How much substance around China-related issues should we expect from the G-7?;
In yesterday’s newsletter I commented about “China to build Zhejiang into demonstration zone for common prosperity - Xinhua” that “Xi means it when he talks about Socialism." That got some pushback from several readers, as the PRC economy does not look very Socialist. My point is not that it is now, but that Xi wants it to be, and that if that is the case we should think about what other economic and social “reforms” he may try to push through;
What should we expect from the Zhejiang “demonstration zone for common prosperity”?;
How can China fully reopen its borders if it insists on zero cases? I originally thought the borders would only really start opening back up after the 2022 Beijing Olympics, but now I think it may take much longer. And if it does, does Xi see that as problem or a benefit?;
Are the US and European economic policy responses to the pandemic the cause of inflation in China, as some top voices are suggesting? ;
I just finished watching the Sima Nan interview, and he talked about the socialist development model being to let a portion of the population become wealthy first, and then introducing measures to make it wealthy for the whole population. He contrasted this with capitalism, where there is a small group of the wealthy who want to keep their wealth, and not share it with the rest of the community. The main emphasis is on community development and shared resources.
He briefly talked about this as a development model which China would introduce to the rest of the world.
To me, it sounds like a Chinese version of the Scandinavian development model. It is a capitalist development model, with emphasis on community and shared resources, with certain benefits coming from the government. In terms of wealth, no one is very wealthy, and everyone has generally the same amount of wealth.
Sima Nan 司马南 is a Beijing commentator I frequently watch on YouTube. In this episode he talks about the Common Prosperity Model Community for Zhejiang, and frames it in terms of a final realization of socialism, and socialism entering a new period of prosperity. He uses Deng Xiaoping's quote of some people becoming wealthy first, and then others becoming wealthy later. Now that China is prosperous, it is taking care of all levels of society. If your Chinese is good, it is good to watch: https://youtu.be/WKAh_Vge1wE
It would be a very high risk strategy for anyone that did advocate democracy.
I can only think that it would happen if the party was feeling particularly weak, which I suppose would be due to some catastrophic failure of policy like a failed invasion of Taiwan. Otherwise, somewhat of a long shot.
I am also fascinated by the question of how (if?) the CCP will eventually climb down off its zero COVID posture once enough of the population had been vaccinated to prevent another Wuhan. It seemed like they would need to eventually; but perhaps Xi will enjoy the even more granular level of population control offered by the COVID restrictions too much to let them slip so easily?
I cannot agree more, this is about enhancing control over the population. Keep China sealed off from nasty foreign influences. China has been closed for 1.5 years, no foreigner in or Chinese out on foreign trips, and things are not falling apart. A grand experiment and return to 1978 China.
I also go along with Bill on the view that Xi is a true believer in socialism. On the one hand it's true that he will espouse Socialism with Chinese characteristics and also that he will do what he thinks is best for China. But his definition of what is best for China is, I think, highly conditioned by his faith in socialism. There is a quasi religious element here that I think we ignore at our peril.
Doesn't Xi have a favorable precedent to point to in Lenin's New Economic Policy a form of limited capitalism for farmers and small businessmen which restored the Russian economy in the early 1920s when it needed help. It was declared acceptable as necessary by the leadership and brought to an end when it showed signs of excessive success. The scale was nowhere near Chinese capitalism as it is now is but it's certainly a useful socialist precident for bending when needed target. and it justifies a temporary departure from The One True Way.
The ending of the policy was not pleasant for those who had been the "NEP men. i.e. the capitalists
Early in reform, when Deng made favorable speeches about the Wenzhou (Zhejiang) "model" of private ownership, which was technically illegal at the time, he was opening the door to entrepreneurial reform.Zhejiang people flourished.
In the midst of his surveillance state, I have a hard time believing Xi is giving a mid to private wealth.
Good point. Of course, China is far, far beyond the NEP, but on the other hand Jack Ma and some others have begun feeling a bit like those old NEP men.
The question is really how hard he will Xi push this line? I really don't see China as an existential threat to the US in the near future. This decade will really be more about US internal political and social strife and change, and Americans trying to reach consensus about those issues.
If anything, the danger lies in both sides framing the issues in religious terms of good and evil (on the US side by the mainstream media (Fox, MSNBC, CNN, Clear Channel, etc and certain China watchers), when it is really about certain areas of conflicting interests (Taiwan, conflicting business interests around supply chains, and decoupling the global economy from the US$, and international influence). in other areas, (chip-making, electric car exports, etc.), there will be intense business competition.
Recently, it looks like Xi wants to dial back the wolf-warrior rhetoric against the US because he realizes it may be counterproductive to Chinese interests. Some US influencers and media see a strong anti-China stance as an easy position which can draw Democrats and Republicans together, and distraction from their many disagreements. The Chinese wolf-warrior rhetoric fed this position, providing free ammo for them to position China as an existential threat to the US.
I don’t agree, Paul, on the issue of economic coercion. The price of engagement of any sort with China (primarily economic) is political submission.
The main issue is will free and open discussions about justice, about who we are and want to be, be allowed to continue in the world openly (the liberal or rules-based order or whatever one calls it), or will all discussion everywhere be required first and foremost to be an expression of fealty and submission to Xu (as it is in China, and as Xi is pushing for everywhere). In other words, voluntary cooperation or forced submission.
It turns out it’s not true that China didn’t issue the 12 demands to Australia, or that it didn’t bully the NBA or many other companies, or just pass laws sanction policymakers, or that business executives don’t self-censor, and on and on. It’s not true that it didn’t do any of those things or that none of these happen, unfortunately. We can say we think it’s a good thing or not a big deal, it we can’t say that none of them happened. So we should be open about that.
One may not consider free and open debate about how we live our lives to be an existential need, of course—we could all go grand inquisitor in the brothers karamazov for sure :). But what I’m disagreeing with in your post is the idea that that wouldn’t fundamentally change who we are (in democratic nations, obviously), and we should be very open about that to make sure our policy and identity discussions are honest and complete.
I agree with this insight. Indeed, I more than agree with it. I have watched my long time friend Jimmy Lai go to jail because he believes in free speech and was willing to stay in Hong Kong to fight for it. I have worked closely with Apple over the years and helped Jobs when he was just beginning. It is difficult for me not to feel today that every iPhone produced by Apple in China is a nail in Jimmy's coffin. We must be completely honest and realistic with ourselves in considering where coupling with China eventually ends.
Proud to be in discussion with a friend of his. And sad that the engineers of justice can no longer (as they could since ww2) count on solid backing. The bad old days of human history are back 🤣
With respect, I wonder if "one size fits all" doesn't obscure or confuse the fundamental issue. There are in existence many sizes and systems living already living in relative peace with each other. Singapore is not the UK or the US. But no one is afraid of or complaining about its system and how to deal with it. Similarly with india and even, in terms of system, with Iran. But the CCP has declared in the infamous Document 9 that it actively opposes constitutional democracy, free speech, rule of law, and the concept of universal human values. Not only does it oppose them, but it operates an enormous domestic and international surveillance and propaganda machine to stamp them out and counter them. The richer and more powerful China becomes the more able the CCP is to succeed in these aims. It is difficult to see how free world countries can do anything but oppose this pressure.
China has always been a large civilization which has developed largely on its own terms mainly because of relative geographical isolation and outlook; for a long time, Chinese emperors were just not convinced that the rest of the world was worth bothering with. The nations on its periphery were smaller(Korea, Vietnam and Japan) and felt culturally indebted to China. Modern China, the PRC, has combined features of Chinese imperial government, Marxism, capitalism into its own system of government under a revolutionary party which never made the transition to a ruling national party, and assumed the role of a social vanguard party in order to justify its monopoly on power. My view is that western and Japanese aggression against China, and an ineffective KMT lead to the creation of the CCP. It took 150 years, but the west and Japan created their own Frankenstein monster with the CCP.
The question we are now facing is what will this Frankenstein do? Will it be focused on its own region as China traditionally has been, or will it be expansive? Is its system of government exportable to other nations? Right now, I tend to think that the CCP's rise, and Xi's rise, are a set of unique historical conditions unique to China. Of course, I could be completely wrong.
In 19th century Europe, the US and its Declaration of Independence were considered to be a strange experiment in mob rule destined to eventually fail. In the 20th century, the US won two world wars and its largest single challenger collapsed under its own weight. Instead of being a political experiment, the US's values were widely embraced by the rest of the world. Even China looked up to the US until the 2008 subprime mortgage crisis.
My point is that if China is going to export its system, it most likely will have to pick a few fights and win them. Is Xi the person to do that? If he does take that path, he will have to convince Chinese that war is the only way for China to win recognition as a global power. That is not an easy sell.
The point is that Xi is trying to enforce CCP political norms on everyone else (say, free and open discussion of political questions which is a western norm would not be allowed by Xi, a la Australia). As I mentioned, it’s unfortunately not true that he didn’t issue those demands to Australia.
So I think your question is wrongly stated—it’s not how far are we willing to go to impose our norms on China, it’s how far are we willing to go to protect our own domestic norms FROM the CCP.
I think the first step the US can make in resisting Chinese demands (if they come up) is to get US domestic policy in order.
I don't see broad consensus among the two parties in the next decade on policy. This internal division is the greatest gift to Xi. The flip side is that treating China as the main enemy becomes the only issue two parties which hate each other can agree upon, which is not good for the world.
