How China Dictates the Rules of the Game
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HOW CHINA DICTATES THE RULES OF THE GAME THOMAS J. SHATTUCK FOREIGN POLICY RESEArch INSTITUTE All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. © 2018 by the Foreign Policy Research Institute COVER: Adobe Stock. July 2018 Foreign Policy Research Institute “And if all others accepted the lie which the Party imposed— bullying, refusal of service, or fining companies if all records told the same tale—then the lie passed into that label or list Taiwan as its own sovereign history and became truth. ‘Who controls the past’ ran the country. The targeted companies are quite diverse: Party slogan, ‘controls the future: who controls the present Marriott International, Mercedes-Benz, Gap, Zara, controls the past.’” – George Orwell, 1984 Muji, Delta Airlines, and many others. Recently, news coverage of Asia has focused on The CCP has pressured foreign governments in Donald Trump’s trade war against the People’s the past, but is now becoming more overt in its Republic of China (PRC). While it is an important attempt to dictate the rules of the game in both story, as we have seen ad nauseam with Mr. the private and public sectors. As the PRC expands Trump, he changes his mind quite frequently. The its influence through its Belt and Road Initiative, more important story with China has developed there are accusations that China is carrying out over the course of several months—China “debt trap” diplomacy, in which it offers countries sails its aircraft carrier group in a controversial with poor financial standing predatory loans location; countries involved in China’s Belt and for infrastructure development. And when the Road Initiative (BRI) cede to it key ports; private country cannot pay back the loan, China takes companies apologize for breaking Chinese law; the opportunity to take over a key port or area and the Trump administration accuses China with valuable natural resources. The BRI and loan of “Orwellian nonsense. All of these seemingly practices increase Chinese influence across the unrelated events and stories coalesce into a larger, world, particularly in Southeast Asia, Central Asia, much more troubling, picture of China asserting and Africa, where China is focusing its efforts for its economic might to dictate the rules of a new infrastructure development projects. The CCP international order. now has modified the BRI playbook for the private sector, with a tactic called a “market trap” here, In 2018, the Chinese Communist Party (CCP) whereby companies that wish to remain in the employed a new tactic whereby it determines— lucrative Chinese market must accept Chinese and often aggressively dictates—the way in which terms in order to stay. private companies and foreign governments classify Taiwan, parts of Tibet (or India), the South These dual tactics underscore the Chinese China Sea, and Hong Kong and Macao. In its quest leadership’s effort to re-shape international to convince the world that Taiwan is indeed a relations in its favor. By forcing companies to tow part of the PRC, the CCP has resorted to outright its line, particularly in regard to Taiwan and other Xi Jinping visits Donald Trump at Mar-a-Lago in April 2017. 3 Chinese “territory,” China is incrementally changing wants to win the hearts and minds of the Taiwanese reality in its favor. The recent development with people, but their military threats against Taiwan private Western companies, combined with the and the diplomatic assault against Taiwan are not influence garnered from the BRI, puts Western doing that.” countries in a bind: how to properly combat these predatory tactics while still maintaining friendly A Market Trap relations with Beijing. The Chinese market is one that many Western Taiwan’s Status and China’s Rejuvenation companies want—and need—access to in order to increase profits. With 1.4 billion people and a Throughout 2018, a common news story has been growing middle class that dwarfs that population how China is forcing foreign companies to correct of many Western countries, gaining access and a labelling error or face consequences. The most a foothold in the Chinese market is a necessity recurrent offense relates to the designation of to survive. China’s middle class “is expected to Taiwan—as that is the area in which the CCP is expand from 430 million today to 780 million in most sensitive. The official line used in newspapers the mid-2020s.” While China has trapped many around the world is that China views Taiwan as a countries along the BRI in a cycle of debt, it has rogue province. modified that tactic to become a “market trap,” whereby private companies are forced to abide by The overarching claim that Taiwan is a part of China’s rules in order to stay in the market. the PRC is nothing new. The CCP and all high- level officials have made this assertion since the Western companies understand that the CCP will Kuomintang fled Mainland China to Taiwan in only allow that much-desired access on its own 1949. The main difference is that China now has terms. And in 2018, the CCP has taken those the economic (and to some extent military) power terms into the public sphere by publicly shaming to enforce its long-standing claim about Taiwan. companies that have labelled Taiwan, Hong Kong, At the 19th National Congress of the Communist and Macao as separate countries and not as a part Party of China in October 2017, Chinese President of China, or omitted the Nine-Dash Line in the Xi Jinping made quite clear that his goal of the South China Sea as a part of Chinese territory. “great rejuvenation of the Chinese nation” cannot In January 2018, Marriott International—the large occur with the Taiwan question unsettled. In that hotel chain which operates over 250 hotels in address, he said, “Resolving the Taiwan question China—was the first high-profile target of China’s to realize China’s complete reunification is the new tactic. The company was guilty on two shared aspiration of all Chinese people, and is in separate charges: an email survey listed Taiwan, the fundamental interests of the Chinese nation.” Hong Kong, and Macao as separate entities rather than as a part of China and one of its Twitter He later added, “We stand firm in safeguarding accounts “liked” a post by a Tibetan separatist China’s sovereignty and territorial integrity, and group. China shut down Marriott’s websites and will never allow the historical tragedy of national apps for one week as punishment. division to repeat itself. We will never allow anyone, any organization, or any political party, Marriott issued an over-the-top apology in an at any time or in any form, to separate any part attempt to get back in the good graces of the CCP: of Chinese territory from China!” Xi—and most Chinese citizens—view Taiwan as un-reclaimed Marriott International respects territory whose existence prevents China from and supports the sovereignty achieving its full potential. and territorial integrity of China. Unfortunately, twice this week, The people of Taiwan have a different view on this we had incidents that suggested matter. the opposite: First, by incorrectly labelling certain regions within Over the years, the CCP has enacted various China, including Tibet, as countries policies to push Taiwan closer to China, but as in a drop-down menu on a survey Taiwanese Foreign Minister Joseph Wu recently we sent out to our loyalty members; said, “The Chinese government always says it and second, in the careless ‘like’ 4 Foreign Policy Research Institute by an associate of a tweet that incorrectly suggested our support of this position. Nothing could be further from the truth: we don’t support anyone who subverts the sovereignty and territorial integrity of China and we do not intend in any way to encourage or incite any such people or groups. We recognize the severity of the situation and sincerely apologize. The statement went on for another two paragraphs—and the unfortunate employee who liked the tweet was fired from his position. Another noteworthy example of both the odd nature of the offense and the over-the-top apology occurred in May with Gap Inc., the companies: “An advertising is a false one in any clothing company. Gap was selling a t-shirt with of the following cases Commodity performance, China’s borders on the front, but the t-shirt function, origin, usage . does not match the used the “incorrect” map of the PRC by omitting actual situation and has a material influence on Taiwan, “Southern Tibet,” and the Nine-Dash Line. the purchase decision.” Japanese company Muji “Southern Tibet” is land under Indian control that was fined over USD 30,000 for having packaging China claims as part of its territory. The People’s that labelled Taiwan as the country of origin. Daily newspaper tweeted out the correct version of the map—nine dashes included—and it looks as International airlines have been a major target of bizarre as one would expect. Chinese pressure in the categorization of Taiwan, too. At the time of writing, Delta and Qantas’s In order to stay in the market, Gap ventured into websites did not list Taiwan as part of China, but the realm of geopoliticswith its apology: Lufthansa, British Airways, Air Canada, Air France, Turkish Airlines, and Marriott International all Gap Inc. respects the sovereignty listed Taiwan as a territory of China.