Foreign Policy Research Institute A Nation Must Think Before it Acts How China Dictates the Rules of the Game
How China Dictates the Rules of the Game

How China Dictates the Rules of the Game

“And if all others accepted the lie which the Party imposed—if all records told the same tale—then the lie passed into history and became truth. ‘Who controls the past’ ran the Party slogan, ‘controls the future: who controls the present controls the past.’” – George Orwell, 1984

Recently, news coverage of Asia has focused on Donald Trump’s trade war against the People’s Republic of China (PRC). While it is an important story, as we have seen ad nauseam with Mr. Trump, he changes his mind quite frequently. The more important story with China has developed over the course of several months—China sails its aircraft carrier group in a controversial location; countries involved in China’s Belt and Road Initiative (BRI) cede to it key ports; private companies apologize for breaking Chinese law; and the Trump administration accuses China of “Orwellian nonsense.” All of these seemingly unrelated events and stories coalesce into a larger, much more troubling, picture of China asserting its economic might to dictate the rules of a new international order.

In 2018, the Chinese Communist Party (CCP) employed a new tactic whereby it determines—and often aggressively dictates—the way in which private companies and foreign governments classify Taiwan, parts of Tibet (or India), the South China Sea, and Hong Kong and Macao. In its quest to convince the world that Taiwan is indeed a part of the PRC, the CCP has resorted to outright bullying, refusal of service, or fining companies that label or list Taiwan as its own sovereign country. The targeted companies are quite diverse: Marriott International, Mercedes-Benz, Gap, Zara, Muji, Delta Airlines, and many others.

The CCP has pressured foreign governments in the past, but is now becoming more overt in its attempt to dictate the rules of the game in both the private and public sectors. As the PRC expands its influence through its Belt and Road Initiative, there are accusations that China is carrying out “debt trap” diplomacy, in which it offers countries with poor financial standing predatory loans for infrastructure development. And when the country cannot pay back the loan, China takes the opportunity to take over a key port or area with valuable natural resources. The BRI and loan practices increase Chinese influence across the world, particularly in Southeast Asia, Central Asia, and Africa, where China is focusing its efforts for infrastructure development projects. The CCP now has modified the BRI playbook for the private sector, with a tactic called a “market trap” here, whereby companies that wish to remain in the lucrative Chinese market must accept Chinese terms in order to stay.

These dual tactics underscore the Chinese leadership’s effort to re-shape international relations in its favor. By forcing companies to tow its line, particularly in regard to Taiwan and other Chinese “territory,” China is incrementally changing reality in its favor. The recent development with private Western companies, combined with the influence garnered from the BRI, puts Western countries in a bind: how to properly combat these predatory tactics while still maintaining friendly relations with Beijing.