China, coronavirus and the politics of paranoia

The over two hundred independent countries of the world face similar problems dealing with the coronavirus, but the responses from each country are unique. This is one of the fundamental lessons so far from the pandemic. As the proverb says, charity begins at home.  Globalizers thought otherwise. Frontiers, they have preached for decades, are a thing of the past; we are all the same; and economics is more important than culture.  Yet everywhere, their theories are discarded. In  Europe, northern member states of the EU refuse to underwrite “corona virus bonds” demanded by France and southern governments. The politics of Brexit -still front page  news into February 2020- has almost vanished. Competition between the United States and China has intensified. Poorer people in the rich countries are hit worse than the wealthier; the economies of developing countries have ground to a halt; oil, gas and raw material prices have plummeted;  and capital flight to safe havens has accelerated, precipitating tens of millions into penury.

Where will all this end? William Hague – the UK’s former Foreign Secretary- says huge controversies that have been with us for some time, are coming to a head. The EU faces an existential crisis; China-US rivalry is set to hot up; the Pacific century is coming sooner rather than later; oil producing countries like Russia and Saudi Arabia stare at empty treasuries, as the oil price tanks; with more and more people out of work, distributional politics is rushing to the fore; debts are exploding along with demands for debt forgiveness; and with ICT so pervasive, Big Brother is upon us.

The bottom line is that the ideology of globalism has been holed below the waterline, not the reality of globalization as spearheaded by irreversible developments in ICT. What it reveals is the crude reality of a diverse world where nations look after their own first. This is particularly the case in China-US relations.

China’s way to the modern world.

A central feature of Chinese historiography is the repetition over millenia of periods of civil war, interregnum, and chaos, from which a triumphant dynasty emerges to impose peace, followed by a flourishing of the arts and the economy, leading to a period of decadence and corruption, before resuming the cycle of civil war to chaos and disaster. The pattern is recorded in the opening of The Romance of the Three Kingdoms, much read by the young Mao Tse Tung: “The empire long divided, must unite; long united must divide. Thus it has ever been”. For a thousand years, dynastic rule had slowly relaxed its hold over the extensive territories under the emperor’s rule, as the provinces moved from autonomy to independence, culminating in the two and a half centuries of turmoil recorded in the history of the Warring States period (475-221 B.C.) After the seminal year of 221 B.C., China maintained the ideal of empire and unity but followed the historical reality in fracturing, then reuniting in cycles lasting several hundred years.

The last of the over 30 dynasties to have ruled China over the four millenia of its history was the Qing , who ruled from 1644 to 1912. The dynasty was established by Manchu tribes riding into China. They married their military prowess with the governmental and cultural traditions of the Han Chinese, embarking on territorial expansion to include Mongolia, Tibet and Xinxiang, making their domain pre-eminent in Asia,  and by far the largest economy in the world. At the time, that Qing China came into contact with the western empires and trading companies in the late eighteen century, China, writes Henry Kissinger, was “a state claiming universal relevance for its culture and institutions but making few efforts to proselytize; the wealthiest country in the world but one that was indifferent to foreign trade and technological innovation; a culture of cosmopolitanism overseen by a political élite oblivious to the onset of the Western age of exploration; and a political unit of unparalleled geographic extent that was unaware of the technological and historical currents that would soon threaten its existence”. [1]

For millennia, the Chinese had lived in the belief that their country stood at  the centre of the civilised world, of which the nucleus was the rest of Asia. China’s economy and population had accounted for anywhere between one quarter and one third of the world total (see Table 1). Marco Polo, the Venetian traveller, wrote in the thirteenth century of China, with its 70 million of inhabitants,  as “the richest country in the world”, where science was far more advanced than in Europe, where many Chinese inventions such as gunpowder, the marine compass or printing were unknown. Yet on the eve of the industrial revolution in 1820, China was clearly lagging. Its population had grown to over 380 million, while per capita income had fallen from near parity to below forty per cent that of western Europe. This lag in Chinese civilization and technical progress, notably in agriculture, presaged more than a century of da luan, the terrible times whose broad outlines are sketched in Table1,  as China’s per capita income contracted to a fraction of that of the more technically advanced nations. Indeed, relative decline accelerated through the nineteenth century, furthered by the wars and revolution of the first part of the twentieth century, and continued unabated over the next fifty years of the communist dynasty.

Table 1                      China as a percentage of world totals.

                                   1000  1500  1700    1820  1900     1950       2000

Population                      22.1    23.5      23         37         25.6       21.7           21

 

Income                            23          25        22         28         13.2         6.2          3.4

 

WE’s per cap income     113          77          60      41          16.2        6.6          3.1

WE- Western Europe. Source: IMF, Angus Maddison, Chinese Economic Performance in the Long Term. Paris, OECD, 1998. The World Economy: Historical Statistics, OECD, 2003.

