There should be no more doubt that China is a threat to freedom and prosperity in the world – two values critically important to human flourishing and to long-term business success. In its pursuit of a new authoritarian world order that China dominates, the Chinese Communist Party (CCP) is trying to undermine and weaken the West through various means while creating debt traps for the developing countries to harvest their natural resources for its own benefit.
By accepting China into the World Trade Organization in 2001, the West was hoping to convert it into a rights-respecting country and trading partner. That hope never turned into reality. Instead, CPP has increased its authoritarianism and accelerated its pursuit of world dominance.
China helped create the drug crisis in the West by manufacturing and exporting fentanyl precursors. It funds cyber crime to be able to control water systems around the world. It has interfered in other countries’ elections to bolster China-friendly governments. It unleashed Covid onto the world, whether intentionally or through a lab leak, and did not warn other countries about it for months. It also unleashed TikTok that addles young people’s brains in the West (while severely restricting the social media platform’s usage and content domestically).
China’s threat to the world, as well as its atrocious violations of the rights of its own citizens, including the Uighurs toiling in concentration camps and over 40,000 political prisoners, have been widely documented in the media. The articles linked here are good recent examples.
Despite China’s record, governments and companies around the world are flocking there. The lure of trade deals, cheap manufacturing (China produces about 35% of world’s manufactured goods), and the vast market is understandable, especially when most of the world seems to be pursuing them.
Still, I argue that governments and companies ought to avoid business with China, for two main reasons. First: the very real risks and their devastating consequences – loss of freedom and prosperity – that doing business in China poses. Second: evading these risks and their consequences harms one’s ability to consider the big picture and think long term, both of which running successful companies and governments requires.
China is an authoritarian communist regime that ruthlessly oppresses and censors its own people and doesn’t hesitate to do it elsewhere as it seeks to expand its power and territory. Observe the CCP’s brutal takeover of Hong Kong and current aggression toward Taiwan and in South China Sea. Doing business with China fuels its expanding authoritarianism, which is not good for human flourishing, nor for business.
Business with China also poses risks to companies directly. Arbitrary detentions of foreigners (journalists, businesspeople, tourists) by the CPP are not uncommon when it can use them for leverage. It seeks global domination of industries critical to national security (such as rare earth minerals, military equipment, pharmaceuticals) for the same reason while creating entry barriers to foreign competitors. Chinese companies also siphon off technologies from foreign companies with no regard to intellectual property.
The harm from evading the risks of doing business with China is also very real. Evasion blots out uncomfortable facts and their long-term consequences and lets government or business decision makers focus only on the here and now: China hasn’t invaded Taiwan and there is no hot war with the West yet, manufacturing costs are low, Chinese products sell, companies are making profits, the economy grows. Why consider risks that haven’t yet fully materialized?
It is easy to evade the risks and take the pragmatist, do-what-everyone-else-does approach, especially when it may be profitable in the short term. But companies pursuing long-term profitability and governments that take protecting their citizens seriously cannot afford such evasion. They must consider the whole context, acknowledge the risks involved, and act accordingly.
What can be done to minimize the hazard of authoritarian, expansionist China?
Since governments’ major role is to protect citizens against initiation of force, they must be the primary defenders against China. Governments should gradually extricate themselves from economic ties with China: diminishing and ending trade agreements and prohibiting Chinese ownership of domestic companies and other assets critical to national security. Governments should also warn companies of the China risks. Instead, governments in mixed economies can facilitate trade with non-authoritarian countries and encourage domestic manufacturing of products critical to national security.
Businesses also must be vigilant about the China risk; it is in their interest to compete and trade freely and not help authoritarian countries expand their control. Instead of following competitors to trade with China, business leaders should think for themselves and establish supply chains and markets in rights-respecting countries where long-term profits can be maximized. They should also let the government know they are against contributing to a Chinese-led authoritarian world order and for free trade with rights-respecting countries.
Even individual consumers can help reduce the China threat by communicating their concern about it to their political representatives and request the government counteract it, by letting companies know that they avoid Chinese-made products, and by seeking alternatives to them.
Given that freedom and human flourishing are at stake, the commitment and effort these actions require of governments, companies, and consumers are worth it.
