FABRIZIO GOWDY | OCTOBER 9, 2020 | OPINIONS

In an attempt to overtake the United States as the world’s largest and most powerful economy, China has adopted a comprehensive strategy to boost its own markets at the expense of others. The Chinese Communist Party (CCP) is using an array of practices, many of which are illegal and blatantly unfair.

U.S. businesses have long cried foul over China’s use of forced technology transfers, a practice in which a government forces foreign companies to turn over their technology to gain access to domestic markets. China is notorious for its use of such practices, taking advantage of the open nature of the West while maintaining a relatively closed domestic economy. While the private sector has grown significantly in recent years as China has wisely ditched much of its socialist fiscal policies, there still remains enormous state control over large corporations.

The close ties between large Chinese companies and the Chinese government is evidenced by the “Made in China 2025” plan. The plan aims to upgrade high-tech manufacturing sectors such as artificial intelligence, pharmaceuticals, semiconductors, aerospace, information technology, and robotics in an attempt to make China the world’s technology leader by 2049. State-run companies, like telecommunications giant Huawei and e-commerce company Alibaba, receive massive subsidies to give them a competitive advantage.

Aside from unfair government subsidies, these companies receive the aid of state-sponsored Chinese hackers, who steal between 200 and 600 billion dollars worth of U.S. intellectual property every year according to U.S. Trade Representative Robert Lighthizer. American entrepreneurs spend billions of dollars and untold amounts of time innovating, building, and creating, only for CCP-backed leeches to steal the fruits of their labor. Costly and time-consuming American ingenuity is powering cheap and efficient Chinese economic growth.

China’s most notable and far-reaching plan is the trillion dollar Belt and Road Initiative. Implemented in 2013, this plan involves China investing in massive infrastructure projects in every corner of the developing world. China is building a three billion dollar railway in Kenya, a pair of 5,000 megawatt hour hydroelectric dams in Argentina, and an intercontinental highway in Kazakhstan.

But these projects are not simple gestures of goodwill. China is attempting to center global trade around itself, while simultaneously isolating the United States. Furthermore, China takes advantage of the nations they are investing in. The funding for these massive infrastructure projects comes in the form of high-interest loans, which become difficult to repay, especially for the impoverished, developing nations in which China has disproportionately invested.

Desperate to secure better infrastructure and transportation for their citizens, many countries’ leaders cave to the CCP and agree to investment agreements that amount to unescapable debt traps. When these countries default on their debts, the Chinese swoop in and seize key assets We saw this in 2017. When Sri Lanka was unable to repay its debt incurred on a Belt and Road agreement to finance a new port, China forced the Sri Lankans to turn the port over to a Chinese company on a 99 year-lease. Earlier this year, Kenya’s port of Mombasa was seized in a similar fashion.

As China uses debt-trap diplomacy to spread its neo-colonial tentacles around the world, there are important non-economic implications. Look no further than the World Health Organization and the COVID-19 pandemic. Despite having the second largest economy in the world, China is not the second largest financial contributor to the WHO. That title belongs to the Bill and Melinda Gates Foundation, an American charity. In fact, on a per GDP basis, China ranks behind the United States, Japan, Germany, Great Britain, France, Italy, and Brazil in WHO contributions.

However, when the coronavirus crisis erupted earlier this year, something strange happened. WHO officials praised China for its “excellent” response, despite the fact that China attempted to cover-up the outbreak. As late as mid-January, the WHO was parroting false CCP claims that there was “no human-to-human transmission.” In a May interview with a Hong Kong journalist, Bruce Aylward, a senior WHO official, went to great lengths to avoid acknowledging the existence of Taiwan, a democratic republic China refuses to acknowledge and wishes to annex.

WHO Director Tedros Adhanom and Chinese President Xi Jinping meet in January 2020 (Google Images)

The WHO was complicit in the CCP’s coverup, and as a result, the virus wreaked havoc on the rest of the world. But how did China gain this outsized influence in an organization of which it is not the primary funder? The answer is the Belt and Road. The current WHO Director General, Tedros Adhanom, is from Ethiopia. According to the CIA World Factbook, Ethiopia is one China’s most important African allies, and is its third-largest export partner. China has showered Ethiopia's Eastern Industrial Zone, which hopes to become a manufacturing hub, with $100 million of Belt and Road cash. Not wishing to offend the CCP and risk souring economic ties, Director General Adhanom, and by extension much of the WHO, is effectively under China’s thumb thanks to the Belt and Road.

China’s ill-begotten influence will only grow as its economy will almost inevitably surpass America’s in size. The primary advantage China has is its massive population. Despite the enormous recent growth of its middle class, China is still relatively poor on a per capita basis. According to the International Monetary Fund, China’s per capita gross domestic product (total GDP divided by population) sits at just $10,098, which ranks 65th in the world and is comparable to Mexico ($10,118) and is actually below the global average of $11,335; by comparison, the United States comes in seventh with a per capita GDP of over $65,000.

However, China has a population of 1.4 billion, compared to just 330 million Americans. China’s economy does not have to be nearly as productive or efficient as ours to be significantly larger. Barring some unforeseen events, China’s total GDP is expected to surpass the United States in the next decade.

This trend will almost certainly be accelerated by the pandemic, as China’s economy is already shrugging off its recession while our economy is still reeling. Coronavirus is undoubtedly a boon to the Chinese, who were able to use their authoritarian governmental structure to quash the virus domestically while using its status as a manufacturing hub to actively hinder other nations’ responses. When the United States faced shortages of drugs, masks, and other personal protective equipment, China was able to halt exports and hoard critical supplies, allowing the pandemic to spread even further and faster. According to the BBC, China even had the audacity to ship defective medical equipment to hard-hit countries like Italy, Spain, and Turkey in a disingenuous goodwill gesture.

The far-reaching consequences of China’s economic growth will range from health to entertainment. Iconic American institutions like the NBA and Hollywood Studios have already begun to cater to the Chinese market, something I will discuss in future installations of this series.

In the meantime, we need to exert our influence while we still can. China has outsmarted and outmaneuvered us, and now we must acknowledge reality and take steps to counter China’s growing economic dominance before it is too late.

The Economic Threat

FABRIZIO GOWDY | OCTOBER 9, 2020 | OPINIONS