China’s command economy has returned through the backdoor, with the Belt and Road Initiative (BRI) and the state’s effort to pick and promote private enterprise such as information and communications giant Huawei, telecommunications giant ZTE Corp, Alibaba and Tencent.
China completed forty years of economic reforms (1978), a 13-year lead over India’s liberalisation (1991). China’s gaige and kaifang (lit. ‘reform’ and ‘open door’) were introduced in December 1978 at the historic Third Plenum of the 11th Central Committee which set the tone for a homegrown ‘socialism with Chinese characteristics’. The bottom line of reforms was prosperity ‘to be rich is glorious!’ Forty years after, China has ‘risen’ but questions circle whether it has come a disruptor—’risen’ too fast, too soon, what with a schism and premature departure from China’s moderniser Deng Xiaoping’s ‘pragmatism’.
Today, China is ‘gloriously (much) richer’ but un-gloriously mired in backlash—Xinjiang and Tibet aside, embroiled in unsavory trade disputes that include ‘forced technology transfer’, accusations of theft of intellectual property (such as with Samsung, whose latest bendable screen technology was stolen) and the unsavoury politics of business with Iran and North Korea that has led to the arrest of heir apparent of information and communications giant Huawei, Meng Wanzhou (chief financial officer of Huawei) in Vancouver, one that has sent shivers down the corporate spine.
China may have ‘risen’, but not without the pangs of a large internal security budget of $196 billion, higher than its military budget. In the international arena, controversial territorial disputes and conflicts have come its way, notably in the South China Sea, East China Sea or closer home, the tri-junction of India-Bhutan-China at Doklam. In a minor but revealing incident, several airlines had to fall in line over Taiwan by referring to Taiwan as Chinese territory—clearly, a departure from Deng’s ‘letting sleeping dogs lie’. Lufthansa and British Airways fell in line, this came to be viewed as China’s belligerence, not quite the ‘peaceful rise of China’ that former president Hu Jintao (2002-2012) alluded to.
In China, Deng’s ‘pragmatism’ sang in much of the post-reform (post-1978) era. Though a notoriously catch-all phrase, Deng’s nuggets included separation of the party and the state (dang-zheng fenkai), quasi-political institutionalisation of leadership transition (to prevent the rise of another Mao), pace and sequencing of reforms (where rural reforms preceded industrial and urban reforms) sealed with a China that ‘bides its time’.
In the international arena, instead of bickering with neighbours such as Japan, Korea in Northeast Asia, reinforcing its historical tributary relationship in East Asia, rankling key stakeholder America and closer home, leaving unresolved territorial issues on India-China border to ‘the wisdom of future generations,’ Deng relentlessly set the pace for ‘peaceful rising’ scoring several coups that included the brutal suppression of Tiananmen (1989) and the return of Hong Kong back to its fold (1997).
In other words, Deng rode past ideology, personality cult, coterie or ‘kitchen cabinet’ politics, centralisation and command economy. China’s rising sea of reforms lifted boats of poverty; since 1978, China has lifted hundreds of millions out of poverty, quite unprecedented in human history.
In the last few years, perhaps these have been knocked down or reshaped with ‘Xi Jinping Thought on Socialism with Chinese Characteristics in a New Era’ formally introduced into the Chinese constitution in 2017. In good intent, to battle the constraints of bureaucracy (almost 95% of China’s civil servants are party members), corruption and elite politics, president Xi Jinping (2012-) sought a redressal with the increasing fusion of party and state and centralisation of powers such as by repealing the two-term limit for presidency, which earned him the moniker ‘Emperor for Life’.
Much of the political quasi-institutionalisation that underscored leadership transition was swept under the carpet. Today, the Politburo (second-most important body) is practically bereft of younger faces and a leader-in-waiting or heir apparent is missing. Most of the current members of the all-powerful Politburo Standing Committee (PBSC, most important body) will retire given China’s informal ‘67 up, 68 down’ (go up or retire) norm by 2022.
Unlike the past decades, ad-hoc bodies described as ‘informal bodies of extreme power’ called Leading Groups have become prominent under the leadership of president Xi. Notably, the National Computer Network and Information Security Management Centre under the Ministry of Industry and Information Technology was absorbed by the Central Cyberspace Affairs Commission and the National Civil Service Bureau absorbed by the Central Organisation Department—both party outfits. Other such instances reinforce that instead of the separation of powers, the party is the state and the state, the party.
In the international arena, in East Asia and Northeast Asia, South Pacific, as in South Asia (remember Nepal, Sri Lanka, and more recently Maldives which has prompted India giving a $1.4 billion aid?), China has ruffled feathers—coaxing Philippines out of the American orbit and ruffling ASEAN with claims in South China Sea; driving Japan to rearm big time ( Japan’s plans for a F-35 aircraft carrier) with claims in the East China Sea and contributing to the stasis in Northeast Asia, where despite the first inter-Korean meet in a decade and the first North Korea- America meet, peace is elusive.
China’s command economy has returned through the backdoor, with the Belt and Road Initiative (BRI) and the state’s effort to pick and promote private enterprise such as information and communications giant Huawei, telecommunications giant ZTE Corp, Alibaba and Tencent. All this and more are one big cause of all the anxiety in the West (and elsewhere) about China’s rise. Many of these enterprises are shaping the way we look at China (Alibaba owns the prominent South China Morning Post, Hong Kong) and through popular culture (with Chinese media staking its presence, investing in Hollywood productions), and as for cyber-attacks—who knows?
Many of China’s nimble technology firms are reshaping the landscape for Chinese consumers introducing QR (Quick Response Code) cashless transaction. Huawei offers better smartphones and telecommunications equipment at cheaper costs and has enabled millions in Africa and Asia, including India access to better technology at cheaper costs—but the question is whether it is a technology whose morality is in doubt—whether for cyberattacks or circumvention of sanctions against North Korea and Iran.
Forty years of reforms, China is admirably strong and growing stronger. With the trade war, it is likely that the Huawei phones that Bollywood stars peddle will become more expensive — but clearly, the cost of trade war (italics, author) is much more than the cost of goods for the Indian/global consumer.
The trade war and arrest of Meng Wanzhou including preventing Huawei from acquisitions and 5 G is a proxy war. The backdrop is America’s 2019 National Defense Authorization Act (NDAA) which authorised a whopping $717 billion to confront the ‘aggressive behaviour of China and Russia’ — a simple case of dealing with a potential problem in the future by pre-empting and nipping it in the bud.
For China, deserting the boat of ‘pragmatism’, ‘biding its time, hiding its capacities’ — embracing instead a ‘go-out’ both economically and militarily is causing a confluence of unity in the West and the East about how to deal with China. How China can serve its own cause, China knows better.
The author is Singapore-based Sinologist and adjunct fellow at the Institute of Chinese Studies, Delhi. Views are personal.