How the 'Unilateral Neoliberalism' of the US Helped China to Weaponise its Economy for Geopolitics

Bethany Allen's latest book 'Beijing Rules: China's Quest for Global Influence' sheds light on challenges before the world in tackling China, both geopolitically and economically, as it moves closer to the centre of the world’s stage.

Bethany Allen’s book – Beijing Rules: China’s Quest for Global Influence – is centered around the pandemic while examining how China and the United States changed because of it. Using stories and anecdotes about how individuals and private corporations acted during the pandemic, Allen narrates how China pursued its ambition to shape the world.

The use of all means by China, both conventional and unconventional, in the pursuit of this objective is already known, as is Allen’s point that the Chinese state and communist party work together in this endeavour. What makes this book worth reading is the matter-of-fact way in which the author acknowledges that the United States (and more generally the Western world) was deeply complicit in creating the conditions for this to happen. America’s ‘unilateral neo-liberalism’, in Allen’s view, is what created the ideal environment for China to weaponise its economy for geo-political ends.

Beijing Rules: China’s Quest for Global Influence by Bethany Allen. Publisher: John Murray. Photo: flipkart.com

According to Allen, the ending of the Cold War was the moment in time when America took down its democratic guardrails on the economy, upon which American global power was based. Believing in free-market economics, the United States not only ended meaningful policy interventions in the domestic economy but also allowed China a free pass into global trading arrangements in the mistaken belief that markets on their own could sustain American economic dominance in the post-Cold War age. One of the principal arguments in the book is that the West suffered from an ideological ‘handicap’, refusing to believe that Chinese government intervention and policy in the economy might actually succeed in making China a competitor in the long term.

By equating democracy with free-market capitalism, the Americans failed to discern that China could build state capitalism that, at the same time, also allowed its authoritarian political system to thrive.

Allen gives interesting examples of how this blindness about the innate superiority of democracy and free markets caused the Western world to dismiss facts about massive Chinese governmental backing for Huawei which allowed it to challenge Western technological dominance on the one hand, and to ignore instances of Chinese pressure on Western corporations like Zoom or LinkedIn to collaborate with the Chinese communist party’s political goals in return for market access.

Also read: How China Is Shifting Its Foreign Policy to Counter the West

“The belief that companies have a moral right to bolster their profits by any legal means available,” Allen writes, “has also contributed to decades of successful lobbying against government restrictions on trade with China.”

China’s coercive tactics

Allen is not shy about calling out the West for permitting China to leverage its expanding domestic market for geopolitical advantage, as well as to use market-denial means to serve the Communist Party’s interests. The author is disingenuous when she claims that the United States, in contrast, used sanctions to uphold the integrity of the international system rather than in pursuit of their raw national interests.

But this does not detract from the book’s key argument that America’s neoliberal approach permitted the Chinese to use economic coercion to ensure that Hollywood did not produce films that portrayed China in a poor light, to pressurise countries like Norway and the Philippines when they were seen as acting against China’s ‘core’ interests, and to dangle China’s market potential in front of Google, Apple and LinkedIn as a trade-off for them agreeing to censorship demands.

The chapter titled ‘Zooming In’ is, in particular, a chilling account of how the Chinese were able to manipulate employees of Zoom in China in order to shut down virtual meetings that were critical of Chinese politics, even when the participants were located outside China, mostly in the US. The company itself was apparently complicit in granting Chinese security services special access to its systems in return for being allowed to operate in China.

China’s growing influence

Equally revealing are other chapters in the book that talk of Chinese influence operations in the United States, Australia, and other countries through entities like the United Front Work Department or the International Department of the communist party, which have no counterpart organisations in democratic systems and, hence, sail below the radar of Western national security systems.

The chapter titled ‘Spies and Sister Cities’ is a brilliant account of how Chinese intelligence turned a Western Cold War tool – establishing sister-city relationships with cities behind the Iron Curtain in order to bypass Communist governments – into a weapon to subvert America. Christine Fang, a suspected intelligence operative, was able to target (and, in some instances, honey-trap) US politicians and influence local governments by using the easy access provided by sister-city programmes the US had initiated with China, as a geopolitical tool to influence how Americans thought about China.

By 2005, according to Allen, China had 1,247 sister city relationships with 129 countries (including India). Allen writes about the way in which the Chinese offered several sister-city proposals to the Awami League government of Bangladesh during the COVID crisis in return for pandemic assistance.

Representative image of researchers working in a lab in China. Photo: Can Pac Swire/Flickr (CC BY-NC 2.0)

Key chapters in Allen’s book relate to how the pandemic showed both the best qualities of China – in terms of its assistance to others less fortunate – as well as the Communist Party’s worst impulses. Her point is that the pandemic has exposed the Chinese game and come at a reputational cost that the Communist Party seems to have underestimated.

The chapter titled ‘The Global Rush for Masks’ highlights how China’s attempts to corner PPE kits worldwide in the early days of the pandemic, including by using its diaspora, and the supply chain shocks that the rest of the world endured across businesses, has had a powerful and lasting impact on both the US and Europe.

Allen says that the US might have finally turned the corner with policymakers demonstrating a new willingness to use the levers of government to protect the economy. She credits Trump with this turnabout, and at places, the author seems to show a Republican bias. The pivot to the Indo-Pacific, credited to Trump rather than to Obama, marks, as Allen describes it, a substantive and comprehensive departure from the decades-long engagement era. Events in Hong Kong, Chinese behaviour during the pandemic, supply chain shocks, the experience of American allies have, Allen claims, all brought about a structural shift in American policy.

Allen applauds the measures taken by the Biden Administration as “a very good start”, but says that the more difficult tasks of reforming or replacing compromised international bodies like the World Trade Organisation are still needed to fully insulate Western economic interests from geopolitical risk associated with China. She also hammers home the argument that putting new guardrails on Chinese economic behaviour that has geopolitical motives, will require legislative action. In other words, legal force should be deployed in defence of Western liberal values and systems.

The final chapter outlines steps that America might take to build a democratic response to Chinese economic statecraft that will help preserve national security and American economic predominance. It appears to be written with an eye to the next administration in 2025. Allen’s ideas range from strengthening public oversight over social media platforms and strengthening labour unions against predatory big business, to creating mechanisms that will legally prohibit transacting business with entities of authoritarian governments. Many of these ideas, such as diversifying supply chain risks and fire-proofing the American economy by erecting new legal and institutional mechanisms, have been touted in the past. However, Allen does not answer the question about whether the American political system is capable, or even desirous, of fundamental reforms. Nor does it deal with how American corporations can be persuaded to give up profit for the intangible and undefinable objective of serving national security.

The smorgasbord of Allen’s suggestions suggests that while America has identified that it has a problem with China, it has no clear idea of what to do about it. Nor is it clear whether the guardrails that the author is advocating are China-specific and, if so, how they can be legally enacted and enforced. The book itself, however, is definitely worth reading for the wealth of detail on the subject of Chinese economic coercion and because it paints a full picture of the myriad challenges confronting democratic governments in tackling China, both geo-politically and economically, as it moves closer to the centre of the world’s stage.

Vijay Gokhale is a former foreign secretary of India and a former ambassador to China.