Harmony OS and International Relations Theory
By: Paul Dixon
Tags: International Relations, Harmony Os, Economics, Yuan, China

Harmony OS and International Relations Theory

Following the disastrous first half of the 20th Century it was recognised in the Western countries that international relations needed to be put on a more stable long-term footing to avoid a future war that could be truly catastrophic.

Thus, international relations became the subject of serious study and practice in the West. Some of the principles were:

(i) Internationally recognised borders are given and cannot be altered outside of a legal framework — essentially the UN

(ii) Countries sign protocols and agreements and observe the rule of law

(iii) Countries avoid inflicting material damage on each other and acknowledge legal equality

(iv) Trade is beneficial for economic growth and also encourages interdependence

(v) Interdependent economies have mutual self-interests which encourages them to mediate disputes

(vi) Trade is good because it promotes higher productivity and allows development costs to be amortised over a larger sales base

If we look at US relations with China since the 1970’s it could be remarked that the US and its allies spend several decades after the reestablishment of diplomatic relations in integrating China into this system — Pax Americana.

However, under the Trump Administration there has been a departure from the principles of normal diplomatic relations which could in the future lead to conflict:

(a) Unilateral sanctions outside of a legal framework

(b) Singling out individual companies for sanctions

(c) Use of the international financial plumbing to exert coercive influence

(d) Use of undiplomatic language regarding the Corona Virus

It was inevitable that China and the US would have differences of opinions and the US is right to be concerned about the bilateral trade deficit. However, in my view the deficit is caused mostly by the US’ enormous health sector which devours everything in its path and prevents many middle class families from saving. The lack of saving leads to lack of investment and hence the deficit.

Some of the measures enacted by the Trump administration run frankly counter to their own interests if they had taken the trouble to think them through such as is the case with Harmony OS.

Huawei was, inter alia, blocked from using Google’s Android operating system on grounds that can be described as trying to kill off a rival, which is counter to normal trading practices. This has forced Huawei to develop its own operating system, Harmony OS, which is now ready and will soon be rolled out. Unlike Windows Phone where apps had to be developed from scratch most Android apps will work on Harmony OS though they may need to be tweaked. In addition, Harmony has the advantage of the world’s largest market in China so it is extremely unlikely that this will go the way of Windows Phone OS.

In fact, it is likely that down the road there will be a Harmony version of Chrome OS for laptops. Thus, for the first time in the computer era there will be a major operating system not controlled by the US. This all stems from Trump’s ban.

The US administration has also been imposing bans on sales to China by companies which use their inputs such as in making microprocessors. Given that China is and will remain the largest production centre for many technology products the US is giving these companies a strong reason not to source from them. This looks like going the same way as Android and Harmony OS; after a period of disruption China will have found a workaround.

The US cannot own China’s foreign policy, nor cannot it impose its laws extraterritorially like in the Meng/Huawei case. The Trump Administration’s attempts to use the dollar’s dominant role in international transactions to force other countries to follow its policies is without precedent in the post-war system. Were this policy to be continued under the Biden administration it would almost certainly lead to China setting up a parallel payments system — the monetary equivalent of Harmony OS.

China does not appear to have any interest in following the US role in financial markets with huge flows passing in and out every day. However, for the Yuan to be used in international trade all it requires is confidence in its value (ie that it won’t be subject to runaway inflation) and that it will always be convertible so users are not left holding Yuan they don’t need. These criteria can easily be met without following the US route of open financial markets.