Misinformation and foreign policy

A few weeks back I did a post that discussed the first of Philippe Lemoine’s four essays on China’s response to the Covid-19 epidemic. Now I’ve had a chance to read all four of what will likely become the definitive account of China’s role in the pandemic. I cannot recommend them highly enough.  Over at MoneyIllusion I discuss the second essay, and here I’d like to discuss the concluding paragraphs of the fourth essay:

I have examined in detail the accusations made against China in connection with the COVID-19 pandemic. I have concluded that there is a grain of truth to some of them—mistakes were certainly made in the early days of the crisis and the Chinese authorities have not always been forthcoming with information about the epidemic. Nevertheless, a careful review of the evidence suggests that most of the allegations are either exaggerated, unsubstantiated, or nonsensical, and sometimes they are all three. In particular, the claim that China is somehow responsible for the botched response to the pandemic in most Western countries doesn’t withstand even cursory scrutiny. Yet this claim continues to be made—not only by government officials eager to scapegoat China for their own lamentable failures, but also by journalists and citizens who ought to be more concerned about how badly their own countries have been misgoverned during this public health emergency.

I have highlighted several instances in which Western officials and journalists have misrepresented or distorted evidence. This may be a consequence of confirmation bias, fear of being accused of helping China or a tacit assumption that, since the Chinese regime is evil and hated, there’s nothing particularly wrong with dissembling to make it look bad. But, whatever the reason, this disregard for accuracy is dangerous, particularly on the part of journalists, who ought to at least strive to pursue truth irrespective of their personal ideological leanings. And it has contributed to a feedback loop I have observed over the past few months—people blame China for the pandemic because they adopt low evidentiary standards when it comes to accusations against China, which makes them hysterical about China, which in turn leads them to further lower their evidentiary standards, which makes them believe even more nonsensical accusations against China, etc. If people would only pause to consider whether or not the accusations against China make sense, they might realise that many of them do not.

As I wrote in the introduction to this series, there are many reasons to dislike and distrust the Chinese regime. But when dislike and distrust disable the ability to parse evidence and think clearly, they disfigure our understanding of reality. Hatred of the Chinese regime has become so strong and pervasive in the West—especially in the US, where China is seen as its main geopolitical foe—that it creates incentives that allow unsubstantiated allegations to spread largely unchecked. Indeed, not only does this prejudice mean that people adopt a lower evidentiary standard to examine such allegations, but anyone who points out they are unsubstantiated risks being accused of being China’s dupe. As the rivalry between the US and China grows, we should expect disinformation about China to become increasingly common. This is especially true since, as we have seen repeatedly in these essays, China hawks in the US administration are clearly trying to influence public opinion about China by leaking misleading information. China’s regime is appalling in many ways, and it’s understandable that people feel no sympathy toward it, but this fact should not make us accept dubious claims just because they fit our preconceptions. On the contrary, knowing that we feel that way and that it will unconsciously make us less cautious when evaluating claims that cast China in a dark light, we should be extra careful before we accept such claims.

When we look back at history, there are numerous examples of a sort of spiral of misinformation, where actual flaws in a foreign regime lead us to become too credulous about further accusations made against that regime.  For instance, if Saddam Hussein is known to have tortured people and to have repeatedly lied about his military activities, who wants to go out on a limb and defend him from the specific accusation that he is developing WMDs?  A few people (including some of my fellow Econlog bloggers) might have the courage to ask for proof of charges made against highly unpopular regimes, but not many.  History shows that if we base our foreign policy decisions on false accusations against unpopular governments, it usually does not end well.

Here’s The Economist:

Thanks to its high quality and low prices, Huawei’s telecoms gear is popular around the world. Not in America, where the Chinese giant is banished over (unsubstantiated) fears that it could be used by spies in Beijing to eavesdrop on Americans. But expelling Huawei from the United States—and pressing allies like Australia and Britain to do the same—was not enough for the Trump administration. It seems to want Huawei dead.

It’s certainly possible that Huawei is spying on the US, but given Lemoine’s documentation of how the US government has repeatedly lied about China’s role in the Covid-19 pandemic, promoting completely unsubstantiated rumors that the virus escaped from a Chinese lab, why should we accept on faith that Huawei is a national security threat to the US?

