Friction between the world’s two largest economies continues after Vice President Mike Pence accused China of meddling in the upcoming US Mid Terms. Russian interference in US elections “pales in comparison” with Chinese meddling, he claimed, following similar accusations by US President Donald Trump earlier in the summer.

No evidence was given for the accusation and cybersecurity experts contradicted the claims. Even the administration’s own secretary of homeland security, Kirstjen Nielsen, said: “We currently have no indication that a foreign adversary intends to disrupt our election infrastructure.”

The US doubled down when Secretary of State Mike Pompeo said that China and the US are in “fundamental disagreement,” during a tense visit to Beijing last month. Standing next to Pompeo, Chinese foreign minister Wang Yi said that “a direct attack on our mutual trust has cast a shadow on US-China relations.”

Security talks between the US and China planned for October were cancelled, with both sides blaming the other. This may have been due to the escalating trade war, the tense discussions over election tampering or perhaps the US Navy’s incursion into the South China Sea. The guided-missile destroyer USS Decatur sailed within 12 nautical miles of the Gaven and Johnson Reefs in the Spratly Islands as part of what the US Navy calls “freedom of navigation operations.”

It was later leaked that the US Navy was recommending the US Pacific Fleet conduct a series of operations during a single week in November as a major show of force to warn China. The exercise, it was reported, would involving US warships, combat aircraft and troops to demonstrate that the US can counter potential adversaries quickly on several fronts.

Meanwhile, Bloomberg claimed that China has inserted spy-chips in servers used by Amazon and Apple, allowing a back door to access computers and data – something Amazon, Apple and China have denied.

China needs to act globally if it wants to play globally

All in all, it’s been a tough couple of months for US-China relations. Accusations have been flying, both sides’ propaganda machines are working at full pelt and serious warning bells are ringing that suggest things could turn even nastier.

Trump has followed through on his tough stance on China that he promised during this election campaign. China, he says, has been stealing US jobs and unfair trade rules have led to the current US-China trade deficit. China has also been caught out, surprised that Trump has followed through on his threats of sanctions and tariffs, whilst gloating that the west’s democratic system has failed. Both sides need to work together to find a solution rather than continuing to spiral further and further apart.

Trump’s incessant desire to look to the past and to revive dying industries rather than promote new technologies, means that he is allowing China to leapfrog the US when it comes to new industries such as green-tech, fin-tech and AI. On the other hand, China positions itself as a paragon of free trade and globalisation, whilst restricting foreign competitors and subsidising domestic firms. It needs to act globally if it wants to play globally.

Trump thinks that trade is a zero-sum game. If one party is doing badly, it’s because the other is doing too well – trade is a war, which will be won or lost. This is not how trade works but China, who need to portray a strong image domestically and is not comfortable losing face on the world stage, is ready and willing to go head to head.

The repercussions of an escalated trade war are not inconsequential. All diplomacy is manifestly intertwined. Trade talks are held alongside discussions on other important subjects and sadly, urgent matters have been brushed to the side as trade dominates the time and energy of both the civil servants and the press. Human rights issues seem to have totally fallen off the agenda at a time when they are needed more than ever, and the environmental knock-on effects are becoming increasingly apparent. It is in the interest of not just the two countries involved but the world as a whole to start to find a compromise that will de-escalate the trade war before the two sides come to blows and the rest of the world is caught in the crossfire.

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 Cross-cultural training is nothing new in China, but as the nature of the country’s business world evolves, it is becoming more important than ever. Chinese companies have been looking outward and internationalising at a breakneck pace, and many of the old clichés of corporate training no longer ring true.

“The emphasis for the cross-cultural training industry has changed; for several years we’ve been moving away from the traditional style of ex-pat training, where you tell a British person how to survive and do business in China, and much more into facilitating workshops where teams can understand each other better and work together better,” says Laura Mitchelson, Managing Director for Asia-Pacific at ICUnet.AG. “The days of the multinational company structure being foreigners on the top and Chinese underneath has gone – there are plenty of very senior Chinese staff and plenty of Europeans working for Chinese bosses.”

