This is Part 3 of our series, 2018 in Review, and focuses on China. Specifically the narratives that Xi Jinping wants to peddle to the world.
In January 2017, Chinese President Xi Jinping stood at the podium in Davos defending economic globalisation. He argued that the world needed to “adapt to and guide economic globalization, cushion its negative impact, and deliver its benefits to all countries and all nations.” And in this process, “China’s development is an opportunity for the world.” All of this was, of course, in the backdrop of the beginning of Donald Trump’s presidency in the US.
Addressing deputies at the National People’s Congress in March 2018, Xi doubled down on that message:
China will contribute more Chinese wisdom, Chinese solutions and Chinese strength to the world, to push for building an open, inclusive, clean, and beautiful world that enjoys lasting peace, universal security, and common prosperity. Let the sunshine of a community with a shared future for humanity illuminate the world!
Both of those speeches reflected strength. The essential message they conveyed was that the world needed China. And under Xi, China now was surer about its destiny and keener than ever to play a larger international role. Yet as 2018 unfolded, this narrative came under severe strain. To assess how, we need to look at three dimensions: Xi’s status as the core of the Communist Party, the pushback against BRI, and the deepening competition with the US. It is the interplay of these three that is shaping China’s future.
In March this year, the NPC approved amendments to the Chinese constitution, removing presidential term limits. This cemented Xi’s position at the top of the Chinese political system for the foreseeable future. Addressing the deputies, Xi cast his reign within the historical arc of the Communist Party’s rule. China had stood up, become rich and was now growing strong. This would be the definitive feature of the new era, which he had christened at the 19th Party Congress in October 2017. Yet, no sooner had the ink on the amendments dried did the pushback begin.
Intellectuals questioned the promise of a future that was starting to look much like a troubled past. Xu Zhangrun’s essay was perhaps the most emphatic expression of this fear. The pushback hasn’t been limited to just the liberal voices, and neither has it been only about the country’s political direction. China’s economic slowdown and restructuring to focus on high-quality growth, along with changes to its foreign policy, have led to a range of groups vying for their voices to be beard. A younger band of Marxists are questioning the ideological commitment of the Party. Fellow princelings have warned about policies that challenge the “pace of the progress of history.” Veterans are protesting for welfare and opportunities. The private sector is suffering a crisis of faith amid the deleveraging drive and Xi’s emphasis on the role of state-owned enterprises. The middle classes are wondering whether Beijing’s growing international commitments are coming at the cost of their well-being.
And after a brief summer of discontent, when questions were raised about the leadership’s economic policies and handling of foreign affairs, the factional elite appear to have banded together behind Xi for the moment. The Politburo’s session at the end of the year to conduct “criticism and self-criticism” should end any speculation about Xi’s standing with the elite. The statement following the meeting is indicative of this, since it emphasised “the need to maintain political integrity, think in big-picture terms, follow the leadership core and keep in alignment.”
What the above shows is that while Xi commands immense authority, he doesn’t necessarily enjoy unlimited discretionary power. Nevertheless, after a year of turmoil, renewed elite support — expressed as it has been by the Politburo — suggests that Xi has significant leeway to respond to the kind of pushback that Beijing has been experiencing internationally.
From Malaysia, Maldives, Myanmar to Kenya and even Pakistan, Xi’s flagship foreign policy initiative, the Belt and Road, has hit the wall of democratic politics, churning geopolitical currents and economic reasoning. The defeat of Abdulla Yameen in the Maldives and Malaysia’s Mahathir Mohamad’s remarks about the threat of a “new version of colonialism” were perhaps the clearest expressions of the shifting sands. Since then, Beijing has indicated that it is open to “some strategic adjustments.” What this has meant so far is restructuring of and extensions on certain loans, cancellation of dome debt, limiting the scale of some projects and mildly altering the trajectory of CPEC to focus on “social-economic development, job creation and livelihoods.”
These adjustments are not just a matter of countering the narratives of debt traps and new colonialism, i.e. it’s not just about politics. While BRI is deeply political, given that it is directly associated with Xi, Chinese companies and financial institutions are key to its success, and for them, economics matters as well. In this context, and considering China’s continuing struggle to reign in debt, the adjustments are sign that sometimes good economics can sometimes also be good politics. Perhaps, one will get a definitive sense of the direction that this is heading in at the 2019 Belt and Road Forum.
One other strategic adjustment that Beijing has sought to undertake in this backdrop is to reboot its relationships with key middle powers. This, however, has been about much more than just the criticism of BRI. The Narendra Modi-Xi Jinping Wuhan summit, the normalisation of China-South Korea ties and Shinzo Abe’s historic October visit to Beijing came in the backdrop of intensifying Sino-US competition. The tit-for-tat tariff contest between China and the US, which began in June this year, is but one component of an unfolding strategic rivalry.
Innovation, as Xi repeatedly reminded delegates at the 19th Party Congress, will be the most important driver of China’s growth going forward. And in that, foreign capital, technology, talent and markets continue to remain critical for Beijing. A long, protracted contest with the US and possibly Western Europe, which places restrictions on collaboration in innovation and knowledge creation along with flow of capital, components, data and new technologies has the potential to stymie China’s long march to superpower status. Self-reliance might be a good slogan for posturing at home. But it rings hollow at best and counter-productive at worst if one looks at the fix that ZTE found itself earlier this year and Huawei finds itself at the moment.
What’s more, this rivalry with the US is increasingly becoming structural in nature, i.e. it’s moving beyond interests to the domain of values and norms. This was evident in Vice President Mike Pence’s speech at the Hudson Institute in October, where he criticised Beijing’s state-led economic growth model along with its “sharp U-turn toward control and oppression.” The arrest of former Interpol chief Meng Hongwei as part of the Communist Party’s anti-corruption campaign, the arbitrary detention of Canadian citizens in response to the arrest of Huawei’s CFO and the brazen defence of the Party’s repressive policies in Xinjiang suggest that this dimension of Sino-US competition is only likely to further deepen.
How China manages its relationship with the US is going to be crucial to its future growth trajectory and international role. What this now seems to require is a balancing of domestic political and economic priorities and building new partnerships while making calibrated concessions. It’s a task fraught with complexities and risks. But it’s one that some believe Xi has backed himself into by shedding the Dengist approach to foreign policy in the quest to take China to the center stage of the world. To quote Xi, as an old Chinese proverb says, “honey melons hang on bitter vines; sweet dates grow on thistles and thorns.”