Xi's style is drum up support for his policies through leadership task forces 领导小组 where trusted colleagues lead the discussions at the party level, and forming study groups at the senior level to initiate discussion and collect input. One example is Liu He, who is leading trade discussions with the US. Once the policy is broadly agreed upon, they are pushed out to the central government ministries for implementation.
Chinese central government ministries fight a lot over turf; each one has their own think tank which write white papers and publishes them seeking broad support. In simple terms, they hate each other and won't work with each other if they are left to do things themselves. It's a lot like Congress in the US.
Xi's solution has been to work at the Party level because he was head of the Central Party School before assuming his current positions. Since the Party is above the central government ministries, they have no grounds to resist the policies after they have been agreed upon. Their task is implementation.
Historically speaking, the Communist movement has by design promoted the idea of an endless ideological struggle, given its stated end goal of worldwide revolution (though of course in practice this more often worked out to be using international Communist parties as useful idiots to advance Soviet Union geopolitical interests). Setting all other geopolitical considerations aside, as long as the CCP remains deeply Marxist, it is hard to envision any future where there is no profound ideological/political tension between China and the liberal capitalistic bloc.
The word "ideological struggle" is a lot like how the Muslims use the word "jihad". To different people at different times, it has different meanings.
My interpretation of what Xi means by ideological struggle is that through China's opening up and reforms, many Party officials lost faith in socialism as an ideology because the ideology had not been modernized to take into account China's circumstances. This lack of ideological study meant that the whole society just indulged in getting wealthy at any cost. Inside the party, this led to widespread corruption which threatened the stability of the party. Xi had to take firm action on this, as it would have eventually led to China becoming a multi-party democracy, which is exactly what the western powers want, but would have acted against the interests of the Chinese people. Chinese assets would have been carved up and sold the same way Soviet assets were sold off when the Soviet Union ended.
The Party could not and would not permit this to happen, which is why Xi went after corruption in a big way. The ongoing struggle against corruption is a long-term feature of Chinese socialism.
But it is not enough.
The Party is the vanguard party of the Chinese people. This means that it must offer a clear vision for the direction of Chinese society. China cannot fall into the same trap other developed economies have fallen into, which is, that they have become wealthy, and then lost direction, and became stagnant. This happened with the US, Japan and the EU. Made in China 2025, BRI are all major projects and goals for the party which Xi has set forth to make China the world's leading economy.
When it comes to economic policy, everything Xi has done has been about preventing the wealth gap becoming larger without using the sensitive term wealth gap.
It looks to me like Xi is treating China as an experimental lab for socialism; Zhejiang is his latest test project, just as Shenzhen was a test project for his father in 1980. China can adopt features of capitalism, and it must, because it can only become a fully socialist economy when it has achieved a certain level of wealth.
What is Xi's final vision? I don't know, but my guess is that he believes that China can offer a good alternative model for other nations, maybe just as a reference, not for blind copying.
If he succeeds, this ideological struggle would be longer lasting and have much more effect than what socialists from the 1920s were talking about. This is my interpretation of what "ideological struggle" means in 2021 terms.
This stands in stark contrast with the vision of capitalism and trickle-down economics which Reagan and Thatcher offered in the 1980s, and is not attractive to most people outside the US and UK.
This is a worthwhile passage from a Chinese posting on Quora; food for thought:
"There is a saying here in China recently,“we have two mirrors — one is the Soviet Union, the other is the US.”
Mirrors are for us to reflect what kind of mistakes they have made and what kind of traps there might be for us, so we won’t repeat their mistakes and won’t fall into those traps.
By the Soviet Union mirror, we have learned we need to keep reforming, keep opening up, keep a better balanced economic structure, keep serving the people, keep improving our governance, keep fighting on corruption, keep safeguarding our national sovereignty on all aspects including politics, finance, defence, territory, etc., keep enlarging our “friend circle” with more nations across the world……
By the US mirror, we have learned, not to reach out to the whole world as a nasty world cop, instead, focusing on solving our own problems; not to bully the whole world, instead, to cooperate with whoever is willing to cooperate; not to put our national interests above all the rest of the world, instead, to respect others’ reasonable requirements and legal interests, and share profits with all the stakeholders; not to force our development mode, route and values onto any other country, and respect their own choices based on their own history, culture, tradition, etc.; not to shirk our responsibility as one of the major powers in the world, and offer whatever help we can offer to those in need, for example, masks and other PPEs, vaccines, etc. during the pademic……
We Chinese indeed believe in the faith of “Never forget why you started, and your mission can be accomplished,”especially when we have the two mirrors reminding us all alone the way."
This seems deeply self-serving to me on the part of the commentator. A Chinese global superpower will behave much the same way as every other global superpower throughout history (including the US), which is to say always putting its own interests first and not hesitating to use its power in rather ruthless manner in pursuit of those interests.
The notion this poster advances is also undermined by the fact that we can already see the CCP forcing its values onto other countries (the myriad attempts to control discourse re: China in other countries), bullying other countries (too many examples to count), etc. If the intent is to use the US as a mirror towards these ends, it would seem that they aren't doing a very good job of it!
This CBC article is long on heavy-breathing and foreboding about Chinese espionage, and short on specific information about any violations of proper L-4 lab procedures or of Canadian law. It's still not clear whether Qiu and Cheng were fired from the Winnipeg lab for violations of national security or because they (deliberately or not) sent pathogens to China in violation of safety protocols. In any case, there is no link proposed to Covid-19.
Zhejiang is the wealthiest Chinese province, and has the largest number of family-owned private businesses in China (much more than Jiangsu, its neighbor). The vast majority of factories turning out goods in Zhejiang are family-owned.
Private family-owned businesses have played a leading role in China's growth over the past two decades, which is why Chinese leaders have played a very careful game when it comes to their statements about the private sector.
I am very interested in seeing what Xi means by a demonstration zone for common prosperity? There has been a considerable backlash against the ostentatiously rich in China (especially against those working in fashion and media); is Xi planning on using that to trim the power and influence of the private sector in Zhejiang? Does he want private sector companies to become like state-owned enterprises (SOEs)? Is Xi going to kill the goose which laid the golden eggs, at least in Zhejiang?
Earlier Xi went to Shenzhen to mark the 40th anniversary of the SEZ; his father Xi Zhongxun was the first head of the SEZ.
I believe that the official government line is that the SEZ was an astounding success and now all of China is the Shenzhen Economic Zone. This is why the SEZ abolished its border controls (yes, Shenzhen had its own border controls to prevent any Chinese from other regions from relocating to SZ), and the border entry points were dismantled.
The Anti-Foreign Sanctions Law is really interesting. I wonder how implementation will go. It is very broad. Will we see a formalization of unofficial sanctions (boycotts, social media campaigns, etc. against some companies)? I am not so sure because they are useful tools. As for will it deter future sanctions, it may deter full implementation of sanctions, by that I mean more waivers. I don't expect any rhetoric around sanctions to go away. Sanctions are an easy (and overused) tool that make one seem tough. Behaviors rarely change, but it is a great rhetorical tool and an example of "doing something". It could, I suppose, force companies into a position where they have to choose sides. Could we see subsidiaries be exempt from certain sanctions? Would this be a way to possibly square the circle?
As for G7, the text of ministerial statements typically inform the leaders' statement (lots of rewording requested by the NSC on the US side). The Foreign and Development Ministers' Communique was fairly strong. I bet Taiwan is going to be mentioned, along with human rights and COVID origins. Now human rights could be discussed generally - but we will know they are talking about China and Russia. I am sure Beijing will respond with its usual script.
With the signing of the "New Atlantic Charter" yesterday, the potential G7 Leaders' Communique, the discussion of a "D10", and a possible announcement of a Summit of Democracies this fall, I am very concerned about transforming U.S.-China competition into an ideological battle where one side must win. Some Biden administration rhetoric has effectively alluded to this - "democracies must win". Absolutely nothing wrong with strengthening democracy and standing up for what one believes in, but if regime change becomes the ultimate goal, then the relationship will truly become zero sum. Violent conflict will become more likely.
You have hit the nail on the head with the Anti-Foreign Sanctions Law. Past form suggests Beijing will apply it in ways that are neither transparent nor consistent but always politically driven.
The intent is to create uncertainty for multinationals, especially those most vested in China via local subsidiaries. The hope will be that they then create a domestic lobby to influence Washington and Brussels' cost-benefit calculations when considering imposing new sanctions. There will be waivers and exemptions as a result, which will undercut the intended impact of sanctions.
Regardless, multinationals will increasingly be caught between penalties from their home countries for violating sanctions against China and the penalties China can now impose on them for complying.
My take is that the anti-sanctions law is a sword of Damocles which Beijing is hanging over the heads of US companies and their boards. If these companies comply with US sanctions on individuals and companies, they will open themselves up to litigation in Chinese courts, and having their China assets seized as compensation for losses. It means that if they comply with Washington sanction directives, they expose themselves to litigation in China, and unfavorable publicity which might wreck their China business.
Biden's framing of democracy vs. autocracy is not an indicator of a strategy of regime change. It is a call for democracies, and especially for the US, to up their game and deliver good governance. There is no way to avoid an ideological component in US-China competition, and that is as much a function of Beijing and Xi Jinping, as it is of the more recent Biden administration narrative. BTW, the US is planning to hold a Summit for Democracy, not a Summit of Democracies. There is a nuanced difference that I think it meaningful.