We’ve been moving away from where you tell a British person how to survive and do business in China to facilitating workshops where teams can understand each other

Many of the beliefs held by Westerners entering China – such as handing over business cards with two hands – cannot be applied universally in modern business exchanges, where contacts are as likely to scan each other’s WeChat codes as exchange cards. Nevertheless, would be businesses in China do still need to take time to understand how to communicate in China, because beyond the modern fronts of shiny new business districts, there remain many traditional attitudes.

“One of the things that’s true about any culture is that while some signs of culture change quite quickly – the fashions and outward signs of language – the underlying values like attitudes to hierarchy or risk change much, much more slowly,” says Matthew MacLachlan, Head of Intercultural and Communication Skills at Learnlight. “So if you learn the underlying values you won’t be thrown if a Chinese person just throws their business card down rather than hands it over with two hands carefully.”

When the Chinese come to Britain and realise we aren’t all white and we don’t all speak in beautiful middle-class English, it can be a shock for them

The cost of poor cultural integration across businesses can be stark – one estimate says around 30 percent of expat relocations fail in China, at large expense to their employers, while a study from consultancy Aon Hewitt found a third of companies blamed differences in culture for a lack of success after corporate mergers.

And there can still be serious embarrassment where business relations go wrong. For example, while some international businesses will have corporate policies that do not allow them to accept gifts, the giving and receiving of expensive gifts can still be common practice. One businessman remembers an example where an American executive refused an expensive gift in Hong Kong and ended up costing his company a contract worth tens of millions.

“Given the way the world has developed, it’s clear that the majority of British managers who are coming here as ex-pats are in a situation where their Chinese teams understand a lot more about the Western environment than they understand about the Chinese environment,” says Mitchelson. “So they have to get used to the idea of being on the back foot, and people who are used to talking have to get rapidly used to the idea of listening if they want to be successful.”

The cross-cultural industry is not just about training Westerners in Chinese practices, but increasingly, Chinese companies are seeking advice on how to thrive in the UK. As these companies go global, their workforce has to grapple with UK business regulations and culture too.

Business experts report difficulties for Chinese companies abroad getting to grips with practical differences, such as not being able to re-write contracts once they are signed, having to meet hiring and diversity regulations, and understanding rules around controlling shareholder stakes. A complex disciplinary process can take some understanding, including legislation around hiring and firing, as can regulation about asking potential employees about age or plans to start a family. Some media have even reported misunderstandings in which Chinese business leaders have shared hongbaos (red envelopes) of cash with government officials to ‘smooth over’ deals.

“As we have stereotypes of the Chinese, so the Chinese have stereotypes of us,” adds MacLachlan. “When the Chinese come to Britain and realise we aren’t all white and we don’t all speak in beautiful middle-class English, it can be a shock for them.

“And, although China is generally a culture that communicates indirectly, as Brits we communicate indirectly but in a very different way. We use lots of flowery, additional words when we are being rude or direct. We know, for example, that if someone says “With the greatest respect”, then they are about to be terribly rude to you.”

This kind of idiomatic language and indirect culture is even difficult for the increasingly Westernised millennial generation of Chinese, who are more likely to have studied abroad or already worked for international managers. This, says Mitchelson, emphasises the need for cross-cultural trainers to help teams trust each other, and build a corporate environment where colleagues can ask each other questions about their lives and understand each other better.

A third of companies blamed differences in culture for a lack of success after corporate mergers

Stewart Ferguson, who facilitates cross-cultural training for the China-Britain Business Council, says their emphasis has shifted from emphasising the differences of working in China to focusing on the similarities.

“People tell me they are worried about causing offence in China because they’ve read so much about how hard it is to do business in China,” Ferguson says. “I ask them, what are you planning to do in the meeting? Strip naked and run around the room? Or are you going to be an informed professional acting the same as when you do business in other parts of the world? If so, there’s no problem.

“The greatest problems are caused by a long-standing perception that China is different – but what people really mean is that the language is different. After that, fundamentally people are the same everywhere.”

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To what extent is the Belt and Road initiative already benefiting the economy of China?

It is still very early days, as the initiative was only announced in late 2013 and its success can only be judged in 10 or 20 years’ time.

Having said that, there are a few indicators we can look at. At home, the Belt and Road appear to have brought new infrastructure investment, especially new roads and railways over China’s western borders. But the truth is that much of this investment would have happened anyway, so it cannot really be attributed to the initiative. Sceptics would also point out that yet more debt-fueled investment isn’t necessarily what China needs.