China’s self image as the centre of the world was rudely shattered during the first and second Opium Wars of 1838-42 and 1856-60, when the Manchu government suffered a crushing defeat at the hands of the British and French expeditionary forces.  It was forced to open its ports and to conclude humiliating, inequitable treaties, as well as having to pay huge amounts in ‘indemnities’. Hong Kong, a barren rock, was ceded to the British Crown in perpetuity, and later Kowloon and the New Territories were leased for 99 years. A succession of civil wars wracked the country, by far the most savage of which was the Taiping Rebellion of 1851-1864. About twenty million people died before the dynasty managed to quell its leader, Hong Xiuchuan, a self-declared younger brother of Christ. Further humiliating defeat by Japan in 1895 prompted government officials to try and convince the ruling dynasty of the necessity of “self-strengthening” and reforms, and particularly of developing a modern ordnance industry.  But the imperial court feared it would lose power and influence if economic and political reforms were implemented. The Qing dynasty, which had ruled since the 1640s, collapsed in 1911.  In January 1912, Sun Yat Sen, the founder of modern China, became provisional president of the Chinese Republic.

The historian Ho Pingti picks up the story:  “For a whole decade from 1917 to 1927 there were incessant civil wars in various parts of the country…From 1928 on the Nationalists were repeatedly at war with the Communists…These wars were brought to an end in 1936; then war with Japan broke out in July 1937…In August 1945 civil war between the Nationalists and Communists was renewed.”[2] Within four years of the defeat of Japan and end of the Second World War, the Communists were able to defeat the US-backed, more modern and four times as numerous Nationalist forces. Chiang Kai-shek, the Nationalist Generalissimo, fled to Taiwan, still claiming to be the legal leader of China.  Mao Zedong proclaimed the People’s Republic of China (PRC) on 1 October 1949, declaring that at last “the Chinese people have stood up”.

Asserting China’s sovereignty and status infused Mao’s demonic will to drag the country by force, and regardless of human suffering, on the path to modernis ation. His obsession was to extirpate the traditions which he identified with China’s century of decline. In the frantic search for success, policy swung from one extreme to another. Clamping the Soviet industrial plan on China’s rural economy proved problematic, as the countryside was bled of resources to finance heavy industrial projects. In The Great Leap Forward, engineered by Mao in 1959 to accelerate steel production through the promotion of household furnaces, 30 million lives were claimed  by a man-made famine. After a pause, Mao launched the Cultural Revolution in 1966; mobilised China’s youth against authority figures, deprived a generation of their basic education, and caused at least one million deaths. By the time of his own death, Mao was responsible, his biographer records, for the death of 70 million people—far outclassing Hitler’s 20 million, and Stalin’s 50 million.[3] In international relations, China was isolated, virulently hostile to its former ally the Soviet Union, and partly reconciled with its former enemy, the United States.

This partial reconciliation, recorded in the Shanghai meeting between President Nixon and Mao in Shanghai in February 1972, was to articulate the foreign relations and internal development of China for the coming decades.As Kissinger writes, “the reentry of China into the global diplomatic game, and the increased strategic options for the United States, gave a new vitality and flexibility to the international system”’. It was also a prime factor in the coming transformation of China, and of the world.

China embarks on its transition.

China was in sorry condition when Deng Xiao-ping returned to power, after an interlude of two years following Mao’s death in 1976. He had been twice purged by  Mao, on account of his opposition to the Great Helmsman’s wilder schemes, and was well know for the famous statement attributed to him, to the effect that “what matters is not that the cat is black or white, but that it catches mice”. Under his direction, China embarked on a dual policy of domestic economic reforms, and a marked improvement in relations with the United States and the western allies. But as the Chinese saying goes, “an open window inevitably attracts in flies”. Four decades later, the house of China was abuzz. Growth statistics reported the highest rates in the world, wealth disparities widened, and faith drained from the communist dynasty’s promise to create a new, more just society. Within the party-state, divisions ran deep about the content, direction and speed of reforms.  Official policy adopted pragmatism, as portrayed in the slogan, “mo zhe shi ziguo he”, which translates much as “feeling the stones as you cross the river”. But there was no evading discussion about China’s ultimate destination.

Marxism-Leninism-Maoism has remained the ideological glue which holds the regime together. As stated in the Four Cardinal Principles, enunciated by Deng at the start of his reforms, the regime must continue to follow “the socialist road”, maintain “the dictatorship of the proletariat”, champion communist party leadership, and stay loyal to Marxism-Leninism and Mao Zedong thought.  Not surprisingly, the Chinese communist leadership was aghast at the Polish comrades’ initial willingness to accede in 1980-81 to the demands of Poland’s non-official opposition, Solidarity, for union autonomy and political reform. Initially, they were attracted by  Party-Secretary Gorbachev’s reforms in the USSR in the late 1980s, but so were the students who gathered to read a declaration in Tiananmen Square in May 1989, calling on the government to accelerate economic and political reforms[4]—the first known major push within China to reform the regime. The students wanted an end to corruption, more intra-party democracy, and a curb on the abuse of power by officials. Many leaders, notably Zhao Ziyang –former premier and leader of the communist party (CCP)— as well as party intellectuals sympathised with them, and understood that a market economy and political reform went together. As Wu Jiaxing, a young researcher at the Investigation and Research Division of the Communist Party’s Central Office had written, Deng’s policies were “an express train toward democracy through the building of markets”.[5] He was arrested in July on account of his association with regime reformers.