And what are we to make of the fact that the US government has seemed willing to use Huawei as a stick to achieve its trade negotiation demands?  What does it suggest if the US government is willing to do something that they claim would hurt our national security in exchange for a few more soybean exports?


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Henderson and Horton on Whether China is an Economic Threat

Scott Horton is a well-informed foreign policy analyst who interviews people mainly about foreign policy. Because of the potential foreign-policy implications of my recent Defining Ideas article on China, Scott interviewed me last week. His interview is titled, “David Henderson on the Supposed Economic Threat from China.” It goes about 42 minutes.

There are two things I like consistently about being interviewed by Scott: (1) his energy and (2) the fact that I always learn something from him.

Here are the highlights with approximate times:

2:47: Gains from trade don’t stop at the border.

4:00: The asymmetry in the gains and losses from trade and what that means for the discussion on economic policy.

9:45: Tariffs fell gradually after the war.

10:15: The Box bought down costs of international trade across oceans more than small reductions in tariffs did.

11:30: The role of improvements in technology in losses of U.S. manufacturing jobs.

14:45: Obama economist Jason Furman’s comment about the gains for the average U.S. family from Walmart.

16:50: The role (or not) of regulation in moving jobs to China.

17:40: The Economic Report of the President under Trump and its analysis of where the U.S. stands in degree of regulation relative to Western Europe and other advanced economies.

19:50: China’s economy and why it has done so well. [HINT: It’s not mainly slave or prison labor.]

21:15: TikTok.

22:40: “You didn’t dance well?”

23:30: How the U.S. feds made it easier for the Chinese government to blackmail federal employees.

24:40: Much of intellectual property is handed over to Chinese firms contractually.

26:25: Are “we” in competition with “them?”

27:40: One thing that Trump is most sincere about and most wrong about.

28:30: Increase in size of Chinese military.

31:30: The Blob: They make a good living by stirring the pot.

32:30: Scott teaches me something about Colin Powell and his role in getting George W. Bush to respond moderately to China after the Chinese government forced a U.S. Navy EP-3 airplane to land on Hainan Island.

34:00: The report of one of my students who was on that airplane.

About 4 or 5 minutes in which we discuss nuclear war.

41:00: Are there interest groups in U.S. business that want the U.S. government to restrain its hawkish actions toward China?








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Philippe Lemoine on Covid-19 conspiracy theories

A great deal of confusing and contradictory information has been written about the events surrounding the outbreak of Covid-19 in Wuhan, China. Philippe Lemoine has now provided a long and carefully documented account of the early days of the epidemic. This will be followed up with three more installments, discussing conspiracy theories regarding acknowledgement of human-to-human transmission, the origin of Covid-19 (lab or natural), and pandemic data from China.

I approached this piece with a bit of skepticism, as in February I had been highly critical of China’s initial response and I had heard that Lemoine’s account was less critical of China. In fact, his account seems pretty even-handed and I found it persuasive. Here’s one excerpt, summarizing the events of late December 2019:

The truth is that, all things considered, and despite a few mistakes at the end of December, the identification of SARS-CoV-2 as the cause of the outbreak was remarkably fast. It could probably have been identified even faster had the cluster of pneumonia been noticed sooner. According to the New York Times, which relied on Chinese media reports and interviews with former officials, the system created after the SARS epidemic in 2002–04 to detect outbreaks of infectious diseases didn’t work properly. Every suspicious case was supposed to be immediately reported to the national health authorities in Beijing, who employ people trained to detect contagious outbreaks and take steps to suppress them before they spread. This system was created to prevent precisely the kind of political interference that had kept Beijing in the dark and delayed the response at the beginning of the first SARS outbreak in 2002. According to the Times, it didn’t work because the local health authorities insisted on controlling what was reported to Beijing instead of allowing doctors to report the information, as intended. That is why the national health authorities only realized there was a cluster of unusual pneumonia in Wuhan on December 30th, when rumours of SARS began to appear on social media. . . .

Needless to say, bureaucratic ineptitude is hardly unique to authoritarian countries in general, or to China in particular. It is a consequence of human frailty, and the conduct of many countries during this pandemic—including, and perhaps especially, some of the West’s democracies—offers countless examples of bureaucratic incompetence. We’ll probably never know exactly what went wrong in those very early days of the pandemic and who bears personal responsibility for China’s mistakes, because police states do not conduct public inquiries that risk undermining their own legitimacy and authority. We can speculate that, had everything worked exactly as it was supposed to, SARS-CoV-2 might have been identified as the cause of the pneumonia outbreak a few days, or perhaps a week, sooner. But we don’t live in a world without human error, we live in this one.

