longer look to be on the horizon. My sense was that Wall Street was a big advocate for, I would say, friendly relations with China when they thought they would someday bring what Americans thought was a comparative advantage of providing financial services to a very large scale market. And I don’t think it’s been pretty rough road for them to gain access and contributed in that regard. And I’m just curious how you thought that sector was adjusting at this time.

Jamil Anderlini:

Yeah. So I mean a classic example, right? So who were the big lobbyists on behalf of China 15, 20 years ago? It was Goldman Sachs, it was JP Morgan and Morgan Stanley. It was the big financial institutions who looked at this enormous, very under developed financial product market in China and just were licking their chops. And not just the Americans, the Swiss banks and the British banks, Australian banks thought they were going to come in and because of their much more sophisticated products they could provide and their value add in a very, very primitive financial market, they thought they were just going to make out like bandits. And what happened was, they came in and they found out that even once the WTO conditions allow them to operate in China, that there were still all sorts of hidden regulations and hidden rules that they weren’t really able to overcome. And I think the peak, the absolute peak, all foreign financial institutions market share in China was about five percent.

Five percent of the entire market was as big as foreign investors got, foreign players got, and they never got near that again. So, they were massive lobbyists on behalf of China for many, many, many years, hoping that just around the corner Beijing would let them in. I remember going to see this, I won’t name him, but this forlorn Goldman Sachs executive, who’d been very, very senior and was sort of sent to Beijing and he sort of decided he was going to go live in Beijing and be close to them. And he said, you’ve got to breathe the same air as your clients. He was very, very sort of stoic. And I just watched them get sort of sadder and sadder over the years that he lived in Beijing, as it became clear and clear that they were never going to make headway.

And now it’s very interesting if you look at, as this trade war ramped up and then as the, as I say, the new cold war really started to get underway. Beijing, the Communist Party suddenly said, we’re going to open up and allow you to own your own subsidiary, something they’ve been lobbying for for decades. And suddenly the Goldman Sachs of the world, the American banks suddenly got very excited. Oh, we’re going to be able to finally, finally, we’re going to get in there and it’s two decades or three decades later and we’re going to get a little piece of the action and it’s still worth it because it’s so big. Even though China has a totally closed capital account, we’re going to make some money. They were preparing all these banks were preparing to hire hundreds of bankers up in Beijing and then COVID-19 hit, and then the real sort of cold war is starting now, I think, and they must be feeling very, very dejected at their chances I would say of really ever breaking in to that market.

Now, another point I would make is, if you look at who’s powerful in Washington D.C from a lobbying perspective today, I mean, no question before the financial crisis, it was Wall Street, it was the Wall Street banks. These were the people who could buy senators and congressmen and who really had by far the biggest influence inside the beltway in Washington D.C. But I would argue that today it’s the technology companies that are the richest and probably the most influential when it comes to kind of lobbying power, the giant technology companies. And guess what? Guess which companies are totally shut out of the Chinese market and always have been? Google, Facebook, Amazon. So all the companies that are really the most powerful in many ways today in the U.S that probably holds the biggest weight when it comes to lobbying in D.C, those are exactly the companies that China has always kept out with the so-called great firewall of China. And so, again, that’s adding to my point that the lobbying direction in D.C is certainly for disengagement, maybe even decoupling, not for greater engagement today.

Rob Johnson:

Yeah. I remember, right after the 2016 election, I was in Beijing with Mike Spence, and we met with some very high level Chinese officials. And one of them said to me, I can see with all the fake news and manipulation and discussions of Russia, that your society is now coming around to a view of the cybersecurity web based intrusion that we have been aware of for a long time. So he was sort of saying it to put it in a parable, the Americans were treating Silicon Valley like a superhero, and all of a sudden became skeptical in a way that the Chinese had always been skeptical. And I replied to him, it’s interesting that you’re skeptical or hesitant because you turned right around and set up your own systems. So it’s not that you’re averse to having the systems you’re averse to having the system that is not controlled by Chinese people. And he nodded. Yeah. But I think-

