What now, China?

Last week, while I was visiting China, I noticed an excitement among the Chinese people over the royal welcome accorded by Britain to visiting Chinese president Xi Jinping. Many were thrilled to see their President honored by no less than Queen Elizabeth II.

Perhaps, the Chinese felt proud Britain is at last recognizing China as its equal. Some Chinese observers commented Britain is now a strong ally of China, noting how Britain surprised the US by being among the earliest to join Beijing’s Asian Infrastructure Investment Bank (AIIB).

The AIIB is China’s financial muscle to support its Silk Road initiatives. It also effectively minimizes the impact of its non-inclusion by the US in the Trans Pacific Partnership or TPP, or the free trade zone that attempts to economically isolate China.

Over the weekend, we got word a United Nations-backed arbitral tribunal at The Hague, in the Netherlands, unanimously decided it has the right to hear Manila’s historic case against Beijing over the West Philippine Sea.

This is a first round setback for China who refused to recognize the court’s jurisdiction. The legal process will take more time before a final determination. But China will find it difficult to ignore a possible adverse final ruling from the court, if it wants to gain international respectability as a law abiding nation.

There are other things going on in China’s domestic front that poses challenges to its current leadership. While there is agreement among the locals that President Xi Jinping has effectively consolidated power, indeed, the most powerful Chinese leader since Deng Xiaoping, he has also created powerful enemies.

President Xi has carried out a tough, honest to goodness anti-corruption drive that has struck fear in the hearts of many Chinese government officials. Not even the powerful military officers were exempted in Xi’s version of Daang Matuwid.

It was related to me that as a consequence, Macau casinos have lost a significant amount of business. Even the potent and very expensive Chinese brew, maotai, an essential in banquets and a favorite gift was reported to have gone down in sales. Someone observed some high end restaurants have gone out of business because Chinese officials are so afraid of being photographed feasting in restaurants.

This is why President Xi must be careful not to give his enemies an opening to weaken his public approval which is currently rather strong. That makes it difficult for the Chinese President to go against strong nationalist sentiment on its various territorial disputes, making acceptance of an adverse international court’s verdict difficult.

Still, it is clear China values international opinion greatly. The warm British reception enabled the Chinese leadership to present an image of a West that is not solidly anti-China.

Of course that is ironic. In the mid-19th century Britain led two Opium Wars against the Qing dynasty. After winning both wars, Britain forced China to buy its opium that resulted in widespread addiction in China and caused serious social and economic disruption.

Because China has a glorious history that goes back thousands of years, it was civilized when Europe was in the Dark Ages, it has an elephant’s long memory. The resentment arising from the abuses it suffered in the hands of foreign powers still influences Chinese sentiment today.

But the Chinese leadership is wise enough to use its economic power to force the British to finally kowtow to Beijing. The vast Chinese market is so attractive an inducement, as it turns out, for Britain to veer away from the US in its approach towards China. The Brits may have reassured the Americans they love them, but business is business.

Indeed, business is also China’s strategy to win the world. Despite all its muscle flexing in its adjoining seas, China is banking on soft power or the use of diplomacy, trade and cultural matters to gain international friends and respectability.

I suspect, the Chinese leadership is afraid of having a mistaken shot fired in the contested maritime territories because it will upset everything they have going for them now.

I see China’s strong verbal reaction on the US naval exercise in the West Philippine Sea more of a cry of desperation to please not heat up the waters more than necessary because the consequences are not good for the parties. China does not want any disruption to its economic rise that war will bring.

But now that China has the economic and military might to stand up and defend their national dignity, they are not about to quietly allow an intrusion in what they claim is their territory by a western power, the US.

Then again, China’s future is so intertwined with the US. I suspect it is the same thing for the US given China is its largest creditor and many US companies profit well from the Chinese market. The war of words over the “intrusion” of the American warship cannot be more than acoustical. The quick visit to Beijing of the American Pacific naval commander will see to that.

In the end, business makes the world go round. The China Daily last week reported there are three Chinese suitors in a bidding war for the Starwood hotel chain of Sheraton, Westin and W hotels worldwide. Among the Chinese bidders is the partly government-owned Jin Jiang International Hotels.

On the same business section page of China Daily is the report of how Apple earnings got a boost from its China sales.  And in Japan, China’s Spring Group is set to launch a chain of hotels in Japan. And the British luxury car maker Bentley is targeting a long-term development plan in China.

When President Xi visited Seattle this month, it was announced China will buy 300 civilian aircraft from Boeing valued at $38 billion. Many in the US business sector are still eager to do business in China and would rather avoid confrontation.

Back to the domestic front, the attempt of the Chinese leadership to shift the economy from export led to domestic consumption has not been easy. Investors have complained the mandated 15 percent annual rise in domestic wages to create domestic demand is making their goods uncompetitive.

There have been reports of factory closures and layoffs, including those in Shenzhen across the Hong Kong border that resulted in violence. One thing the Chinese government cannot afford to happen is widespread discontent from job losses or from an economy that is seen to be enriching only a few and doing nothing for the many.

So, how do all these affect us? What happens at the West Philippine Sea will depend on how these various concerns present themselves at critical junctures. Chinese leaders have to carefully balance the need for gaining international respect as a responsible superpower with a nationalist sentiment at home seeking retribution for the wrongs China suffered when it was fragmented and weak. They see us as an American proxy in the maritime dispute.

What now, China?

We need to remind China we are not their enemy… that we are also a developing Asian country like it is. Our poor fishermen earning a subsistence livelihood for decades at Scarborough Shoal are no different from their struggling fishermen and peasants.

We have to remind China we are a small country in its neighborhood and must not be bullied by one who should know better, having experienced bullying itself from the world powers more than a century ago.

China must realize it makes no sense to pursue a policy driven by a false understanding of national pride. Why bamboozle a small neighboring nation for territory so far from China’s shores?

While we were driving through Xinjiang pro-vince last week, I saw all that flat land as far as the eyes can see and beyond. I thought, China has more than enough land for its people. Why deprive us of a few outcrops from the sea and the fishing grounds that provide poor fishermen some subsistence livelihood?

Maybe our next administration will have a more experienced and savvy Foreign secretary who is not beholden to the United States and is credible enough to the rest of Asean to win support in our dispute with China. We also need a credible official to improve our diplomatic efforts in seeking a way out of the dispute with China.

I heard a high US Embassy official told a senior Malacanang official to tone down the rhetoric on China because if a shooting war erupts, the US will not come to our aid. But that need not be said. It is obvious. We must learn to fight our own battles based on the realities of our limitations and geopolitical demands. 

Uncle Sam will be there only if it is in its interest to do so and our interests are not always mutual. Why can’t our leaders understand that?

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco