China is gambling, and the CCP believes it holds a winning hand. The late great Kenny Rogers sang, “Every gambler knows / That the secret to survivin’ / Is knowin’ what to throw away / And knowin’ what to keep / ‘Cause every hand’s a winner / And every hand’s a loser…” (…And the best that you can hope for is to die in your sleep, a promise Rogers kept for himself.)
President Trump signed a law Congress passed hitting China with some sanctions with teeth for its trashing of promised democratic freedoms and local control for Hong Kong. Trump also signed an executive order removing preferred economic partner status from Hong Kong.
“No special privileges, no special economic treatment and no export of sensitive technologies. In addition to that, as you know, we are placing massive tariffs and have placed very large tariffs on China,” said the president.
China has vowed to hit back with its own sanctions. And there’s something we don’t see often in the modern world: a nation punching back at the United States, the world’s only superpower. China decided to turn another card in the game of Texas hold’em it’s playing with the U.S., and to increase its bet, instead of playing close to the vest or folding.
Why would the CCP feel they can succeed in winning the pot on this poker hand?
First: They know the U.S. has no appetite for war. Short of the PLA invading Taiwan, or declaring open war with India (which I believe we’d simply watch from afar), China sticks to little provocations, like denying the assertion of freedom of navigation in the South China Sea or the Strait of Taiwan, while doing nothing when U.S. warships test that doctrine. China doesn’t want a military war with America, mainly because they’d lose.
Don’t get me wrong here. The Chinese military has been improving and growing by leaps and bounds. It’s professional, dedicated, and taking full advantage of all that technology that allows China to manufacture iPhones, Teslas and every other high tech device under the sun that feeds America’s ever ravenous consumer diet. At some point, I feel that the CCP will be confident enough to take us on militarily, if the need arises. But not in this poker hand.
Ironically, China is more afraid of a fight with India, and is taking great pains to cool what was becoming a hot war on its shared border. And this leads to where we (Americans) are with China.
Second: What is China willing to lose?
For one thing, TikTok. Whatever value China, Inc. has gained from having over 2 billion downloads, the CCP is willing to sacrifice that to keep its aces safe. India is the number one market for TikTok, with well over 600 million downloads, with the U.S. third (China is second), with around 165 million. Losing a social media hit is not going to stop China from exercising control over Hong Kong.
Also, China will sacrifice Huawei’s 5G efforts in western nations. The U.K. has followed America’s lead and reversed itself, banning Huawei from its 5G network. This ban appears to be the direct result of U.S. sanctions, which, along with COVID-19, have harmed the company’s ability to manufacture parts and maintain logistics to support a large 5G effort, according to sources in Britain.
Third: The aces.
China has long pursued a policy of outright theft of intellectual property, in return for cheap, agile manufacturing of goods. That, plus the nation’s near monopoly on certain rare-earths is its ace.
Rare-earth metals are essential for producing most technological equipment. It is impossible to build a car without cerium, a smartphone without europium, a guided missile without neodymium. China now controls the supply of all 16 strategically critical rare-earth metals. In fact, 96% of global mining output for rare-earth metals comes from within China’s borders. [emphasis mine]China’s Dangerous Monopoly on Metals, Wall Street Journal, April 14, 2019
Also, China’s government has no compunction about allowing its people to suffer. There’s no government duty of care for the average Chinese citizen under communist rule. People are a resource for the state, period. Trump’s tariffs are useless because American companies just pass them on to American consumers. If Chinese companies lose business, workers just live more poorly, or are sent back to rural parts to subsist in a third-world economy.
Nobody in China has to worry about losing an election.
But Trump does.
The Chinese hope to gain everything. They hope to wait out the current president, and when another comes into office, they will play a different hand, a much stronger hand.
We’ve already seen the cultural, technological, and economic power China can project into the U.S. Up until just two days ago, you couldn’t order an NBA jersey with the custom message “FreeHongKong.” You literally could not type those letters without generating an error message.
China, Inc. has invested in our sports, our media, our educational institutions, our businesses, and our politics. They hold more U.S. debt than any foreign nation in the world ($1.1 trillion). If there’s a real “war” in the sense of China trying to subdue or in some way conquer America, this is a major weapon on China’s side.
In reality–realpolitik–denying the U.S. resources, and starving us for credit won’t work out too well for China. Putting us in a corner tends to wake up Americans politically and fan some very hot flames of nationalism. The CCP would rather fan the flames of division and political strife.
They’ll play their aces, and throw away the deuces. And when it’s time to call the pot, they want to be holding the winning hand. There seems to be very little President Trump can do to win that hand right now. He needs China more than they need him.
Politics is our biggest weakness, and China is going to play it very strongly. With Hong Kong, they’ve raised the stakes significantly.