Jamil Anderlini:

I would argue they’re averse to having systems that are not controlled directly by the Communist Party, not by Chinese. If the Chinese people were to control the internet, I think the Communist Party would be not long for the world probably. That’s their view. It’s very clear that the internet is not safe to be put in the hands of ordinary people or ordinary businesses, it has to be absolutely controlled by the ruling party. And I’ve actually had senior officials tell me that directly. They’ve said, when I’ve asked them why top senior communist party officials are all allowed VPNs, virtual private networks, which allow them official ones, which allow them to surf the global internet freely, Google and all sorts of things, news sources and anything they want outside of the walls of the great firewall.

And when I asked, well, how come it’s okay for you to see all this stuff but not the sort of average Chinese person to read anything they want on the internet? And they said, why would we trust the people with this, it’s too far too dangerous to trust the people with free flows of information, direct quote from a senior of party official to me.

Rob Johnson:

Wow. Wow. Well, I’m quite anxious in realm of U.S, China relations, is that unless the United States and China move to a more cooperative place that the challenge of climate can be truly addressed. How do you see both the need for collaboration and how we might get there in repairing this relationship? Because in some sense, necessity beckons us, at least in my view.

Jamil Anderlini:

Absolutely. I mean, if you go back to the Obama administration, I think the Obama administration started from a place of, we can deal with anybody that was really the platform Obama was elected on and so, there’s no country that we shouldn’t at least think about talking to. And we’re open and this is the new America. And I think it was pretty quickly that they worked out that it wasn’t going to be so easy when it came to China. And I think they quite quickly narrowed the scope of their kind of ambition when it came to dealing with China. There’s just so many thorny issues when it comes to U.S, China the bilateral relationship. And I think they decided to narrow the scope, I mean, deal on various things when they could deal with, on them.

But one of the areas they focused on, and I thought it was a very smart idea at the time, because it seemed not very politically sensitive and not really sort of very contentious was climate change. So, the U.S and China got together with other countries and that was where they really tried to make a concerted effort for the betterment of humanity, where we’re going to deal with climate change. The U.S was historically the biggest polluter, China is by far on a scale of several multiples by far the biggest emitter of greenhouse gases carbon today. So you have China the big modern day polluter, and you have the U.S the great traditional historical polluter.

And as I pointed out earlier, a lot of that pollution in China is actually outsourced pollution from the rest of the world. You don’t want to make dirty things in your country, so you send it off to be made in China. But without these two countries, you don’t have a solution. The scale is just so vast when you talk about Chinese emissions that without China being part of some sort of deal or some sort of arrangement and the U.S of course, as well, you’re just not going to deal with this as a global issue. And like you my great fear is that, we’re talking about a new cold war where there’s going to be only areas of confrontation and conflict and no areas whatsoever really of real cooperation.

And I think it’s incredibly sad. I think it’s incredibly dangerous, frankly, because journalists are prone to a little hyperbole, let’s put it that way. But I don’t think it’s hyperbole to say that the chances frankly of outright armed conflict between the U.S and China are rising all the time, at least when it comes to proxy countries, proxy territories. And that’s what I really worry about, frankly. I think climate change must be addressed by these two countries in particular and bringing along the rest of the world, but neither of them seems capable or willing to show leadership in this area, or frankly, in many other areas. And they seem both to be locked in a kind of cycle of conflict, which is extremely concerning I would say.

Rob Johnson:

I agree. I am reminded of my friend Orville Shell, who with a coauthor wrote a book called Wealth and Power. This was several years ago, but Orville gave a presentation at an INET event. When in essence, he said, given the woundedness of the middle kingdom, China, because of essentially from the Opium Wars, through the Japanese invasion at the time of the Second World War, the Chinese have a great yearning to regain the stature of their national identity at what you might call the top of the world order. And the United States, which has been in that role since the changing of the guard around the time of Bretton Woods, with the British handing the baton to them, the United States would like to have an integrated system led by America and which you might call it is China that transforms itself to be a cohesive element of that system, but essentially emulating the organization of America.