The student demonstrations on Tiananmen Square in May-June 1989, played out in the full glare of the global media which had turned up to cover Gorbachev’s visit to Beijing, caused the party leadership to suffer its worse high-level split since the years of the Cultural Revolution. The key lessons learnt were encapsulated by two of Deng’s reported statements. First, “the CCP status as the ruling party must never be challenged. China cannot adopt a multi-party system”.[6] Second, “Two conditions are indispensable for our development: a stable environment at home and a peaceful environment abroad. We don’t care what others say about us. The only thing we really care about is a good environment for developing ourselves”.[7]

The events of June 1989 in Tiananmen Square dramatically changed perspectives on China’s future. With the collapse of the Soviet Union in 1991, Peking was the one remaining major communist power left in the world. How to reconcile the conflicting strands of China’s external relations and internal development in the new global context while keeping party discipline presented the leadership with awesome challenges. The Soviet Union was no longer there to help shroud the differences between Beijing and Washington. Within China, the leadership’s resort to force against the students in 1989 won plaudits among a population paralysed by the fear of a return to past disasters. Anxious questions about China’s future yielded the four broad and very different narratives which form the substance of the rest of this chapter.

The most immediate of these was the story of how China became irrevocably interdependent with the rest of the world; of how it emerged in a world society of states, fashioned by the western powers,  and as a great power in its own right; of how, the regime retained its Maoist-Marxist-Leninist view of the world as a  theatre of permanent conflict;  and of the regime’s ever rejuvenated sense of a real and present danger of sudden regime death.

China becomes irrevocably interdependent with the rest of the world.

In his book, The Great Convergence: Information Technology and the New Globalization, (Cambridge, Mass., Harvard University Press, 2016), Richard Baldwin, professor of Economics at the Geneva Institute of International and Development Studies, has written that there have been two great leaps forward in globalisation: the first came in the early 1800s, when steam and power lowered the costs of moving goods; the second came after 1990, when revolutionary changes in communication technology radically lowered the cost of moving ideas. During the first globalisation, the ancient civilizations of Asia and the Middle East- which had dominated the world economy for four millennia- were displaced in less than two centuries by today’s rich nations. In this period, called by historians the ‘Great Divergence”, economic, military and cultural power came to be concentrated in the hands of few. “From 1990, the trend flipped: a century’s worth of rich nations rise has been reversed in just two decades. Their share is now back to where it was in 1914.” This trend -the “Great Convergence- is surely, he writes, “ the dominant fact of the last two or three decades. It is the origin of the anti-globalisation sentiment in rich nations, and much of the assertiveness of “emerging markets”.[8]

The novelty in the new globalisation is the international fragmentation of production and the transfer of know-how abroad. Rich country sources of competitiveness, such as management and marketing know-how, are being mixed and matched with developing country comparative advantage, say low cost labour. “As this combination is happening inside the contours of global value chains, national boundaries are no longer the only relevant frontiers. The complex flows of goods, services, investment and technology that used to move only within rich country factories, are now part of international commerce” (pp.175-176). “The production fragmentation arising from the new international organisation of production means that international competition can effect national economies …job by job, rather than sector by sector”.

China has been at the centre of this process. In 1978, China ranked number 32 world exporter; per capita income was 7% of the US’s; sixty per cent of the population survived on less than $1 a day, and international trade at 1% gdp was the lowest out of 120 developing countries. By 2010, China had become the world’s largest exporter; had overtaken the United States as the world’s largest economy in 2014; its foreign exchange reserves stood at over 2 trillion dollars; and per capita income had risen to near one third of that of the United States.  Central to this extraordinary story was Deng’s decision to adopt maritime Asia fast growth strategies, opening the country to trade and foreign direct investment.  The result in trade and investment was to fast convert mainland China into the heart of the East Asian economy, and in 2002, China became a full member of the WTO. In the early 1990s, inward investment to China was equivalent to 6% gdp, falling to  3% gdp in the first decade of the new millennium, placing China among the top three recipients of fdi, alongside the US and the UK, and by far the largest recipient of fdi among developing countries, accounting in some years for 25-30% of the total to all developing countries.  By 2001, the 145,000 foreign invested enterprises  were reckoned to account for 10% of the urban workforce, 17% of industrial output, and –variably from one year to the next—forty to fifty  of annual exports.[9]  There were by then about 700 R&D centres in China run by international businesses, two thirds of whose production now went to the domestic market. In 2005, of China’s top 100 exporters, 53 were foreign companies and all were electronics or information technology companies.

