Post #159: China From the Inside Out

China’s Moment?

Who would have imagined that in the week of Donald Trump’s inauguration, China’s President Xi Jinping would tell an international audience that while one major country seems ready to engage in trade protectionism and perhaps bring on a trade war, China remains deeply committed to globalization, not only with respect to trade and investment but also to fighting climate change. (The speech was at the annual Davos World Economic Forum[1] of the rich and powerful; see www.theguardian.com/business/2017/jan/17/china-xi-jinping-china-free-trade-trump-globalisation-wef-davos.)  That is how our world is changing with the Trump shock, which has given China an unusual opportunity to exert global leadership.

The opening for China is wide thanks to several developments abroad and in the United States: Trump’s rejection of the Trans-Pacific Partnership and possibly also of the Paris Agreement on climate change; China’s wooing of the Philippines despite losing its legal case in the South China Sea dispute; costly US failures in the Middle East; and Trump’s travails on US-Russia relations.  Beijing’s party elite can also claim that China’s political stability and steady economic growth measure up well against America’s unpredictable and unpopular new president, fracturing democracy, racial violence, and high crime rate. What more perfect scenario could there be for China to claim international leadership as a globally “responsible power”?

But there is more to the story.  For one thing, China’s embrace of globalization is only partial, as Elizabeth Economy demonstrates (www.foreignaffairs.com/articles/china/2017-01-22/beijing-no-champion-globalization).  Moreover, in some areas of foreign policy, China falls short—such as creating alliances, restraining North Korea, overcoming historical grievances with neighboring countries, and abiding by international legal norms.  The chief obstacles to its acceptance as a great power, however, lie within.  Xi Jinping, like Mao Zedong, believes the key to international status and power—and to the communist party’s own legitimacy and longevity—is maintaining domestic stability, which for Xi means delivering sustained prosperity.  While Beijing can boast of several major domestic accomplishments in recent years—reduction of the poverty rate, ending of the one-child policy, consistently high growth rates, modest legal reforms, and investments in renewable energy—its leaders have reason to feel insecure about the future and about China’s international influence.[2]

Following is a rundown of recent developments:

Politics and Leadership

  • Xi Jinping has been amassing personal power by acquiring new titles and concentrating real authority in various special groups rather than in the cabinet and ministries. Abandoning the supposedly established principle of collective leadership, Xi’s personalized rule—cemented at a party Central Committee gathering last October, when Xi was called the “core” leader—has inspired charges of Mao-style cultism.  In practical terms, Xi will be the unchallenged leader during a second five-year term to start this year; and he will be able to hand-pick replacements for five of the seven people who are retiring from the all-powerful Central Committee politburo standing committee.
  • Communist Party rule has been further cemented by the issuance of guidelines for lawyers and media designed to ensure conformity with the party line. Party directives to media in 2016, for instance, stressed not reporting negative images, such as of party leaders, public health and safety accidents, and scandals (http://foreignpolicy.com/2016/12/16/all-the-news-unfit-to-print-what-beijing-quashed-in-2016/).
  • In Hong Kong, China’s promise to maintain the open political system keeps deteriorating. Candidates for election to the city’s Legislative Council must now swear to uphold the view that Hong Kong is an “inalienable” part of China.  (A few of these candidates nevertheless were elected recently, and then summarily removed from the Council.)  The roughly 1,200 members of the Council just (s)elected a pro-Beijing chief executive over a much more popular candidate, demonstrating that Hong Kong’s “high degree of autonomy” continues to decline since the Umbrella Movement in 2014.