And Orville also brought up in that presentation that part of what was going to be difficult was not just the yearning to rise versus the kind of desire to hold on to the leadership in America, but that these two countries come from very different philosophical systems. Cartesian enlightenment in the U.S case and the kind of Daoist and Confucian traditions. Deal with many things, particularly uncertainty very differently. And I’m curious, because you live right in this intersection, working with the FT in Asia, but having been in Beijing and Hong Kong, do you think Orville’s large perspective, how you say contributes to that understanding of where we are and the difficulties of moving forward?

Jamil Anderlini:

Well, absolutely. So I’d just like to say that Orville is one of my favorite human beings on earth and really one of the great Sinologists in my opinion. And, I talk to him quite regularly and I’m always a tiny bit smarter after listening to him. I would also point out that the focus on the environment and climate change for the Obama administration, the first person who first explained to me what that policy was going to be and who I was intimately involved, and it was Orville actually. So he was intimately involved in formulating that approach to China under the Obama administration. So, yeah, I agree with him entirely that we’re talking about absolutely different worldviews in some ways, however, the U.S and China are quite alike in that they both have this idea that they are exceptional.

Americans absolutely believe in the idea of American exceptionalism and so to the Chinese, the middle kingdom as you referenced earlier, China really believes it’s an exceptional country, it’s different from everywhere else. And, they both also, I would argue believe in this idea of manifest destiny, the U.S was destined to be sort of the world’s leading super-power, and China absolutely believes that today. And if you look at what Xi Jinping from the very first moment he took over as general secretary of the communist party in late 2012 in that very first speech. And I was there actually in the Great Hall of the People standing a few meters away from him with some other foreign journalists. And he stood there and he said, I’m here to bring about the great rejuvenation of the Chinese nation, and that is the China dream he said.

And that’s manifest destiny. That’s the idea that, here I am Xi Jinping, I’m the one who’s going to bring the great rejuvenation, the return to some halcyon time when China was the dominant nation in the world. It’s very explicit, I mean, we’re not talking about sort of, you don’t have to read tea leaves to sort of understand what he’s talking about, and to understand the appeal to the Chinese people. And it’s very interesting because he’s revived in a way that was anathema to several generations of communist leaders, he’s revived sort of old ideas of Confucianism, old ideas of kind of ancient Chinese wisdom that were scorned, were actually purged by Mao Zedong and even in later generations of communist leaders didn’t really want to talk about Confucianism and the cultural revolution for 10 years in China from 1966 to 1976, was about wiping out Chinese traditional ideas, religion, Chinese traditional concepts.

So he’s revived a lot of these things in the pursuit probably you could argue of a very strong nationalism, and American nationalism and Chinese nationalism don’t leave much room for each other. And I think that’s another reason why we are headed into, I would argue in a period of more conflict, because in the American view of the world there isn’t much room for an ascendant China and in the Chinese current view of the world I don’t think there’s room for the U.S at least in China’s neighborhood. So China has got a stated goal of pushing America out of the Pacific, it’s certainly the Western part of the Pacific. And it’s very clear. I mean, it’s in all of the military doctrines. It’s in many of the speeches that party leaders give, it’s not a secret either. So, you know, we’re talking about a status quo power and a power that wants to really shake up that status quo. And that’s another reason we’re headed for conflict, more conflict.

Rob Johnson:

I remember, I used to work in the United States Senate and there was a gentleman named Michael Pillsbury who wrote a book. I can’t remember what it was, I guess it’s relatively recent, but I’ve seen him speak, it was called the 100-year marathon, China’s strategy to replace America as the global superpower. And it resonated with many of these things we see coming to the surface now.

Jamil Anderlini:

Yeah. I mean, you need a title that’s going to sell books, right? So it’s kind of an alarmist title of a pretty well read. I mean, Michael Pillsbury is on, he has a certain view of China and it’s representative of a certain position on the spectrum in the sort of sinologist world. But, I think argues quite cogently and quite convincingly. And like you say, quite a few of the things that he’s argued have certainly been born out by actions in recent years.

