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>>> China Knows How to Buy Off Enemies


Multiple dynasties used bribes to win time until they could take on their foes. The U.S. should be wary.


Bloomberg

By Michael Schuman

July 13, 2019


https://www.bloomberg.com/opinion/articles/2019-07-14/china-will-be-happy-to-buy-off-u-s-for-trade-peace?srnd=premium


Past emperors paid off barbarians beyond the Great Wall.

Though China is playing coy for now, it’s likely to buy large quantities of American goods as part of any final trade deal with the U.S. in order to narrow the long-running imbalance between the two countries. The propriety of demanding such purchases is highly questionable. Punishing China with tariffs on its exports until it awards bigger orders to American companies and farmers is effectively extortion.

The Chinese, though, have faced this sort of blackmail many times over their history. And the way they’ve chosen to handle it holds lessons for the U.S. today. The biggest: Be careful what you wish for.

The history goes all the way back to 200 B.C., during the earliest years of China’s imperial age. The newly formed Han Dynasty (206 B.C.–220 A.D.) was threatened by the Xiongnu, who had forged a powerful confederation of tribes on the northern steppe. The founding Han emperor marched with an army to defend his empire, only to discover he was badly outmatched. Held under siege by the militarily superior nomads in the dead of winter, the emperor barely escaped with his life and what little remained of his frostbitten force.

In the wake of the humiliating defeat, the Han court decided, in essence, to pay off the Xiongnu. The Han agreed in a peace treaty to hand over large amounts of silk, grain and other goodies annually; in return the Xiongnu promised not to maul the Chinese empire. With their talent for colorful euphemisms, the Chinese described the exchange not as bribery but as “peace through kinship relations.”

The policy was controversial. Some Chinese officials argued it just made practical sense. The Han were not strong enough to beat the Xiongnu on the battlefield and the amount of money involved, though a mind-blowing windfall for the steppe nomads, was a bargain for the rich dynasty. Some argued further that the arrangement would eventually weaken the Xiongnu, by making them dependent on Chinese wealth.

Others, however, condemned the strategy as appeasement. Though the treaties ostensibly treated both parties as equal, the Chinese were in reality in an inferior position, paying a form of tribute. The situation was the reverse of the proper world order, in which the Chinese emperor’s rightful place was on top. One Han statesman described the arrangement as “a person hanging upside down.” Worse still, the Xiongnu were never satisfied. They persistently demanded larger payoffs, while continuing to raid Chinese territory anyway.

The Chinese lost patience. In the 130s B.C., the strengthened Han Dynasty, under a more militant emperor, shifted from “peaceful” relations to war, later eliminating the Xiongnu as a major threat to China’s security.

The Song Dynasty (960-1279 A.D.) inked similar agreements with different batches of northern invaders. One such arrangement, with the Khitan, generally kept the peace for about a century and allowed the Song to enjoy wealth both material and cultural. In fact, China experienced a near-industrial revolution in those years, with advancements in technology and production beyond anything taking place in Europe at the time.

The parallels with today should be clear. Once again, a Chinese government, confronted by a foreign foe, intends to use some of its ample wealth to preempt more dire outcomes. The amount of money involved is not significant to the Chinese; they have to import their soybeans and natural gas from somebody, so it might as well be the U.S. Meanwhile, among the barbarians -- in this case, the Americans -- the sum is being heralded as a veritable treasure, with President Donald Trump repeatedly boasting about the expected bonanza for U.S. farmers.

Beijing will almost certainly try to use the lure of these billions to wriggle out of more meaningful concessions. Chinese negotiators appear to be resisting the more critical reforms originally demanded by U.S. negotiators, such as scaling back China’s market-distorting industrial policies. If anything, the purchases could leave the U.S. in a weaker position by making American farmers and energy companies more reliant on Chinese customers.

If it works, buying soybeans will also buy China time to strengthen itself, just as it did during the old dynasties. The Chinese are perfectly willing to sacrifice a bit of money (and pride) today if it means they can become stronger in the future.

All the while, the Trump team is fostering ill-will among China’s leaders by pressing for bigger purchases. Thus the recent Chinese condition that the U.S. be “realistic” in its requests. The bitter taste left by humiliating “tribute” payments might come back to haunt the U.S., by offering Beijing yet another reason to hold a grudge against Washington.

The U.S. would be better served forgoing the payoffs and focusing on its original complaints: the torrent of subsidies the Chinese state lavishes on favored companies and the regulatory hurdles holding back foreign companies in China. Stripping away such unfair practices would give U.S. companies more freedom to do business in China and likely narrow the U.S. trade deficit on their own. There’s no reason to think extortion will work any better now than in the past.

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Michael Schuman, who is based in Beijing, is the author of "The Miracle: The Epic Story of Asia's Quest for Wealth" and "Confucius and the World He Created."