Bonnie is right. The U.S.-China competition, indeed, the free world-China competition inevitably has a strong element of ideological competition. We can't ignore that.
100% agree that the United States should up its game and deliver good governance. We should always be aiming to do this, because it is morally right and leads to material benefits. And thank you for that distinction. Very meaningful. Any outcome document and speeches would allow further analysis.
Sure, ideological competition is a function of both sides and can't be avoided - to a degree it is essential to the idea of both countries and baked into our respective policies. I think the danger is what happens if ideological competition turns into confrontation (which already exists at some levels, but is manageable) and how we work with it. There are risks to both sides on this. Perhaps thinking about it is premature, but I rather have a possible set of routes to follow.
Inflation is clearly the result of two independent influences: the ending of the demographic dividend and the commodity boom. Both are the result of policies that have run well past their expiry dates: the one-child policy and the investment-led growth policy. However, it’s important to note that the Chinese leadership is well aware of the need for a rapid turnaround in both. The former has been addressed already with a three-child policy. The latter was addressed by the PBOC at this week’s Lujiazui Forum in Shanghai. The challenge in both cases is whether they can move fast enough.
The first time they’ve addressed the investment-led growth policy will not be at this week’s forum. It was in a 2007 Wen Jiabao speech (and as early as 2000 from the leasing economist of the reform era Wu Jinglian). Xi getting his own family and the Deng’s and the Chen’s and the Peng’s to give up most of their wealth and SOE equity (ie rebalancing away from investment) is a tough not to crack.
All signs currently point to the Beijing Olympics copying Tokyo and banning overseas spectators from coming in to watch the Games next February. Tokyo provides the perfect excuse for China to refuse entry to foreigners - even if things go well in Japna from a COVID perspective (and that's a big if) - and there's just no reason why China would take that risk when it has been incredibly risk averse during the entire pandemic. 382,000 foreign visitors came to Beijing for the 2008 Olympics, so the expectation would be about a 1/3 of that number would come next year given that the Summer Games are 3x larger. But the tens of thousands who do come in regardless (athletes, coaches, officials, media etc) will provide a clue as to how/when China will partially or fully re-open its borders. The talk here now is that that will happen after the Party Congress in late 2022, but to be honest everyone is just guessing, and the "forced" entry of all those people for the Olympics will make it clear whether that's realistic or acceptable from China's zero risk perspective.
mark, you may well be right, but a bit of a bummer for beijing. a large part of the plus side for holding the olympics is their propaganda value. lots of visitors to be filmed admiring the wonders of 2022 chinese socialism. but if they ban spectators, will they limit the foreign tv crews? and even if they don't, will foreign tv stations want to send crews to the olympics when there are no spectators and fewer opportunities for programmes wider than just the events themselves? why not just save money and take the chinese coverage of the events themselves? some of us have been urging not a boycott of the olympics but a boycott of attendance by vips and fans, in order to ensure no opportunity for ccp propaganda. by banning spectators, the ccp would achieve that for us, with no cost.
I honestly don't think coverage will be affected. The main sports coverage is provided by the IOC, not CCTV, NBC or anyone else, so it will just focus on the events themselves and broadcasters are now used to showing events without fans - they just slightly adjust the angles, so you don't see empty seats. There could still be domestic fans in attendance, but I don't think there's a whole of propaganda value to be had there - unlike in 2008 when China won 51 golds, they won't win too many next year, so don't expect too many shots of celebrating Chinese fans (Opening/Closing Ceremonies aside). Given the wider context of these Games and the pressure to "tell the full story", though, I think there will be plenty of foreign TV crews doing more political stories away from the venues.
I still believe the Olympics present a tremendous opportunity to require demands that the CCP must satisfy in order for the US & allies to show-up. It's a fancy adult dinner party (whereas 2008 was a coming-of-age party), and the CCP will want perfect attendance by all nations and absolute flawless execution. Lots of "Face" is on the line. We should use it. #leverage..... Here's an op-ed I wrote about this idea recently for Smerconish/CNN: https://www.smerconish.com/exclusive-content/americas-leverage-with-beijing
Any country that insists on using a metric of "zero cases" for a reopening will never reopen. Even with the miracle of highly effective vaccines, and especially with the less effective vaccines used in China and most of Asia, zero cases is a mirage that will never, ever happen. It is like saying that nobody will be allowed to drive until there are zero road fatalities, or that we will stay closed until we have zero cases of the flu. As bad as our approach to COVID has been in many cases, the more American idea that this is about bringing down numbers to an acceptable level of risk is a fundamentally better idea than the unrealistic notion that this is about bringing things to zero.
I doubt that Xi sees this as either a problem or a benefit. The control-freak tendencies of the CCP are hardwired into everything that they do. You can't control a virus so their paradigm is that it must be eliminated entirely. This strategy looked better than the American one pre-vaccine but it is a fundamentally bad approach for the future.
In my opinion, I don't believe Xi envisions middle class development of Zhejiang and then all China within a Western capitalist framework. Xi has enhanced the power and broad economic control of SOEs as the way to spread the benefits of Chinese socialism since taking power. From the view of the CCP, the private sector belongs to the state. It is not a "free system" driving growth, merely in need of regulation and "guidance". What ever PR program is launched in Zhejiang it won't be aggressive free markets run by private ownership.
We should remember the slow tortuous path Deng's Four Modernizations took to catalyze early reforms. And I believe Deng trusted the marketplace to make intelligent economic decisions about modernization and growth. It was always powerful Maoist views and party interests that pushed back.
Xi, if anything is Mao in a Western business suit.
Perhaps we are seeing a new version of Socialism with Chinese Characteristics. My idea is that both the US and China will need to spend the next couple of decades on social capital - health care, pensions, education. Zhejiang is an excellent province in which to run some tests. This has to mean money for primary schools, health care and insurance, and a trustworthy pension system. I believe Shaoxing enacted a pension system for farmers about six or eight years ago. It was pretty small, though - a thousand or couple of thousand yuan a month. Zhejiang has completed (I think) reconciling the university pension system so that it is part of the provincial system. Before, each school had its own pension system. There was insurance for farm crop
losses, but a lot of farmers didn't buy it. And typhoons are pretty common.
Dunno if it would make sense to make it mandatory somehow - although that
would probably have to cross provinces to make it stronger. The list of illnesses
covered by rural health insurance is pretty short - could greatly expand that
with heavy subsidies. As it is, urban areas generally provide social services for their residents, and rural areas do the same. Perhaps greater services in rural areas fit with Xi's overall centralization ideas, and the central government will help Zhejiang with new social service costs.
Super interesting questions—putting aside the soe share of the economy which to me is the most pressing issue, to focus on other (still very crucial) issues, to what extent is there room for “better governance” somewhere like Zhejiang? In terms of healthcare, social security, hukou, rural land rights, etc.
In other words, creating benefits through efficient administration and incentives and policy and anti corruption versus resource reallocation from the soe sector.
There are - or at least, were, up to about 2014 - plenty of local government experiments in better governance and service provision. These had to do with citizen comment and complaint procedures and greater efficiencies in service provision. One experiment, the Yantai experiment in Shandong, has been copied in Zhejiang and elsewhere. In 2014 I wrote a paper on changes to government land use policies that was published in the Zhejiang Province School of Administration Journal (CCP Party School Journal). Couple of paragraphs from that august work -
The Chinese government has learned to respond to the wishes of the people, in some cases better than in others. In general, one expects that the higher the level of government, the more sophisticated the leadership, the less tied for promotion to enhanced local GDP, the more willing leaders will be to listen to the local view.
Zhejiang Province is a key example. Rich, experienced, open to the world, and innovative, Zhejiang has long been in the forefront of administrative reform in China. The Zhejiang model of land reform, allowing for transfers of development rights (TDR) within and between local governments, is well known (Wang, Tao, and Tong, 2009). And more recently, Haining has been selected as a pilot for land reform, allowing mortgages of village property and sales of farmer land to those outside the village; and Wenzhou has established a “rural property rights service center, that in theory allows sales of village land to citizens from within the county.
As far back as 1995, the Yantai Service Promise System, in Shandong Province “drawing on the New Public Management approach to administration,” represented a serious attempt to make the bureaucracy more customer oriented and professional (Foster, 2006). Fifteen government departments were required to provide service delivery promises to citizens, and the local government leaders appeared to consider citizen complaints and survey results quite seriously in individual leader evaluations.
A version of the Yantai system was begun in Jinhua in 1996,
and in Wenzhou, in 2003. Other cities – Beijing, Guangzhou, and others - have implemented more open communications with citizens, and provided a survey mechanism to review the performance of government departments.
....
I haven't kept up on this. Experimentation is most certainly not dead, but I don't know how much it is pushed now.
Constructive criticism: your stuff strikes me as reform era heavy. Now that 60-75% of the economy has been privatized (depending on whether you use academic or financial sources ifaict), and a sh**on has been invested in infrastructure, what other reforms will Xi do?
Zhejiang has many small (1-5M population cities; small by Chinese standards) cities which have many factory employees from other parts of China. The big question will be how to deal with these migrant employees? This boils down to making changes in the hukou registration system which disallows migrant employees from getting local benefits such as education and healthcare. It will be interesting to see if Xi proposes changes to the hukou registration system so that migrant workers are able to tap into the local hukou system.