Rob Johnson:

You mentioned moments ago about being there at the time Xi Jinping came to power. And I remember having a meal with you and your family a few years later, it was quite some time ago. And you turned me on to a museum exhibit that was at a national museum in Beijing. That was almost like a history of the national ascendance of China. And it was a very, very striking and very strong message. I was a bit surprised they let me go see it, but-

Jamil Anderlini:

They want everyone to see it.

Rob Johnson:

Yeah, they want everyone to see it. Yeah. I don’t remember what the name of that exhibit or whatever, but I remember using-

Jamil Anderlini:

Yeah, it was called the road to rejuvenation and it was [inaudible 00:30:53]

Rob Johnson:

That was lot. It foreshadowed a lot of what you’re talking about.

Jamil Anderlini:

Absolutely. I mean, fascinating for me as a sort of student of modern Chinese history, that exhibition is one of my all time favorites, but just because it’s so interesting and because it’s so telling, it changes all the time, as the photographs were in the former Soviet union would change when an official would be purged and they’d be cut out of the photographs next time, same under Mao Zedong as well under the communist party. So does that exhibition change on a regular basis as party officials are purged, their photographs disappear from that exhibition and as one faction or another rises or falls, so do the displays and those exhibitions of various things that are associated with those various factions. So for example, when the minister of railways was arrested and thrown in prison ostensibly for corruption, the big display about the development of the high speed rail system suddenly shrank to a very, very small exhibition in that exhibition.

So it’s fascinating, if you want to know who’s up or who’s down you can go to that exhibition. And if you’ve been regularly and you have a keen eye, you’ll be able to tell who’s about to, or has just been purged, just by going through certainly the more modern parts of that exhibition. But yeah, it tells you a lot. It was set up after Xi Jinping came to power, that exhibition. It’s name is the road to rejuvenation so obviously it’s his centerpiece. It’s in the national museum, it’s a permanent exhibition. It’s right off Tiananmen Square in the center, the heart of Beijing. And yeah, it gives you a very clear propaganda view of how the party tells history. And the way that the communist party tells history like other communist parties and authoritarian systems over the years is it’s fluid, right?

So history is a tool to be used for modern political purposes. So you rewrite history on a regular basis in order to serve whatever your political goals are today. But one thing that doesn’t usually change is that modern Chinese history always, no matter what museum you go to, no matter what the topic of the subject of the museum, almost inevitably, every museum exhibition begins with, modern Chinese history begins in 1840 with the first opium war. And there’s a long screen usually about the evil British, there’s always the evil British. And I tried to explain this to my British colleagues and to people in the British government. And I say, look, you’re hoping for a trade deal with China, you’re really hoping that one day you guys are going to get some great benefits from cozying up to China or your communist party or however you do, you will never get any benefit, you are always going to be the perfidious British who started the opium wars and carved China up like a melon.

And it’s very powerful this stuff, it’s taught to very young children from a very early age, they are taught history by learning about the opium wars from 1840. And it’s fascinating because that curriculum wasn’t brought in China until 1990, 1991. And it’s explicitly called the patriotic education curriculum. And it was brought in immediately after the Tiananmen Square massacre, because the feeling was these student led protests showed that the average Chinese young person was not sufficiently patriotic enough and they needed to be taught how to be much more patriotic. And so it’s fascinating and how the curriculum has changed over the years. But that exhibition is a very powerful living example. And I’d urge everyone who go to Beijing to go see it.

Rob Johnson:

By the way, I do recall there was an app for a smartphone that you could almost see like the highlight reel. I don’t know if that still exists, but at the time I went, I downloaded an app and came home and showed my friends some of what I had seen in the power of the image that was being created and disseminated. But I’ll go research again whether that window in for those of us that are in lockdown all around the world now, would give people another way of experiencing that exhibit. Though it was much more vivid spending three, four hours in there and all the twists and turns and what you might call the visual editorials. And it was just fantastic. And that’s a belated thank you to you for turning me on years ago. But that experience has always really resonated with me.