There are several lessons to be drawn from Lemoine’s research (my interpretation, not necessarily his):

1. My February post suggesting that China was the worst possible place for a Covid-19 epidemic to begin was clearly wrong.  They made mistakes, but no worse than one would expect in most countries.

2.  The US government response to the epidemic was at least as dishonest as the Chinese government response, and far more incompetent.

3.  US government claims of a Chinese Covid-19 conspiracy are false.

This issue is important, as the US government is currently using the alleged Chinese cover-up as one of the excuses for starting a cold war with China.  Recall that the Spanish-American War, the Vietnam War and the Iraq War we all based, in part, on false conspiracy theories peddled by the US government.

I eagerly await the next three installments in his series.  I expect Lemoine’s full account to eventually become the definitive history of the initial outbreak.  Read the whole thing.


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The US-China Trade War/Soybean Front: Home before the (Next Batch of) Leaves Fall

On July 9, 2018, over two years ago, reader CoRev wrote: Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices. Prices were in the 982 range […]

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COVID-19 Response in Emerging Market Economies: Conventional Policies and Beyond

By Martin Mühleisen, Tryggvi Gudmundsson, and Hélène Poirson Ward The economic impact of the COVID-19 pandemic on emerging market economies far exceeded that of the global financial crisis. Unlike previous crises, the response has been decisive just like in advanced economies. Yet, conventional policies are reaching their limit and unorthodox policies are not without risks. […]

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A Sword of Damocles for TikTok?

There are indications that the US government might force a sale of the Chinese app “TikTok” to an American firm—perhaps Microsoft. It seems to me that the Australian government has a better solution:

Speaking on Tuesday to this year’s virtual Aspen Security Forum, Australian Prime Minister Scott Morrison disclosed that his government had reviewed the national security risks associated the Chinese app and found there weren’t any. There is “no evidence,” he said, “that there is a misuse of anyone’s data that has occurred, at least from an Australian perspective.”

That’s also true of the US.  But there are numerous technology experts who suggest that there are real risks that TikTok could engage in future mischief, perhaps even trying to influence US politics:

Last year the Guardian reported on leaked documents that detailed how TikTok removed or hid content that mentioned forbidden topics such as the Falun Gong, a spiritual movement banned in China. The result is that some posted videos are not widely available to other users. In effect, TikTok filters out videos that displease the company’s moderators.

TikTok has since said the documents disclosed by the Guardian have been updated and the rules for moderating content vary depending on the country. A Buzzfeed investigation last year found that content about the Hong Kong protests in 2019 was not taken offline, for example.

It’s possible that in its national security review of TikTok, Australia reached a conclusion similar to Buzzfeed’s — that is, there may have been problems before, but the company has taken steps to allow more open use of its product. Even still, there is no guarantee that TikTok won’t change its rules in the future. As Morrison acknowledged, the app’s cord goes back to China.

That’s the risk that the U.S. government is now trying to mitigate. TikTok may conform to Western norms now, as it seeks to expand its market share in places such as the U.S. and Australia. Over time, however, the situation may reverse itself. As TikTok becomes ever more popular among Westerners, their outlook on the world may more closely resemble China’s.

The reason I prefer the Australian approach is that it puts a sword of Damocles over the Chinese firm.  Let’s assume that prior to the 2024 presidential election, TikTok starts intervening in ways that favor the preferred candidate of the Chinese Communist Party?  Or they use TikTok to spy on the US government.  Even though TikTok is owned by a private firm and would probably prefer to stay out of politics, one could imagine the Chinese government forcing some sort of mischief.

In my view, this action would end up being extremely counterproductive, for two reasons.  To see why, recall that the behavior of TikTok will be watched closely by the US government, just as Russia’s interference in the 2016 election has led to increased scrutiny over Russia’s use of platforms such as Facebook.  So the US government would almost certainly discover their actions.  It’s hard to influence 200 million voters in complete secrecy.

Consider what happens if TikTok’s actions are discovered a few weeks before the election:

1. TikTok would be banned from the US, costing Chinese investors many tens of billions of dollars in market capitalization.

