On its 70th anniversary, the People’s Republic of China must face the end of 40 years of prosperity and a very different environment.
As the People’s Republic of China celebrates its 70th anniversary, Xi Jinping’s avowed intent to gain world leadership by 2049 has produced a backlash, notably in the USA, and this is a destabilizing factor for the Chinese model and the globalization that has carried it along.
China’s emergence is unprecedented in the history of capitalism. In the space of four decades, one of the world’s poorest countries has become the world’s leading economic power in terms of comparative purchasing power. This once self-sufficient nation has become the world’s leading exporter, with 3,000 billion dollars of foreign reserves. Better still, it now holds leads the field leadership in the key technologies of the 21st century.
And yet, this meteoric rise has been the result of a series of disruptions. From the founding of the People’s Republic up to the death of Mao, China paid for its return to sovereignty and its conversion to Communism by four lost decades, with a standard of living in 1976 that was lower than that of 1949. From 1958 to 1961, the “Great Leap Forward” left tens of millions dead – the victims of famine. From 1966 to 1976, the “Cultural Revolution” threw the country into chaos and civil war.
The father of the Chinese miracle was Deng Xiaoping who, in 1978, and following the example of Singapore, launched his four modernizations. They laid out an original model that combined capitalism and totalitarianism. Xi Jinping announced a new direction during the 19th Communist Party Congress in October 2017, creating new ties with the Maoist legacy whilst staking a claim for world leadership. This ambition is based on a global strategy. From a political standpoint, it combines the return to the life-presidency of an empire, the strengthening of Marxist dogma in schools, universities and businesses, and the setting up of a broad-based digital surveillance of the population. From an economic standpoint, it keeps the rewards of growth in the hands of Chinese companies and aims to ensure its technological supremacy by means of the Made in China 2025 Plan. Militarily, China is continuing to build a Great Sea Wall and is investing in a high-seas navy, in space and in cyberwarfare. Strategically, it is carrying out a power-based policy founded on increased pressure on Taiwan, the annexation of the China Sea, supremacy in the Asia-Pacific region and in projecting its authoritarian government model of State capitalism by means of the new Silk Roads which, because of dependency through debt, makes it easy to take control of assets and strategic companies, even of whole countries.
The emergence of China is thus taking place against a background of intolerable tension. Its intensive method of achieving growth is generating unbelievably high inequality and an irreversible destruction of the environment. The priority given to industry and exports, supported by grants of public money and the undervaluation of the yen, has unsettled the middle classes in developed countries. Its economic model, based on predation and expansion is now raising fears. Its totalitarian capitalism, which supports the view that imperialism is the ultimate stage of Marxism, constitutes a deadly threat to political freedom.
Therefore, just as in 1978, China must rethink its strategy. But Xi Jinping, its new red emperor, is putting the country on track towards a highly risky confrontation with the rest of the world. In its quest for world leadership, China has some considerable assets to its advantage: its ability to carry out long-term strategies, a dynamic population, and, what is more, the meanderings of US policy.
But XI Jingping’s aggressive attitude exposes China to some serious risks. The trade and technology war with the US, as shown in the increase in customs duty on Chinese imports – from 3% to 4% – is causing a fall in growth, bringing it under 6%, and massive capital outflow. Increased public and private debt, which amounts to 260% of GDP, is generating dangerous speculative bubbles. Predatory practices are causing protests in Asia and Africa. Its desire for expansion is a fear factor and fosters a rapprochement between the USA, India, Japan, Australia and Vietnam. The people’s uprising in Hong Kong underlines the flaws in the Chinese model and the resistance it generates, and is galvanizing the proponents of Taiwanese independence.
What the 21st century has in store for us will depend on how the rivalry between China and USA and their ability to avoid any direct armed confrontation is played out. China’s challenge to the USA is unparalleled, for as well as being both economic and technological, it involves a clash of politics, ideologies and civilizations. Under pressure from an economic slowdown, the escalation of a trade war and demonstrations in Hong Kong, Xi Jinping has chosen to put a stop to reforms, to close off the economy, solidify dictatorship and exacerbate nationalism. It could well be that he is making the same mistake as Kaiser Wilhelm II in 1914 when up against the United Kingdom, and militarist Japan in the 1930s when up against the USA.
(Column published in Le Point, 3rd October 2019)