When your columnist started advising representatives from foreign businesses how to get into the Chinese market, the first and second things he told them was to stay out of politics and repeat the phrase “win-win co-operation” ad nauseam. Nowadays, he has to change his strategy and tell them to vocally get into politics – by supporting the Party and the People’s Leader Xi Jinping unequivocally and vocally. This is because companies are increasingly forced to publicize their allegiance to the Communist Party of China or risk losing access to the world’s biggest consumer market.
This pressure comes from the usual suspects: the actual Party apparatchiks, but also from the consumers themselves, who are increasingly jingoistic in their own vocal support for the Party. There is no win-win anymore. The Party wants to be the only winner, especially when the current occupant of the White House promised his electorate that they would win so much, they would get “tired of winning.”
The Party has celebrated a “big win” in the case of Cathay Pacific Airways. It is a disturbing example of official pressure dictated by the Party, one might call this “centrally planned arm-twisting.” The company’s chief executive, Rupert Hogg, and Chief Customer and Commercial Officer, Paul Loo, both resigned. They were deemed insufficiently patriotic in the face of the Hong Kong protests and became high profile sacrificial lambs on the altar of Xi Jinping. This week, John Slosar resigned as chairman too. These victories come at a time when President Xi is also increasingly portrayed by the Party press as the powerful leader to guide the nation to victory in the Sino-American trade war. On both fronts, the victories may prove to be hollow – and the painful price for “winning” will mostly be paid by Chinese consumers.
If Beijing continues to pressure foreign companies to toe the Party line – and publicize doing so – and if it continues to engage in tit-for-tat sniping with the erratic trade warring White House, it be will inflict damage not just on the cowed “hostile foreign forces,” but on its own economy, eventually hurting the purchasing power of the Chinese people. Even without having to worry about inconveniences such as elections and scathing comments in a free press, the Party is in danger of not keeping up its end in its unwritten social contract with the people: “you stay out of politics, we’ll give you the opportunities to get rich.” This was once the domestic “win-win” that the Party promised the people, but the people have not won recently.
Beijing’s bullying also cuts deep self-inflicted wounds in its attempts to persuade the world that its flagship companies can be trusted. On the one hand, the Party seems to have a veto on who will run Cathay Pacific. On the other hand, it issues solemn promises that a company like Huawei is completely independent and transparent. One of these two must be false. China either believes in the freedom of companies to select their own boards and managers or it doesn’t. The fact that the Party press revels in the knowledge that the Party can strong-arm businesses into following its diktats is not good for China’s own national champions to enter the global marketplace, especially in sensitive segments of western markets, such as telecoms infrastructure.
Meanwhile, multinational businesses are left with only bad choices. Western investors and regulators will punish them if they are seen to be coerced by Beijing, but Beijing threatens to cut them off from the consumer market. And if they try to walk an increasingly narrow middle ground between these two options, there are the Chinese consumers, who, easily whipped up online by influencers falling over themselves to prove their loyalty to the People’s Leader, accept nothing less than apologetic grovelling from evil western capitalists.
Here, Cathay Pacific is again a case in point. The Global Times, a nationalist tabloid owned by the People’s Daily, was at the forefront of the attack. In its continuing strategy of wanting to be “redder than red” the newspaper survives on adding fuel to whatever nationalist fire the Party has deemed appropriate for lighting. It seems that it sometimes even goes after targets that are then retroactively deemed hostile by the Party, the two entities intertwined in such a way that outside observers cannot decide if the nationalism leads the socialism or the other way round. For instance, the tabloid has recently started denouncing the big four accountancy firms because of suspected “unpatriotic” behavior among their Hong Kong employees – meaning support for the anti-extradition treaty protests that have evolved into full-fledged calls for democracy.
Although businesses can no longer afford to stay out of politics, Chinese leaders still love to talk about win-win co-operation with foreign governments and companies. Indeed, in a free market and with little government interference, all trade and economic co-operation will, by and large, be win-win. There are only a few people in the world who cannot see this basic truth, but unfortunately, two of these people are also Presidents of the world’s largest economies. One of the pair is President for Life and the other might be replaced by one of the plethora of candidates of a Democratic Party, that has also all but abandoned common sense when it comes to free trade and the role of government. Win-win co-operation is increasingly seen as an aspect of “globalism” in the west and as a meaningless phrase in China.
The era of win-win is over. We are in danger of entering an era of lose-lose.
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