Jamil Anderlini: The Legacy of the Opium Wars

Transcript

Rob Johnson:

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

Jamil Anderlini:

Thanks Rob.

Rob Johnson:

We have upon us, what I think you’ve accurately described as the new Cold War. US-China relations are quite strained. This has been a pathway we’ve been on for quite some time. How do you see 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 US and China, they’re really at their [inaudible 00:01:38], they’re the worst that they’ve been since ties were normalized in 1979. I’d say they’re 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 odd, 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.

Jamil Anderlini:

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 particularly the US 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 west and China? China’s 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 is this relationship worked? Well, first of all, China was in the mid ’70s, late ’70s, China was coming out of the 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.

Jamil Anderlini:

And Deng Xiaoping in the late ’70s, early ’80s, he said, “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 great change in Chinese policy to embrace the world. And what happened was, the rest of the world looked at China, and gradually it took a several decades, but it really sped up in the ’90s and the early 2000s, 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 2000s, mid 2000s, it cost 15 times more to produce in Mexico for the US market, than it did to produce in China for the US market.

Jamil Anderlini:

And so, the rest of the world decided to shift its manufacturing production, basically outsource almost everything that you could to China. And it also outsources pollution. Look at how polluted the west was in the ’80s, even in the ’90s, and look how 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.

Jamil Anderlini:

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 kind of the people in the decision making chairs various times of the last decade are important. But I would argue much more important are the structural shifts, the structural changes that we’re 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 has now moved up the value chain, and is producing much higher value goods. So, instead of the west, particularly America, being able to make the high value things and design everything and then just get it made and 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 decade and more.

Jamil Anderlini:

If you look at what China wants to produce, it’s much, much higher value 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.

Jamil Anderlini:

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, DC and around and around the world, their biggest lobbyists were multinational businesses who have enormously benefited by outsourcing to production to China, and later benefited from the large Chinese market.

Jamil Anderlini:

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 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 as 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 they’re 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 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 a pretty rough road for them to gain access and contribute in that regard. And I’m just curious how you thought that sector was adjusting at this time.

Jamil Anderlini:

So, I mean, classic example, right? So, who 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 underdeveloped financial products 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 allowed them to operate in China, that there was still all sorts of hidden regulations and hidden rules that they weren’t really able to overcome.

Jamil Anderlini:

And I think the peak, the absolute peak of all foreign financial institutions market share in China was about 5%. 5% 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 four lawn Goldman Sachs executive, who’d been very, very senior and was sent to Beijing. And he 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 stoic. And I just watched him get sadder and sadder over the years that he lived in Beijing, as it became clearer and clearer that they were never going to make headway.

Jamil Anderlini:

And now it’s very interesting if you look at, as this trade war ramped up. And then as, as I say, new cold war got really started to get underway, China suddenly said Beijing, the Communist Party suddenly said, “We are going to open up and allow you to own your own subsidiaries,” something they’ve been lobbying for, for decades. And suddenly the Goldman Sachs of the world, the American banks suddenly got very excited. “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, 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 still going to make some money.” All these banks were preparing to hire hundreds of bankers up in Beijing. And then COVID 19 hit, and then the real 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.

Jamil Anderlini:

Now, another point I would make is if you look at who’s powerful in Washington, DC 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 DC. 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? Always have been Google, Facebook, Amazon. So, all the companies that are really the most powerful, in many ways today and in the US, that probably hold the biggest weight when it comes to lobbying in DC, those are exactly the companies that China has always kept out of with the so-called great firewall of China. And so again, that’s adding to my point that the lobbying direction in DC is certainly for disengagement, maybe even decoupling, not for greater engagement today.

Rob Johnson:

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 cyber security web-based intrusion that we have been aware of for a long time.” So, he was saying, 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. But 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 had nodded yeah. But I think-

Jamil Anderlini:

I would argue… Go ahead.

Rob Johnson:

Go ahead. No, please.

