China urged to set aside ideological differences with West to ‘avoid being isolated’, embrace competition

·5-min read

China should play down its ideological differences with the West as much as possible and instead highlight competition in the fields of technology and economics to ensure a favourable international environment for the nation’s development, a key Chinese pro-reform figure has urged.

Beijing is currently facing growing pressure from Washington and its allies over trade, investment and technologies such as 5G and semiconductor development.

The Biden administration is seeking to form a united front with its allies to rein in China, while criticising the country’s human right record and renewing calls for probes into the origins of the coronavirus pandemic, with China’s leadership hitting back by urging the United States to abandon its “ideological biases”.

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“Now is not the time when [China] needs to compete with the West in the field of ideology,” said Li Ruogu, a former chairman of the Export-Import Bank of China.

“Our main issue is still the development [of the economy and society], without which there will be so many problems we cannot resolve,” Li added on Saturday at the second Qujiang Forum in Xian, the capital of Shaanxi province.

We need to have trump cards in technology, having the ability to fight back; on the other hand, in politics, we should not only avoid being isolated but also need to unite more countries to stand together

Xu Qiyuan

Continuing China-US tensions have led to an inevitable trend of China being artificially cut-off from the global supply chain, Li said, although in the end, overseas suppliers will still find ways to sell their products to the attractive consumer markets just like China, driven by capital and profit outlook.

Xu Qiyuan, the director of the research department at the China Finance 40 Forum and a research fellow at the Chinese Academy of Social Science, said that Beijing could learn from Washington, which ensured the security of key parts of its global supply chain without reducing the reliance on imports by depending on allies for the supply of most of its parts and components.

“On the one hand, we need to have trump cards in technology, having the ability to fight back; on the other hand, in politics, we should not only avoid being isolated but also need to unite more countries to stand together,” Xu said.

The Qujiang Forum, which was organised by the China Finance 40 Forum think tank, also said in a report that after considering the deterioration of political relations and the artificial disruption of technology supplies, the risks facing China’s global supply chain could rise sharply, while those facing the US were unlikely to change significantly.

It also warned that China should be wary of the Biden administration’s moves to leverage allies and multilateral platforms to contain China in key technologies amid Beijing’s dwindling diplomatic room for manoeuvre.

China has already made more efforts to seek greater self-sufficiency in some core technologies, such as semiconductors, after the US and its allies moved to restrict supplies.

Addressing the country’s top scientists, engineers and researchers on Friday, President Xi Jinping said China must make breakthroughs in key areas such as artificial intelligence, semiconductors, quantum technology, life sciences and energy.

US, EU to hold China to account on ‘trade-distorting policies’

“Competition over cutting-edge technology has intensified to an unprecedented level. We must have a strong sense of urgency and be fully prepared,” Xi said.

His speech coincided with a similar call from US President Joe Biden, who on the same day asked the US Congress to back an ambitious increase in funding for scientific agencies.

Last week, Kurt Campbell, the White House’s Indo-Pacific policy director, said that the “dominant paradigm” between China and the US would now be one of competition, as the period of US engagement with China had “come to an end”.

The odds that there will be two parallel systems for digital technology is also rising, as the US-China confrontation has intensified, the report added.

This is very important for both the government and enterprises … whether to ‘throw away illusions and prepare for battle’ or ‘continue to embrace hope and strive for better results’

Yu Yongding

Under current conditions, the Biden administration is unlikely and unable to cancel trade tariffs on Chinese products in the short term, but the two countries could seek to exempt more items from the tariffs, the report said.

“The [US Trade Representative] could use tariff exclusion measures to avoid Congressional resistance and domestic political pressure,” the report said.

Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences, said at the forum on Saturday that China is now facing a political judgement, that is, whether the country will eventually be forced to decouple from the US in the hi-tech sector because Washington’s current actions were preparing to minimise the costs of a final decoupling.

“This is very important for both the government and enterprises … whether to ‘throw away illusions and prepare for battle’ or ‘continue to embrace hope and strive for better results’, Yu said. “Any misjudgment will cause huge losses.”

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