Magazine | June 26, 2017, Issue

Salesman Xi

Why do Western liberals love China so?

In advance of the 19th Party Congress in Beijing this fall, which will appoint Chinese president Xi Jinping to another five-year term, the media are busy polishing Xi’s image as the foremost leader of the age. Chinese state media are just following Beijing’s directives. But what should we make of Westerners who give the People’s Daily and the state-run Xinhua news agency a run for their money?

For instance, most major Western news outlets ran lengthy excerpts of Xi’s speech to the World Economic Forum at Davos in January. The coverage was overwhelmingly positive. Eurasia Group’s Ian Bremmer gushed that if listeners closed their eyes during Xi’s speech, they “could almost forget he leads an authoritarian regime.” The speech inspired a Forbes writer to breathlessly call Xi the “leader of the ‘free trade’ world.”

China was similarly elevated in the coverage that followed President Trump’s announcement that the U.S. would withdraw from the Paris climate accords. China, we were told, was now leading “the energy future.” In an interview with the Washington Examiner, Peter Wittig, Germany’s ambassador to the U.S., predicted that Trump’s move would create a “leadership vacuum” that China might fill.

Enthusiastic headlines about China may be more common than ever today, but the normalization of China’s authoritarianism began much earlier. Since 2007, World Economic Forum chairman Klaus Schwab has fixed his seal of approval on Chinese development by hosting an annual “Summer Davos” in China. Those events have coincided with the appearance of a new species of “Davos man” — the authoritarian apologist.

When Thomas Friedman visited Tianjin for Summer Davos in 2010, he was deeply impressed by the Meijiang Convention Center hosting the event. He contrasted the eight months Tianjin needed to build the convention center with the five months the D.C. transit authority needed to repair escalators at the Bethesda, Md., Metro station. Friedman’s New York Times columns about his trip became part of his declinist tome That Used to Be Us.

The technocratic authoritarianism embraced by Schwab and Friedman reveals the priorities of post-ideological business elites preoccupied with infrastructure projects and money-making. The media coverage, in turn, reflects the liberal tendency to praise any of Trump’s opponents. But is China really leading the world in the fight for free trade and against climate change, as Davosites and liberals seem to believe?

The best place to look for an answer is China itself.

A three-hour drive north from Beijing takes us to China’s Grassland Highway in Zhangjiakou, Hebei Province. The highway winds through an expanse of hilly farmland dotted with wildflowers and countless gleaming white wind turbines. Together with the natural beauty of the area, they make the Grassland Highway feel like the world’s largest wind-power advertisement.

Alas, those wind farms, beautiful as they are, are not connected to a “smart grid,” which would allow for efficient distribution of energy regionally and nationally. Moreover, like many wind turbines throughout China, it’s possible that some are not even connected to the grid at all. Chronic mismanagement of wind farms leads to high Chinese wind-power curtailment rates — the percentage of output that is not transmitted — which stood at 16 percent in 2016.

Back in Beijing, we take a one-hour high-speed train from South Railway Station to the newly finished Yujiapu Financial District Station in Tianjin. After a short taxi ride, we arrive at the Sino-Singapore Eco City.

It is a beautiful ghost town.

Although Western media outlets have praised the eco-city as a model community, few Tianjin residents actually live there. The city currently has a population of 50,000, far below the projected population of 350,000 by 2030. Moreover, the environmental benefits of building a low-carbon city of 350,000 in a high-carbon region of 120 million people seem dubious.

So, what’s going on here?

It’s tempting to write off the Grassland Highway and Sino-Singapore Eco-City as Solyndra-style boondoggles, but they should be considered in a different light. China has mastered the art of Potemkin environmentalism.

For example, the Chinese government regularly shuts down factories to produce clean air for major events and international meetings, which meets with online mockery from Chinese citizens. Chinese have grown cynical about their government giving the gift of blue skies to politicians and foreign dignitaries, but Beijing has also promulgated tougher air-pollution regulations to protect Chinese citizens in the event of pollution spikes. The economic costs of compliance, though, mean that the regulations are enforced only sparingly, and only with advance notice.

Beijing takes a similar “appearances first” approach to national energy policy. Although environmentalists applaud China’s growing renewable-energy sector, much of that energy comes from hydropower, including the famous Three Gorges Dam. Such projects provide tremendous electrical power as well as political clout, but at a serious cost to the environment.

