Future of China

My article Future of China appeared in The Statesman.

Here is the link...

China-watchers are divided. Many believe that the Middle Kingdom will collapse in the new future, some don’t. It is a fact that writing about China’s fall can make you rich and famous; the West loves this hypothesis. But is it not wishful thinking?
A few months ago, David Shambaugh, a respected Chinese expert who is director of the China Policy Program at George Washington University, did this exercise in a Saturday Essay in The Wall Street Journal. ‘Coming Chinese Crackup’ circulated widely on social media and hundreds with an interest in the ‘cracking up’ of China, enjoyed.
Wide circulation being the objective of the journal, Shambaugh’s piece was a great success. I shall come back to David Shambaugh, who has now elaborated his theory in a 203-page new book, China’s Future, where he argues that “China is in a state of ‘atrophy’ and ‘decline’, which will continue if no major political reform takes place in the near future.”
Watching the beginning of the deliberations of the two sessions, i.e., the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress, made me think that China is bound to face serious difficulties in the near future. A last Chinese catchphrase calls the slowing down of the economy the ‘new normal’. It shows, says The South China Morning Post, “the government’s higher tolerance for slower growth compared with the breakneck expansion China’s economy has seen over the past three decades.” Well, it will have consequences.
The first one is the unexpected cut in the PLA defence budget. It was announced at the National People’s Congress that the increment will only be 7.6 per cent (to $140 billion) compared to 10.1 per cent last year; it is the smallest military budget increment in several years; the first single-digit since 2010. Even The Global Times, the party mouthpiece admitted that the news came as a surprise “as some media previously predicted that the defence budget would increase by as high as 20 per cent.”
It is also what the usually well-informed Post had expected. One consequence is the modest rise is that the Communist Party may find it difficult to tackle ‘unhappiness’ in the PLA ranks at a time the party has undertaken sweeping reforms and with renewed tensions over the South China Sea and Taiwan Strait. Never since 1949 have reforms been so drastic; one can mention the retrenchments of 300,000 defence personnel, the reshuffle of the Theater Commands, the setting up of a PLA Rocket Force and a Strategic Support Force or the 15 new departments, offices and commissions.
All this requires funds. In this context, the reduction in defence budget does not appear completely ‘normal’. The Post reported that “military officers have taken the rare step of publicly registering disappointment at the increase in China’s defence budget.” While some analysts argued that the ‘surprisingly low’ budget increase shows that President Xi Jinping is in full control and that he is not scared of offending senior military officials, Major-General Qian Lihua, former head of the foreign affairs office of the Ministry of National Defence, acknowledged during a CPPCC panel discussion that this year’s represented a ‘big reduction’.
This type of acknowledgement is rare in China.
Retired Rear Admiral Yin Zhuo, also a member of the CPPCC, openly said that “the growth in defence spending should be commensurate with the national economy, but it also needed to be proportional to the country’s security need.” Yin Zhuo further told China National Radio: “We should not let our military’s development stall... because the security challenges at our peripherals, especially at sea, have been increasing.”
Yin added that the current share of defence spending to GDP (which is around 1.5 per cent) was still too low: “I think 2 to 2.5 per cent would be optimum,” Yin asserted, adding: “And we are slashing 300,000 military personnel - additional resources are needed to resettle these veterans.” There is clearly resentment in the PLA, traditionally China’s ‘stabilizing’ pillar.
But let us come back to David Shambaugh? What had he ‘prophesied’ last year? He remarked: “The endgame of communist rule in China has begun, and Xi Jinping’s ruthless measures are only bringing the country closer to a breaking point.”
The professor’s main argument is the following: “Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping, is hoping that a crackdown on dissent and corruption will shore up the party’s rule.” His new book elaborates on his earlier conclusions. According to Shambaugh, it is the political system which is not up to the mark; he cites Bill Clinton, ‘It’s the economy, stupid’ and the American scholar says: “when it comes to China, it’s the political system!”
If China continues on its present track of hard authoritarian rule, then the mainland will crack up, he believes. The only way out would be to “unleash innovation and effectively reform the financial system” but this is unlikely, as the Communist Party is too insecure; it can’t’ envisage any means other than control and coercion. Shambaugh argues that continuing with the current repressive policies is “a recipe for further social volatility.”
A few days ago, Ren Zhiqiang, a property tycoon, one of the richest men in China and a long-time ‘outstanding party member’, dared to question President Xi Jinping’s ‘absolute loyalty to the party’; Ren’s microblogging accounts were swiftly blocked. A party official announced that Ren would be ‘dealt with seriously’ for his critical postings: “Any remark that does not accord with the party’s lines, principles and policies …is not allowed under party discipline,” the official stated. Ren has (or had) 26 million microblog followers. Last week, when President Xi Jinping paid a highlypublicized visit to China’s top media organizations, journalists had to pledge ‘absolute loyalty’ to Xi. A Guardian article was entitled, ‘Love the party, protect the party: How Xi Jinping is bringing China’s media to heel’.
It asserted: “The Communist party is in a ‘no holds barred’ battle to wrestle absolute control of all media to project a better image of China.” Quoting an editorial in The China Daily, the British publication affirmed: “It is necessary for the media to restore people’s trust in the party… The nation’s media outlets are essential to political stability.” Read ‘stability of the party’. Does this make sense? Add the instability of the so-called ‘minorities’ areas (Tibet, Xinjiang, etc.) which remain an explosive issue if it continues to be mishandled by Beijing, as it is presently. Ultimately, nobody knows if (and when) China will crack up, collapse or simply reform.
The last would be the best alternative for China and the rest of the world, but authoritarianism has limits and President Xi seems to have entered a vicious circle with the impossibility to reset the Middle Kingdom to ‘normal’. India does not have these problems. In terms of tolerance, incredibly chaotic India is eons ahead of China with an opinionated press, scores of anti-government news channels and an extra-vigilant judiciary.
It can’t collapse.