The demographic disaster has been building for many years, obviously, and researchers are certainly aware. But pension problems are even more immediate (what with stolen and misappropriated funds - how like American private equity in corporate takeovers!) and China cannot afford the unrest from unpaid promised pensions. Raising the retirement age will help a little. Social services are provided by provinces, mostly. The central government had to take over pension in dongbei, the northeast, because of mismanagement, the decline of manufacturing companies in the northeast, and the early retirement of workers circa 1999 in the fiscal crisis. Perhaps some nationalization of pension systems either fiscally or administratively or both would help. So would reallocation of funds from physical infrastructure to social capital - the Chinese equivalent of "build one less B1 bomber." I think health care could be a big problem (as it is in the US). The benefit to the government is that rural people's expectations are so low that some improvement in coverage will be welcomed. My crystal ball is not working right now, but my guess is that Chinese foreign involvement in capital projects will have to be curtailed a bit over the next couple of decades as the various social funding crises start to bite.
I think you hit the nail on the head here when you said capital investment will have to be curtailed in the extreme if they want to dramatically increase social services to be more on par with developed nations.
As ever with China in my opinion, the political economy question is ignored, and due to the successes of Chinese policy in the past several decades, whatever pronouncements are made, it’s taken as gospel that they’ll be achieved. Of course, it would be amazing for the people there if Zhejiang really could become a prosperous, modern, developed area in its entirety (I lived there! Love that place, and some of the most independently minded people in China IMO, really enjoyed it), but being honest about what that takes isn’t equivalent to hoping it doesn’t happen.
The two obvious questions are state-owned enterprises and political power. 25-40% of the economy (the state-owned portion, as always I’m open to more exact numbers, 25% is the number I see academically, 40% in financial articles) is state owned and currently spent on infrastructure projects, so it’s possible that connecting Lianyungang, and Yancheng, and Huaian in Jiangsu to the 300 km/hr rail network (up from the 200 one now) is absolutely vital to the development of those areas, and that’s what’s holding those areas back, but there’s no discussion of that (I use them as examples, I can’t find an actual map of the 2035 expansion plan has it been released yet? In any case it will have to be cities of that size as all larger cities are connected already, basically), of whether day those areas wouldn’t benefit more from that money going into higher salaries or benefits for the people, just a pronouncement from China rail group that that’s what will be happening. In other words, the political economy—who controls the resources and decides how they will be used—is completely off the table for discussion (and of course in practice, this is why jingoistic nationalism is encouraged by the party, so that any criticism of its policies is taken as a personal offense by the population who then direct their energies against foreigners rather than asking questions about domestic political economy).
The history of over investing (in infrastructure usually, or other areas) is decisive and obvious to anyone who has looked at it—you desperately need to stop it and transfer those resources to consumers before it’s too late. But there’s no discussion of that issue, just anger at those who bring it up.
The other issue besides misallocation of resources is political power—again the evidence is overwhelming that an impartial state that can ensure vigorous domestic competition is vital to creative destruction and hence economic growth, but one of the tenets of socialism as practiced in China is the party controls the commanding heights of the economy, which by definition will not be allowed to be outcompeted (no matter how much soe “reform” is encouraged, and you see this with the increase in college grads looking to work for soe’s compared to say the Hu era, the new grads aren’t suckers they know what’s up), so again you have a political economy problem—how will the party encourage competition when it controls 25-40% of the economy and will not let it fail or change tack?
These are the real questions facing China, in my opinion. Of course, the USA has massive issues with lobbying and bailouts as well, just different ones and with a much better rule of law and resource distribution foundation.
I think the question of "western-style capitalism" is too broad because US-style capitalism is an extreme version of capitalism compared to Germany's or Sweden's. In those countries, they try to strike a balance, but the US doesn't at all.
Some Chinese i have talked to have expressed interest in the Scandinavian or German models; but no one is interested in the US model, which they think only favors the rich at the expense of everyone else. In German and Scandinavian societies, the rich tend to hide their ostentatiousness, and there is a backlash against the rich in China now. My guess is that Xi hopes to ride this wave of anti-rich populism to see how far it goes in Zhejiang and then claim the "victory" for the Party so that it can be pushed throughout the rest of China.
Paul I am curious as to what you think Xi should or will do with the 25-40% of the economy that is state-owned. It seems he really believes SOE’s are a big part of Chinese socialism so will retain them, would you agree? And what’s your stance on the impact of that? As nothing like that exists in the Scandinavian model for instance.
From his public statements, Xi has stated that he believes that SOEs are not only an important part of the economy, but are an essential part of Chinese socialism. He has also said that he believes that they can be made efficient with AI and other new technologies. I take his statements at face value.
When I mention the Sweden model, I'm talking about standard of living, and government benefits, not government ownership of major companies.
My own speculation is that SOEs and the state-owned banks are really the source of Party control over the economy, which is why Xi will not give up the SOEs. One of the Party's criticisms of the US model is that private companies have too much influence over US government policy through contributions, and their sponsorship of legislation. My interpretation is that this has allowed the wealth gap in the US to become too big, which has led to social and political instability. Many average Chinese have a dislike of the wealthy, and a strong SOE sector would help to prevent the wealth gap from widening.
Please note that this is my own interpretation; no Chinese official would use the term "wealth gap" and still retain his job.
The question is what does he do if the AI tells him to disband the soe because they have 90% too many resources allocated to infrastructure. AI cannot solve the problem of the existence of infrastructure SOE’s being a political not economic decision.
Completely agree USA companies have too much influence on policy.
You’re inequality speculation is wrong though—China has both a higher Gini coefficient AND (and this is wildly underreported generally it seems to me) a faaaar lower household shar or national income (50% vs 73% in the USA). So there is more inequality in China both within the household sector (the traditional rich/poor gap we think of) and in terms of how much of output is paid to people versus kept by businesses and the government (SOE’s etc, the breakdown between govt and soe income in China seems opaque statistically speaking obviously)—which of course are owned by rich people.
That’s not excusing the USA—I voted for warren—but again just want to be clear on the facts.
Surely the AI could be trained that SOEs have to provide policy control over the economy. There is the infamous example of the AI in the United States that injected the same racial bias into parole decisions that it had detected in the case set it was trained on.
The AI dream for China is exactly a dream which will increasingly turn into a nightmare. There is nothing "artificial" about AI..The "artificial" misnomer are alorythms written by humans with biases that get populated across systems which users believe can create magical solutions to complex problems.
I'd prefer to see the word artificial replaced with the names and contact info for each programmer.
The AI won't make a binary answer like that. AI never does that. It is always about optimization. Everything can be improved.
As a programmer, I know what the answer to solving the current US-China problems are: we will reset time back to 1978. With our 2021 knowledge, we will not make the mistakes which led to us to where we are now.
100%. Your words were “your interpretation” though, and in an educated forum like this I just want there to be a clear understanding of the facts so discussion is solid, and a clear delineation between what’s actually happening and what is an analysis of what many think is happening (and in this case, the inequality data is clear and not disputed).
I agree with what you're saying, it's quite vital to get the question and definitions right to be able to answer in a substantive way.
As a socialist who nonetheless find significant value in democracy and free expression, I'm not infrequently disappointed by a rather authoritarian and state-oriented streak in discussions of leftist/socialist/anti-capitalism politics and policies in China, which precludes many interesting possibilities like workplace democracy, worker co-ops and so forth. The aforementioned authoritarian and state-oriented framing of the Overton Window is of course not limited to either China or left-wing politics.
That said, I agree with Bill and respectfully disagree with those pushing back on him in regards to how seriously Xi take socialism. By my own estimates, Xi has demonstrated that he has at least some ideological goals beyond mere political survival or self-enrichment, and that his ideological goals include a genuine commitment to Chinese socialism—even if it's an adulterated understanding of socialism which has come a long way from Marx's concern for Enlightenment values, worker welfare, or the international proletariat class.
The current push in China for a pullback from market reforms, SOE privatization, and so forth carries both risks and opportunities for the country and the world. The era of Reform and Opening initiated by Deng brought great advancements and developments to China but it was far from an unalloyed success. Environmental degradation, worker exploitation, disintegration of community bonds, grotesque wealth inequality, cultural trivialization, increased leverage over the political process by oligarchic capital owners unaccoubtable to any nation-state—these are some of the issues exacerbated by Deng's reforms, and you should note that these problems aren't limited to China, but rather are rearing their heads everywhere where capitalism has run its course.
So, will China's move towards an economic and political system more recognizable as socialism be a net positive or negative to the country and the world? It's too soon to say, and neither success nor failure are assured. But one way or another, the current developments in China will be hugely influential on the future developments of global capitalism and global socialist movements alike.
I agree that Xi is a socialist, but the point to remember is that Xi is a _Chinese_ socialist which means that he is a pragmatist and nationalist who will always put Chinese interests first. Xi has a built-in constraint; he will do what works for Chinese society as it is now.
When most older Americans talk about socialism and Communism, there is a strong tendency to think in terms of the Soviet Union, and that cripples their ability to understand China in general, and Xi in particular.
祝大家端午節快樂！
I just finished watching the Sima Nan interview, and he talked about the socialist development model being to let a portion of the population become wealthy first, and then introducing measures to make it wealthy for the whole population. He contrasted this with capitalism, where there is a small group of the wealthy who want to keep their wealth, and not share it with the rest of the community. The main emphasis is on community development and shared resources.
