| Both the upsides and downsides of China's nationalistic turn were on display this week. Chinese state and social media were agog over the unveiling of domestic tech champion Huawei Technologies Co.'s latest smartphone, which testing appears to show has achieved 5G capabilities. That's despite Huawei having lost access to advanced American-designed equipment, marking a milestone for China's state-led focus on building domestic capabilities. On the other side of the ledger, China has triggered a wave of antipathy among many of its regional neighbors. A controversial map purporting to show Beijing's ownership of disputed territories and maritime areas antagonized officials from New Delhi to Manila. And a state-encouraged binge of anti-Japanese fervor has complicated ties with Tokyo. While there's no doubt Huawei's achievements are impressive, and a sign of more to come in China's drive to dominate advanced technology, it's the second dynamic that's likely to prove more powerful. Beijing's inward, nationalistic shift threatens to leave its companies and consumers increasingly isolated from global trends—ultimately hurting its economy.  A Huawei Technologies Co. Mate 60 Pro smartphone Photographer: Justin Chin/Bloomberg The ability of Chinese President Xi Jinping to kick the ball into his own net shouldn't be underestimated, given the history. Just weeks ago, his meeting with Indian Prime Minister Narendra Modi suggested a rapprochement between the leaders of Asia's most populous nations, and potentially great economic partners. Fast forward to this week, and that opening seems shut again. Xi has decided to skip the G-20 summit Modi is hosting in New Delhi. India and China have long been at loggerheads over flashpoints including a border dispute in the Himalayas. This week, India lodged a diplomatic protest with Beijing over the publication of an official map that shows China claiming Indian territory in—you guessed it—the Himalayas. The same map spurred opposition from Philippine President Ferdinand Marcos Jr., giving his strategically located nation all the more reason to tighten its ties with the US. Malaysia and Vietnam also objected. And this all just days before a gathering of Southeast Asian leaders. As for Japan, China has been encouraging Tokyo not to go along with the export control and investment flow-strictures the US has championed in recent years. In April, then-Foreign Minister Qin Gang delivered that message directly to his Japanese counterpart, saying "peaceful coexistence and friendly cooperation are the only right choice." But the current, amped-up outrage in China over Japan's release of treated wastewater from its Fukushima nuclear plant is hardly likely to see Tokyo entertain the idea of a softer line with Beijing. (The plant was destroyed in 2011 by an earthquake-driven tsunami.) Despite international validation of Japan's measures with the Fukushima water, Japan's companies and individual citizens have come under nationalist Chinese pressure in recent days. Tokyo is now contemplating World Trade Organization action against Beijing.  The Fukushima Dai-Ichi nuclear power plant in Futaba, Japan. Japanese utility Tokyo Electric Power Co has started to release treated radioactive water from the wrecked nuclear power plant into the Pacific Ocean, part of its nearly $150 billion effort to clean up the worst atomic accident since Chernobyl. Photographer: Kentaro Takahashi/Bloomberg For Tom Miller, a senior analyst at Gavekal Research and former long-time China resident, the country's inward turn was a key takeaway on his recent visit—his first in four years. "China feels a lot more cut off from the rest of the world" now, he says. Some of that is a hangover from Covid lockdowns and the departure of many foreign residents during that time, he notes. But it's also clear that a domestic focus "is very much a feature" of Xi's overarching approach. And Miller cautions that "the more you focus on domestic strength and the more you cut off contact with the outside world, there is a risk that that can have a sort of stultifying effect." Back in the 1990s and early 2000s, Japan was well ahead of the US in having technically superior mobile devices, setting the pace in innovation with connection to email, camera phones and even electronic payments. But today Japan is an also-ran in the smartphone field. China similarly could find itself stuck in the back—if it keeps out of the global flow, Miller says. So, for all the excitement and pride over the latest Huawei phone, it's the provocative stance toward many non-Chinese emanating from Beijing that may have more effect on China's future. Speedy gadgets or not, the Communist leadership's nationalistic imperative threatens to leave the country behind. —Chris Anstey Get Bloomberg's Evening Briefing: Sign up here to receive our flagship newsletter in your mailbox daily, along with our Weekend Reading edition on Saturdays. Bloomberg CEO Forum @ Asean: Join us Sept. 6 in Jakarta, Indonesia, for a series of conversations on the trends, risks and opportunities facing Asean economies and how they fit into the global picture. Speakers include top leaders from B Capital Group, Microsoft, Pertamina and many more. Register here for a virtual pass or to request to attend. | 
No comments:
Post a Comment