It is easier to look at the progress overseas. Here the aim is to place China at the centre of a trade and investment nexus stretching across Eurasia and the Indo-Pacific. Specifically, Beijing hopes state commodity producers, engineering firms and capital goods makers will find a lucrative new source of growth. It views the Belt and Road initiative as a lifeline for indebted firms suffering from weak demand at home and looking to export their overcapacity. It also calculates that better transport connections will bring prosperity to its own underdeveloped border region by transforming them into viable regions.

Official rhetoric exaggerates the potential of the Belt and Road to absorb industrial overcapacity. It is plausible that China could finance US$50-100 billion of overseas projects per year – but if you consider that China’s domestic infrastructure spending was running at about US$150 billion per month in 2015, it becomes immediately apparent that overseas construction demand will only be marginal. What government data do show are that Chinese firms signed construction contracts worth US$189 billion and earned revenues of US$145 billion in 60-odd Belt and Road countries in 2015-16. Some planned projects will not come to fruition, but the numbers are substantial and will probably grow.

Has that had a trickle-down effect in other countries or will much of the revenues generated go back to China?

Many of the construction revenues will go to Chinese construction companies and capital goods exporters. Some loans by the Chinese will be made on the condition that the recipient spends the money on Chinese goods. But China is also adamant that the Belt and Road is open to all, and it has specifically said it is willing to work with everyone. The extent to which that happens will vary from country to country. In Sri Lanka, almost all the diggers I saw at Colombo Port City were Japanese or South Korean, not Chinese.

China’s initiative will also have to dovetail with other national and sub-regional efforts, where the World Bank and ADB [Asian Development Bank] lend funds and construction firms from other countries will play a role. Chinese construction also employ local workers, while new ports and industrial zones also create jobs for locals. So there is truth in Beijing’s contention that its infrastructure push can benefit all sides.

Britain has just sent its first freight train to China along a Belt and Road corridor. Do you think the Belt and Road initiative is having direct benefits to Britain’s economy?

The UK sees the initiative as an opportunity for commercial cooperation, which explains why it was so keen to join the Asian Infrastructure Investment Bank. China claims that the initiative is open to all – the theme of the recent Belt and Road Forum was “interconnected development” and “international coordination” – and the UK is keen to work with Chinese firms in third countries. There could be opportunities in infrastructure, financial and professional services, agriculture and the environment, advanced manufacturing, transport and logistics, and energy and resources. The City could play a role in financing projects and, potentially, issuing RMB bonds.

Does Trump’s lack of experience in Asia (and, for example, his cancelling of the Trans-Pacific Partnership) give China the chance to dominate the region further?

Yes. The decision to bin the Trans-Pacific Partnership (TPP), which would have anchored the US’s economic and diplomatic presence in Asia, brings China a step closer to becoming the undisputed regional power. If the US continues to weaken its economic leadership in Asia, China will step up its efforts in order to fill the void. China is a strong supporter of the Regional Comprehensive Economic Partnership, an alternative free-trade vision to TPP that encompassing the 10 ASEAN countries and their six FTA [free-trade agreement] partners: India, Japan, South Korea, Australia, New Zealand and, crucially, China. Unless Trump comes up with policies that enhance rather than diminish Asia’s economic security, Asian states may have little alternative other than to seek a closer relationship with Beijing.  

Do we see China’s rise as the end of a singular global power and the start of a multi-polar era of power?

I don’t have a crystal ball but if Xi Jinping’s plans are realised, the 21^st century will be dominated by two superpowers: China and the US.

China’s Asian Dream: Empire Building Along the New Silk Road, by Tom Miller is out now with Zen Books. 

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One of the frustrations of dealing with China in the decade after it entered the World Trade Organisation (WTO) in 2001 was the ways in which, almost daily, the People’s Republic was clearly an emerging economic superpower but one that continued to act diplomatically like it belonged to the middle ranks. The two sides of this one story didn’t seem to add up.