While it’s true that Beijing has reduced the share of energy production coming from coal, China’s coal-power capacity is still expected to grow by 19 percent over the next five years. Chinese energy demand is intrinsically linked to urbanization, and urbanization shows no signs of slowing down. It is therefore difficult to reconcile claims that Beijing is environmentally responsible with the fact that China’s current development plans envision building enough homes for nearly 3.4 billion people.

More to the point, two of Xi Jinping’s most important projects also run counter to his reputation as a climate defender. In April, China unveiled the Xiongan New Area to much fanfare. A megacity in Beijing’s backyard, Xiongan would cost at least $290 billion to build, increase burdens on northern China’s water supply, and require a 2 percent spike in steel production at a time when the carbon-heavy industry desperately needs reform.

Overcapacity in steel as well as in coal is driving an even bigger project. Xi’s trillion-dollar One Belt, One Road (OBOR) plan aims to re-create the ancient Silk Road for modern times. Beijing has produced a number of propaganda videos proclaiming OBOR China’s gift to the world. Left unmentioned in the videos: The gift entails China’s building nearly as many coal-power plants overseas as it is closing at home.

China’s environmental record remains mixed at best, yet Xi’s support for the Paris accords sets him apart from past Chinese leaders. What changed?

Prior to 2014, China denounced climate-change agreements as a conspiracy against the developing world. In response, President Obama offered Xi an easy deal: China would get credit for protecting the environment simply by modernizing industry and growing its service sector. At the same time, because every signatory, by its own choice, sets a different national goal to reduce emissions, Trump is right that the Paris accords demand more from the U.S. than from China.

Some argue that China’s about-face resulted from increased middle-class awareness of air pollution or China’s political maturation. But what most explains China’s commitment to restraining emissions is the fact that Western countries made their own commitments first and China sees a chance to profit.

It’s no coincidence that China found religion on climate change at almost exactly the same time that it developed — and sometimes stole — the technological base to export green technologies, from high-speed rail to electric buses to wind turbines to solar cells. Like almost everything else in China, however, green technology is characterized by subsidized overcapacity. The industry is also deeply protectionist at its core, even as it covets access to foreign markets.

A 2016 analysis of the global wind-turbine market by Renewable Energy World found that “China sourced 97 percent of its turbines from 23 Chinese wind turbine OEMs [original equipment manufacturers], shutting out all but a few Western turbine OEMs. Conversely, 97 percent of all installations throughout the rest of the world were supplied by over 18 Western and Indian wind turbine companies and almost no Chinese suppliers.”

China’s Goldwind, which is a market follower outside of China, is the world market leader in wind power by virtue of the Chinese market alone.

China has had even more success with solar, producing about 70 percent of the photovoltaic cells sold worldwide. This led the U.S. to pursue anti-dumping and anti-subsidy tariffs against China starting in 2012. The EU has taken similar actions.

The Davos crowd may have cheered Xi’s attack on protectionism, but industry experts suffer no delusions about China’s free-trade record. Economics professor Christopher Balding notes that traditional trade barriers mark China as “one of the least open major economies.” He adds, “China has also become adept in using non-tariff barriers to prop up favored companies.”

Germany’s ambassador to China, Michael Clauss, has claimed that German firms are still being pressured by China to engage in technology transfers, a violation of World Trade Organization (WTO) rules. Technology transfer, which always ends with foreign firms’ being pushed out of domestic markets, was a key method by which China developed high-speed rail and wind power. EuroCham — the European Chamber of Commerce in China — regularly complains that European firms are shut out of the Chinese procurement process.

AmCham, the U.S. Chamber of Commerce in China, has echoed Eurocham’s concerns. In its annual China business-climate survey, over 60 percent of respondents said they doubted China would open up its markets to foreign competition. A full 80 percent said they felt unwelcome in the Chinese market.

James McGregor, chairman of the PR firm APCO Worldwide in China, has been even more blunt. He recently told the Washington Post’s Fred Hiatt that Chinese policies are “aimed at domination of the industries of the future,” including “artificial intelligence and all the things that are important to the American economy.”

Those industries of the future include green technologies beloved by Davos men and liberals alike. China intends to corner that market, and it’s violating WTO rules and leveraging the West’s commitment to the Paris accords to make it happen. Why is China getting away with this?

Perhaps it’s because Xi Jinping is a better salesman than Donald Trump. Or perhaps the West is too busy buying what Beijing is selling to stop and look at the bill.

– Mr. Stinson has lived in China since 2004.

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