The Economic Influence of a Rising China

Picture of City of Shanghai China at night

By: T. Jeffersonian

Even before pandemic revelations, Hawaii knew that it is extremely vulnerable to foreign influence and is reliant on foreign money. In 2018 alone, foreign visitors spent roughly $6.58 billion in Hawaii. The state government pocketed $2.08 billion dollars in tax from 2018 tourists alone. As we have seen from Coronavirus, major changes in the international economy or even in the policy decisions of foreign states can impact the tourism economy and the thousands of local jobs it supports. Before the pandemic, Chinese visitors to Hawaii were on decline due to the U.S.-China trade war. After the pandemic, Chinese tourism could again increase to the islands. If the Hawaii grows accustomed to Chinese visitors and money, this economic reliance on the Chinese market could be used as leverage for Beijing to influence local Hawaiian businesses and the state government itself.

In 2018-2019 during the United States – China Trade war, Chinese economic power and influence in U.S. corporations that have large economic interaction with the Chinese market were on full display. As its global market power mounts, China is increasingly able to leverage foreign corporations to not just influence their home governments, but also to advance China’s broader strategic interests around the world. A clear example of this influence at work would be changes in the U.S. movie market. Hollywood is increasingly reluctant to cast China in anything but a positive light for fear of squandering a chance at success in the growing Chinese movie market and passing Chinese censors. The 2012 remake of the classic 1984 Cold War film Red Dawn was famously changed at the last minute in post-production to remove China as the central antagonist. Top Gun 2 has been criticized for removing the Taiwan flag from Maverick’s deployment jacket. The NBA kneeling to Beijing on the events in Hong Kong have put professional basketball at odds with many American values, including free speech. Given that the NBA is worth roughly $5 billion in the Chinese market alone, there is no wonder why superstars such as LeBron James or the owner of the Brooklyn Nets, Joe Tsai, would spread pro-Beijing talking points to U.S. audiences for fear of being banned in the Chinese market.

After the pandemic, should Chinese money pour into the local Hawaii economy, while this would undoubtedly drive jobs and local tax revenue in the short term, it will put our democracy at a greater risk to Chinese state influence, especially as China aims to dominate the affairs of the Pacific. Such brazen foreign influence may have been farfetched in Hawaii before the pandemic, but Coronavirus has changed our circumstances. Chinese investments will be attractive during post-pandemic economic recovery. Before the pandemic, China has already successfully undergone a similar infiltration of Australia’s economy and government as a means to further the interests of Beijing. China expanded its economic relations to become Australia’s number one trading partner after which there was a sustained boom in Chinese tourism to Australia and Chinese investment in Australian properties. The Chinese economy is now central to Australia’s economic wealth generation. Along the way, the Chinese Communist Party has been able to gain influence in Australia’s democracy, buying off or threatening politicians and Australian corporations and suing journalists to repress skepticism of the Chinese regime. For a place like Hawaii, which is a strategic center for the Pacific, a military center for the United States, and a place so susceptible to foreign money, Australia’s current dilemma could be a cautionary flag for Hawaii politicians and business leaders.

Like Australia, our state property values have been historically affected by international investment. Hawaii has previously experienced rapid foreign investment into the Islands in the 1980s and 1990s that caused much alarm to Hawaii residents. Japanese investors bought up large tracts of Hawaii property, raising property prices, and impacting our local communities. Should large-scale Chinese tourism or investment increase greatly in the Islands, we may experience an even more sinister threat to our Islands like that already experienced in Australia. Before the pandemic and the Trade War, Hawaii considered allowing Chinese ships to import goods from the mainland by challenging the existing legislation of the Jones Act. The Jones Act is a federal law that regulates maritime commerce in the United States. The Jones Act requires goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents. Shipping goods in accordance with this law is hugely expensive. The desirability of relying on cheap shipping from Chinese companies, many of which answer to the Chinese Communist Party in Beijing, is one that must be debated. Changing the Jones Act and breaking the domestic monopoly on shipping to the Islands is a necessary step to lessen Hawaii’s high cost of living; however, we must ensure that in doing so we are also protected from Chinese economic pressure and influence. As we have seen during the pandemic, Hawaii’s economy is already vulnerable enough but as we recover from the Coronavirus, Hawaii residents and policy makers alike should scrutinize Chinese economic involvement in the Islands. In this scrutiny, we must recognize the hidden threat that Beijing’s economic presence and influence can have in our state.