He briefly talked about this as a development model which China would introduce to the rest of the world.
To me, it sounds like a Chinese version of the Scandinavian development model. It is a capitalist development model, with emphasis on community and shared resources, with certain benefits coming from the government. In terms of wealth, no one is very wealthy, and everyone has generally the same amount of wealth.
All under the leadership of the Party, of course.
Sima Nan 司马南 is a Beijing commentator I frequently watch on YouTube. In this episode he talks about the Common Prosperity Model Community for Zhejiang, and frames it in terms of a final realization of socialism, and socialism entering a new period of prosperity. He uses Deng Xiaoping's quote of some people becoming wealthy first, and then others becoming wealthy later. Now that China is prosperous, it is taking care of all levels of society. If your Chinese is good, it is good to watch: https://youtu.be/WKAh_Vge1wE
How likely is it that an advocate of western-style democracy is going to come from inside the Party structure?
It would be a very high risk strategy for anyone that did advocate democracy.
I can only think that it would happen if the party was feeling particularly weak, which I suppose would be due to some catastrophic failure of policy like a failed invasion of Taiwan. Otherwise, somewhat of a long shot.
I am also fascinated by the question of how (if?) the CCP will eventually climb down off its zero COVID posture once enough of the population had been vaccinated to prevent another Wuhan. It seemed like they would need to eventually; but perhaps Xi will enjoy the even more granular level of population control offered by the COVID restrictions too much to let them slip so easily?
I cannot agree more, this is about enhancing control over the population. Keep China sealed off from nasty foreign influences. China has been closed for 1.5 years, no foreigner in or Chinese out on foreign trips, and things are not falling apart. A grand experiment and return to 1978 China.
Clyde Prestowitz
I also go along with Bill on the view that Xi is a true believer in socialism. On the one hand it's true that he will espouse Socialism with Chinese characteristics and also that he will do what he thinks is best for China. But his definition of what is best for China is, I think, highly conditioned by his faith in socialism. There is a quasi religious element here that I think we ignore at our peril.
Doesn't Xi have a favorable precedent to point to in Lenin's New Economic Policy a form of limited capitalism for farmers and small businessmen which restored the Russian economy in the early 1920s when it needed help. It was declared acceptable as necessary by the leadership and brought to an end when it showed signs of excessive success. The scale was nowhere near Chinese capitalism as it is now is but it's certainly a useful socialist precident for bending when needed target. and it justifies a temporary departure from The One True Way.
The ending of the policy was not pleasant for those who had been the "NEP men. i.e. the capitalists
Early in reform, when Deng made favorable speeches about the Wenzhou (Zhejiang) "model" of private ownership, which was technically illegal at the time, he was opening the door to entrepreneurial reform.Zhejiang people flourished.
In the midst of his surveillance state, I have a hard time believing Xi is giving a mid to private wealth.
Clyde
Good point. Of course, China is far, far beyond the NEP, but on the other hand Jack Ma and some others have begun feeling a bit like those old NEP men.
The question is really how hard he will Xi push this line? I really don't see China as an existential threat to the US in the near future. This decade will really be more about US internal political and social strife and change, and Americans trying to reach consensus about those issues.
If anything, the danger lies in both sides framing the issues in religious terms of good and evil (on the US side by the mainstream media (Fox, MSNBC, CNN, Clear Channel, etc and certain China watchers), when it is really about certain areas of conflicting interests (Taiwan, conflicting business interests around supply chains, and decoupling the global economy from the US$, and international influence). in other areas, (chip-making, electric car exports, etc.), there will be intense business competition.
Recently, it looks like Xi wants to dial back the wolf-warrior rhetoric against the US because he realizes it may be counterproductive to Chinese interests. Some US influencers and media see a strong anti-China stance as an easy position which can draw Democrats and Republicans together, and distraction from their many disagreements. The Chinese wolf-warrior rhetoric fed this position, providing free ammo for them to position China as an existential threat to the US.
I don’t agree, Paul, on the issue of economic coercion. The price of engagement of any sort with China (primarily economic) is political submission.
The main issue is will free and open discussions about justice, about who we are and want to be, be allowed to continue in the world openly (the liberal or rules-based order or whatever one calls it), or will all discussion everywhere be required first and foremost to be an expression of fealty and submission to Xu (as it is in China, and as Xi is pushing for everywhere). In other words, voluntary cooperation or forced submission.
It turns out it’s not true that China didn’t issue the 12 demands to Australia, or that it didn’t bully the NBA or many other companies, or just pass laws sanction policymakers, or that business executives don’t self-censor, and on and on. It’s not true that it didn’t do any of those things or that none of these happen, unfortunately. We can say we think it’s a good thing or not a big deal, it we can’t say that none of them happened. So we should be open about that.
One may not consider free and open debate about how we live our lives to be an existential need, of course—we could all go grand inquisitor in the brothers karamazov for sure :). But what I’m disagreeing with in your post is the idea that that wouldn’t fundamentally change who we are (in democratic nations, obviously), and we should be very open about that to make sure our policy and identity discussions are honest and complete.
clyde
I agree with this insight. Indeed, I more than agree with it. I have watched my long time friend Jimmy Lai go to jail because he believes in free speech and was willing to stay in Hong Kong to fight for it. I have worked closely with Apple over the years and helped Jobs when he was just beginning. It is difficult for me not to feel today that every iPhone produced by Apple in China is a nail in Jimmy's coffin. We must be completely honest and realistic with ourselves in considering where coupling with China eventually ends.
Proud to be in discussion with a friend of his. And sad that the engineers of justice can no longer (as they could since ww2) count on solid backing. The bad old days of human history are back 🤣
My question is how far are we willing to go to enforce that there is only one size which fits all when it comes to political systems?
And when does the exercise end? Or is this an endless exercise, with new wars and battles to be fought for each new generation?
Clyde
With respect, I wonder if "one size fits all" doesn't obscure or confuse the fundamental issue. There are in existence many sizes and systems living already living in relative peace with each other. Singapore is not the UK or the US. But no one is afraid of or complaining about its system and how to deal with it. Similarly with india and even, in terms of system, with Iran. But the CCP has declared in the infamous Document 9 that it actively opposes constitutional democracy, free speech, rule of law, and the concept of universal human values. Not only does it oppose them, but it operates an enormous domestic and international surveillance and propaganda machine to stamp them out and counter them. The richer and more powerful China becomes the more able the CCP is to succeed in these aims. It is difficult to see how free world countries can do anything but oppose this pressure.
China has always been a large civilization which has developed largely on its own terms mainly because of relative geographical isolation and outlook; for a long time, Chinese emperors were just not convinced that the rest of the world was worth bothering with. The nations on its periphery were smaller(Korea, Vietnam and Japan) and felt culturally indebted to China. Modern China, the PRC, has combined features of Chinese imperial government, Marxism, capitalism into its own system of government under a revolutionary party which never made the transition to a ruling national party, and assumed the role of a social vanguard party in order to justify its monopoly on power. My view is that western and Japanese aggression against China, and an ineffective KMT lead to the creation of the CCP. It took 150 years, but the west and Japan created their own Frankenstein monster with the CCP.
The question we are now facing is what will this Frankenstein do? Will it be focused on its own region as China traditionally has been, or will it be expansive? Is its system of government exportable to other nations? Right now, I tend to think that the CCP's rise, and Xi's rise, are a set of unique historical conditions unique to China. Of course, I could be completely wrong.
In 19th century Europe, the US and its Declaration of Independence were considered to be a strange experiment in mob rule destined to eventually fail. In the 20th century, the US won two world wars and its largest single challenger collapsed under its own weight. Instead of being a political experiment, the US's values were widely embraced by the rest of the world. Even China looked up to the US until the 2008 subprime mortgage crisis.
My point is that if China is going to export its system, it most likely will have to pick a few fights and win them. Is Xi the person to do that? If he does take that path, he will have to convince Chinese that war is the only way for China to win recognition as a global power. That is not an easy sell.
The point is that Xi is trying to enforce CCP political norms on everyone else (say, free and open discussion of political questions which is a western norm would not be allowed by Xi, a la Australia). As I mentioned, it’s unfortunately not true that he didn’t issue those demands to Australia.
So I think your question is wrongly stated—it’s not how far are we willing to go to impose our norms on China, it’s how far are we willing to go to protect our own domestic norms FROM the CCP.
I think the first step the US can make in resisting Chinese demands (if they come up) is to get US domestic policy in order.
I don't see broad consensus among the two parties in the next decade on policy. This internal division is the greatest gift to Xi. The flip side is that treating China as the main enemy becomes the only issue two parties which hate each other can agree upon, which is not good for the world.
100%
Xi's style is drum up support for his policies through leadership task forces 领导小组 where trusted colleagues lead the discussions at the party level, and forming study groups at the senior level to initiate discussion and collect input. One example is Liu He, who is leading trade discussions with the US. Once the policy is broadly agreed upon, they are pushed out to the central government ministries for implementation.
Chinese central government ministries fight a lot over turf; each one has their own think tank which write white papers and publishes them seeking broad support. In simple terms, they hate each other and won't work with each other if they are left to do things themselves. It's a lot like Congress in the US.
Xi's solution has been to work at the Party level because he was head of the Central Party School before assuming his current positions. Since the Party is above the central government ministries, they have no grounds to resist the policies after they have been agreed upon. Their task is implementation.