The main impact of fdi has been on stimulating the domestic economy, and accelerating China’s insertion in the global division of labour. Such large injections of resources have stimulated growth, especially in those provinces which have received most. With output of foreign enterprises growing in the mid-1990s at four times the rate of local enterprises, it was not surprising that they acted as locomotives on local economies, attracting sub-contractors and stimulating suppliers. Domestic enterprises benefited by the transfer of technology and managerial know-how. Not least, fdi built a highly competitive and dynamic manufacturing export sector:  65% of the growth of exports in the 1990s and early 2000s was attributable to foreign firms investing in China.[10]  For the three decades following the Open Door policy, China’s trade grew four and half times faster than global trade—an achievement unrivalled by any other country. Following the global financial crash of 2008, China soon rebounded, growing at about 7 per cent per annum, became the world’s second largest importer after the US, and accounted for anywhere between 20 to 50% of  third countries’ supply chains. [11]

As I conclude in an article, posted on this blog,[12] “China is irrevocably embedded in global interdependence. There is no exit, and there is no going back. The communist party-state is in charge, but it has little option other than to supervise the country’s transformation to a market society. China’s deep embedding in the global economic structure has fundamentally altered the balance in China between authorities and markets. …The driving forces behind this process will continue to operate, such as the innate animal spirits of the Chinese and foreign business community, the hard work of Chinese people, the growing flexibility of the economy, and its opening on to world markets. » Yet it is also true that China’s success has propelled it into great power conflict with the United States. “

China’s leadership is well aware of the challenge in seeking to reconcile the permanent reality of the huge country’s irrevocable interdependence with the rest of the world, and the great power implications of success in growing the domestic market, and becoming a prime provider of goods and capital to the rest of the world. China has all to gain as a constructive partner, as President Xi repeatedly emphasises in international fora. The dilemma is made more acute by the fact that  China’s entry to the WTO has coincided with a weakening of the international institutions created after World War II to foster co-operation between states. The Doha round has not been concluded; the IMF’s claim to set the rules for international finance have been challenged; the World Bank’s priorities have been questioned; the UN Security Council has failed to deliver global security; the EU has failed to create a coherent European polity; global terrorism, crime, disease and ecology all require co-operative efforts.

The diplomacy of interdependence involves negotiating the balance between specific vulnerabilities experienced by participating states in the world polity Over time, these vulnerabilities have risen to the top of the agenda: notably, the loss of high value-added manufacturing jobs in the US, or in the case of China, the political pressures on the party-state to become more accountable to domestic populations, as information flows within China and with the rest of the world- however much policed they may be- multiply, and as production platforms in China move up the value-added chain, requiring hugely improved management and ever more instructed workforces. Interdependence ensures that the nature, performance and legitimacy of the party- is constantly on trial – not least to domestic public opinion.

The regime’s response to the coronavirus pandemic  is a case in point. It illustrates  how powerful is the regime’s temptation to deny, to cover up, or to finger scapegoats, inside or outside of China,  in order to deflect criticism, and to re-script history.  In the last resort, the regime knows that its population sits in judgement, and that the rest of the world is looking on.

China and Great Power politics in the Twenty-first Century.

In his book, The Tragedy of Great Power Politics,[13] John Meersheimer, Professor of Political Science at the University of Chicago, rubbishes the western pundits and leaders who convinced themselves that international politics had undergone a profound transformation following the collapse of the Soviet Union in 1989-91. Global integration they assumed,  was all about economics and sameness;  frontiers were a thing of the past and political cultures were cute remnants of bygone eras. As President Bill Clinton put it, “in a world where freedom, not tyranny is on the march, the cynical calculus of pure power politics simply does not compute. It is ill-suited to a new era”. Clinton proceeded, though, to extend NATO’s frontiers eastwards, prompting Russia’s then President Yeltsin to seek reconciliation with Beijing, ending in the 2004 agreement between Moscow and Beijing on their common frontier – ending Beijing’s claims to Siberia- claims that had bedevilled Sino-Russian relations since the 1860s.  He also had the US Airforce bomb the Serbs, inadvertently demolishing the Chinese Embassy in Belgrade. The Chinese leadership did not consider that the bombing was inadvertent.

The real world of geopolitics never went away, Meersheimer argues. “The collapse of the Soviet Union did not give rise to a change in the anarchic structure of the system, and without that kind of profound change, there is no reason to expect the great powers to behave much differently in the new century than they did in previous centuries” (p.361). “Considerable evidence, he continues,…indicates that power politics has not disappeared from Europe and Northeast Asia, the regions in which there are two or more great powers, as well as possible great powers such as Germany and Japan”. “Europe remains bipolar (Russia and the United States are the major powers), which is the most stable kind of power structure. Northeast Asia is multipolar (China, Russia and the United States), a configuration more prone to instability”, but for the moment security competition there is moderated by the presence of US forces in the region, the existence there of nuclear arsenals, and the relative weakness of China and Russia. Meersheimer writing at the turn of the millennium, argues that these power structures in Europe and Northeast Asia,  are likely to change over the next two decades, leading to “ intensified security competition and possibly war among the great powers” (p.362). The greatest potential threat to the United States is a rising China.

Northeast Asia is replete with major sources of conflict – the two Koreas, the competing Chinas of Taipei and Beijing, mutual suspicions between China and Japan, the American military and naval presence, and Chinese claims over the South China seas, as far southern as the Philippines, and the Straits of Malacca. Realpolitik may have fallen out of favour in Washington D.C. in the 1990s, or in EU capitals, but not in Beijing. China, “may well be the high church of realpolitik in the post-Cold War era,” cites Meersheimer, quoting from Thomas Christensen’s article on the subject in the journal Foreign Affairs. [14] China sees threats all around its periphery, and to party-state rule within. But were it to continue modernising aits economy at its present rapid pace, China would become a giant Hong Kong, with four times as much latent power as the US. “In that circumstance, it is hard to see how the United States could prevent China from becoming a peer competitor”(p.401).

