China, Corporations, and New Geopolitics

William Daniell (1769–1837): Egg Boats off Macao, China// Public domain

“May you live in interesting times,” the old Chinese curse seems extremely relevant. The events of the last three years: the pandemic, the war in Ukraine, and the accelerating economic and geopolitical crisis make us look with growing nostalgia at the old years of stability and peace. However, we are not doomed to a fateful future. Nevertheless, it is worth watching reality closely, drawing conclusions from it, building bold scenarios, and reacting to changes.

We pay too little global attention to what is happening in China. The Communist Party persistently continues the policy of a restrictive lockdown in response to COVID for over 2.5 years. Funnily enough, this policy is probably an ideal dream for many opinion leaders in Poland, given their position just a few months ago. But seriously, in the Chinese authoritarian system, this sanitary regime is more violent than anywhere else in the democratic world. The result is an economic slowdown but also the beginning to be, for Chinese conditions, an unprecedented social revolt.

In fact, there is no good way out of this situation for the Chinese authorities. The lockdown, with all its fatal side effects, has lasted for so long that it will now be extremely difficult to step back and say that all those sacrifices were pointless. If the lockdown is lifted, a great wave of disease will pass through unvaccinated China, taking a terrible toll. It is inevitable as lockdown only delays, not prevents, the spread of the disease.

However, the narrative in China was completely different and the social cost of lockdown was more severe than elsewhere. Albeit rational, retreating will be a disgrace to the infallible authoritarian power. The authorities will probably try to lift the restrictions in stages, but social patience remains unknown. On the other hand, insisting on lockdown condemns China to the scale of social rebellions, which may shake even such a state. It will be necessary to tighten the course, continue to lock China into the world and all the evil that comes with it. Either way, big trouble lies ahead for Xi Jinping and China.

In accordance with political correctness, it is difficult to officially enjoy the troubles of a growing power, but it must be clearly stated that we are witnessing a growing clash between an authoritarian and a democratic world. It is most tragic today in Ukraine, of course.

Today, one can risk the hypothesis that the Russian invasion would not have happened if Putin had not received consent from the Chinese leadership. Moreover, the continuation of the invasion and attacks on Ukraine depends on the support of other authoritarian states; from deliveries of drones from Iran or mysterious transports from China to Russia, about which the media has recently written. Furthermore, it is probably in China’s hands to cease this conflict.

We cannot also fail to notice how the digital field and the issue of cyber security is becoming an important front in the clash between the democratic and authoritarian worlds. Big technology companies play a gigantic role here. It is really crucial from which legal regime the company providing technology solutions to citizens comes and with which government it cooperates. One cannot pretend that in the 21st century large technology corporations are not one of the key players in the field of geopolitical clashes, because they are.

Reality is changing. Major part of public opinion and decidion-makers are still engaged in a ritualistic attack on the big players in the digital market, especially those hailing from the US. This is a mistake. It does not mean that the legal environment of the giants should not change in any way, because we would like to see more competition in the market, but we should understand their importance and the significance of their resources in the geopolitical race. Priority should be given to ensuring that they are not replaced by entities originating from authoritarian legal regimes.

In this context, I am not convinced that the ‘liberal’ consensus around the minimum corporate tax initiative [1] is appropriate. Forced tax harmonization should always raise many questions. After all, it can often act as a deterrent to international integration, discouraging weaker players. It not only deprives weaker countries (such as Poland) of opportunities to build competitive advantages on the market and incentives for investment, but also favors highly developed ones. It may also lower the ability of these corporations to compete in the global market with entities originating in China, for example.

We should think of how to make the digital market more competitive. The question is whether large corporations should be able to buy and take over shares of promising start-ups. Today, the market is too much of an oligopoly, but it is also not true that technology corporations are assured of automatic dominance. The recent troubles of Facebook or Twitter show that every company eventually reaches the twilight point of its expansion.

Over-regulation rarely produces good results. It usually brings many expensive responsibilities for companies, many propaganda glories for politicians, and trace benefits for service recipients. Does accepting cookies on every website you visit really ensure the safety of recipients and improve the quality of the service they receive? Are all provisions of the GDPR really rational? Let us remember this in the case of the increasingly geopolitically important market for digital services.


The article was originally published in Polish at:

Translated by Natalia Banaś

Continue exploring:

Russia and Its Weakness

China’s Growing Presence in Hungary: Opportunity or Challenge?