Historically speaking, the Communist movement has by design promoted the idea of an endless ideological struggle, given its stated end goal of worldwide revolution (though of course in practice this more often worked out to be using international Communist parties as useful idiots to advance Soviet Union geopolitical interests). Setting all other geopolitical considerations aside, as long as the CCP remains deeply Marxist, it is hard to envision any future where there is no profound ideological/political tension between China and the liberal capitalistic bloc.
The word "ideological struggle" is a lot like how the Muslims use the word "jihad". To different people at different times, it has different meanings.
My interpretation of what Xi means by ideological struggle is that through China's opening up and reforms, many Party officials lost faith in socialism as an ideology because the ideology had not been modernized to take into account China's circumstances. This lack of ideological study meant that the whole society just indulged in getting wealthy at any cost. Inside the party, this led to widespread corruption which threatened the stability of the party. Xi had to take firm action on this, as it would have eventually led to China becoming a multi-party democracy, which is exactly what the western powers want, but would have acted against the interests of the Chinese people. Chinese assets would have been carved up and sold the same way Soviet assets were sold off when the Soviet Union ended.
The Party could not and would not permit this to happen, which is why Xi went after corruption in a big way. The ongoing struggle against corruption is a long-term feature of Chinese socialism.
But it is not enough.
The Party is the vanguard party of the Chinese people. This means that it must offer a clear vision for the direction of Chinese society. China cannot fall into the same trap other developed economies have fallen into, which is, that they have become wealthy, and then lost direction, and became stagnant. This happened with the US, Japan and the EU. Made in China 2025, BRI are all major projects and goals for the party which Xi has set forth to make China the world's leading economy.
When it comes to economic policy, everything Xi has done has been about preventing the wealth gap becoming larger without using the sensitive term wealth gap.
It looks to me like Xi is treating China as an experimental lab for socialism; Zhejiang is his latest test project, just as Shenzhen was a test project for his father in 1980. China can adopt features of capitalism, and it must, because it can only become a fully socialist economy when it has achieved a certain level of wealth.
What is Xi's final vision? I don't know, but my guess is that he believes that China can offer a good alternative model for other nations, maybe just as a reference, not for blind copying.
If he succeeds, this ideological struggle would be longer lasting and have much more effect than what socialists from the 1920s were talking about. This is my interpretation of what "ideological struggle" means in 2021 terms.
This stands in stark contrast with the vision of capitalism and trickle-down economics which Reagan and Thatcher offered in the 1980s, and is not attractive to most people outside the US and UK.
This is a worthwhile passage from a Chinese posting on Quora; food for thought:
"There is a saying here in China recently,“we have two mirrors — one is the Soviet Union, the other is the US.”
Mirrors are for us to reflect what kind of mistakes they have made and what kind of traps there might be for us, so we won’t repeat their mistakes and won’t fall into those traps.
By the Soviet Union mirror, we have learned we need to keep reforming, keep opening up, keep a better balanced economic structure, keep serving the people, keep improving our governance, keep fighting on corruption, keep safeguarding our national sovereignty on all aspects including politics, finance, defence, territory, etc., keep enlarging our “friend circle” with more nations across the world……
By the US mirror, we have learned, not to reach out to the whole world as a nasty world cop, instead, focusing on solving our own problems; not to bully the whole world, instead, to cooperate with whoever is willing to cooperate; not to put our national interests above all the rest of the world, instead, to respect others’ reasonable requirements and legal interests, and share profits with all the stakeholders; not to force our development mode, route and values onto any other country, and respect their own choices based on their own history, culture, tradition, etc.; not to shirk our responsibility as one of the major powers in the world, and offer whatever help we can offer to those in need, for example, masks and other PPEs, vaccines, etc. during the pademic……
We Chinese indeed believe in the faith of “Never forget why you started, and your mission can be accomplished,”especially when we have the two mirrors reminding us all alone the way."
https://qr.ae/pGAga2
This seems deeply self-serving to me on the part of the commentator. A Chinese global superpower will behave much the same way as every other global superpower throughout history (including the US), which is to say always putting its own interests first and not hesitating to use its power in rather ruthless manner in pursuit of those interests.
The notion this poster advances is also undermined by the fact that we can already see the CCP forcing its values onto other countries (the myriad attempts to control discourse re: China in other countries), bullying other countries (too many examples to count), etc. If the intent is to use the US as a mirror towards these ends, it would seem that they aren't doing a very good job of it!
https://www.cbc.ca/news/canada/manitoba/winnipeg-lab-security-experts-1.6059097
Wondering if any American friends have read this article.
Also The Globe and Mail's Nathan VanderKlippe is doing a terrific China series on the eve of his departure - too bad all articles are paywalled.
This CBC article is long on heavy-breathing and foreboding about Chinese espionage, and short on specific information about any violations of proper L-4 lab procedures or of Canadian law. It's still not clear whether Qiu and Cheng were fired from the Winnipeg lab for violations of national security or because they (deliberately or not) sent pathogens to China in violation of safety protocols. In any case, there is no link proposed to Covid-19.
Zhejiang is the wealthiest Chinese province, and has the largest number of family-owned private businesses in China (much more than Jiangsu, its neighbor). The vast majority of factories turning out goods in Zhejiang are family-owned.
Private family-owned businesses have played a leading role in China's growth over the past two decades, which is why Chinese leaders have played a very careful game when it comes to their statements about the private sector.
I am very interested in seeing what Xi means by a demonstration zone for common prosperity? There has been a considerable backlash against the ostentatiously rich in China (especially against those working in fashion and media); is Xi planning on using that to trim the power and influence of the private sector in Zhejiang? Does he want private sector companies to become like state-owned enterprises (SOEs)? Is Xi going to kill the goose which laid the golden eggs, at least in Zhejiang?
100%. How many free trade zones can you have before the whole country is just a free trade zone lol.
Earlier Xi went to Shenzhen to mark the 40th anniversary of the SEZ; his father Xi Zhongxun was the first head of the SEZ.
I believe that the official government line is that the SEZ was an astounding success and now all of China is the Shenzhen Economic Zone. This is why the SEZ abolished its border controls (yes, Shenzhen had its own border controls to prevent any Chinese from other regions from relocating to SZ), and the border entry points were dismantled.
The Anti-Foreign Sanctions Law is really interesting. I wonder how implementation will go. It is very broad. Will we see a formalization of unofficial sanctions (boycotts, social media campaigns, etc. against some companies)? I am not so sure because they are useful tools. As for will it deter future sanctions, it may deter full implementation of sanctions, by that I mean more waivers. I don't expect any rhetoric around sanctions to go away. Sanctions are an easy (and overused) tool that make one seem tough. Behaviors rarely change, but it is a great rhetorical tool and an example of "doing something". It could, I suppose, force companies into a position where they have to choose sides. Could we see subsidiaries be exempt from certain sanctions? Would this be a way to possibly square the circle?
As for G7, the text of ministerial statements typically inform the leaders' statement (lots of rewording requested by the NSC on the US side). The Foreign and Development Ministers' Communique was fairly strong. I bet Taiwan is going to be mentioned, along with human rights and COVID origins. Now human rights could be discussed generally - but we will know they are talking about China and Russia. I am sure Beijing will respond with its usual script.
With the signing of the "New Atlantic Charter" yesterday, the potential G7 Leaders' Communique, the discussion of a "D10", and a possible announcement of a Summit of Democracies this fall, I am very concerned about transforming U.S.-China competition into an ideological battle where one side must win. Some Biden administration rhetoric has effectively alluded to this - "democracies must win". Absolutely nothing wrong with strengthening democracy and standing up for what one believes in, but if regime change becomes the ultimate goal, then the relationship will truly become zero sum. Violent conflict will become more likely.
You have hit the nail on the head with the Anti-Foreign Sanctions Law. Past form suggests Beijing will apply it in ways that are neither transparent nor consistent but always politically driven.
The intent is to create uncertainty for multinationals, especially those most vested in China via local subsidiaries. The hope will be that they then create a domestic lobby to influence Washington and Brussels' cost-benefit calculations when considering imposing new sanctions. There will be waivers and exemptions as a result, which will undercut the intended impact of sanctions.
Regardless, multinationals will increasingly be caught between penalties from their home countries for violating sanctions against China and the penalties China can now impose on them for complying.
My take is that the anti-sanctions law is a sword of Damocles which Beijing is hanging over the heads of US companies and their boards. If these companies comply with US sanctions on individuals and companies, they will open themselves up to litigation in Chinese courts, and having their China assets seized as compensation for losses. It means that if they comply with Washington sanction directives, they expose themselves to litigation in China, and unfavorable publicity which might wreck their China business.
Biden's framing of democracy vs. autocracy is not an indicator of a strategy of regime change. It is a call for democracies, and especially for the US, to up their game and deliver good governance. There is no way to avoid an ideological component in US-China competition, and that is as much a function of Beijing and Xi Jinping, as it is of the more recent Biden administration narrative. BTW, the US is planning to hold a Summit for Democracy, not a Summit of Democracies. There is a nuanced difference that I think it meaningful.
Clyde
Bonnie is right. The U.S.-China competition, indeed, the free world-China competition inevitably has a strong element of ideological competition. We can't ignore that.