Kissinger adds a further perspective on the same theme. China, he writes, [15]has entered a “global Westphalian system”, of independent states, overlaid by “an extensive network of international legal and organisational structures designed to foster open trade and a stable international financial system, establish accepted principles of resolving international disputes, and set limits on the conduct of wars when they do occur” (p.7). The order is not of China’s making. Nonetheless, Beijing is an active member of the UN, and of its ancillary organisations, notably the WTO, or – as has become evident during the present coronavirus pandemic – of the WHO. But it also seeks to mould them to China’s interests. Kissinger hedges his bets: “Any international order comprising both the United States and China must involve a balance of power, but the traditional management of the balance needs to be mitigated by agreement on norms and reinforced by elements of cooperation” (p.231).

War between the United States and China is possible, but not inevitable. That is the conclusion of Graham Allison, in his study on whether the United States and China are destined for war. [16] He continues: “..the underlying stress created by China’s disruptive rise creates conditions in which accidental, otherwise inconsequential events could trigger a large-scale conflict. In making choices to push back against bullying, meet long-standing treaty commitments, or demand the respect their nation deserves, leaders on both sides may fall into a trap that they know exists but which they believe they can avoid. The relentless advance of new technologies, from anti-satellite and cyber-weapons to others whose names remain classified, multiplies effects that will not be fully understood before they are used in a real conflict. On current trajectories, a disastrous war between the United States and China in the decades ahead is not just possible, but much more likely than most of us are willing to allow” (p.184). His recommendation is that leaders in both countries clean up their own domestic mess, thereby opening the way to a policy where the emphasis is on sharing the coming Asian century more equitably.

To realists, this is no more than pious platitude. The regime has no intent to relinquish its hold. It cultivates international prestige and domestic control.  The growth dividend from China’s insertion into the world economy has been invested in the modernisation of land, air, naval and space forces. China has no intent of accepting Japan or India as permanent members of the UN Security Council. It seeks to establish dominance in its own maritime environment. In the July 2010 ASEAN regional forum, held in Hanoi, Chinese Foreign Minister Yang Jiechi declared that “ China is a big country and other countries are small countries, and that’s just a fact”. Another fact is that the regime is communist.

The party-state is Maoist-Marxist-Leninist in its view of the world.

The Chinese party-state is not authoritarian; it is communist. The two are not the same. In 1964, the late Juan Linz – the Spanish sociologist and student of the Franco regime – defined authoritarianism as characterised by four key features: a limited pluralism, with political constraints on the legislature, political parties and interest groups; a political legitimacy predicated on identifying the regime as a necessary evil to accelerate economic development, and counter insurgencies, whether communist or supposedly “democratic”; minimal political mobilisation and suppression of regime opponents; and ill-defined and elastic executive powers.  [17] A communist regime is significantly different. In its extreme form under Stalin or Mao, it imposes monopoly control over society by terror, and seeks to control virtually all aspects of  social life, including the economy, education, art, science, private life and morals of citizens. As Robert Conquest, the historian of the Soviet gulag, wrote, a totalitarian state is one which recognises no limit on its authority in any sphere of public or private life. If  circumstances so dictate, it is quite prepared to extend that authority to whatever length is feasible.[18]

Mao Tse Tung has never been repudiated by his followers. Deng, the author of the crackdown in Tienanmen Square in June 1989, stated, “In the China of today, we can never dispense with leadership by the Party.”[19] There was excellent reason for this position: reneging on Mao -the regime’s founder- risked shaking the regime’s foundations. China’s post-Mao leadership have been close students of the USSR’s fall, and in particular follow in Mao’s footsteps in criticising the impact of Chairman Khrushchev’s denunciation of Stalin in February 1956.  The problem was dexterously handled in a Central Committee document of 1982 entitled On the various Historical Issues since the Founding of the People’s Republic of China, in which Mao retained his status as a “great Marxist, proletarian revolutionary, militarist and general”, but was criticised for starting the Cultural Revolution. With this definition available, the 1982 constitutional reform re-affirmed the ‘Four Cardinal Principles”, guided by Marxist-Leninist-Mao Zedong Thought”: party-state hegemony; the leading role of the party; a unitary state; the concentration of powers, and democratic centralism in the party. “His accomplishments must be considered before his mistakes”, the document declared. Deng personally commented that Mao was “seven parts good, three parts bad.” The 7/3 ratio has entered children’s history books.

