Why did Saudi Arabia and Iran go to Beijing to restore diplomatic relations?
Why did Brazil’s President Lula visit Huawei headquarters in Shanghai this week, after declaring that the BRICs (Brazil, Russia, India and China) should launch a global currency to replace the dollar?
Why did French President Emmanuel Macron declare after his meeting with Xi Jinping: “For the French president… it is crucial for the European nations to avoid becoming ‘vassals’ when Europe can be ‘the third pole’ vis-à-vis the United States and China. We do not want to adopt a ‘bloc-to-bloc logic’… and submit to ‘the extraterritoriality of the dollar.’”
Why is a procession of Southeast Asian presidents (Indonesia, Vietnam, and Malaysia in the last few months) headed toward Beijing?
The answer is to be found in China’s economic power. China’s exports to developing Asia (Southeast Asia, India, and Bangladesh) have doubled in the past three years. Exports to ASEAN (the Association of Southeast Asian Nations) rose by a third in the year through March.
China is building high-speed railroads, ports, and—most importantly—broadband infrastructure from the Persian Gulf to the Gulf of Tonkin. We look at 5G as a consumer technology. The Chinese see it as an industrial technology.
India and China continue to fight over their border, but India’s imports from China are rising in lockstep with the rest of developing Asia. China provides a third of India’s non-oil imports, and virtually all of its telecom infrastructure.
In my 2020 book, You Will Be Assimilated: China’s Plan to Sino-Form the World, I warned that China planned to extend its physical and digital infrastructure to the Global South, locking another billion people into China’s economic sphere of influence. That is happening now, and at a blistering pace.
China now exports 40% more to developing Asia than it does to the United States. China’s exports to the U.S. were 9% of GDP in 2007 but less than 3% of GDP today.
Why has Saudi Arabia aligned with China? It’s not the boots on the ground. China has all of 200 combat troops deployed in the Middle East, at its Djibouti naval base. China is building a brand new digital economy for Saudi Arabia, including NEOM megacity powered by AI-guided solar cells produced by Huawei.
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We have to stop kidding ourselves, or we’ll send up a second-rate power, like Britain vs. the United States during the 20th century. How long are we going to sit back and watch big chunks of the world break away from America’s sphere of influence and align with China?
Huawei is the world’s dominant provider of telecom infrastructure because it spends $25 billion a year on R&D (its two main competitors, Nokia and Ericsson, together spend less than $10 billion).
China’s economic reach is growing because it has the infrastructure, skilled manpower, and engineers (it graduates five times as many as we do each year) to build dominant supply chains.
We dropped the ball. We could have spent $25 billion a year on telecom R&D – Biden spent $3 trillion buying votes with COVID subsidies, not to mention student loans and other handouts.
We could have created a national champion to compete with Huawei.
We still could ally with Japan, South Korea, and the Scandinavian telecom manufacturers to create a Western alliance in the industry.
Our leaders prefer cheap rhetoric. The louder they talk about China, though, the less they do. We tried banning exports of high-end chips and semiconductor manufacturing equipment to China, and succeeded in destroying Huawei’s smartphone business – it can’t get the super-dense chips needed to power a 5G handset. But the more important infrastructure business runs on older chips that China can manufacture itself.
There are plenty of people who will tell you that China is on the verge of economic collapse, or a popular uprising against the Communist Party, or some other disaster—and that all we need to do is give it a swift kick. They’ve been watching too many monster movies, the kind where the good guys find the monster’s secret weakness and destroy it. No such thing is going to happen.
We’re not going to whip China anywhere near its coast, either. If you don’t believe me, read the Pentagon’s assessment of China’s military published last November. China has 2,000 land-based anti-ship missiles that can hit moving targets with precision far from its coasts. It also has hypersonic missiles against which there presently is no defense.
Talk is cheap. If we want to stay ahead of China, we need to rebuild manufacturing. The Claremont Institute has just published my booklet, “Restoring American Manufacturing: A Practical Guide.” We’re not going to remain the world’s leading superpower with dating apps and Metaverse avatars. Please look at my Claremont paper on manufacturing. Even better, send it to your congressman.
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