100% agree that the United States should up its game and deliver good governance. We should always be aiming to do this, because it is morally right and leads to material benefits. And thank you for that distinction. Very meaningful. Any outcome document and speeches would allow further analysis.
Sure, ideological competition is a function of both sides and can't be avoided - to a degree it is essential to the idea of both countries and baked into our respective policies. I think the danger is what happens if ideological competition turns into confrontation (which already exists at some levels, but is manageable) and how we work with it. There are risks to both sides on this. Perhaps thinking about it is premature, but I rather have a possible set of routes to follow.
Inflation is clearly the result of two independent influences: the ending of the demographic dividend and the commodity boom. Both are the result of policies that have run well past their expiry dates: the one-child policy and the investment-led growth policy. However, it’s important to note that the Chinese leadership is well aware of the need for a rapid turnaround in both. The former has been addressed already with a three-child policy. The latter was addressed by the PBOC at this week’s Lujiazui Forum in Shanghai. The challenge in both cases is whether they can move fast enough.
The first time they’ve addressed the investment-led growth policy will not be at this week’s forum. It was in a 2007 Wen Jiabao speech (and as early as 2000 from the leasing economist of the reform era Wu Jinglian). Xi getting his own family and the Deng’s and the Chen’s and the Peng’s to give up most of their wealth and SOE equity (ie rebalancing away from investment) is a tough not to crack.
All signs currently point to the Beijing Olympics copying Tokyo and banning overseas spectators from coming in to watch the Games next February. Tokyo provides the perfect excuse for China to refuse entry to foreigners - even if things go well in Japna from a COVID perspective (and that's a big if) - and there's just no reason why China would take that risk when it has been incredibly risk averse during the entire pandemic. 382,000 foreign visitors came to Beijing for the 2008 Olympics, so the expectation would be about a 1/3 of that number would come next year given that the Summer Games are 3x larger. But the tens of thousands who do come in regardless (athletes, coaches, officials, media etc) will provide a clue as to how/when China will partially or fully re-open its borders. The talk here now is that that will happen after the Party Congress in late 2022, but to be honest everyone is just guessing, and the "forced" entry of all those people for the Olympics will make it clear whether that's realistic or acceptable from China's zero risk perspective.
mark, you may well be right, but a bit of a bummer for beijing. a large part of the plus side for holding the olympics is their propaganda value. lots of visitors to be filmed admiring the wonders of 2022 chinese socialism. but if they ban spectators, will they limit the foreign tv crews? and even if they don't, will foreign tv stations want to send crews to the olympics when there are no spectators and fewer opportunities for programmes wider than just the events themselves? why not just save money and take the chinese coverage of the events themselves? some of us have been urging not a boycott of the olympics but a boycott of attendance by vips and fans, in order to ensure no opportunity for ccp propaganda. by banning spectators, the ccp would achieve that for us, with no cost.
I honestly don't think coverage will be affected. The main sports coverage is provided by the IOC, not CCTV, NBC or anyone else, so it will just focus on the events themselves and broadcasters are now used to showing events without fans - they just slightly adjust the angles, so you don't see empty seats. There could still be domestic fans in attendance, but I don't think there's a whole of propaganda value to be had there - unlike in 2008 when China won 51 golds, they won't win too many next year, so don't expect too many shots of celebrating Chinese fans (Opening/Closing Ceremonies aside). Given the wider context of these Games and the pressure to "tell the full story", though, I think there will be plenty of foreign TV crews doing more political stories away from the venues.
I still believe the Olympics present a tremendous opportunity to require demands that the CCP must satisfy in order for the US & allies to show-up. It's a fancy adult dinner party (whereas 2008 was a coming-of-age party), and the CCP will want perfect attendance by all nations and absolute flawless execution. Lots of "Face" is on the line. We should use it. #leverage..... Here's an op-ed I wrote about this idea recently for Smerconish/CNN: https://www.smerconish.com/exclusive-content/americas-leverage-with-beijing
Any country that insists on using a metric of "zero cases" for a reopening will never reopen. Even with the miracle of highly effective vaccines, and especially with the less effective vaccines used in China and most of Asia, zero cases is a mirage that will never, ever happen. It is like saying that nobody will be allowed to drive until there are zero road fatalities, or that we will stay closed until we have zero cases of the flu. As bad as our approach to COVID has been in many cases, the more American idea that this is about bringing down numbers to an acceptable level of risk is a fundamentally better idea than the unrealistic notion that this is about bringing things to zero.
I doubt that Xi sees this as either a problem or a benefit. The control-freak tendencies of the CCP are hardwired into everything that they do. You can't control a virus so their paradigm is that it must be eliminated entirely. This strategy looked better than the American one pre-vaccine but it is a fundamentally bad approach for the future.
In my opinion, I don't believe Xi envisions middle class development of Zhejiang and then all China within a Western capitalist framework. Xi has enhanced the power and broad economic control of SOEs as the way to spread the benefits of Chinese socialism since taking power. From the view of the CCP, the private sector belongs to the state. It is not a "free system" driving growth, merely in need of regulation and "guidance". What ever PR program is launched in Zhejiang it won't be aggressive free markets run by private ownership.
We should remember the slow tortuous path Deng's Four Modernizations took to catalyze early reforms. And I believe Deng trusted the marketplace to make intelligent economic decisions about modernization and growth. It was always powerful Maoist views and party interests that pushed back.
Xi, if anything is Mao in a Western business suit.
Perhaps we are seeing a new version of Socialism with Chinese Characteristics. My idea is that both the US and China will need to spend the next couple of decades on social capital - health care, pensions, education. Zhejiang is an excellent province in which to run some tests. This has to mean money for primary schools, health care and insurance, and a trustworthy pension system. I believe Shaoxing enacted a pension system for farmers about six or eight years ago. It was pretty small, though - a thousand or couple of thousand yuan a month. Zhejiang has completed (I think) reconciling the university pension system so that it is part of the provincial system. Before, each school had its own pension system. There was insurance for farm crop
losses, but a lot of farmers didn't buy it. And typhoons are pretty common.
Dunno if it would make sense to make it mandatory somehow - although that
would probably have to cross provinces to make it stronger. The list of illnesses
covered by rural health insurance is pretty short - could greatly expand that
with heavy subsidies. As it is, urban areas generally provide social services for their residents, and rural areas do the same. Perhaps greater services in rural areas fit with Xi's overall centralization ideas, and the central government will help Zhejiang with new social service costs.
Super interesting questions—putting aside the soe share of the economy which to me is the most pressing issue, to focus on other (still very crucial) issues, to what extent is there room for “better governance” somewhere like Zhejiang? In terms of healthcare, social security, hukou, rural land rights, etc.
In other words, creating benefits through efficient administration and incentives and policy and anti corruption versus resource reallocation from the soe sector.
There are - or at least, were, up to about 2014 - plenty of local government experiments in better governance and service provision. These had to do with citizen comment and complaint procedures and greater efficiencies in service provision. One experiment, the Yantai experiment in Shandong, has been copied in Zhejiang and elsewhere. In 2014 I wrote a paper on changes to government land use policies that was published in the Zhejiang Province School of Administration Journal (CCP Party School Journal). Couple of paragraphs from that august work -
The Chinese government has learned to respond to the wishes of the people, in some cases better than in others. In general, one expects that the higher the level of government, the more sophisticated the leadership, the less tied for promotion to enhanced local GDP, the more willing leaders will be to listen to the local view.
Zhejiang Province is a key example. Rich, experienced, open to the world, and innovative, Zhejiang has long been in the forefront of administrative reform in China. The Zhejiang model of land reform, allowing for transfers of development rights (TDR) within and between local governments, is well known (Wang, Tao, and Tong, 2009). And more recently, Haining has been selected as a pilot for land reform, allowing mortgages of village property and sales of farmer land to those outside the village; and Wenzhou has established a “rural property rights service center, that in theory allows sales of village land to citizens from within the county.
As far back as 1995, the Yantai Service Promise System, in Shandong Province “drawing on the New Public Management approach to administration,” represented a serious attempt to make the bureaucracy more customer oriented and professional (Foster, 2006). Fifteen government departments were required to provide service delivery promises to citizens, and the local government leaders appeared to consider citizen complaints and survey results quite seriously in individual leader evaluations.
A version of the Yantai system was begun in Jinhua in 1996,
and in Wenzhou, in 2003. Other cities – Beijing, Guangzhou, and others - have implemented more open communications with citizens, and provided a survey mechanism to review the performance of government departments.
....
I haven't kept up on this. Experimentation is most certainly not dead, but I don't know how much it is pushed now.
I hear you Clyde, thanks for the detailed answer.
Constructive criticism: your stuff strikes me as reform era heavy. Now that 60-75% of the economy has been privatized (depending on whether you use academic or financial sources ifaict), and a sh**on has been invested in infrastructure, what other reforms will Xi do?
Zhejiang has many small (1-5M population cities; small by Chinese standards) cities which have many factory employees from other parts of China. The big question will be how to deal with these migrant employees? This boils down to making changes in the hukou registration system which disallows migrant employees from getting local benefits such as education and healthcare. It will be interesting to see if Xi proposes changes to the hukou registration system so that migrant workers are able to tap into the local hukou system.