Law and Society

  • Human rights and civil society are under assault. The Xi Jinping leadership is jailing lawyers and labor leaders, and abducting and repressing journalists, historians who defame Mao (such as Yang Jisheng, author of monumental works on the Great Leap Forward famine and the Cultural Revolution), book sellers in Hong Kong, and publishers. These acts clearly violate due process of law and limit freedom of speech and movement; but they also usually succeed at silencing critics.
  • Prospects for deeper legal reform that would embrace the principle of an independent judiciary took a major hit when the supreme court chief justice, who has sought to strengthen the legal profession, declared: “We should resolutely resist erroneous influence from the West: ‘constitutional democracy,’ ‘separation of powers,’ and ‘independence of the judiciary’” (nytimes.com/2017/01/18/world/asia/china-chief-justice-courts-zhou-qiang.html).
  • Xi’s anti-corruption campaign has netted numerous violators; but it also clearly has a political purpose as well inasmuch as the campaign has not targeted the families of the party elite—the so-called princelings, of whom Xi is one.
  • Crime and punishment are heavily politicized. One recent case, involving a poor peasant who was executed after he killed a village chief in retaliation for the demolition of his home, has sparked angry criticism of the Chinese Communist Party for giving the harshest sentences to the least powerful in society.  The most corrupt officials never get a death sentence (nytimes.com/2016/11/21/world/asia/villagers-execution-in-china-ignites-uproar-over-inequality-of-justice.html).
  • That case is linked to the larger issue—as large as official corruption for many Chinese—of sales of people’s land by local leaders to developers, with little compensation. Such sales are important sources of income for local governments.  People who protest are likely to wind up in jail, like the nine villagers of Wukan, where protests over land grabs have been going on since 2011 (http://chinadigitaltimes.net/2016/12/nine-imprisoned-ten-years-2016-wukan-protests/).
  • “Rule by law” is often something of a farce considering the Orwellian charges used to jail dissidents and activists, such as “subverting state power,” “picking quarrels and provoking troubles,” and “improper discussion of the Center’s policies.”
  • Labor strikes and protests doubled in 2015 over 2014 as troubled state-owned businesses in manufacturing, mining, and construction either closed down or denied workers promised benefits. The government has alternately responded with force and payouts; but it is likely to face even more labor unrest in the future as the state-owned sector shrivels (nytimes.com/2016/03/15/world/asia/china-labor-strike-protest.html).
  • Official warnings about the dangers of “foreign influences” remind some of the Cultural Revolution. NGOs and NPOs have come under new restrictions, and universities are undergoing political surveillance to ensure conformity with the party line. Foreign journalists are often followed and harassed (Melissa K. Chan, “Reporting from China,” International Journal of Communicationhttp://ijoc.org/index.php/ijoc/article/view/5155/1976).
  • Chinese authorities have also tried to “export” suppression of civil liberties. For instance, they have successfully pressured Thailand and Malaysia to prevent pro-democracy speakers from China, such as a newly elected young Hong Kong legislator, from entering their country, and to deport Uighur refugees seeking safety  (nytimes.com/2016/10/05/world/asia/joshua-wong-thailand-hong-kong.html).

The Economy

  • Capital flight is becoming a serious problem: outflow from overseas investment and individuals’ movement of their money abroad significantly exceeds inflow from foreign investment. Xi, despite his glowing endorsement of globalization, would have it otherwise.  As Economy writes, China “sets sharp limits on capital outflows from China and restricts opportunities for foreign technologies to dominate the Chinese market or, alternatively, forces technology transfer from foreign firms to Chinese companies.”
  • The rich-poor gap in China now exceeds the gap in the US. The top 20% of Chinese earners have received nearly half of total income while the poorest 20% of earners account for 5% of total income. (Ian Talley, “China Is One of the Most Unequal Countries in the World, IMF Paper Says,” Wall Street Journal, March 26, 2016.)
  • The economy’s extraordinary rise masks serious weaknesses that raise questions about its long-term sustainability. High growth rates are a thing of the past; “the new normal” is more moderate growth. The weaknesses are of long standing, and include resistance to deeper reforms at the top as well as at the grassroots; the financial viability of state-owned enterprises, which contribute very little to the overall economy despite state protection; employment for well-educated young people; a looming debt crisis that threatens the banking system; overvalued and overbuilt real estate; a new materialism linked to very un-socialist values; large-scale internal migration; and a rapidly aging society.
  • To avoid what leaders fear most—“instability”—will have to address the rapidly rising cost of internal security, as well as significant annual increases in the military budget.

