Beware The Threat Of China

China’s emergence on the world stage over recent decades has helped the economies of many countries. And its embrace of a new economic model has lifted millions of its own people out of poverty. But it is now entering a new and more dangerous era.

Low cost competition

Competition from China created significant challenges for many Western economies over the years, as manufacturers were undercut by lower costs. But the same economies also gained as growth thrived without the sting of inflation. The relationship between China has however entered a new and more sinister phase as issues of trust and national security emerge to cause concern.

The latest suspicions come in the form of the Chinese technology company Huawei, which is accused of secretly taking pictures of other companies’ facilities and stealing material and information to gain commercial and corporate advantage. There is also an increasing realisation that the culture of many Chinese companies rewards and encourages individuals for the secretive collection of industrial information.

China, of course, refutes these claims but there is growing evidence to support the accusations. As a result the West’s tendency to ignore such matters for the sake of financial investment is changing, not least because of concerns about national security issues.

High cost competition

Military hardware and software are already excluded from Chinese influence in a number of countries given their strategic importance to the independence of national governments. But the conversation has shifted to consider the level of risk involved in working commercially with China’s technology companies.

The telecommunications sector is of vital importance to governments as technology is used to gather and, at times, misuse information beyond the confines of the law. Examples of how Facebook abused the data of millions of users, highlights the issue of how companies take advantage of private data. Once again China comes under suspicion as its understanding of the laws of privacy differ from other countries, as illustrated by how it treats the private details of its citizens.

As a result the balance between a government’s desire to do business with China and the benefits of such a relationship is increasingly under examination. The time for treating investment from China as purely commercial without thinking about the associated security ramifications has passed as governments become more vigilant. Chinese investment in construction, military, research and technology projects is now scrutinised as the long-term effects are weighted in terms other than financial. Not least, because of the British government’s recent assertion that China follows its own interpretation of what is legal and ethical when engaging in overseas investments.

Huawei, as China’s largest technology company, is already under the spotlight for its work with governments, universities and businesses but there are countless other bodies that operate in a similar way outside the glare of publicity. And with such a plethora of arrangements already in place China will keep extending its economic and political reach far beyond its borders.

So, governments are more reticent about accepting strategic investment from China but such belated action is unlikely to halt its troubling influence on the global economy.