Jamil Anderlini:

I would argue they’re adverse 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 they are all, senior Communist Party officials are all allowed VPNs, virtual private networks, 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 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 party official to me.

Rob Johnson:

Well, I guess where I’m quite anxious in the realm of US-China relations is that, I don’t think 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 in, 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. It’s like 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 US-China bilateral the bilateral relationship. And I think they decided to narrow the scope, I mean deal on various things when they could deal on them.

Jamil Anderlini:

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 very contentious, was climate change. So, the US 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 US was historically the biggest polluter. China is by far on 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 US, 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.

Jamil Anderlini:

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 deal or some arrangement, and the US, 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 I think not… 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 US 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.

Jamil Anderlini:

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, several years ago. But Orville gave a presentation at a INET event where 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 a China that transforms itself to be a cohesive element of that system, but in essentially emulating the organization of America.

Rob Johnson:

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 US case and the kind of Deus 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 of contributes to that understanding of where we are and the difficulties of moving forward?

Jamil Anderlini:

Well, absolutely. So, I just like to say that Orville’s 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 little, 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 was intimately involved in it, was Orville actually. So, he was intimately involved in formulating that approach to China under the Obama administration.

Jamil Anderlini:

So, I agree with him entirely that we’re talking about absolutely different worldviews. In some ways, however, the US and China are quite alike in that they both have this idea of that they are exceptional. The Americans absolutely believe in the idea of American exceptionalism, and so do 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 US was destined to be the world’s leading superpower, and China absolutely believes that today.

Jamil Anderlini:

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 other 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 healthy time when China was the dominant nation in the world. It’s very explicit. I mean, we’re not talking about, you don’t have to read tea leaves to 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 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 culture revolution for 10 years in China from 1966 to 1976, was about wiping out Chinese traditional ideas, religion, Chinese traditional concepts.

Jamil Anderlini:

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, 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 US, at least in China’s neighborhood. So, China’s got a stated goal of pushing the 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 the military doctrines, it’s in all the many of the speeches that party leaders give. It’s not a secret either. So, 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, I guess it’s relatively recent, but I had seen him speak, and 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:

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, he has a certain view of China, and it’s representative of a certain position on the spectrum in the Sinologist world. But I think he 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, but 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 that I was a bit surprised they let me go see it.

Jamil Anderlini:

Oh, they want everyone to see it.

Rob Johnson:

Yeah. They want everyone to see it. Yeah. But I don’t remember the name of that exhibit or whatever, but I remember you-

Jamil Anderlini:

Yeah. It was called the Road To Rejuvenation and it was-

Rob Johnson:

That’s right. But it foreshadowed a lot of what you’re talking about.

Jamil Anderlini:

Absolutely. The first for me, as a 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 in those exhibitions are various things that are associated with those various factions.

Jamil Anderlini:

So, for example, when the minister of railways was arrested and thrown in prison ostensibly, for corruption, the big display about the kind of the development of the high speed rail system suddenly shrank to a very, very small exhibition in that exhibition. So it’s a 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.

Jamil Anderlini:

But it tells you a lot. It was set up after Xi Jinping came to power, that exhibition. Its 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 Tienanmen Square in the center, the heart of Beijing. And 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, it’s fluid. 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.

Jamil Anderlini:

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. It’s always the evil British. And I try to explain this to my British colleagues and to people in the British government. And I say, “Look, you are hoping for a trade deal with China. You are really hoping that one day you guys are going to get some great benefit from cozying up to China and Communist Party, whoever 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.”

Jamil Anderlini:

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 into in China until 1990 ‘91. And it’s explicitly called the patriotic education curriculum. And it was brought in immediately after the Tienanmen 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 the, 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. And the power of the image that was being created and disseminated. But I’ll go and 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 so, that’s a belated, thank you to you for, for turning me on years ago. That experience has always really resonated with me.

Rob Johnson:

When you’re looking at the US and China, I remember early in this conversation, you talked 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 that with no environmental restrictions, with the 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 and large scale role in China.