Deng could scarcely have made a clearer statement that he cared not a fig about western public opinion than when in June 1989 he ordered the PLA to suppress the student movement in blood. In his famous “southern tour” of early 1992, Deng put reform back as a priority in his famous statement that “it is glorious to get rich”. His offer to the Chinese people was to widen  the sphere of private liberties, but for them to stay out of politics. For the privileged members of the party-state, he opened a wide grey zone where the “nomenklatura capitalists” of the new China could seek to maximise business opportunities, outside of or alongside an incomplete legal system. As Lee Kuan Yew, Singapore’s late Senior Minister has noted, “The size of China’s displacement is such that the world must find a new balance in 30 or 40 years. It is not possible to pretend that this is just another big player. This is the biggest player in the history of man”.[20] By 2025, World Bank figures showed Asia with China at its heart would represent 55-60% of the world economy, while the West—the US and the EU– would be down to 30%. China was on the way to becoming the next economic superpower.[21]

China, the argument runs, is not so much bent on a “peaceful rise”, as in the grip of a relentless “nationalism of grievance and thwarted grandeur”.[22] Ambition is fired by a widely-shared and deep-seated psychological need in China to compensate for past humiliations. Great Britain has returned Hong Kong in 1997 to the motherland, followed by Portugal’s return of Macao in 1999. The next step is for China to absorb Taiwan, whose main protector is the United States. According to China’s July 1998 White Paper on defence, the United States is the main threat to world peace and stability. Through NATO, or its network of global alliances, the US continues its cold war strategy, and operates as a self-appointed global policeman. China’s task is therefore to “say no” to US hegemonism, build up its power base, and nurture its grievances until the moment is ready to strike.[23]

According to one much-cited study by two senior PLA colonels, Unrestricted Warfare, [24]  the US has mastered the art of total war, where all means– from currency manipulations, to media control, or psychological warfare and drug smuggling—are deployed to assert control over contenders and challengers. The book is an exemplary illustration of Maoist-Marxist-Leninist thinking applied to public policy. The key to confronting the US challenge, the colonels argue, is for China to build up it’s comprehensive strength, to play to the weaknesses of the US, and—paradoxically—to accommodate the US as the sole world power, rather than to defy it from a position of relative weakness. In the longer term, China’s interest is to strive to create a peaceful international environment, conducive to economic development.[25] This includes the pursuit of reunification with Taiwan through peaceful means, and enhancement of a Chinese pole in a multi-polar world. In international fora, China should take the lead in building a new political and economic order with less inequality between the rich and the poor. China must join the lead group of countries in world affairs, on its own terms, while acting as the champion of developing nations. In short, the US is an indispensable partner, but also an unavoidable rival. [26]

There is undoubtedly a strong strand of  paranoia in Chinese foreign policy. As Communist ideology has withered, China’s leadership has fanned intense, nationalist sentiments,[27]  whereby schoolchildren are taught about the humiliation that a prostrate China suffered in the nineteenth century. In Chinese eyes, China’s rise threatens no-one. Consequently, the allegation of a “China Threat” indicates political hostility or strategic conspiracy to hold China down.[28] There is no lack of documentation to substantiate the allegation.. Since the year 2000, the US Department of Defense has submitted an annual China Military Power Report to Congress. The 2019 report, lays stress on the regime’s Made in China 2025 policy to replace imported technologies by home made technologies. [29] In 2018, the White House published a report entitled, “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and of the World”. [30]

The facts that the Western powers have done anything but hold China down, or that the Chinese people have been their own authors of modernisation, matters little. As psychologists know, a common symptom of paranoia is attribution bias:  sufferers read hostile intent into all actions – especially westerners who preach democracy and human rights imperialism. In The China That Can Say No, a book written by a group of young Chinese intellectuals and that sold two million copies – China must modernise,  but not on Western terms. [31]

Domestic imperatives.

In 2012, Xi Jinping came to power, and re-asserted the absolute dominance of the Communist party, of which he was General Secretary. He also became President-of-China-for-life. Dissidents were crushed and party rivals jailed. Rather than follow Deng Xiao-ping’s advice that China bide its time, keep its head below the parapet, and focus on economic development,  Xi has adopted a more aggressive style: his diplomats are styled “Wolf Warriors”- so named after a Chinese 3D war action movie- hunting down global baddies. Xi rolled out his One Belt, One Road initiative for economic dominance in Eurasia, and launched the China 2025 programme   to upgrade the manufacturing capabilities of Chinese industries and make China into a more technology-intensive powerhouse.[32]  To those who believe the thesis that China is about to rule the world, it all seems part of the big plan. Jacques Martin – the former editor of Marxism Today, which served as the prime ideas factory for New Labour- wrote as much in his bestseller,  When China Rules the World: The End of the Western World. [33]  The book has been lauded for winning a status among Washington DC intellectuals,  “best compared with the one Thomas Friedman’s The World is Flat had five years ago”.

The best that can be said is that things ain’t that simple. The world is anything but flat,  and Washington DC intellectuals very often get things badly wrong. As David Shambaugh – one of the world’s leading authorities on China – has pointed out, China is the most important rising power, but he challenges the view that China will rule the world. In China Goes Global : The Partial Power, Shambaugh argues that China is a partial power and has a long way to go before it becomes, if it ever does, a global power.[34] Our danger, he writes, is to overestimate China.  “Underlying China’s inconsistent behaviour, he writes,  are an odd combination of contradictory attitudes towards the world: confident..but insecure, assertive but hesitant, occasionally arrogant but usually modest, a sense of entitlement growing out of historical victimisation, risk averse but increasingly engaged, a cautious internationalism combined with strong nationalism and deeply embedded parochialism, truculence combined with pragmatism, a regional power with a global sense of itself, a China that wishes to be left alone but finds itself dependent on the world, and an increasingly modern and industrialised but still poor and developing country. In short, China is a confused and conflicted rising power undergoing an identity crisis of significant proportions. We should expect these multiple international identities to play out simultaneously on the world stage” (p.316).

