“One of the central theories of Xi Jinping,” former Secretary of State and CIA Director Mike Pompeo told the House Select Committee on China January 30, is:
“Show up in Africa with some stolen intellectual property from the United States that you built with cheap labor inside of China and then dump it on the world in an effort to aggregate political power.”
This should go into the Guinness Book for a record number of mistakes per word in a single sentence.
‘Show up in Africa with some stolen intellectual property from the US’
China’s signature export to Africa is digital broadband. Huawei, China’s national champion and by far the world’s biggest provider of telecom infrastructure, built 70% of Africa’s mobile broadband capacity. Huawei was accused of copying some Cisco code some twenty years ago, and paid up after a court case. But its intellectual property for digital broadband doesn’t come from the US. It can’t come from the US because we don’t manufacture any telecom equipment. We haven’t for years.
Huawei spends $25 billion a year, or a remarkable one-quarter of its gross revenues, on R&D. It built an entire village outside Shenzhen with replicas of famous European buildings to house part of this R&D staff. They really are there. I visited the campus and saw them, with my own eyes. Here I am at the Huawei corporate library, modeled on France’s Bibliotheque Nationale:
‘That you build with cheap labor‘
That’s not true, either.
I visited a Huawei manufacturing plant that turns out 2,400 5G base stations per day – about a quarter of the world’s installed capacity. They aren’t built with cheap labor; in fact, they aren’t built with any labor to speak of, because the plant is fully digitized. Robots do almost all the work. There are just 45 Huawei personnel in white coats checking on the robots.
One assembly task is still done by hand. I didn’t ask how much Huawei pays the 45 workers, but it hardly matters, because labor is a tiny part of the plant’s value added. (I wasn’t allowed to take pictures.)
‘Dump it on the world‘
China sells infrastructure at a profit. In fact, Huawei in 2022 had a $6 billion profit and a 6.6% operating margin, close to the average operating margin for Chinese industrial companies. Some Chinese companies surely are guilty of dumping somewhere and sometimes, but I’ve never before heard an allegation that China is dumping goods on Africa.
‘In an effort to aggregate political power‘
That concluding phrase in the Pompeo sentence is the biggest misperception of all: China has displayed no interest whatsoever in meddling in the governance of African countries. It is indifferent to how we barbarians govern ourselves, be we Africans or Americans.
China is very interested in economic power, including access to raw materials and control of export markets. In the mid-2010s, China’s exports went primarily to developed markets, but during the past year, China’s exports to the Global South exceeded exports to developed markets by nearly 20%.
Part of that shift, to be sure, represents the re-routing of trade to the United States through Vietnam, India, Mexico and other intermediaries, which buy and assemble Chinese components for resale to the United States. This pantomime is referred to as “friend-shoring,” and has only strengthened China’s hold over global supply chains.
But China’s exports to a great extent represent digital and physical infrastructure. I wrote in a December 2023 study for American Affairs:
Just as railroads turned local products into world-market commodities during the nineteenth century, mobile broadband turns marginalized people in the developing world into actors in the global economy. China’s trillion-dollar investment in the Belt and Road Initiative has digitized communications in scores of developing countries, with transformative effects.
China’s economic growth, starting in the late 1970s, was the great economic event of the second half of the twentieth century. The per capita GDP of the world’s most populous country grew 27-fold between 1979 and 2022 in terms of real purchasing power parity, according to the World Bank.
A second wave of transformation is now underway in the rest of the Global South. This may be the great economic event of the first half of the twenty-first century, and the United States is largely a bystander.
The four cited misstatements in Pompeo’s sentence stem from a catastrophic error of perception on the part of the former secretary of state and many other American analysts: If China is doing anything, it must be cheating and plotting to take over governments.
China is doing something that challenges the world standing of the United States in a far more dramatic way: It is transforming economic life in parts of the developing world from the grassroots up. America’s failure to grasp this may be the single greatest blunder in the sordid history of American foreign policy.