2. The scandal would help the most anti-China candidate in the US presidential race.

For these reasons, China would be unlikely to interfere in US politics in such a crude fashion.

Now let’s assume that the US launches a cold war against China, freezing their firms out of the US tech sector.  In that case, the first of the two costs above is no longer operative.  China has much less to lose from interfering in US politics.  But without TikTok would China be able to cause harm to the US?  Yes, look at the Russian actions in 2016.

Indeed it’s probably not a coincidence that it was Russia and not China that engaged in widespread interference in US politics during 2016.  It’s not that the Chinese are too pure to do so—they interfere in Taiwanese politics, and to a lesser extent in other smaller countries.  On the other hand, they have a lot to lose from strong sanctions by the US government, as the US is the largest market for their products.  In contrast, Russia exports very little to the US. (Ironically, Australia is at greater risk than the US.)

So perhaps the best way to keep the Chinese government from misbehaving is to allow them to become deeply enmeshed in the US economy, and then use that close relationship as a sword of Damocles.  Tell TikTok they can stay as long as they don’t engage in any major mischief.

PS.  I say “major mischief”, as every tech company will do a few small things that are objectionable, as when Twitter or Facebook overreact in removing a politically sensitive item.

PPS.  The Australian government has already banned Huawei, so their TikTok decision is not motivated by blindness to the Chinese security risk.




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Global Imbalances and the COVID-19 Crisis

By Martin Kaufman and Daniel Leigh The world entered the COVID-19 pandemic with persistent, pre-existing external imbalances. The crisis has caused a sharp reduction in trade and significant movements in exchange rates but limited reduction in global current account deficits and surpluses. The outlook remains highly uncertain as the risks of new waves of contagion, […]

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Fiscal Policies for a Transformed World

By Vitor Gaspar and Gita Gopinath The ongoing COVID-19 pandemic has already prompted an unprecedented fiscal policy response of close to $11 trillion worldwide. But with confirmed cases and fatalities still rising fast, policymakers will have to keep the public health response their No. 1 priority while retaining supportive and flexible fiscal policies and preparing […]

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Two countries, going in opposite directions

The Wall Street Journal has an interesting article on the Covid-19 situation in the US and China:

In recent days, many U.S. states have been forced to reverse course and shut down restaurants and bars and require face coverings in public settings as new daily infections surpassed 50,000 on Wednesday for the first time.

The new wave of coronavirus infections and restrictions on business activity threatens to throw a nascent recovery off course, after the U.S. on Thursday reported a second straight monthly drop in the jobless rate in June.

That doesn’t sound good. Meanwhile, in China the virus seems under control:

In China, meantime, health authorities have aggressively attacked even small outbreaks as they emerge across the country. The most recent cluster, which broke out at Beijing’s largest wholesale food market last month, prompted a swift and vigorous response from the local government, including the testing of millions of citizens and new restrictions on people’s movements in and out of the capital.

On Friday, Chinese health authorities reported just two new locally transmitted infections in the country for the previous day, both of them in Beijing.

This may allow the Chinese economy to boom in the second half:

The Chinese economic data released on Friday showed the number of total new businesses rising at the sharpest rate since August 2010, as service providers made plans for increases in consumer demand in the coming months, Caixin said. . . .

Sporadic outbreaks in China shouldn’t derail its economic recovery, said Lian Ping, an economist at Zhixin Investment Research Institute. The Shanghai-based economist is forecasting year-over-year economic growth of more than 6% in the latter half of 2020—roughly in line with the 6.1% gross domestic product growth rate China reported in 2019.

Of course there are much better models than China, such as Taiwan, South Korea, Australia and New Zealand. The bottom line is that it’s misleading to speak of a trade-off between a healthy population and a healthy economy.  The two go hand in hand.

Happy Fourth of July!

PS.  Note that while China was taken by surprise by Covid-19, the US had several months to prepare a response.  How did we spend that time?


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“The US and China in the global order: the role of the dollar and tensions with China”

Yesterday, I had the pleasure of joining a virtual panel sponsored by the Official Monetary and Financial Institutions Forum (IMFIF), is think tank covering central banking, economic policy and public investment. I joined Robert Dohner, former Deputy Assistant Secretary of the US Department of the Treasury (2005-18), Scott Kennedy, Senior Adviser and Trustee Chair in […]

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