In China’s Future, [35] Shambaugh goes further: “there has not been a single case of a country that has developed a modern economy without democratising”. Will China transition out of the “middle income trap” and implement various reforms to “rebalance” the economy and move up the value chain- or will its authoritarian political system (my italics) prevent it from doing so?” (pp.xv-xvi) To help answer his question, he sees four possible pathways that China may tread: the path to neo-totalitarianism, as in the period of 1989-92; the current path he describes as hard authoritarianism, with only limited success in implementing needed reforms; the soft authoritarianism, characteristic of the years from 1998 to 2008, involving a looser party-state control over society, but unlikely to be taken; and a semi democracy, much along Singaporean lines, where the ruling party remains in power, and rights are restricted but where there are regular elections, a parliament, an independent judiciary, the rule of law, a professional civil service, no corruption, a multiethnic society, high quality education for all and many basic human rights. Though not inconceivable as a future, he doubts that the CCP would ever accept these features. Which path China takes will have a large impact on the “degree of confidence PRC leaders have in their ability to deal effectively with external relations” (p. 171). The possibility of war with the United States and neighbours is not to be discounted, he says. Only by selecting one of the two latter pathways-soft authoritarianism or semi democracy- will China have a greater chance of a win-win outcome- “improving chances of successful reforms at home and more co-operative relations abroad” (p.172).

In his excellent book, China’s Crony Capitalism: The Dynamics of Regime Decay, [36] Professor Minxin Pei holds no hostages. In describing General Secretary Xi’s campaign to expunge corruption from the party, he writes “..the lurid details of looting, debauchery, and utter lawlessness that have emerged during the campaign only confirm, albeit with fresher empirical evidence, the prevailing view that, instead of building Deng Xiao-ping’s “socialism with Chinese characteristics”, modernisation under one-party rule has produced a .. rapacious crony capitalism”. The reason, he writes, is not hard to fathom. “ Those already inside this select circle (of political and business élites) have every incentive to preserve their privileges and the institutions that make them possible;” (p.260). Unless the powers that be cut the Gordian knot linking political power to    property rights, the regime is in danger of decay and collapse. This study, he summarises “finds pervasive institutional decay-degeneration of norms, disloyalty to the regime and subordination of the regime’s corporate interests to the private interests of members of corruption networks”. (p.264) The evidence , he concludes, is that “it is inconceivable that the CCP can reform the political and economic institutions of crony capitalism because they are the very foundations of the regime’s monopoly of power” (p.267).

Should China watchers expect regime implosion? Don’t hold your breath, writes Stephen Krotkin, Stalin’s biographer, in Foreign Affairs. [37] “China will soon have an economy substantially larger than that of the United States. It has not democratised yet, nor will it anytime soon, because communism’s institutional setup does not allow for successful democratisation. But authoritarianism (my italics) has not meant stagnation, because Chinese institutions have managed to mix meritocracy and corruption, competence and incompetence, and they have somehow kept the country moving onward and upward. It might slow down soon, and even implode from its myriad contradictions. But analysts have been predicting exactly that for decades, and they have been consistently wrong so far”.

Conclusions.

China is irreversibly interdependent with the rest of the world; democratic centralism is the essence of the party-state. The two are not compatible.  Interdependence with the rest of the world is carried by  the flow of goods, knowledge, capital or viruses. Democratic centralism in the party-state thrives off secrecy, and the urge to control. In an interdependent world, the domestic affairs of one state impinge directly on all. The urge to control, and the secrecy that goes with it, raises doubts about the regime’s motivations. The regime regularly declares its aim to  be a great power, and as such to be a pillar of the global system from which it benefits. Yet its handling of the coronavirus epidemic raises the disquieting question whether Xi Jinping deliberately set out to sicken the world. [38] The key word here is “deliberately”. The word speaks to the image that President-for Life Xi likes to furbish: Machiavellian, all seeing, a world statesman. But there is also the evidence of paranoia: US Secretary of State Mike Pompeo calls it “Beijing’s coronavirus disinformation campaign”- disinformatzy is what the USSR did with the western media during the Cold War – as illustrated by the trope that the virus was American in origin. Worse, the evidence is also there of the regime’s incompetence: its suppression of information, its threats to medics who ring alarm bells, its lockdown in China but its open travel to neighbours and the rest of the world.

The conclusion is simple: the epidemic is a disaster for China’s image abroad, and suggests that it does not protect its own citizens. If Xi is to mend fences at home and abroad, he is well advised to accept, immediately, an international body with a mandate to report on what happened in Wuhan. That could be a pathway to shifting from his preferred Hard Authoritarianism to a more reform friendly Soft Authoritarianism, and even to Semi-Democracy à la Singapore. Don’t hold your breath.

 

 

 

[1] Henry Kissinger, On China, , London, Allen Lane, p.32.

[2] Ho, Pingti, The Population of China, Harvard University Press, 1959, p.249.

