Who Needs Who?: China and the World, Xi Jinping and China
The recent “two meetings” political event surrounding China’s National People’s Conference and Political Consultative Conference has left most observers with the impression that significant changes to China’s political economy will not be forthcoming under Xi Jinping or the 13th Five-Year Plan (example here). The key question, as we covered two weeks ago, concerns whether or not China will in fact lose ground across several key areas: political stability, economic openness, and international integration. Moreover, as we addressed last week in a series of posts (here and here), narratives privileging stasis and regression–in other words, which further signal an end to the “reform and opening” thesis–have become increasingly dominant as the primary frames through which new information is interpreted. Accordingly, we see:
- Attention focused on media censorship and on high-profile pushbacks against censorship as bellwethers of political intransigence and instability.
- Concern over China’s military and environmental impact on the rest of Asia.
- Emerging consensus that conditions favoring China’s soft power are eroding.
- Mainstream prevalence of the belief that China is a key cause of geopolitical instability in Asia and the Asia-Pacific; that China is a “predator state”; and that China’s rise is inextricably tied to irridentism in the South China Sea and Southeast Asia.
Mirroring this crisis of confidence in the likely direction and shape of China’s futures is a buoyed optimism concerning other Asian economies: India, Indonesia, and a seemingly resurgent Japan (examples here, here, and here). A new emerging market thesis is forming: that ASEAN, Asia, and first-world multinationals and equity markets can shake off slowing global growth rates without China’s help.
A formerly dormant question is returning to the fore: is China really a new kind of superpower, or another Soviet Union in the making?
FURTHER ANALYSIS: NEWS BEYOND THE MEDIA
Here we note several additional developments, which do not necessarily contradict the narratives described above but, at the same time, do not appear to have been adequately digested by the marketplace of China-related ideas.
- China’s legal system is taking on greater caseloads and clearing more defendants. Legal reform continues in sensitive areas related to charity law andmarket competition.
- Regardless of what observers outside of Asia believe, there are still robust signs of consensus within India that China is still far ahead economically; moreover, China’s deepening relations with countries in Southeast Asian and Eurasian countries indicate a growing network of bilateral ties.
- Recent reports on China’s environment have indicated moderate success inreducing CO2 emissions and deforestation.
- Hong Kong’s recent independence movement aside, there appears to be no willingness on the part of the business and financial community to increase separation from the mainland (here and here).
- While lending and growth may be slowing, outflows of ODI andconsumer spending seem poised to increase; for consumers, a relative dearth of trustworthy investment options (coupled with the specter of inflation) are likely to continue driving wealth toward domestic and global real estate markets.
REFLECTIONS IN BRIEF: THE DOUBLE MEANING OF CHINA’S “MIDDLE-INCOME TRAP”
In conclusion, we find that the main surprise of the past week has been the emergence of new signals indicating that there is growing internal doubt concerning Xi Jinping’s ability to move China beyond the feared middle-income trap. Though international belief still exists that China may reach a high-income future more or less on schedule, it is hard to know what to make–beyond a sense that confidence is wavering–of China’s continued efforts to periodically and publicly solicit the advice of international leaders concerning solutions to an acknowledged political-economy impasse. What must be additionally concerning for Xi, however, is that another side of this trap is already evident: voices both within and outside of the party, which one might argue can be seen as representing and responding to the demands of China’s new middle classes, are already showing signs of impatience with a political model more suited to producing rapid, investment-driven gains in growth. With a confident military and private sector (to whose representatives Xi personally delivered alargely unreported reassurance during the Two Meetings sessions) waiting in the wings, we must ask whether Xi and the princelings are still seen as bearers of hope, or as outmoded vestiges of a no longer-existing era.
© CORINT 2016