China: Hard to Tell

Scalable Analysis
Feb 4, 2020 · 7 min read

The thing about China is that its issues are so many and so deep, that they are difficult to wrap around.

China has effective institutions of governance, but it is also deeply compromised by corruption and patronage. China is leading efforts to clean up its environment, but it is also burdened by massive environmental problems. It has a dynamic innovative economy, but it also has large state-owned enterprises that are inefficient. China wants to innovate but it is also rapidly ageing. In fact, it will grow old before it gets rich.

Faced with these extremes in the imagery, it is possible for observers to both comment that China will be the most powerful country in a few more decades, and also at the same time, for other observers to claim that China is bound for imminent collapse.

Both visions are true and compelling, and one can select the necessary evidence to create such a claim.

Both of these visions cannot exist at the same time for long. The resources needed to support the needs of an ageing population cannot at the same time be used to build a tremendous arsenal to intimidate powers. China’s leaders will gradually have to shift resources away from the military and diplomacy and focus on husbanding the resources to support the aged and the elderly, while at the same time, clean up the environmental damage created in the pursuit of growth.

We don’t know what that might look like — a slowing China uncertain of its place in the world. Would it be even more insecure and paranoid, and so making costly strategic mistakes?

We can easily a world where resource competition becomes increasingly scarce. A China, declining from a previous peak, begins to make rash strategic moves to secure resources by force, plunging the world into conflict.

Sounds familiar? Japan, in the 1930s was involved in rash strategic moves to secure resources it thought was scarce. A resource embargo by the United States prompted the Pacific War. There are multiple possibilities of war. It might be encouraging a war on the Korean Peninsula. Or in the South China Sea. Or even an invasion of Taiwan, or Vietnam.

I guess this is the mind-boggling aspect of the futures of China — they are so divergent, that it is difficult to plan for, so people want to think that the smart leaders in China will just keep to a middling path. One can certainly hope that China’s leaders will pursue a middling path — acting to ensure its own interests, and at the same time, to invest in her own people especially with an ageing population. One would hope that the Chinese leaders of that hypothetical future (in the 2030s and 2040s) will be able to temper the nationalist attitudes that would have been ingrained by then, and channel towards productive and constructive pathways of community-building, and not towards destructive xenophobic, war-mongering attitudes, even if they might be easier to pursue.

A crucial aspect of China’s political trajectory that makes thinking about its future so difficult is the issue of intra-elite competition — the competing dynamics between different groups of elites in China. Prior to the rise of Xi Jinping, there had been established fiefdoms, and at the same time, tremendous corruption. When Xi Jinping came to power, he had to fight against these factions and establish his own stamp of power. He has done so throughout his entire first term, leaving no organised faction to resist him as he went about changing ruling norms. His own stamp of power was visible as his ruling attributes and concerns were enshrined into the constitution — the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era — XJPTSCCNE, and the Eurasian connectivity project — the Belt and Road Initiative (also known as One Belt One Road, Belt and Road, etc). In so doing, he would have refashioned patronage lineages — the ones of previous leaders such as Bo Xilai and Zhou Yongkang — major political leaders in their own right, had been destroyed. On the other hand, he has created his own lineages of patronage — witness the rise of the aides and officials who had worked with him throughout his entire career. He has done this not only in the bureaucracy and the party, but also in the military, replacing the highest military commanders in the People’s Liberation Army (the armed forces of the People’s Republic of China).

It is difficult to find such drastic reconfiguration of the elite system in China; one would have to go back to the changing of leaders in the post-Tiananmen era in the early 1990s, or with Deng Xiaoping’s rise to power in the 1980s. However, the question is not just about what Xi Jinping has done, but what happens when he steps down from his position of authority.

The political elite in China operates almost like a black box — we have very little idea about the intrigues that are happening. We don’t know about Xi’s command of power over all the bureaucracies of power. The Communist Party is also a sprawling bureaucracy — there are many organizations and lines of control.

For now, it is not apparent who might be the next leader of China — Xi Jinping has not revealed a successor in waiting by promoting someone of an appropriate younger age into the Politburo Standing Committee — the central cabinet from which power flows through. It is also unclear how much power Xi has in the Central Military Committee — the military cabinet of China. When Xi Jinping exits power, are his aides the ones to rule China? How will they adjudicate between themselves, without someone with an overwhelming power base?

One can think of the great conqueror of ancient times — Alexander of Macedon. With his generals, he conquered the ancient world — from the Greek peninsula, to the “known world” of his time and place — acquiring a territory stretching from Greece to the edges of modern-day Pakistan, and much of central Asia and Egypt. His empire might be large, but it would break apart upon his death, rule by the various generals, who would fight with each other in the centuries thereafter. This is merely a colourful illustration of how different leaders in China might simply divide up rule according to different sectors — perhaps such as how Hu Jintao allowed various leaders to hold sway in different ‘domains’, until something serious happens, such as when high-speed trains crash, or when one of the princelings (children of these senior party leaders) are caught in scandals.

It is for these unstable dynamics — of when a strong and robust leader leaves the scene, and for various reasons, is not able to handover to a coherent set of leaders, that crises can occur internally. And given that the next few decades in China are likely to be less promising for growth than previous decades, there are few good omens for China.

Don’t get me wrong — China has achieved much. China alone was responsible in lifting 800 million people out of extreme poverty, and it has done very well itself in the past 4 decades in opening up to the world. It will surely make advances in science and technology, and reclaim for itself the position of the largest economy in the world. It will be able to innovate, rival, and surpass the US and Western Europe in several areas. It will be able to export its ideas and culture around the world, and will be admired by many. China’s cities will be desired destinations for travel, just as many cities in the US and Europe are. It’s just that it has grave issues of such magnitude, that a failure in a single area could be catastrophic, which makes projections of current success problematic to say the least.

A more stable path for political continuation would be a more responsive political system that is tolerant of some dissent, and able to channel it in productive ways. Addressing the issue of a genuine rule of law might also help in creating a sense of legitimate authority.

China’s political leaders will probably be thinking about how to entrench a system of anti-corruption, and in figuring out how to sustain patronage ties without using bribery and reciprocal economic exchanges — sounds oxymoronic, but bureaucracies can sustain patronage lineages without corruption through methods such as career support, bureaucratic cover, legitimate resourcing, mentorship, and various other mechanisms. These are not illegal — these are established ways of garnering support within a bureaucracy for one’s initiative, and often do not require linkages of financial support. (For a masterful and cynical representation of such activities, refer to BBC’s political comedy series, Yes Minister, and the sequel, Yes Prime Minister.)

Any sane person would want to wish a country well — instability brings about pain and suffering for the millions of people who have to endure poor leadership.

Epilogue: I started writing this before the outbreak of the Novel Coronavirus that seemed to be emerging from the city of Wuhan. While China’s leaders are working to stem the spread of the epidemic across China, the response has come under criticism — from early denial in late 2019, to the suppression of news in early January 2020. While this might be due to a few ineffective leaders, the patterns are also reminiscent of what happens at the national level — the suppression of dissent and criticism. The national leadership will certainly stay in place — after the event, the provincial and city-level leaders will certainly be replaced by a new set of leaders.

Meanwhile, the national leadership has to contend with deleveraging debt in local governments, which will lead to closures of inefficient firms, and an uptick of joblessness. Coupled with the possible re-election of Donald Trump in the US, who might be even more anti-China in his second term, China’s national leaders will have to be creative in how they approach the world.

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