[3] Jung Chang, Jon Halliday, Mao: The Unkown Story, London, Jonathan Cape 2005.

[4] The Tiananmen Papers, introduced by Andrew J.Nathan, The Tiananmen Papers, Foreign Affairs, January-February 2001, Vol.80.No.1. pp.2-49.

[5] Quoted in Stanley Rosen, Gary Zou, The Chinese Debate on the New Authoritarianism (1), Chinese Sociology and Anthropology, Winter 1990-91. p.5.

[6] Quoted in Willy Wo-Lap Lam, China after Deng Xiaoping, Singapore: Wiley,1995..p.385-6.

[7] Quoted by Andrew J.Nathan in, The Tiananmen Papers, Foreign Affairs, January-February 2001, Volume.80.No.1. pp.2-49.

[8] Richard Baldwin, The Great Convergence: Information Technology and the New Globalization, (Cambridge, Mass., Harvard University Press, 2016),p.1.

[9] “China:Foreign Investment”, Oxford Analytica, February 5, 2001.

[10] Francois Nicolas, “L’irresistible ascension de la Chine en Asie orientale”, Politique Erangère, 2/2004.pp.269-284.

[11] “How to navigate the US-China trade war: global supply chains at risk as the two biggest economies seek to decouple”, Financial Times, February 28, 2020.

[12] https://storybookreview.wordpress.com/2011/08/15/china-in-the-global-business-system-wrecker-or-stakeholder/

[13] John Meersheimer, The Tragedy of Great Power Politics, New York/London, Norton, 2001.

[14] Thomas J. Christensen, “Chinese Realpolitik », Foreign Affairs 75, No.5. (September-October 1996), p.37.

[15] Henry Kissinger, World Order: Reflections on the Character of Nations and the Course of History, London, Allen Lane, 2014. p.7.

[16] Graham Allison, Destined for War : Can America and China Escape Thucydidedes’ Trap, Scribe, Melbourne/London, 2017. p.184.

[17] Juan J. Linz, “An Authoritarian Regime: The Case of Spain”, in Cleavages, Ideologies and Party Systems (eds. Eric Allard & Yrjo Littunen). Helsinki: Academic, 1964.

[18] Robert Conquest, Reflections on a Ravaged Century. New York/London, Norton, 1999.p. 74.

[19] Deng Xiaoping, “The necessity of upholding the four cardinal principles in the drive for the Four Modernisations”, in Major Documents of the People’s Republic of China, Beijing, Foreign Language Press, 1991, p.49.

[20] Cited in Samuel P Huntingdon, The Clash of Civilizations and the Remaking of World Order, Simon and Schuster, New York, 1996.p.231.

[21] William Overholt, China: The Next Economic Superpower, Weidenfeld and Nicholson, 1993.

[22] Richard Bernstein and Ross H. Munro, The Coming Conflict, New York, Vintage Books, 1998 p.42.

[23] Sung Ch’iang et al, Zhongguo keyi shuo bu (The China That Can Say No) Beijing: Zhonghue gongshang lianhe chubanshe, 1996.

[24] Qiao Liang and Wang Xiangsui, Unrestricted Warfare, Beijing: PLA Literature and Arts Publishing House, February 1999, http://www.cryptome.org/cuw.htm

[25] Rosalie Chen, “China Perceives America: perspectives of international relations experts”, Journal of Contemporary China (2003), 12(35), 285-297.

[26] Analysed  by S.J.Noumoff, in “The Significance of the Chinese People’s Liberation Army White Paper”, China Report 41: 3(2005).

[27] Christopher R. Hughes, Interpreting Nationalist Texts: a post-structuralist approach, Journal of Contemporary China, (2005), 14(43), May, 247-267.

[28] See Yan Xuetong, “The Rise of China in Chinese Eyes”, Journal of Contemporary China (2001), 10(26), 33-39.

[29] Department of Defense, Annual Report to Congress: Military and Security Developments, Involving the People’s Republic of China. 2019. China Military Power Report pdf.

[30] Final-China-Technology-Report 6-8-18.pdf.

[31] Suisheng Zhao, “Chinese Intellectuals’ Quest for National greatness and Nationalist Writing in the 1990s”, The China Quarterly,  No.152. December 1997.pp. 725-745.

[32]China to Invest Big in Made in China Strategy”,  The State Council, Xinhua, October 12, 2017.http://english.www.gov.cn/state_council/ministries/2017/10/12/content_281475904600274.htm

[33] Jacques Martin, When China Rules the World: The End of the Western World and the Birth of a New Global Order, London, Penguin Books, 2009,

[34] David Shambaugh, China Goes Global : The Partial Power, Oxford University press, 2013.

[35] David Shambaugh, China’s Future, Polity Press, 2016.

[36] Minxin Pei, China’s Crony Capitalism: The Dynamics of Regime Decay, Harvard University Press, 2016.

[37] Stephen Krotkin, Realist World : The Players Change, but the Game Remains, Foreign Affairs, July/August 2018.pp.10-13.

[38] Ben Lowsen “Did Xi Jinping deliberately sicken the World? PRC moral turpitude forces us to consider the unthinkable.””The Dpilomat, April 15, 2020.

About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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