China is desperate to overtake America as the world’s economic superpower – and who can stop it

On Saturday, the Mail launched a new series uncovering China’s role in fuelling the coronavirus pandemic. We have investigated claims about the origins of the virus in Wuhan and documented the cover-up of the outbreak by the Chinese authorities. Today, in the concluding article, we explore fears that China is in prime position to exploit the West’s economic implosion in the wake of Covid-19. 

With hindsight, one of the more surreal video clips to appear on the internet during this coronavirus global crisis was filmed halfway up a Swiss mountain on January 22.

That was the day before the city of Wuhan — which spawned the Covid-19 pandemic that has claimed more than 160,000 lives globally — was put into belated lockdown by the Chinese authorities Huanan seafood market, thought to be the source of the contagion, had already been closed for more than three weeks.

For almost a month the Chinese Communist Party leaders in Beijing had been busy seeking to silence whistle-blowers — including medical staff and researchers — who were trying to warn their fellow citizens and the wider world that an epic disaster was unfolding.

 Still the truth continued to leak out. By the second half of January the spread of the virus was being documented by the world’s press —and there was already speculation about a Chinese cover-up.

For some of the world’s movers and shakers, however, it was business as usual as they gathered for the annual World Economic Forum in the Swiss ski resort of Davos.

Among the star speakers was distinguished Singaporean academic and former diplomat Kishore Mahbubani, the author of a new and much talked-about book called Has China Won?

People work in a factory of motorbike and scooter parts in Suixi county in central China’s Anhui province Friday, April 17, 2020.

In it he examines Beijing’s seemingly relentless march towards overtaking the U.S. to become the world’s No1 economic superpower.

The book was completed before the corona­virus crisis began. So a filmed interview with a representative of event sponsors Deutsche Bank began with the question its title posed.

Had China ‘won’? ‘No,’ Mr Mahbubani replied.’ Then, with an enigmatic smile: ‘Or more accurately, not yet.’

During the ten-minute conversation the author compared America’s ‘plutocracy’ with its geopolitical rival which, he said, ‘has become a meritocracy and is run by the youngest and most dynamic leaders in China’.

It was an assertion that was surely open to challenge, not least because, at 66, President Xi Jinping is no spring chicken.

Even as Mr Mahbubani spoke, we now know that thousands of Chinese were being arrested, for speaking out about their leaders’ handling of the unfolding crisis.

But in Davos it was mentioned not once, by either interviewer or author. Mr Mahbubani has been a longstanding cheerleader — some say apologist — for the Chinese Communist Party and the economic ‘miracle’ it has wrought over the past 40 years.

He has a habit of glossing over much of the totalitarian baggage — including, it has been alleged, the 1989 Tiananmen Square massacre, as well as secrecy over Covid-19 — key to the party’s success.

But he is important to this growing debate. The Economist magazine this week consciously echoed Mr Mahbubani’s central question with a front cover headline asking: ‘Is China winning?’

Could it be that China will actually profit — financially and in extending its influence — from a global catastrophe that many regard to be of its own making?

On Saturday, in the first part of this series on China’s role in the coronavirus pandemic, we reported on how the country appeared to be swiftly returning to normal life, with record spending reported in some cities and factories resuming production.

A farewell ceremony is held for the last group of medical workers who came from outside Wuhan to help the city during the coronavirus outbreak in Wuhan

A farewell ceremony is held for the last group of medical workers who came from outside Wuhan to help the city during the coronavirus outbreak in Wuhan

It is predicted that after a sharp contraction in the first quarter, the Chinese economy will ‘bounce’ by eight per cent in the second.

Meanwhile, much of the West still in lockdown heads for economic meltdown. The stock markets have collapsed, unemployment is soaring.

In the UK, a worst-case collapse of up to 35 per cent in GDP is being predicted by the Office for Budget Responsibility, while the Resolution Foundation think tank estimates almost 12 million people could be furloughed or unemployed in the next three months.

Is it any wonder, then, that a backlash against the Chinese leadership for triggering this savage downturn is already taking place?

There has been talk of a ‘reckoning’ from Downing Street, and last week Foreign Secretary Dominic Raab, now acting Prime Minister while Boris Johnson recovers from Covid-19, said China’s relations with the UK will not be ‘business as usual once the crisis is over’.

