Last week in Switzerland, at the World Economic Forum, Chinese Vice Premier He Lifeng discussed his country’s role in the global economy. “China is committed to fostering common prosperity with its trading partners through its own development,” he said, “and making the pie bigger for the global economy and trade. We never seek trade surplus; on top of being the world’s factory, we hope to be the world’s market too.”
Delivered with a straight face and in the shadow of a $1.2 trillion global trade surplus, I’d like to imagine the Vice Premier continued his remarks by telling the roomful of world leaders about new oceanfront property in Sichuan province that will be a great opportunity for everyone.
Of course, He’s address was a footnote to what became the main event in Davos last week. That was the speech from Canadian Prime Minister Mark Carney, who invoked Czech dissident Václav Havel and his description of a greengrocer hanging a “Workers of the World, Unite!” sign in his shop window, signaling participation in the communist system, perpetuating the subjugation of the very workers that system was supposed to benefit. This was prelude to Carney taking down Canada’s sign, as it were, inveighing against American hegemony in the modern era:
For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection.
We knew the story of the international rules-based order was partially false that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigour depending on the identity of the accused or the victim.
This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes.
So, we placed the sign in the window. We participated in the rituals, and we largely avoided calling out the gaps between rhetoric and reality. This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.
Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.
You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.
Here I’ll pause to note that people occasionally ask me how in the world I came to host a podcast about China, or what qualifies me, a former lawyer and sportswriter, to now opine about geopolitics on a weekly basis.
The answer to the first question is that three years ago Ben Thompson and I were thinking about Stratechery Plus and searching for tentpole topics that any savvy news consumer should want to know more about, but that were not well covered by mainstream media. China and its interactions with the rest of the world were my first nomination (in retrospect, a good bet!). Plus, as an avid reader of Sinocism, the chance to host with Bill Bishop was a dream. So, three years later, here we are.
As for what qualifies me to offer any insight of my own? I read the news every week and don’t ignore the implications of what I’m reading. That, I’ve come to realize, is a real superpower when it comes to understanding China’s rise and its relationship the rest of the world. Merely maintaining a half-decent memory and a firm grasp on the facts puts you head and shoulders above the China insights and policy prescriptions from many pundits and world leaders, including someone like Mark Carney. That’s not because these leaders are stupid, mind you, but because doing business with China requires leaders to engage in so much cognitive dissonance, in so many areas, that eventually, any kind of coherent, clear-eyed recognition of reality becomes impossible.
The Main Character Carney Missed
Carney’s Davos speech was praised at the New York Times by Ezra Klein, who called the remarks “a brave act,” and wrote that “Carney is right that America’s power is, in part, dependent on the willingness of other countries to be entwined with our might.” Klein later doubled down on the praise with a podcast episode dedicated to “The Most Important Foreign Policy Speech in Years.” David French, also at the Times, wrote that Carney “delivered what might be the most important address of Trump’s second term” and “articulated a vision of how the ‘middle powers’—nations like Canada—should respond to the great powers.” There’s no better bellwether for elite consensus than the Times, and indeed, those rapturous sentiments were echoed all over the world last week, including in Davos, where Carney’s remarks received a standing ovation.
Leaving aside whether the decision to criticize Trump trade policy in a room full of frustrated European leaders was in fact “a brave act,” my problem with Carney’s speech and the fawning coverage it received is that none of these people seem interested in grappling with the the world-historic trade surplus in the room. Blaming the United States for asserting its leverage and upsetting the status quo is a predictable and perhaps understandable response, but it’s such an incomplete rendering of what’s happened that it’s effectively dishonest.
Go back to He Lifeng’s comments at the outset. “China is committed to fostering common prosperity with its trading partners through its own development,” the Vice Premier said, “and making the pie bigger for the global economy and trade.”
