When is it OK to trade with China?

When is it OK to trade with China?
The West tries to thread the China needle.

Two news stories this week highlight different sides to this tricky question.

The first involves a leaked letter acquired by a journalist at the Daily Star Bangladesh, and the second, reported in the Global Times yesterday, describes a social media storm that has blown up in China over supply chains.

The letter is from the Chinese embassy in Dhaka to the Bangladesh government and regards loans of some $3.6 bn offered as part of its Belt and Road project. In it China announces it will no longer invest in high-polluting projects such as coal mining or coal-fired power stations.

China is currently pouring hundreds of millions of dollars into its bid to revive the ancient Silk Road linking China and Europe. More than 140 countries along the route are to receive big dollops of investment. If this money now comes with a “no carbon” rider it could be a dramatic game changer in the fight to reduce carbon emissions and contain global climate change.

The following day, meanwhile, the Global Times was reporting rising temperatures of a different sort with news that Chinese social media is aflame over an announcement by H&M in September 2020 that it will no longer source cotton from Western China.

Chinese star Huang Xuan, celebrity spokesperson for the Swedish fashion brand, swiftly announced he was cutting ties with the company.  In a statement Huang said he would oppose any attempt to smear or spread rumors about his country.

Other western brands such as Nike, Adidas and Burberry have been swept up in the online storm over similar changes to their supply chains. More than 50 mainland influencers and celebrities had cancelled endorsement deals, it was reported.

By Thursday the hashtag #nike had become the biggest trending topic on the microblogging site Sina Weibo, with 720 million views and 530,000 comments over its announcement to boycott Xinjiang cotton.

Comments such as “Nike is even more disgusting than H&M” and “It makes me throw up,” “I will boycott the brand” were receiving most likes, the Global Times reported.

As of this morning the Nike online store in China was still active but Baidu searches for H&M produced no results.

These two stories represent different sides of the same coin for foreign companies and policy makers.

On the one hand China’s economic heft and technical know-how is essential for any meaningful strategy to combat global warming – plus any number of other global issues, from improving healthcare to poverty alleviation.

Moreover, working with China will be essential for any hope of prosperity in the post-pandemic world. 

Yet with social justice high in the public consciousness following BLM and #MeToo, to say nothing of the trauma of Covid, governments and executives in the West find themselves weighing public and media outrage against political pragmatism and the bottom line.

As noted in the current issue of The Economist, the big challenge will be knowing where to draw the line between engagement and appeasement. Wherever that line ends up, it will not be pain free.

John Millichap

Co-founder & creative director, Signal8 Digital Marketing
john@signal8.co