Part of this imbalance was due to just how unexpected events turned out to be in this era. In the period after joining WTO, China’s economy entered a period of phenomenal GDP growth. We have to remember the assessments of most on the November evening when, after almost 14 years of haggling and hard bargaining, China became a WTO member. For many back then, the consensus was that China would struggle hard to comply with the terms it had agreed. Its domestic companies were likely to fight against foreign competition. Its very inefficient agricultural sector was ill-placed to take on entry by other players. Its state enterprises, in particular, looked doomed. And this was before even talking about the moves towards liberalising the country’s primitive nascent services and finance sector.

It is clear, as never before, that China is now a global power.

Almost two decades on, the augurs of doom look like they are referring to another place. From 2002 onwards, China experienced double digit growth year on year. No economy of similar size and complexity has ever seen anything like it. The Asian tigers all did their own version of miraculous growth but on a smaller scale. China could truly praise itself and say that it marked up figures unlike any other place on the planet. And it did this while fulfilling its WTO commitments.

Visitors in this era almost saw money growing from the ground. On a visit to Inner Mongolia in 2006, a place I lived in in the mid-1990s when it was regarded as backward, smoggy and remote, I remember the amount of wealth that was visibly being generated in the provincial capital Hohhot from the mining boom. This continued so that the autonomous region as a whole had the highest provincial growth rate in the country over this period. One local county even posted rates of over 40 percent. This sort of breakneck development had last been seen when Shenzhen, named a Special Economic Zone, was transformed from a fishing town in the early 1990s.

What was lacking over this period was a geopolitical narrative that originated in China and somehow communicated how the country understood its economic development and the meaning of this to the outside world. There were attempts to speak about “peaceful rise” in the mid-2000s. But this had limited traction in the wider world. As one observer noted to me around the time the phrase appeared, “it sounds slightly ominous”.  It didn’t catch on.

Since 2012, there has been much greater effort to spell out two things. One is what Chinese leaders, speaking on behalf of their country, think its new prominence means. China is now the largest trading partner to over 120 countries. It can no longer speak like a marginal place. It has to use a different language about its ambitions, one that accepts its prominence but does not sound intimidating.

The Belt and Road initiative sounds like an invitation, not an order.

The second thing is to communicate China’s desire to work with partners in the outside world in positive ways. It is clear, as never before, that China is now a global power. Its domestic challenges, particularly its environmental challenges, are ones that the world relates to and is impacted by. If China fails to address its challenges, that becomes an international problem, not just a local one. This is the privilege, and the burden, of sheer size.

The need to have a joint narrative to stress this commonality and to set out China’s case as a global power everyone can work with has never been more urgent. Something too prescriptive, and people get nervous, worrying about an assertive, pushy China. But saying nothing doesn’t work either. Then people start to assume the worst.

The Belt and Road initiative, and its various iterations, is the most important statement regarding China’s view of its global vision, and the first which is starting to have some resonance in the outside world. There are a number of its attributes that are now becoming clear. The first is simply that it avoids being normative by not laying down rules. The clue is in the title: it is an initiative, not a policy. In many ways, it simply clears away a space for those inside and outside China to imagine or propose, how they make the all important link. Do they want to build infrastructure, manufacture, create brands, or service logistic lines? In many ways, the idea raises questions, rather than setting out clear guidelines.

This has been one of the criticisms made of the initiative. Many, myself included in the last few years, have demanded to know what the content of the idea is. Where is the main budget coming from? Who in China has responsibility for it, and what sort of standards will it be judged against? In some ways, however, while that model might have a satisfying solidity, it falls into the trap of exposing China to criticisms by those eager to see the country look like it is laying down the law to the rest of the world.

If the language of the Belt and Road initiative is indeed the way that China intends from now on to speak to the world, then it falls short of the sort of declarations expected by some who are convinced they see a China bent on global dominance. But it also avoids the pitfall of being seen as devious, barbed and ingenuous. China is speaking about partnership, and asking for a dialogue. The question from now on therefore lies with the outside world. Now they know how China wants to speak, and the sort of things it is willing to speak about, how do they respond? This will be the key quest for the next decade or so as this epic idea develops.

Kerry Brown is Professor of Chinese Studies and Director of the Lau China Institute at King’s College, London, and an Associate Fellow of Chatham House. He is the author of “China’s World” which is published by I B Tauris in June.

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