In reality, China is doing precisely the opposite. As the Wall Street Journal wrote in December, “China’s Growth Is Coming at the Rest of the World’s Expense.” According to Goldman Sachs economists cited in that piece, while in the past “1% more output in China would raise the rest of the world’s output by 0.2% as it pulled in imports,” today that dynamic has flipped negative as Chinese exports lead to factory closures and job loss. “The upshot,” the Journal writes, “is that Goldman sees China growing about 0.6 percentage point a year faster over the next few years, but that will reduce the rest of the world’s growth by 0.1 point a year.” This trend will, inevitably, “generate growing headwinds for other industrial economies in Europe and East Asia, and for Mexico.”
China may not be explicitly seeking to erode the industrial capacity and employment centers of its trading partners, but that’s what’s happening, and it’s not changing. Exports have risen every year for five years straight, state subsidies will continue for strategic sectors while economies of scale advantages persist in non-strategic sectors, and all of it makes it that much harder for international businesses to survive. Likewise, China may want to position itself as “the world’s market” in addition to “the world’s factory,” but its consumer market is in a depression/deflationary spiral, is increasingly crowded with domestic competition, and is far less attractive to foreign businesses than it was 10 years ago. This is all downstream of 2015’s “Made in China 2025” set of industrial policies and what Xi Jinping characterized in 2020 as a “dual circulation” strategy, in which the General Secretary exhorted the Communist Party to “tighten the international industrial chain’s dependence” on China, while forging a domestic market that can be self-sustaining independent of Western firms.
These are critical details. It’s politically convenient for Chinese leaders to discuss the country’s trade surplus as a happy accident and something the Party is working to address, just as it’s politically convenient for embattled world leaders to believe them, rather than jeopardize business with the second largest economy in the world. It is, however, an objective fact that the macroeconomic realities straining the global economy are the result of policies emphasized by the CCP. Understood through that lens—through the explicit and public guidance set forth by Xi Jinping and the Chinese government—it’s clearly China, not the United States, that has upended the global system the world knew, made trade impossible and rendered globalization a losing proposition for much of the developed Western world (not to mention the mounting frustration among Chinese allies). Yet talking around these realities, naming the U.S. as a hegemon but not China, is a textbook example of the cognitive dissonance that’s required to do business with the P.R.C.
Canada and the New World Order
The context for Carney’s speech was a Canada-China trade deal agreed upon several days earlier, during the Prime Minister’s visit to China. “Mine is the first visit of a Canadian Prime Minister in nearly a decade,” Carney told his counterparts in Beijing. “The world has changed much since that last visit. And I believe the progress that we have made, and the partnership, sets us up well for the new…. world…. order.”
The deal, which Carney called a “strategic partnership,” generated lots of predictable bluster within the Beltway, with many voices declaring that U.S. policies are driving allies into the arms of Chinese adversaries. In reality, what Canada agreed to was relatively modest, reducing the tariff rate on an import of 49,000 Chinese electric vehicles (3% of the total market in Canada) in exchange for China’s agreement to reduce tariffs on agricultural products and Canadian canola oil, a $2.6 billion business that had been sanctioned by the PRC since Canada announced 100% tariffs on Chinese EVs in 2024. In any event, while I think the risks of further damage to the U.S. relationship were not worth the marginal rewards from China, I’m not here to litigate the logic of what Canada agreed to on that trip.
Carney’s halting delivery of the “new world order” line is what struck a chord with me. The words were carefully considered, delivered slowly for effect (and effective translation), and there should be no mistake about what was happening in that video. That was a leader attempting to ingratiate himself to an authoritarian government, incorporating language that’s favored by Xi, himself, to describe a vision for the world in which China uses its leverage to erode U.S. leadership and Western norms, and usher in an era of multi-polarity whereby China wields as much or more leverage as the United States. It’s a moment worth considering alongside last week’s celebrations of Carney’s refusal to subjugate Canadian values in the name of economic self-preservation.
Meanwhile, it doesn’t take any mental gymnastics to imagine what Xi Jinping’s “new world order” would look like in practice, as in many ways it’s already here. Look at the decade-long transformation of Hong Kong, once a beloved international hub and today a that’s city rife with fear, repression, dubious prosecutions, and far fewer foreigners than there used to be.
