"China is in Danger of Growing Far Below its Potential"
From Neue Zürcher Zeitung's TheMarket.ch,May 26:
Joerg Wuttke, outgoing president of the EU Chamber of Commerce in China,
talks about the disappointing economic recovery after the end of the
zero Covid policy, the ideological isolation of the Party leadership and
the great power conflict with the United States.
China’s
development and the advancing conflict between the USA and the People’s
Republic are among the most important geopolitical and economic issues
of the coming years – even decades. Hardly any company is currently not
considering how to deal with the challenge of China and the growing
uncertainty.
Russia’s
war in Ukraine has forced many economic actors – including investors –
to rethink their exposure to China. Scenarios of what would happen in
the event of an attack on Taiwan need to be thought through. The Party
leadership’s crackdown on successful private sector companies such as
Alibaba, Tencent and Didi has spooked many investors, as did the
draconian lockdown measures during the Covid pandemic.
Few
Western observers have a more intimate knowledge of China than Joerg
Wuttke. The outgoing president of the EU Chamber of Commerce in China
has lived in the People's Republic for more than forty years. In an
in-depth conversation with The Market NZZ, which has been lightly edited
for clarity, Wuttke shares his views on where China is headed.
«China today not only has a one-party system, but a
one-man decision-making system»: Joerg Wuttke
Mr.
Wuttke, you have witnessed the opening and rise of China over the past
forty years. What are your thoughts when you look at the country today?
I
was incredibly lucky to witness the greatest economic comeback story in
the history of the world. When I came to China, jackets were green or
blue, married girls had short hair and unmarried ones wore braids. China
conquered the future at an incredible speed – which is still true
today: Germany now realizes, for example, that within three years the
Chinese have managed to build better electric vehicles than we have and
are leaving us in the dust. At the same time, I am now experiencing
something that I would call a mental closure. Beijing has embarked on an
ideological path that de facto means China’s disconnection from the
world.
A reorientation inward?
You
can’t necessarily put it that way. It is primarily an ideological
reorientation. Economically and industrially, China does not necessarily
want to isolate itself. President Xi Jinping has issued the slogan that
China should be independent of the world, but the world should be
dependent on China. That’s what it boils down to. For me, an ardent
supporter of globalization who founded the EU Chamber of Commerce in
China in 2000 with a view to the country’s admission to the WTO, this is
a deeply worrying prospect.
How
can that go together, an ideological encapsulation while at the same
time trying to keep close economic ties with the rest of the world?
It
hasn’t worked anywhere yet, in my opinion. There is no such thing as a
North Korea with export power. I also believe that the Party leadership
is smart enough to recognize where it is doing damage to itself. Right
now, it’s just incredibly difficult to see where the journey is going.
China has always managed to square the circle so far, and has made a
miraculous resurgence combining communism with a kind of Manchester
capitalism. At the same time, we recognize that the current ideological
backlash is leading to enormous counterpressure, especially in the
private sector. My fear therefore is that China will grow far below the
potential that this incredible nation actually had. But we must not
forget: It’s not just China that is turning its back on the world. It is
also the Americans who are weakening China with their technology war.
There
is a firm conviction in China that the U.S. wants to prevent the rise
of the People’s Republic. There is talk of a new Cold War. How do you
see this?
The
trust between Washington and Beijing is gone. The Chinese are convinced
that the Americans want to prevent their rise to their rightful place
in the global hierarchy. Nevertheless, I think the Cold War of the last
century is a false analogy, because it was an ideological conflict
between two military powers. Today, we are talking about a trade and
technology war between two closely intertwined economic powers in a way
that was never the case between the Soviet Union and the United States.
This makes the conflict much more difficult for economic players and
creates an insane amount of uncertainty among businesses. I am
concerned, for example, that China is currently being viewed in the West
through the lens of the war in Ukraine. We constantly read forecasts
about when China will attack Taiwan.