Intermediate-range ballistic missile 'DF-26' drive past the Tiananmen Square during a military parade in Beijing, China

Intermediate-range ballistic missile ‘DF-26’ drive past the Tiananmen Square during a military parade in Beijing, China

‘We will have to ask the hard questions about how it came about and how it couldn’t have been stopped earlier,’ he said.

Pressure has been growing for some weeks among leading Tory backbenchers for the Government to revise the controversial decision it made in January to allow the Chinese telecommunications giant, Huawei, to provide some of Britain’s 5G infrastructure. But it is not only politicians who are angry.

Yesterday, a Survation survey for the neo-Conservative think tank the Henry Jackson Society (HJS), suggested that more than 80 per cent of Britons want China to face an inquiry over the virus outbreak.

Seventy-one per cent wanted the Government to sue China for damages — which could be as high as £350billion.

A security guard wearing a protective face mask holds the locked gate of the Forbidden City which remain closed for visitors following the new coronavirus outbreak in Beijing

A security guard wearing a protective face mask holds the locked gate of the Forbidden City which remain closed for visitors following the new coronavirus outbreak in Beijing

Some 74 per cent thought China was to blame for allowing Covid-19 to become a pandemic. Brussels is also watching Beijing with suspicion.

The EU’s competition chief, Margrethe Vestager, has urged the governments of member states to buy stakes in their countries’ strategic asset companies, lest China snaps them up at bargain prices as share values crash.

Too late, in many cases, say the hawks. Matthew Henderson, a former British diplomat in Beijing, is director of the Asia Studies Centre at the HJS.

‘We have bent over backwards over the past two decades to believe that China is unstoppable and everyone is in a win-win situation by doing business with them,’ he told the Mail.

‘And that is nonsense. After this is over it will not be the same China we have fawned over.

‘Let’s have some straight thinking. What do we need from an aggressive China that could not be trusted to tell the truth about a global pandemic?

Can we not avoid the current level of dependency we have on them for certain goods?’

Mr Henderson said that a number of high-tech British industries and ‘almost every single’ academic research and development institution has already been ‘colonised or penetrated’ by the Chinese state.

A man walks on the street in Guangzhou, Guangdong province, China, 16 April 2020

A man walks on the street in Guangzhou, Guangdong province, China, 16 April 2020

‘What can’t be bought is copied and we have been letting them do this because, at the end of the day, we needed their money.

‘We have to sit down with our partners and say, ‘There is an existential challenge here.’

If the rule-based order is undermined, we are all undermined. We must ring-fence our national assets, even if it costs us a little more.

If you took the word ‘Chinese’ and substituted it for ‘Russians’ people would get more excited… [What China does] is not illegal, much of it, but at the end of the day the effect is malign.’

The London-based Chinese author and dissident Ma Jian agrees. ‘After more than two months we still do not know how many people are dead in China or the source of the virus,’ he told the Mail this week.

‘For the basic questions the answers are suppressed.

‘The West has been dealing with a regime utterly unworthy of trust. It is naïve to think it could lead China to democracy. And this virus is the most painful of lessons.’

An employee works on the production line of surgical masks at Yilong medical instruments Co., Ltd amid the coronavirus outbreak on April 16, 2020 in Zunyi, Guizhou Province of China

An employee works on the production line of surgical masks at Yilong medical instruments Co., Ltd amid the coronavirus outbreak on April 16, 2020 in Zunyi, Guizhou Province of China

Since the late 1970s and the accession to the presidency of Deng Xiaoping, the Chinese Communist Party has been on an extraordinary mission to transform, root and branch, the country’s economy while maintaining a strict control over society.

Until a slowdown in the third quarter of last year — which saw a 27- year low — economic growth has been phenomenal.

Even at its slowest it stood at 6 per cent, compared to the UK economy’s own growth for 2019 of 1.4 per cent.

In 1999, China was the UK’s 26th largest export market. By 2018, it was our sixth. But far more was coming the other way.

By 2018 China was the fourth largest source of imports to the UK. Annual Chinese imports here have grown for 19 years running. And every year we suffer a trade deficit.

The latest figures showed it at an annual £22.1billion. Last year — long before coronavirus — it was predicted that this relentless surge would see the Chinese outstrip the United States economy sometime in 2020.

‘It is important to step into the mindsets of China’s leaders and understand the psychological forces driving them,’ Mr Mahbuban said in his Davos interview.

‘For them the most important [matter] is the hundred years of humiliation that China suffered from the Opium Wars [fought and lost against the British] between 1840 and 1949, when the People’s Republic of China was established.

