A Date Which SHOULD Live in Infamy

A Date Which SHOULD Live in Infamy

Today is the 35th anniversary of the day the Chinese Communist Party reestablished itself and reiterated its true character.  Thirteen years after Mao’s death, and after a decade of “free-market” reforms, the CCP showed that nothing had changed.  Moreover, it warned its naïve global adversaries that nothing would ever change, as long as it retained power.

For roughly seven weeks, beginning on April 15, 1989, Chinese protestors, led mostly by students, occupied Beijing’s Tiananmen Square, demanding freedom and democracy, insisting that the reforms of the previous decade had not gone far enough, and clamoring for freedom of speech and freedom of the press.  Late on the evening of June 3, the CCP, tired of the protestors’ dedication/stubbornness, declared martial law and began deploying troops to the Square.  The next day – June 4th, 1989, a date which should live in infamy – the tanks rolled into the protest zone, and the “Butchers of Beijing” began the slaughter of somewhere between several hundred and several thousand of their own people.

I’d like to say that the global reaction was swift and exceptionally harsh and that the nations and leaders of the West learned the lesson the CCP was trying to teach them, but, of course, I can’t.  The reaction was mostly weak and perfunctory.  Worse still, no one learned a thing.

Less than a decade after the Tiananmen Massacre, the American government – which is to say the Clinton Administration – was demanding that the world accept China into the World Trade Organization and recognize it as a conventional state and trading partner.

Eleven years after the Massacre, PetroChina, the listed arm of the Chinese National Petroleum Company, debuted on the New York Stock Exchange, its IPO having been underwritten by Goldman Sachs.

Fourteen years after the Massacre, yours truly (following the senior analyst he supported) resigned his position at another large Wall Street firm to start an independent research company, in large part because the investment bankers at our firm had decided that our criticism of the CCP was unhelpful to their business dealings and would, thus, not be published as part of the firm’s research product.

In short, less than 15 years after one of the most brazen and bloody mass slaughters of innocents in modern history, the entire world had forgotten the incident and had done everything within its power to get back to “business as usual” with the very regime that perpetrated it.

Twenty-plus years on, the denial of the regime’s character continues largely unabated, as feckless and reckless politicians and businessmen close their eyes and pretend that all is well, that the CCP is no different than any other “regime,” and that China is slowly but surely becoming a “normal” country.

Back in the mid-1990s, when the China-normalization business was gaining steam, we wrote a long piece warning that inviting the CCP to play in our sandbox would force us to change our rules rather than them to change theirs.  In defense of our position, we cited a Wall Street Journal piece from trade and manufacturing expert Tom Duesterberg, who is presently a senior fellow at the Hudson Institute.  He wrote:

Starting with a core group of like-minded nations, the WTO has grown, in terms both of the commerce covered by its agreements and of the proportion of the world’s population voluntarily abiding by its rules.  The U.S. has remained an acknowledged champion of that system, despite domestic political pressures to stray.  Frequently, it has been a lonely champion patiently lobbying both its allies and potential members of the GATT-WTO system to be more rigorous in abiding by the agreed rules.  Thus the U.S. has for years sought to reduce the prevalence of bribery, high-handed government influence and unfair commercial practices as means to win international business. . . .

If a large rogue nation like China becomes a part of the WTO before it is ready or willing to abide by its rules, the ability of all its members to impose the politically difficult disciplines in their own countries will be seriously compromised.  The new WTO has trouble enough mustering the will to enforce standards like those covering intellectual property and government procurement, and has yet to adopt strong rules on bribery.  Brazen disregard of the agreements from a new member like China would serve as a tempting example for other wavering nations to follow, especially if the U.S. doesn’t insist on strict adherence by the Chinese.

In other words, Duesterberg made the prediction first: instead of us imposing our values on them, they will impose their values on us.

Last week, Bloomberg reported that Apple is seeing a resurgence in China.  After struggling for more than a year with cell phone sales in the market that accounts for roughly 1/5th of its total revenues, Apple is, again, seeing positive results and vastly improved numbers.  The experts cited by Bloomberg all agreed that Apple’s recovery was the result of smart pricing and status-seeking by Chinese consumers:

Apple and its Chinese resellers have been cutting prices since the start of 2024, and those deals are extending into the sale season that accompanies the June 18th shopping festival in the country….

“We believe the reversal in user interest could be due to the premiumization trend in China,” [ analysts Steven Tseng and Sean Chen] wrote. “More than half of survey respondents say they’re willing to spend more than 4,000 yuan ($550) on their next phone vs. just 33% who currently use premium handsets.”

Now, that may all be true, but I would suggest that other forces are at work as well.

Apple’s current problems began with the CCP and its declaration that iPhones represented privacy and security risks to users.  Apple’s resurgence, in turn, also began with the CCP.  First, Tim Cook made a backside-kissing visit to China in March.  Second, Cook and Apple happily complied with the CCP’s April demand that it remove WhatsApp and Threads from the App Store in China.  After all, apps like those could be used to share unapproved information or coordinate unapproved actions.  And heaven knows, the CCP cannot have that, which means that Apple and Cook cannot have it either.  Back-scratchies all around!

In 35 years, the only thing that’s changed in China is that the regime has grown more sophisticated and more proactive.  Its leaders are still Butchers and its nature is still totalitarian, but its tactics are subtler and probably more effective.

Of course, now it has Western cooperation, especially from the likes of Tim Cook, which makes all of the above much easier.

Tank Man, whose 35th anniversary is tomorrow, is but a vague memory, a brave man who did what he did only to be forgotten and betrayed by a naïve and grasping West.

Stephen Soukup
Stephen Soukup
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Steve Soukup is the Vice President and Publisher of The Political Forum, an “independent research provider” that delivers research and consulting services to the institutional investment community, with an emphasis on economic, social, political, and geopolitical events that are likely to have an impact on the financial markets in the United States and abroad.