The demographic disaster has been building for many years, obviously, and researchers are certainly aware. But pension problems are even more immediate (what with stolen and misappropriated funds - how like American private equity in corporate takeovers!) and China cannot afford the unrest from unpaid promised pensions. Raising the retirement age will help a little. Social services are provided by provinces, mostly. The central government had to take over pension in dongbei, the northeast, because of mismanagement, the decline of manufacturing companies in the northeast, and the early retirement of workers circa 1999 in the fiscal crisis. Perhaps some nationalization of pension systems either fiscally or administratively or both would help. So would reallocation of funds from physical infrastructure to social capital - the Chinese equivalent of "build one less B1 bomber." I think health care could be a big problem (as it is in the US). The benefit to the government is that rural people's expectations are so low that some improvement in coverage will be welcomed. My crystal ball is not working right now, but my guess is that Chinese foreign involvement in capital projects will have to be curtailed a bit over the next couple of decades as the various social funding crises start to bite.
Hi William,
I think you hit the nail on the head here when you said capital investment will have to be curtailed in the extreme if they want to dramatically increase social services to be more on par with developed nations.
As ever with China in my opinion, the political economy question is ignored, and due to the successes of Chinese policy in the past several decades, whatever pronouncements are made, it’s taken as gospel that they’ll be achieved. Of course, it would be amazing for the people there if Zhejiang really could become a prosperous, modern, developed area in its entirety (I lived there! Love that place, and some of the most independently minded people in China IMO, really enjoyed it), but being honest about what that takes isn’t equivalent to hoping it doesn’t happen.
The two obvious questions are state-owned enterprises and political power. 25-40% of the economy (the state-owned portion, as always I’m open to more exact numbers, 25% is the number I see academically, 40% in financial articles) is state owned and currently spent on infrastructure projects, so it’s possible that connecting Lianyungang, and Yancheng, and Huaian in Jiangsu to the 300 km/hr rail network (up from the 200 one now) is absolutely vital to the development of those areas, and that’s what’s holding those areas back, but there’s no discussion of that (I use them as examples, I can’t find an actual map of the 2035 expansion plan has it been released yet? In any case it will have to be cities of that size as all larger cities are connected already, basically), of whether day those areas wouldn’t benefit more from that money going into higher salaries or benefits for the people, just a pronouncement from China rail group that that’s what will be happening. In other words, the political economy—who controls the resources and decides how they will be used—is completely off the table for discussion (and of course in practice, this is why jingoistic nationalism is encouraged by the party, so that any criticism of its policies is taken as a personal offense by the population who then direct their energies against foreigners rather than asking questions about domestic political economy).
The history of over investing (in infrastructure usually, or other areas) is decisive and obvious to anyone who has looked at it—you desperately need to stop it and transfer those resources to consumers before it’s too late. But there’s no discussion of that issue, just anger at those who bring it up.
The other issue besides misallocation of resources is political power—again the evidence is overwhelming that an impartial state that can ensure vigorous domestic competition is vital to creative destruction and hence economic growth, but one of the tenets of socialism as practiced in China is the party controls the commanding heights of the economy, which by definition will not be allowed to be outcompeted (no matter how much soe “reform” is encouraged, and you see this with the increase in college grads looking to work for soe’s compared to say the Hu era, the new grads aren’t suckers they know what’s up), so again you have a political economy problem—how will the party encourage competition when it controls 25-40% of the economy and will not let it fail or change tack?
These are the real questions facing China, in my opinion. Of course, the USA has massive issues with lobbying and bailouts as well, just different ones and with a much better rule of law and resource distribution foundation.
I think the question of "western-style capitalism" is too broad because US-style capitalism is an extreme version of capitalism compared to Germany's or Sweden's. In those countries, they try to strike a balance, but the US doesn't at all.
Some Chinese i have talked to have expressed interest in the Scandinavian or German models; but no one is interested in the US model, which they think only favors the rich at the expense of everyone else. In German and Scandinavian societies, the rich tend to hide their ostentatiousness, and there is a backlash against the rich in China now. My guess is that Xi hopes to ride this wave of anti-rich populism to see how far it goes in Zhejiang and then claim the "victory" for the Party so that it can be pushed throughout the rest of China.
Clyde
Yes, U.S. capitalism is quite different from capitalism in other countries.
Paul I am curious as to what you think Xi should or will do with the 25-40% of the economy that is state-owned. It seems he really believes SOE’s are a big part of Chinese socialism so will retain them, would you agree? And what’s your stance on the impact of that? As nothing like that exists in the Scandinavian model for instance.
From his public statements, Xi has stated that he believes that SOEs are not only an important part of the economy, but are an essential part of Chinese socialism. He has also said that he believes that they can be made efficient with AI and other new technologies. I take his statements at face value.
When I mention the Sweden model, I'm talking about standard of living, and government benefits, not government ownership of major companies.
My own speculation is that SOEs and the state-owned banks are really the source of Party control over the economy, which is why Xi will not give up the SOEs. One of the Party's criticisms of the US model is that private companies have too much influence over US government policy through contributions, and their sponsorship of legislation. My interpretation is that this has allowed the wealth gap in the US to become too big, which has led to social and political instability. Many average Chinese have a dislike of the wealthy, and a strong SOE sector would help to prevent the wealth gap from widening.
Please note that this is my own interpretation; no Chinese official would use the term "wealth gap" and still retain his job.
Thanks, appreciate the great answer.
The question is what does he do if the AI tells him to disband the soe because they have 90% too many resources allocated to infrastructure. AI cannot solve the problem of the existence of infrastructure SOE’s being a political not economic decision.
Completely agree USA companies have too much influence on policy.
You’re inequality speculation is wrong though—China has both a higher Gini coefficient AND (and this is wildly underreported generally it seems to me) a faaaar lower household shar or national income (50% vs 73% in the USA). So there is more inequality in China both within the household sector (the traditional rich/poor gap we think of) and in terms of how much of output is paid to people versus kept by businesses and the government (SOE’s etc, the breakdown between govt and soe income in China seems opaque statistically speaking obviously)—which of course are owned by rich people.
That’s not excusing the USA—I voted for warren—but again just want to be clear on the facts.
Surely the AI could be trained that SOEs have to provide policy control over the economy. There is the infamous example of the AI in the United States that injected the same racial bias into parole decisions that it had detected in the case set it was trained on.
The AI dream for China is exactly a dream which will increasingly turn into a nightmare. There is nothing "artificial" about AI..The "artificial" misnomer are alorythms written by humans with biases that get populated across systems which users believe can create magical solutions to complex problems.
I'd prefer to see the word artificial replaced with the names and contact info for each programmer.
For sure, but political economy here means the AI would be telling Xi he can’t both control the commanding height AND have superior economic growth.
That’s not an anti China or anti America thing it’s just sort of how it is economically.
With respect, people act on perceptions, not on facts.
This is why Chinese officials never use the term wealth gap. It would open up a Pandora's box.
The AI won't make a binary answer like that. AI never does that. It is always about optimization. Everything can be improved.
As a programmer, I know what the answer to solving the current US-China problems are: we will reset time back to 1978. With our 2021 knowledge, we will not make the mistakes which led to us to where we are now.
On a practical level, I know that is unrealistic.
100%. Your words were “your interpretation” though, and in an educated forum like this I just want there to be a clear understanding of the facts so discussion is solid, and a clear delineation between what’s actually happening and what is an analysis of what many think is happening (and in this case, the inequality data is clear and not disputed).
I agree with what you're saying, it's quite vital to get the question and definitions right to be able to answer in a substantive way.
As a socialist who nonetheless find significant value in democracy and free expression, I'm not infrequently disappointed by a rather authoritarian and state-oriented streak in discussions of leftist/socialist/anti-capitalism politics and policies in China, which precludes many interesting possibilities like workplace democracy, worker co-ops and so forth. The aforementioned authoritarian and state-oriented framing of the Overton Window is of course not limited to either China or left-wing politics.
That said, I agree with Bill and respectfully disagree with those pushing back on him in regards to how seriously Xi take socialism. By my own estimates, Xi has demonstrated that he has at least some ideological goals beyond mere political survival or self-enrichment, and that his ideological goals include a genuine commitment to Chinese socialism—even if it's an adulterated understanding of socialism which has come a long way from Marx's concern for Enlightenment values, worker welfare, or the international proletariat class.
The current push in China for a pullback from market reforms, SOE privatization, and so forth carries both risks and opportunities for the country and the world. The era of Reform and Opening initiated by Deng brought great advancements and developments to China but it was far from an unalloyed success. Environmental degradation, worker exploitation, disintegration of community bonds, grotesque wealth inequality, cultural trivialization, increased leverage over the political process by oligarchic capital owners unaccoubtable to any nation-state—these are some of the issues exacerbated by Deng's reforms, and you should note that these problems aren't limited to China, but rather are rearing their heads everywhere where capitalism has run its course.
So, will China's move towards an economic and political system more recognizable as socialism be a net positive or negative to the country and the world? It's too soon to say, and neither success nor failure are assured. But one way or another, the current developments in China will be hugely influential on the future developments of global capitalism and global socialist movements alike.
I agree that Xi is a socialist, but the point to remember is that Xi is a _Chinese_ socialist which means that he is a pragmatist and nationalist who will always put Chinese interests first. Xi has a built-in constraint; he will do what works for Chinese society as it is now.
When most older Americans talk about socialism and Communism, there is a strong tendency to think in terms of the Soviet Union, and that cripples their ability to understand China in general, and Xi in particular.