Clearly, those were the worst hundred years of China’s history — in 4,000 years. ‘The desire never to see that again means that China can be strategic, disciplined and focused on the long term — whereas by contrast the U.S. is coming out of 100 years of triumphalism. They are so over-confident.’

When he became President in 2013, Xi Jinping simply took up this baton and ran harder. In a speech last year he used the word ‘struggle’ no less than 60 times. He has pledged that by 2049 — the centenary of the Chinese Communist Party seizing power, China will have achieved ‘the great rejuvenation of the Chinese nation’. And at any cost, its seems.

On January 23 this year, the day of the Wuhan lockdown and with corpses lying in the streets, President Xi spoke at a reception in Beijing, where he ignored the looming disaster and told of the need to ‘race against time and keep abreast with history to realise the first centenary goal of the dream of national rejuvenation’.

One of the key stepping stones to this goal is Xi’s ‘Made in China 2025’ plan to upgrade China’s manufacturing base.

He wants the country to move away from being the world’s sweatshop, making low-value goods for export, to concentrate on high-tech, highvalue industries instead.

Which is why there are so many Chinese postgraduates in the research and development departments of Western universities. The plan foresaw the growth of the Chinese middle classes and with it a decrease in dependence on foreign consumer demand.

Beijing’s crowing confidence in victory over a struggling America was illustrated in a remarkable opinion piece published by the official Xinhua News Agency on March 4, when the scale of the pandemic was only just beginning to be recognised.

It acknowledged that the mercurial Donald Trump — who has hit Beijing hard with trade war tariffs — had praised Chinese efforts in the crisis.

But it went on to boast: ‘While China has made significant progress in controlling this new pneumonia, the United States is caught in a rain storm; more and more states are declaring a state of emergency, medical supplies in the U.S. are extremely scarce and a runaway new coronary pneumonia epidemic is almost inevitable.

The stock market in the United States has plunged continuously, with a decline of more than 12 per cent in just one week…Once the stock market continues to plunge, it will not only affect the U.S. economy, but … the challenges facing Trump’s presidential throne are increasing.’

There was no mistaking the message: America was weak, China was strong.

And while President Trump did not seem much interested in helping those outside the U.S., Beijing engaged in what might be called PPE (personal protective equipment) diplomacy — in one month sending abroad four million face masks, aid and debt relief to African nations and dispatching a train-load of supplies on to virusstricken Madrid.

The Mail spoke to Mr Mahbubani this week and he remained staunch in his praise for Beijing’s actions. The Covid-19 crisis had merely emphasised ‘the strength and resilience of China’ compared to the ‘the Anglo-Saxon world’.

He added: ‘There were one or two initial stumbles and mistakes early on in this crisis, but very quickly the country got to grips with tackling the problem in order to protect the vast majority of its 1.4billion population.

‘It is one of only a very few countries able to take very drastic action quickly and carry its citizens with it. It managed to shut down everything just before Chinese New Year.

Can you imagine the U.S. being able to do the same two days before Thanksgiving? It wouldn’t happen.’

A number of commentators point out that if Western consumer demand collapses, there will be consequences for China, too.

‘When their customers’ economies hit bottom the tide will ebb; the cash will run out,’ Mr Henderson said.

‘In any case, I question their current growth figures.’ Others counter that depression or recession in the West might not hit an increasingly self-sufficient China as hard as some think.

Kerry Brown, professor of Chinese studies at King’s College London and a former First Secretary at the British embassy in Beijing, says: ‘The question is whether China’s domestic sources of growth will be enough to make up for [the plunge in] its external growth sources,’ he said.

‘Beijing has worked on a ‘soft decoupling’ from [the need for] foreign demand for a number of years, but Covid-19 could cause it to accelerate. Europe is in a pretty precarious position.

‘It already was, and is now more so. Globally, it’s no longer a case of sink or swim together.’ Prof Brown argues that Britain will need to take a rational approach.

‘You have to strip the emotion away from it.

‘If in a few months’ time Europe’s growth is poor, America is struggling but China is OK, who do we turn to to get good returns and find economic possibilities?

At what point will political reservations be overruled by terrible growth?’

He added: ‘It’s natural that people are very furious now and looking for someone to blame. But, as we emerge from this, the entity that we blame for starting the crisis might be the one which rescues us. It’s a public health issue now but it will end up in the field of economics.’

And in that there is one clear favourite: China. The winner’s enclosure awaits.