Xi Jinping’s Three Errors

This column was previously published in L’Opinion on 4th november 2019
When he lands in Beijing on Monday, Emmanuel Macron will find a country that is in the middle of reinventing itself, as it has done at the end of each of the last four decades. But, although China’s ambition for the next ten years is clear — to avoid the notorious “middle-income trap”, just like Japan and South Korea in the past — this aim is now under threat because of three fundamental errors made by Xi Jinping.
Firstly, launching into a war with the USA ten years too soon, since China is still too dependent on American technology. China’s spending on information technology is only 5% of what its American “friend” spends on it. Combined with the classic initial air pocket of any new “tech“ cycle, the brake that the USA is putting on it will, in the short term, delay the “wheel of history’ so dear to Huawei; 5G, self-driving electric vehicles and robotization will take longer than originally thought in making us forget the incredible success of smartphones during the last decade.
China clearly wants to avoid the “middle-income trap”. But there is a threat to the attainment of this objective.
Secondly, losing the confidence of the private sector since the summer of 2018, even though the private sector is the source of almost all of the 13 million annual job creations. This has led to the undeniable economic slow-down that China is facing. Chinese entrepreneurs have now realized that the promises made in 2012 to let “market forces” have more influence have been consigned to history.
Thirdly, contrary to the legacy of Deng Xiaoping in international relations, wanting to replace 20th century American “soft power” by Chinese “sharp power”, as illustrated by the new Silk Roads. The promising rhetoric that emerged from Davos in 2017 and which offered China the prospect of replacing the USA as a new pillar of global multilateralism, has proved short-lived. On the contrary, it has given way to a dangerous rise in Chinese nationalism, tarnishing the country’s image in the eyes of ASEAN and the West, both of whom have been even more shocked by the way the Hong Kong affair has been dealt with.
It is highly likely that “New China” will continue to surprise us
However, recent history has taught us never to ignore the surprising faculty of the Chinese authorities to learn from their mistakes. Bill Gates’ famous prophecy about tech can then be adapted to Chinese economic development: “We always overestimate the next ten months and underestimate the next ten years.”
Will President Macron be able to see beyond the tangible signs of China’s short-term problems and anticipate the prospects for Europe arising from this Chinese dynamic over the next decade — prospects that might be more disquieting if President Xi were to correct his past errors? Since the probable amateurism of the president’s entourage gives little cause for optimism, it is rather up to French private companies to contribute to the next stage of this “New China” which is highly likely to surprise us. Because its 150 million consumers are still hungry for European quality, and because its businesses are seeking to achieve much higher productivity by means of European know-how, it is up to us to become the vital partner in the new Sino-American war.
