7 hours ago
As the US bombs Iran and enters another war, China is the likely winner
China is publicly "deeply concerned" about events in the Middle East but privately is probably celebrating.
America is off to war again, and China will be the winner as it has been for two decades.
Throughout China's rise as an industrial power since it joined the World Trade Organisation on December 11, 2001 — exactly three months after 9/11 — America has been constantly sidetracked and weakened by wars and unrest.
It started with the "War on Terror" after 9/11, then Afghanistan, Iraq in 2003, Yemen from 2002, Libya in 2007, Syria from 2014, the contested US election and riots of January 6, 2020, Ukraine and then Gaza over the past two years, Donald Trump's two trade wars, and now … Iran.
Trump understood the problem and campaigned on "no more wars," but has been unable to resist the pressure from America's military establishment and Israel.
Meanwhile, China has been quietly making friends, building its military muscle as part of a frenetic industrial policy, and not using it (although it's been doing some industrial-scale espionage to get technology).
China's leaders still work on the old-fashioned idea that economic policy is for improving the prosperity of citizens and strengthening the country, not for conducting ideological culture wars, and that diplomacy is about winning friends and influencing people.
Events last week were a perfect example of the difference between the world's two superpowers.
As Trump was leaving the G7 summit in Kananaskis, Alberta, last week to prepare to bomb Iran, flinging threats at the other six members and refusing to sign the communique, Chinese President Xi Jinping was in Astana, Kazakhstan, for the second China-Central Asia Summit.
The Astana summit's outcome was a "Treaty of Permanent Good‑Neighbourliness and Friendly Cooperation", led and signed by Xi on behalf of China and the leaders of the five stans — Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.
They adopted the "Astana Declaration", affirming the "China‑Central Asia Spirit" of "mutual respect, trust, benefit and assistance".
Until the 20th century, wars were fought for plunder and slaves: they were mostly heists, enriching invaders with loot and hostages dragged away to work for free.
That especially goes for the British and European colonisers of the 17th to 19th centuries, and before them, ancient Rome, Carthage, Alexander the Great, and various ancient and medieval warlords and pirates.
But looting and plunder are out these days, or at least it can't be obvious, and slaves are definitely out; wars are designed to entrench or inflate national leaders, usually autocrats or would-be autocrats, and do nothing but weaken and distract everyone involved.
That is even more so when it is based on lies (Iraq) or goes too long (Vietnam and Afghanistan) or goes too far (Gaza) because it not only comes with a crippling cost, it saps morale, divides the country and erodes global support.
Russia's economy is being ruined by its invasion of Ukraine, probably irreparably, and Israel's moral foundations and international standing are being destroyed by its levelling of Gaza and refusal to accept a Palestinian state.
Iran's regime is now being brought undone by its insistence on enriching uranium for nuclear weapons of war and refusing to give up.
But the big loser throughout has been, and still is, America, debilitated by its fury and expensive over-reach.
Throughout America's warmongering, China has been peacefully remaking its history, starting with the "Four Modernisations" of Deng Xiaoping around 1980 and culminating with joining the WTO in 2001.
Then, in 2018, during Trump's first term as president, China got a wake-up call.
On December 1 of that year, Meng Wanzhou, the chief financial officer of Huawei and daughter of its founder, was arrested by the Canadian Mounties in Vancouver on a provisional US extradition request. Two months later, she was charged with fraud by the US Department of Justice. Four years later, the case was dismissed.
At the same time, the US imposed an effective embargo on semiconductor exports to China as part of a general trade war initiated by Trump.
All of which had been preceded by an Australian ban in August 2018 on Huawei taking part in the rollout of 5G mobile infrastructure because of national security concerns, which was, rightly, seen as a curtain-raiser for the US main event.
China was blindsided by the restrictions on semiconductors from the US, shocked because they pride themselves on forward planning.
So, China's leadership set about fixing it. Not only did they invest billions in developing a semiconductor industry, but they also spent even more money on virtually every other industrial product to make sure they had complete independence.
If the US could block semiconductors today, tomorrow it could be chemicals, cars, robots, or solar panels. Trump has shown they were right.
Chinese banks were told to stop lending to real estate — property developers simply couldn't get bank funding — but anyone with an industrial project got a hearing. In just a few years, bank lending shifted dramatically towards industrial products and away from real estate.
So, China has spent the past seven years since that fateful arrest in Vancouver in 2018 building a formidable industrial technology military complex, but it has not invaded anyone or gotten involved in any wars.
Meanwhile, the greatest industrial technology military complex in world history has been constantly fighting wars or supporting other countries fighting them at a total cost of at least $US6 trillion ($9 trillion).
Apart from the cost, those wars have divided and demoralised the United States, especially Iraq, Afghanistan and Gaza, and now Trump is starting another war with Iran while trying to rebuild America's industrial base with tariffs and a trade war, which won't work, having repealed Biden's Inflation Reduction Act, which at least subsidised renewable energy industries.
Will China ditch its policy of "good neighbourliness" and invade Taiwan?
Unlikely, you would think. They might blockade the place one day, but that's doubtful as well — China's leadership would be reluctant to destroy Taiwan's economy before taking it over.
And they have seen what America's aggression has done to itself over the past 24 years.
Alan Kohler is finance presenter and columnist on ABC News and he also writes for Intelligent Investor.