When you’re looking at the U.S and China, I remember early in this conversation you talk a little bit about the personalities, but I think the structural issues that you brought up were extremely important. And in my own sense of the United States, we’ve talked about essentially all the companies with no environmental restrictions with a huge pool of labor could engage in foreign direct investment and be profitable. You had people imagining, envisioning, fantasizing about huge economies of scale. Coke and Pepsi selling to 1.2 billion people. And you had a lot of people thinking, including Silicon Valley and others, that they were going to gain substantial market share that the American comparative advantage would allow them to play a very profitable in large scale rule in China.

But even before Donald Trump began his campaign, places like the council on foreign relations started making reports. I remember Kurt Campbell and another gentleman named Blackwell and others, in 2014 were writing reports that could see that the convergence or the dreams of scale, or the integrity of intellectual property rights, were not going to get to the place that they had imagined in their fantasies. And at the same time, when I talked to Chinese officials, they could say to me things like, well, if we were the size of Tonga, then we’d send people to America, get some value added in education, come back, Americans be the tow boat we would latch on, and we would engage in development, but with it would cause them no difficulty. But they have a population five times the size of the American population or four and a half times the size.

And so in some sense, they were swamping the tugboat as the momentum continued things like the China 2025 report which said, we’re going to walk up the ladder of knowledge, intensive industries and displace all these people we import from, or allow for foreign direct investment. So I think there’ve been a lot of structural telltale signs of… Well, there are two other things the Chinese said to me, the engine of growth in the world in the next phase is largely going to be China moving out of the middle income trap and having rising living standards here. That’s where the world’s aggregate demand will be centered. And I think, they also said Americans do not practice what their economists preach. They talk about free trade can make everyone better off and no one worse off, but it implies a tremendous amount of adjustment systems in the transformation, given the size and influence of the Chinese economy in which you might call changing the patterns of comparative advantage.

And the American government doesn’t do that. It deregulates, it cuts taxes for the rich, it lets people keep their money offshore. So tax evasion is now legal tax avoidance. Then they say they can’t afford it, their infrastructure and their school systems wither. And a top level Chinese leaders said to me, there’s nothing we can do about that, but we’re being demonized. So I’m painting a portrait here of many facets of this breakdown, but I think it’s deep and I think it’s been there. How would I say, even before the personalities of Xi Jinping and Donald Trump moved to the floor.

Jamil Anderlini:

Absolutely. And I would agree entirely that this has been coming for quite a long time. I would argue that it goes back to the aftermath of the global financial crisis because pre the global financial crisis I think in China, they really looked at the U.S as a model that in many ways that China hoped to emulate and economically in particular. And after 2008, I think there was a feeling, a recognition that America certainly wasn’t perfect and that Wall Street had blown up this global system that China certainly didn’t want to copy. And so I think, definitely it goes back to back then. And frankly speaking, I think there was a bit of hubris started to creep in, in China, a feeling that actually maybe well founded perhaps, but a feeling that China didn’t want to, or didn’t need to copy America, that China actually maybe had a much better system.

And that certainly is the sort of mainstream of the rhetoric today, at least domestically, I mean, it’s not really what China tries to project outside its borders, but it’s certainly the message to the Chinese people. And you can see it going into overdrive right at the moment with the protests that are happening in the U.S and the rioting and looting happening across the U.S, the Chinese state media has wall to wall coverage of that and saying, see, that’s the American system and look at how much better our system is. And so, I think you could date it easily back to 2008. But certainly I think that the personalities of showjumping and then later Donald Trump. Xi Jinping came into power in 2012, Donald Trump obviously 2016, early 2017. I think those two personalities, well, to a certain extent, they’re both reactions to the changes that have happened, the underlying structural changes and their accelerants for this kind of more confrontational approach to their bilateral relationship. And I think the personalities do matter. They’re not sort of irrelevant. And I would say both of those personalities have accelerated the more confrontational approach from each country.

