Thanks to the Oppressed Chinese
By Pierre Lemieux
Assuming a nuclear war can be avoided, perhaps future historians will remember the growth of the Chinese influence in the world as the event that saved individual liberty, prosperity, America, and Western civilization. At least, that’s the optimistic way to look at Chinese tyranny and its impatient imitators in the West.
This hope is inspired by the Cold War. When Communists were conspicuously and proudly in power in the Soviet Union (and in China and elsewhere), they served as a foil for Western rulers and citizens, who were constantly reminded of what not to become. Communist policies such as restrictions on international trade, central planning, tax tyranny, police surveillance, philosophical and artistic crushing, philosophical poverty, persecution of dissidents or eccentrics, enforced prudishness, or militarization of society suggested what the government of a free society should not do. Not that everything was perfect in “free societies,” far from it. McCarthyism was not a glorious episode of American history. The opponents of communism were often tempted to justify domestic repression in the name of combatting communist-style repression. But we faced a constant spectacle of the terminus (given the technology of the times) of what Friedrich Hayek called “the road to serfdom” (see The Road to Serfdom, University of Chicago Press, 1944).
These economic, philosophical, political, and aesthetic barriers crumbled with the fall of the Berlin Wall. Several decades then passed in a philosophical vacuum where democracy is, by default, a common and vague shared value, as if the German Democratic Republic, the Democratic Kampuchea, or the Democratic People’s Republic of Korea had never claimed to be the real democracies. (Alan Charles Kors notes this point in “The Ethics of Democracy,” Georgetown Journal of Law & Public Policy 18.) The new cold warriors, those against China, now seem liberated from all scruples against using dirigisme similar to that of the enemy.
A Wall Street Journal article illustrates what I mean: Alex Leary and Katy Stech Ferek, “Biden Builds on Trump’s Use of Investment Review Panel to Take On China,” July 7, 2021. We can observe how Leviathan grows, whether Democratic or Republican:
The evolving mission means the multiagency panel led by the Treasury Department [the Committee on Foreign Investment in the U.S., or CFIUS] is set to be a linchpin in the Biden presidency’s plans to square off with the world’s second largest economy and potential peer competitor of the U.S., current and former officials said. …
For much of its existence, Cfius only reviewed deals that were voluntarily submitted for scrutiny. Its more assertive course began under the Obama administration which grew alarmed at Chinese buying sprees of tech companies, and accelerated during the Trump administration.
Congress in 2018 expanded the committee’s powers with bipartisan legislation that gave it more power to look for deals that could potentially harm U.S. national security but weren’t submitted for review. The Biden administration continues to add staff to seek out those cases that it deems should be scrutinized.
Controls on foreign investments have also intensified in other countries. Although this movement seems to be directed at China, it is an easy prediction that it will soon hit companies in friendly countries. Trump himself showed the slippery way with tariffs on steel and aluminum from allied countries under the excuse of national security. Magnachip Semiconductor Corp. is a recent example of the new activism of CFIUS, which has blocked the sale of the company to Chinese interests. Magnachip is domiciled in Luxembourg, carries most of its operations in South Korea, and sells mainly in Germany and Asia, but has many American investors and is listed on the New York Stock Exchange.
Control of foreign investment or trade is like international sanctions: it “works” (from the American government’s viewpoint) because it threatens Americans with serious penalties.
Except for the extreme case of a raging war, I think there is no serious case for the government of a free country to prohibit its own citizens or subjects from selling goods and services, or corporations or shares of corporations, to any foreign buyer. Any company operating in the United States or listed on an American exchange is anyway overregulated by, and potentially under the total control of, the US government. And pretending that the government in DC will help the American economy prevail (whatever that means) over the Chinese economy by emulating Chinese dirigisme, that is, by limiting the economic freedom of Americans, is a tragic illusion. That is not how the Cold War was won or could have been won.
It is of course important to always distinguish Chinese residents and businesses on one hand and their tyrant on the other hand—illustrating the danger of using “China” for both the tyrant and the tyrannized. It is in the interests of most Americans—of most individual Americans—to be free to trade with China; if it were not, they would not have to be coerced by their own government to refrain from doing it.
If it is true that the deepening of Chinese totalitarianism will help Western people and their rulers rediscover the difference between a free country and an unfree one, we should thank the poor oppressed Chinese for their unwitting help. Perhaps they will in the process discover the difference themselves.