At the United Nations, China sits on the Human Rights Council despite ongoing accusations of genocide against its Uyghur population, and has used its influence to shut down debate on Xinjiang, weaken resolutions condemning Russia, and lobby members to mischaracterize the meaning of a 1972 UN resolution in a years-long campaign to enshrine China’s claims to Taiwan as international law. At the World Health Organization, China’s influence is so pervasive that in this video an American doctor can be seen pretending not to hear a question about Taiwan and then closing the Skype call to avoid answering a follow-up, in a clip that goes a long way toward explaining the WHO initially abetting the CCP’s efforts to downplay COVID’s severity and eventually obscure the extent to which China obstructed investigations of COVID’s origins. At the World Anti-Doping Agency, Chinese donations and influence allegedly led to burying 23 positive test results for Chinese swimmers before the 2021 and 2024 Olympics. At the World Trade Organization, China spent decades clinging to its status as a “developing country,” which for the past 15 years meant a first-world superpower enjoyed third-world obligations, affording China more leeway with respect to state subsidies and longer timelines to comply with rules and adverse rulings. When the U.S. pushed to strip this status from China in 2019, the Chinese delegation teamed with nine actually-developing nations to successfully scuttle the measure.
Those are just major world institutions. That’s before you get to the way Chinese money has compromised think tanks, green energy orgs, media, Hollywood, and yes, Harvard. The PRC playbook in any of those contexts is not complicated: China is aggressive about buying influence in international institutions, shrewd about weaponizing the rules of the rules-based order when it’s advantageous, and unapologetic about disregarding those rules when it’s not. Carney, again, wasn’t wrong to single out the unraveling of the open and fully integrated world at the hands of an “international law for thee, but not for me” hegemon; he just cited the wrong country.
Chinese leaders, to be clear, should not be begrudged for their ingenuity in a lot of these areas, using their system’s advantages and seizing on Western complacency. But the full scope and implications of that activity is why the world wound up where it is today, and it’s a reality that should prompt more introspection from those who denounce the U.S. using leverage of its own to affect changes and remake the order that U.S. partners had come to know. Because really, what sort of outcomes has that order and its institutions been yielding lately? Ezra Klein’s column makes an elegant argument that America’s restraint with allies and trade partners was always the source of its strength, and while that is indisputably true, his insight fails to account for the costs of that restraint, and the corrosive behaviors the whole world now tolerates as a cost of doing business.
In Canada, specifically, China has been accused of operating secret police stations to harass the Chinese diaspora extraterritorially, interfering in domestic politics to the benefit of Trudeau’s Liberal party, jailing two Canadian citizens under false pretenses for over 1,000 days to protest the arrest of a Huawei’s Meng Wanzhou, and looking the other way as thousands of kilograms of precursor chemicals enter Canada every year to support transnational drug gangs dealing fentanyl throughout North America. Carney, himself, said in April of last year that China is Canada’s greatest security threat. Yet two weeks ago, asked whether his assessment has evolved, Carney said, “The security landscape continues to change. And in a world that’s more dangerous and divided, we face many threats.”
The West’s Direction of Travel
None of this is to single out Canada or Carney. His viral Davos speech was delivered at a time when leaders all over the West are faced with similar choices navigating tariffs, heightened demands from the U.S., and tensions between two rival superpowers. So far, those leaders are mostly refusing to choose, redirecting attention to Trump, and trying to gin up business however they can. Last week, it was French President Emmanuel Macron decrying U.S. bullying and soliciting direct Chinese investment across Europe’s key sectors (because apparently funding Russia’s war in Ukraine doesn’t count). This week, it was U.K. Prime Minister Keir Starmer visiting Beijing with nearly 60 British business executives, in a bid to revive the “golden era” of U.K.-China relations, while promising that he won’t be forced to “choose between” doing business with China and maintaining close ties with the United States.
“President Xi tells the story of blind men being presented with an elephant,” Starmer said Thursday in Beijing. “One touches the leg and thinks it is a pillar; another feels the belly and thinks it is a wall. Too often this reflects how China is seen. But I profoundly believe that broader and deeper engagement… is our way of seeing the whole elephant, and therefore building a more sophisticated relationship, fit for these times.”