Rob Johnson:

I’m grinning as I’m listening to you because I’m remembering one of your predecessors in China, Richard McGregor and his book The Party about particularly at the outset of the book, there’s this passage or scene where American financiers come in and the Chinese leaders tell them essentially, well, you blew up Asia in the nineties and now you’ve blown up yourself. You’re certainly not the model we’re going to emulate as we build this country. But I thought Richard’s book captured that 2008 and slightly beyond window very, very skillfully.

Jamil Anderlini:

Yeah. Richard was my boss when he was the training Bureau chief. And he’s the one who hired me to the financial times, he’s I like to think of him as my rabbi or laoshi, my teacher. And yeah, he’s a great journalist and a great author.

Rob Johnson:

Yes, indeed. So I guess the other thing that relates to China and China, U.S relations, that is how would I say very much on the radar right now is the evolution of Hong Kong. And I know you live there and I’ve told this story a couple of times on this podcast about being in a car in December last year or late November, I believe it was, when a bomb went off in the street and Hong Kong was a bit like a ghost town. The weekend I was there, the conference I was attending officially canceled and then went to a closed venue and convened there, but it was not publicized, and there was quite a bit of a protest in the streets. But, tell me a little bit about what’s happened more recently. What’s going on now in Hong Kong and what does it portend and what can we learn from that?

Jamil Anderlini:

Yeah. Well, if there’s a new cold war between the U.S and China, which I believe there is, we’re in the early stages of it, if there is then Hong Kong until now has been West Berlin, but Beijing is about to turn it into East Berlin. Let’s put it that way. This is really, as one of my colleagues put it probably slightly more poetically, you need to think about this as two giant weather systems colliding. So if one of the weather systems is authoritarian, increasingly totalitarian communist party rule in mainland China. And the other weather system is the liberal Western democratic ideology, these two ideological weather systems are really smashing into each other right above Hong Kong. And it’s really causing a tempest down here on the ground.

The latest is that, next week, June forth is the 31st anniversary of the Tiananmen massacre. And we expect large protests, maybe not very large actually because for 30 years, every year there’s been tens if not hundreds of thousands of people have come to Victoria Park in Hong Kong, they’ve gone there and they’ve held a candle that vigil, it’s the only place on Chinese soil inside the People’s Republic of China, where it’s been until now legal and totally allowed for people to remember this event from 1989. Except that this Thursday, Hong Kong government, the Hong Kong police have banned that vigil for the very first time. And they claim that that’s because of the danger of COVID-19, but that seems like a very lame excuse.

It’s clear that the real reason is almost certainly that Beijing is intent on introducing a very strict draconian national law imposing it on Hong Kong and the Beijing appointed Hong Kong government don’t want to further antagonize the leadership up in Beijing with the possibility of a very large, very visible, very well covered, vigil on this very sensitive anniversary. So this week is going to be, I think, very important. But the underlying issue is that Beijing, I think surprised the Hong Kong government and almost everybody in Hong Kong with this announcement very recently, just a week or so ago, week and a half ago, this announcement that they were going to circumvent, bypass the local legislature. They were going to effectively throw out the idea of one country, two systems through which Hong Kong was supposed to be governed and actually contravene the basic law, the mini constitution here in Hong Kong by directly imposing a national security law on Hong Kong.

So we’ve talked to quite a few constitutional scholars and great legal and it’s very hard to find someone who argues that this is even legal under Hong Kong and Chinese law under the constitution here. But I think that’s irrelevant in a sense because Beijing has just effectively decided it’s going to do this. I don’t think anybody wanted this even the most pro-Beijing figures, although many of them have come out to publicly support this. I mean, until Beijing said this, they were all opposed to this as a possibility even. I think so in Beijing’s calculation and the communist party’s calculation, they were very, very worried about elections, tightly controlled, but somewhat democratic elections that were supposed to happen in September. If you go back to late last year when these district council elections, which are the absolute lowest level of election when these happened, the pro-democracy figures, antigovernment figures, candidates won a sweeping landslide, 85% of the seats, or more were won by pro democracy antigovernment.