Rob Johnson:

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. America’s be the tugboat we would latch on. And we would engage in development.” But 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 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.

Rob Johnson:

So, I think there’ve been a lot of structural telltale signs of… And the other… Well, there are two other things that 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 assistance 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.

Rob Johnson:

And top level Chinese leader 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 even before the personalities of Xi Jinping and Donald Trump moved to the fore.

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 US as a model, 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 the 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.

Jamil Anderlini:

And frankly speaking, I think there was a bit of hubris started to creep in China, a feeling that actually and 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 mainstream of the rhetoric today, at least domestically. I mean, it’s not really what China tries to project outside its borders, but that’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 US and the rioting and looting happening across the US. The Chinese state media is 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.

Jamil Anderlini:

But certainly I think that the personalities of Xi Jinping and then later Donald Trump. Xi Jinping came out into power in 2012, Donald Trump in 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 they’re accelerants for this kind of more confrontational approach to the bilateral relationship. And I think it’s the personalities do matter. They’re not irrelevant. And I would say both 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 in his book, The Party, particularly at the outset of the book, there’s a passage or a scene where American financiers come in and the Chinese leaders tell them essentially, “You blew up Asia in the ’90s 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’ve thought Richard’s book captured that 2008 and slightly beyond window, very, very skillfully.

Jamil Anderlini:

Richard was my boss when he was the China bureau chief. And he’s the one who hired me to the Financial Times. I like to think of him as my rabbi or [foreign language 00:44:43], my teacher. And 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-US 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 the story a couple 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 essentially officially canceled, and then went to a closed venue and convened there, but it was not publicized. And there was quite a bit of protest in the streets, but it seems… Tell me a little bit about what’s happened more recently. What’s what’s going on now in Hong Kong, and what does it portend? What can we learn from that?

Jamil Anderlini:

Well, if there’s a new Cold War between the US 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 the mainland, 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.

Jamil Anderlini:

The latest is that next week, June 4th is the 31st anniversary of the Tienanmen Massacre. And we expect very large, well, 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 Wan Chai in Hong Kong. They’ve gone there and they’ve held a candle lit 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 Beijing as Hong Kong government, the Hong Kong police, have banned that vigil for the very first time. And they claim 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 security law, imposing it on Hong Kong. And that the police don’t want to, 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.

Jamil Anderlini:

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 is 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 minds, 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.

Jamil Anderlini:

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, in 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, anti-government figures candidates won a sweeping landslide, 85% of the seats or more were won by pro-democracy anti-government. So, that really caught Beijings 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 at a landslide.

Jamil Anderlini:

So, this was a stinging rebuke. And I think it’s quite clear that Beijing felt that when these elections come round in September for the legislative council which is the local legislature, that they might even have lost the local legislature. So, which would’ve been much more embarrassing to try and annul 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 protestors off the streets, and everyone will be cowed into silence and acceptance.

Jamil Anderlini:

And guess what if, 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, the mini constitution, when a national security law was proposed in 2003, you had the biggest protest up till that point, peaceful protest ever in the history of Hong Kong against it. And the plan was swiftly abandoned. And the Hong Kong government, the 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, the free press.

Jamil Anderlini:

The way that national security is interpreted in China, 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, you were talking about witnessing a bomb exploding here in Hong Kong. I’ve been out 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.

Jamil Anderlini:

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 for about eight, nine months now is being 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. That’s a daunting portrait. I’m an old sailor. So when you talk about weather systems colliding, most often, that’s where you see thunderstorms and lightning. And it sounds like that’s exactly, what’s how approaching or upon us now in Hong Kong.

Rob Johnson:

But Jamil, I always really love talking with you. And I learn a lot. I’m inspired to be more curious by your vitality. And I hope that we can come back on this podcast together from time to time as events unfold. But I guess for 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 they’re 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. And check out more from the Institute for New Economic Thinking at, ineteconomics.org.