We’ll see. Starmer’s trip came on the heels of reports that China spent several years intercepting communications from 10 Downing Street, and the trip itself was conditioned upon the Labour Government last week approving plans for a Chinese “mega embassy” in downtown London, overruling internal security concerns and objections from the White House. This all comes amid an ongoing mess surrounding Starmer’s plans to transfer British ownership of the Chagos Islands, home to Diego Garcia, one of the most important U.S. military bases in the world, to China-aligned Mauritius. We’re also only a few months removed from the U.K. government abandoning a high-profile espionage prosecution against a Parliament staffer because no one from Labour would testify that China is a national security threat, a predicate for proving the charged offense. Again, none of this is top secret or in any way conspiratorial. This is just what the news looks like every week.
It’s tempting to feint toward middle ground at the end here, acknowledging the difficult choices facing leaders like Starmer or Carney, nodding at the complexity of our world, etc. The truth is, that’s not where I land. Just because choices are difficult, or inconvenient, does not mean there are not clear correct answers. Reviving structural dependencies on a demonstrably hostile authoritarian state is a bad idea, particularly if it risks corrupting an alliance with an American partner whose consumer market, military, and currency reserves are strategically more important. Failing to reckon with these realities is only defensible if you start from the premise that all these leaders have been asleep for the past 15 years, and especially the past 12 months.
But again, we’ll see. Leaders seeking business abroad and political wins at home often take their eyes off the ball, and modern media makes that easier. We live in an era in which China is regularly celebrated for its climate leadership, Trump is pilloried for preferring the stability and abundance of fossil fuels, and the entire conversation ignores that China gets 88% of its own energy from coal, oil and natural gas, with twice the carbon emissions of the U.S., while burning more coal every year than all 27 EU member states combined. This sort of thing happens in lots of areas; it’s a reflection of Western political incentives, and maybe a return on years of Chinese investments in elite Western institutions. Still, at some point the farce becomes dangerous.
Ross Douthat wrote last week that the celebration of Mark Carney reminded him of the viral fanfare that once surrounded Angela Merkel, a leader whose legacy is now complicated by the destabilizing impact of mass migration, voluntarily abandonment of nuclear energy, voluntarily de-industrialization, and a pivot to Russian gas that was strenuously opposed by President Trump and left Germany profoundly reliant on an authoritarian government that invaded Ukraine three months after Merkel left office. Carney is not Merkel, but that’s the risk. And as an aside, in 2025, Chinese exports to the German market were up 108% year-over-year, while Germans lost 10,000 manufacturing jobs per month.
I of course understand why many Americans, and particularly international audiences, may find the aesthetics and demands of Trump foreign policy to be unsettling. But if any of Trump’s foreign counterparts allow emotions and short term interests to become a substitute for moral or strategic clarity, they are an even bigger threat to the future of the liberal Western order. Because ultimately, which world leader is more pernicious? The one who talks boorishly about a broken system and brags about structural advantages that will be leveraged to fix it, or the leaders who tend to obscure the problem altogether? The latter group is polite, impeccably credentialed, and speaks eloquently about a system of global engagement, clean energy and progress. Implicit in those appeals, though—from Carney, Starmer, and Macron, as well as those from Clinton, Blair, Bush, Merkel, Scholz, and Obama—is a request to avert our eyes from all the evidence that the system they describe has led to economic calamity for millions of working people, created structural weaknesses throughout the West, and is likely to demand illiberal concessions in service of economic self-preservation in the future.
It’s ultimately the gift and the curse of reading the world’s news every week. Any clear-eyed recognition of malign Chinese behavior, I’ve found, also yields clear-eyed recognition of the sorts of Western pundits and leaders who have enabled it for decades. And they’re not quite done yet.
Sharp Text is extension of the Stratechery Plus podcasts Sharp Tech, Greatest of All Talk, and Sharp China. We’ll publish once a week, on Fridays. To subscribe and receive weekly posts via email, click here.