So that really caught Beijing’s by surprise. They actually, in the weeks leading up had been clearly messaging that they thought that pro government and anti demonstrator candidates were going to win in a landslide. So this was a sort of stinging rebuke. And I think it’s quite clear that Beijing felt that when these elections come around in September, that they were for the legislative council, which is their local legislature, that they might even have lost the local legislature, which would have been much more embarrassing to try and to null those results. So in Beijing’s mind what they’ve done is they have introduced this now when the rest of the world is distracted by the virus, and when the Hong Kong people haven’t been protesting so much over the last few months because of the virus. And by ramming through this legislation, they hope that they will scare the protesters off the streets, and everyone will be cowed into sort of silence and acceptance.

And hey guess what? If people do still come out and protest against this, as they have over the last week, then they’ll pretty soon have a national security law, which they can use to round everybody up. There are very deep concerns, if you go back to 2003 when a much, much milder version of this was proposed actually under the basic law of the mini constitution, when a national security law was proposed in 2003, you had the biggest protest up til that point, peaceful protest ever in the history of Hong Kong against it and the plan was swiftly abandoned. And the Hong Kong government, Hong Kong legislature has never been in a political position where they were able to even suggest reviving that national security legislation. Partly because it’s getting quite technical, but partly because the legislation itself is almost certain to contradict other parts of the mini constitution in Hong Kong, which are supposed to guarantee freedom of speech, freedom of religion, freedom of assembly, free press, the way that national security is interpreted in mainland China is extremely broad.

So somebody who posts a poem or a satirical cartoon on the internet can go to prison for several years for subversion or incitement to subvert state power as it’s referred to in Chinese law. So you can see the quite large ramifications for Hong Kong, if well, this law is almost certain to be pushed through in time for those elections in September. And my great concern is, I mean, you were talking about witnessing a bomb exploding here in Hong Kong. I’ve been up many times out to the frontline to witness as a reporter to see how these protests are playing out. And, I’ve seen them get quite violent in some cases. And my great fear is that in doing this Beijing, the communist party has closed off in many ways the possibility of peaceful protest, closed off the avenues for people to protest peacefully and for some of the more radical members of the protest movement, you could see them going, unfortunately, very unfortunately for Hong Kong and for everyone here, moving in a much more violent direction.

And my prediction well for about eight, nine months now has been that, unfortunately, I think we may end up in Hong Kong in a situation somewhat like Northern Ireland, and that will be a disaster for the Hong Kong people for the world, for anyone who loves Hong Kong and loves China as I do.

Rob Johnson:

Yes. Well, thank you. I say that’s a daunting portrait. It doesn’t, how would I say? I’m an old sailor. So when you talk about weather systems colliding, most often that’s where you see thunderstorms enlightening, and it sounds like that’s exactly what’s approaching or upon us now in Hong Kong. But Jamil, I always really love talking with you and learn a lot, I’m inspired to be more curious about your vitality, and I hope that we can come back on this podcast together from time to time as events unfold. But I guess at this moment I just want to thank you for being here today and encourage everybody to follow your fine work with the Financial Times and their good judgment of making you their Asian editor, I want to applaud that too. But thanks for being with me today and like I said, let’s meet again soon.

Jamil Anderlini:

It’s always a pleasure Rob. Thanks. Thanks so much.

Rob Johnson:

Bye-bye.

About the Host

ROB JOHNSON serves as President of the Institute for New Economic Thinking.

Johnson is an international investor and consultant to investment funds on issues of portfolio strategy. He recently served on the United Nations Commission of Experts on International Monetary Reform under the Chairmanship of Joseph Stiglitz.

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About the Guest

Jamil Anderlini is the Asia Editor of the Financial Times, responsible for all coverage out of Asia. He was previously Beijing Bureau Chief.