Energy and the Environment

  • Greenpeace reports that China, while promising to draw 20 percent of its energy from renewable sources, is in fact continuing to construct coal-fired plants—on average, one plant a week until 2020 (nytimes.com/interactive/2016/07/13/world/asia/China-Coal-Power.html). But this month China’s National Energy Administration announced that 103 coal-fired plants scheduled for or under construction had been cancelled, probably due in part to overcapacity but also to the five-day red alert in December as coal burning caused toxic smog in over twenty cities. The commitment to coal, especially at local levels, is undermining wind farms, in which China is a world leader.  Wind energy is underutilized, due to coal use and the fact that many wind farms are located in the far west, too far for economical transmission of electricity to the energy-hungry east (www.nytimes.com/2017/01/15/world/asia/china-gansu-wind-farm.html).
  • As has long been observed, China faces a water crisis: “Four hundred Chinese cities now face a water shortage. One hundred and ten cities face a severe water shortage. This is a very serious problem,” says Liu Changming, a retired hydrologist with the Chinese Academy of Sciences in Beijing. One small Chinese city in Gansu Province, out in the northwest, has actually run out of water (marketplace.org/2016/04/21/world/warning-parched-china-city-runs-out-water.
  • Serious problems in China’s nuclear power industry have come to light: sixteen safety incidents at eight plants in 2016. (China will soon have 35 plants in operation.) Chinese experts say that the problems are ultimately political: too much pressure from party officials on too few well-trained nuclear technicians, resulting in lack of transparency on safety matters and inadequate inspection of plants (rfa.org/english/news/china/concerns-01092017121057.html).

Gloating or Cooperating?

In short, China has achieved amazing overall economic growth with political stability, but it has not set an example of superior governance or sustainable economics at home. It remains quite a distance away from realizing the “China dream,” becoming a development model for Third World countries, or standing as an example of humane governance.  In fact, in some respects—such as wealth and income inequality,  ethnic repression, destruction or waste of natural resources, erosion of countervailing institutions, and now especially the meaning and future of accountable governance—China faces problems similar to those faced by the US and other Western countries. But given the size and diversity of China’s population, the scale of the problems is less manageable; and given China’s closed, top-down political system, popular pressure for change is seldom effective.  As Francis Fukuyama recently wrote, China has a strong state but lacks two other major ingredients for effective governance: rule of law and democratic accountability (http://fsi.stanford.edu/sites/default/files/fukuyama_feb.16_wp_0.pdf). It also lacks a value system that might promote social cohesion, as Wang Jisi writes (“Inside China,” Global Asia, vol. 5, no. 2 [Summer, 2010], p. 8).  These deficiencies can be papered over for a time, but they cannot be overcome merely by pumping up GDP, punishing corrupt officials, or feeding patriotic fervor.

Americans have no reason to gloat, however.  The Chinese have problems, the US has problems, and the best way to get along is for each country to focus on its own problems while also, when possible, collaborating on matters of common concern such as climate change and renewable energy.  On the other hand, if the approach of both countries’ leaderships is to test the other’s “resolve” on issues such as the South China Sea, trade deficits, and human rights, rest assured the Cold War will resume just as it already has resumed in Europe.

—————–

[1] For background, see my Post #63, Davos: The One Percent and the Rest.

[2] Also see Post #111, Broken Rice Bowls.

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4 Comments

  1. Excellent Professore! A+ Two more issues: development strategy in Africa and treatment of religions. On the last front there was in interesting article in NYT on Xi’s promotion of Buddhism to improve the morals of the party cadres and others. A complex big show but the Trumpets opened the door to China’s expansion of global leadership. Now we watch the two sound and light shows.

    At least China does not start wars of choice all over the world.

    ________________________________
    ROBERT WISE, Associate Principal
    503.278.3454 | http://www.coganowens.com

  2. Hi Mel. Excellent article. We’ve been in China for five weeks, one more to go. Three in Guangxi and two in Jiangsu and Zhejiang. My impression is that the folks on the street seem farther from large scale instability than their counterparts in America. Folks seem too entrenched in either keeping their rice bowls intact (those at the lower end) or getting ahead while enjoying the fruits thereof. The armies of Chinese tourists we’re seeing do not seem likely to rock the economic boat. People complaining about traffic while driving their own late model cars do not look like candidates for upsetting, let alone overturning anything. It just doesn’t have that feel, and it’s hard to imagine it getting that way, without a crushing economic disaster. Roger

    Sent from my iPad

    >

  3. Thanks for a post that compresses so much information re: current conditions in China. One question: As land grabs occur, favoring developers, what happens to the people kicked off their land? Are they forced to migrate to cities for work, losing homes where they have residential registration

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